<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
May 8, 1998
Date of Report (Date of Earliest Event Reported)
General Growth Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11656 42-1283895
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
110 N. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 960-5000
-------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN.
The registrant hereby amends its Current Report on Form 8-K dated May 26,
1998 as follows:
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the financial statements, pro forma financial information
and exhibits filed as a part of this report:
(a) Financial Statements of Businesses acquired
and to be acquired.
The financial statements of Southwest Plaza, the financial statements of
Northbrook Court, the combined financial statements of the Landmark Mall,
Mayfair Complex, Northgate Mall, Oglethorpe Mall and Park City Center, and the
combined financial statements of certain retail properties of MEPC American
Holdings, Inc., U.K.-American Properties, Inc. and Caledonian Holding Holding
Company, Inc. as listed in the accompanying Index to Financial Statements and
Pro Forma Financial Information are filed as part of this Current Report on Form
8-K/A.
(b) Pro Forma Financial Information.
The pro forma financial information of General Growth Properties, Inc.
listed in the accompanying Index to Financial Statements and Pro Forma Financial
Information is filed as part of this Current Report on Form 8-K/A.
(c) Exhibits.
See Exhibit Index attached hereto and incorporated herein by reference.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum
---------------------------------
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
Date: June 2, 1998
-3-
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
Number Name* Number
- ------- ----------------------------------------------------------- ------
<C> <S> <C>
2.1 Purchase and Sale Agreement, dated May 8, 1998, among
Grosvenor International Limited, P.I.C. Investments,
Northbrook Court I L.L.C. and Northbrook Court II L.L.C.**
2.2 Stock Purchase Agreement, dated as of April 17, 1998, among
MEPC plc, MEPC North American Properties Limited, U.K.-
American Holdings Limited and GGP Limited Partnership.**
2.3 Merger Agreement, dated May 14, 1998, among GGP Limited
Partnership, GGP Acquisition L.L.C. and U.S. Prime Property,
Inc.**
2.4 Sale and Contribution Agreement, dated April 2, 1998,
between Southwest Properties Venture and GGP Limited
Partnership.
4.1 Redemption Rights Agreement, dated April 2, 1998, among GGP
Limited Partnership, General Growth Properties, Inc. and
Southwest Properties Venture.**
4.2 Indenture and Servicing Agreement, dated as of November 25, 1997,
among the Issuers named therein, LaSalle National Bank, as Trustee,
and Midland Loan Services, L.P., as Servicer (the "Indenture
Agreement").
4.3 Form of Note pursuant to the Indenture Agreement.
4.4 Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and
Rents, Fixture Filing and Financing Statement, dated and effective as
of November 25, 1997, among the Issuers, the Trustee and the Deed
Trustees named therein.
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte and Touche.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Coopers & Lybrand L.L.P.
</TABLE>
- ---------------
* In accordance with Rule 601(b)(2) of Regulation S-K, the exhibits to these
agreements and the related disclosure schedules have not been filed. The
Company agrees to furnish supplementally a copy of any such omitted exhibit
or disclosure schedule to the Securities and Exchange Commission upon
request.
** Previously filed by the Company in its Current Report on Form 8-K dated May
26, 1998.
-4-
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
The following financial information is presented in accordance with Rule
3-14 of Regulation S-X of the Securities and Exchange Commission. Accordingly,
such historical information has been audited only for the respective properties
most recent fiscal year as the transactions relating to the properties acquired
or to be acquired (as described in the registrant's Current Report on Form 8-K
dated May 26, 1998) are not with related parties and the registrant, after
reasonable inquiry, is not aware of any material factors related to the
properties not otherwise disclosed that would cause the reported financial
information to not be necessarily indicative of future operating results. In
addition, as the properties will be directly or indirectly owned by entities
that elect to be treated as REITs for Federal income tax purposes, a
presentation of estimated taxable operating results is not applicable.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SOUTHWEST PLAZA
- ---------------
Statements of Revenues and Certain Expenses for the Year Ended December
31, 1997 and for the Three Months Ended March 31, 1998 (Unaudited)....... F-2
NORTHBROOK COURT
- ----------------
Statement of Revenues and Certain Expenses for the Three Months Ended
March 31, 1998 (Unaudited)............................................... F-3
Independent Auditors' Report.............................................. F-5
Statement of Revenues and Certain Expenses for the Year Ended December 31,
1997..................................................................... F-6
Notes to Statement of Revenues and Certain Expenses....................... F-7
LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS, NORTHGATE MALL, OGLETHORPE
MALL AND PARK CITY CENTER
- -----------------------------------------------------------------------
Independent Auditors' Report.............................................. F-9
Combined Statements of Revenues and Certain Expenses for the Year Ended
December 31, 1997 and for the Three Months Ended March 31, 1998
(Unaudited).............................................................. F-10
Notes to Combined Statements of Revenues and Certain Expenses............. F-11
MEPC AMERICAN HOLDINGS INC., U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN
HOLDING COMPANY, INC.
- --------------------------------------------------------------------------
Independent Auditors' Report.............................................. F-14
Combined Statements of Revenues and Certain Expenses for Certain Retail
Properties for the Year Ended September 30, 1997 and for the Three Months
Ended December 31, 1997 (Unaudited) and March 31, 1998 (Unaudited)....... F-15
Notes to Combined Statements of Revenues and Certain Expenses............. F-16
GENERAL GROWTH PROPERTIES, INC.
- -------------------------------
Pro Forma Condensed Consolidated Statement of Operations for the Year
Ended
December 31, 1997 (Unaudited)............................................ F-19
Notes to Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended
December 31, 1997 (Unaudited)............................................ F-20
Pro Forma Condensed Consolidated Statement of Operations for the Three
Months Ended
March 31, 1998 (Unaudited)............................................... F-23
Notes to Pro Forma Condensed Consolidated Statement of Operations for the
Three Months
Ended March 31, 1998 (Unaudited)......................................... F-24
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998
(Unaudited).............................................................. F-26
Notes to Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1998 (Unaudited)......................................................... F-27
</TABLE>
F-1
<PAGE>
SOUTHWEST PLAZA
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS--UNAUDITED)
The Statements of Revenues and Certain Expenses, as shown below, present the
summarized results of operations of Southwest Plaza. On April 3, 1998, the
Company acquired 100% of Southwest Plaza, a two-level enclosed mall shopping
center located in Denver, Colorado, with approximately 1.3 million square feet
of GLA. Southwest Plaza, which opened in 1983 and was renovated in 1994 and
1995, is anchored by Joslin's, Foley's, Sears, JCPenney and Montgomery Ward.
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1997 1998
------------ ---------
<S> <C> <C>
Revenues:
Rental income.......................................... $ 9,650 $2,391
Percentage rent........................................ 311 203
Tenant recoveries and other charges.................... 5,040 1,227
------- ------
15,001 3,821
Expenses:
Real estate taxes...................................... 2,220 588
Management fee......................................... 505 130
Property operating expenses............................ 3,609 931
------- ------
6,334 1,649
------- ------
Revenues in excess of certain expenses................. $ 8,667 $2,172
======= ======
</TABLE>
F-2
<PAGE>
NORTHBROOK COURT
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS--UNAUDITED)
The Statements of Revenues and Certain Expenses, as shown below, present the
summarized results of operations of Northbrook Court. On May 8, 1998, the
Company acquired 100% of the partnership interests in Westcoast Estates, the
partnership that owns Northbrook Court, a two-level enclosed mall shopping
center located in Northbrook (Chicago), Illinois, with approximately 1.0
million square feet of GLA. Northbrook Court, which opened in 1976 and was
renovated in 1996, is anchored by Lord & Taylor, Marshall Fields, Neiman
Marcus and General Cinema.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31,
1998
---------
<S> <C>
Revenues:
Rental income....................................................... $5,138
Expenses:
Property operating expenses......................................... 2,341
Management fee...................................................... 131
------
2,472
------
Revenues in excess of certain expenses.............................. $2,666
======
</TABLE>
F-3
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NORTHBROOK COURT
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
F-4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
General Growth Properties, Inc.
We have audited the accompanying statement of revenues and certain expenses
of Northbrook Court for the year ended December 31, 1997. This financial
statement is the responsibility of Northbrook Court's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying statement of revenues and certain expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, and is not intended to be a complete presentation of
Northbrook Court's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenues and certain expenses of Northbrook
Court for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
San Francisco, California
February 6, 1998, except for Note 1
for which the date is May 28, 1998
F-5
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NORTHBROOK COURT
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
Revenues:
Minimum rent......................................................... $10,653
Percentage rent...................................................... 620
Tenant recoveries.................................................... 8,209
Other income......................................................... 772
-------
Total revenues..................................................... 20,254
-------
Expenses:
CAM expenses......................................................... 4,462
Real estate taxes.................................................... 4,255
Management fee....................................................... 496
Other property operating expenses.................................... 674
-------
Total expenses..................................................... 9,887
-------
Revenues in excess of certain expenses................................. $10,367
=======
</TABLE>
The accompanying notes are an integral part of the financial statement.
F-6
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NORTHBROOK COURT
NOTES TO FINANCIAL STATEMENT
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The statement of revenues and certain expenses is for an enclosed mall
shopping center including all free standing stores which was acquired by
General Growth Properties, Inc. (the "Company") on May 8, 1998 located in
Northbrook (Chicago), Illinois and referred to as Northbrook Court.
The statement is not representative of the actual operations for the period
presented as certain expenses, primarily depreciation and amortization
expense, interest expense and other costs not directly related to the future
operations of the property have been excluded.
Revenue Recognition
Minimum rent revenues are recognized on a straight-line basis over the terms
of the related leases. The amount of straight-line rent included in minimum
rent is approximately $107. Percentage rents are recognized on an accrual
basis. Recoveries from tenants for taxes, insurance and other shopping center
operating expenses are recognized as revenues in the period the applicable
costs are incurred.
A provision for doubtful accounts representing that portion of accounts
receivable which is estimated to be uncollectible has been included in other
property operating expenses.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions of the reported amounts of revenues and certain expenses during
the reporting period. Actual results could differ from those estimates.
2. FUTURE REVENUE RENTALS
The minimum future rentals based on noncancelable operating leases held as
of December 31, 1997, are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
------------
<S> <C>
1998........................................................... $10,709
1999........................................................... 10,187
2000........................................................... 10,064
2001........................................................... 9,327
2002........................................................... 8,110
Thereafter..................................................... 31,591
</TABLE>
F-7
<PAGE>
LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS,
NORTHGATE MALL, OGLETHORPE MALL AND PARK CITY CENTER
COMBINED STATEMENTS OF REVENUES AND
CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
F-8
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
General Growth Properties, Inc.
We have audited the accompanying combined statements of revenues and certain
expenses of the Landmark Mall, Mayfair Complex, The Meadows, Northgate Mall,
Oglethorpe Mall and Park City Center (the "Malls") for the year ended December
31, 1997. This financial statement is the responsibility of the Malls'
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined statement of revenues
and certain expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined statement of revenues and certain expenses. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
combined statement of revenues and certain expenses. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying combined statements of revenues and certain expenses was
prepared for purposes of complying with certain rules and regulations of the
Securities and Exchange Commission as described in Note 2 to the combined
statement of revenues and certain expenses and is not intended to be a
complete presentation of the combined revenues and expenses of the Malls.
In our opinion, the aforementioned combined statements of revenues and
certain expenses presents fairly, in all material respects, the combined
revenues and certain expenses of the Malls for the year ended December 31,
1997 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Atlanta, Georgia
May 14, 1998
F-9
<PAGE>
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF:
LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS,
NORTHGATE MALL, OGLETHORPE MALL AND PARK CITY CENTER
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER MARCH 31, 1998
31, 1997 (UNAUDITED)
----------- ------------------
<S> <C> <C>
REVENUES:
Rental income, including percentage rentals..... $50,395,444 $12,771,299
Tenant common area, property taxes and insurance
recovery....................................... 29,800,315 7,589,063
Other operating income.......................... 4,932,749 902,294
----------- -----------
$85,128,508 $21,262,656
=========== ===========
EXPENSES:
Building and common area........................ $19,699,537 $ 4,652,847
Real estate taxes............................... 10,052,263 2,600,512
Management fee.................................. 2,387,575 651,676
Other operating expenses........................ 5,420,300 1,308,107
----------- -----------
37,559,675 9,213,142
----------- -----------
Revenues in excess of certain expenses.......... $47,568,833 $12,049,514
=========== ===========
</TABLE>
See notes to combined statements of revenues and certain expenses.
F-10
<PAGE>
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF:
LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS,
NORTHGATE MALL, OGLETHORPE MALL AND PARK CITY CENTER
1. BUSINESS:
The combined statements of revenues and certain expenses include the
operations of the Landmark Mall, Mayfair Complex, The Meadows, Northgate Mall,
Oglethorpe Mall and Park City Center ("the Malls"). Other than Park City
Center, the Malls are owned by U.S. Prime Property Inc. ("USPPI"), a privately
held Real Estate Investment Trust. USPPI has a 50% interest in Parcit-IIP
Lancaster Venture, the owner of Park City Center. P City, Inc. ("PCI"), an
affiliate of a shareholder of USPPI, owns the remaining 50% interest.
<TABLE>
<CAPTION>
Property City State
---------------- ----------- ------------
<S> <C> <C>
Landmark Mall Alexandria Virginia
Mayfair Complex Wauwatosa Wisconsin
The Meadows Las Vegas Nevada
Northgate Mall Chattanooga Tennessee
Oglethorpe Mall Savannah Georgia
Park City Center Lancaster Pennsylvania
</TABLE>
On May 14, 1998, USPPI entered into a Merger Agreement with GGP Limited
Partnership (the "Buyer"), an affiliate of General Growth Properties, Inc.
Under the Merger Agreement, the Buyer will acquire all of the outstanding
capital stock of USPPI for cash. Immediately prior to the merger, PCI will
transfer its interest in Park City Center to USPPI.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Presentation: The accounts of each property are combined in the
statements of revenues and certain expenses. The financial statements are not
representative of the actual operations for the period presented as certain
expenses that may not be comparable to the expenses expected to be incurred in
the future operations of the to be acquired properties have been excluded in
accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission. Expenses excluded consist of interest, depreciation, amortization,
impairment, corporate expenses and other costs not directly related to the
future operations of the properties.
b. Revenue Recognition: The Malls recognize minimum rental income over the
term of a lease on a straight-line basis. Contingent rentals based on the
properties' operating expenses and tenant sales volumes are recognized as
revenue when earned. Percentage rental income based on tenant sales volumes
were $2,811,000 for the year ended December 31, 1997 and $635,000 (unaudited)
for the three-month period ended March 31, 1998.
c. Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
d. Unaudited Information: The combined financial statement for the three-
month period ended March 31, 1998 is unaudited. In management's opinion, such
combined financial statement includes all adjustments, consisting solely of
normal recurring adjustments, necessary for a fair presentation.
F-11
<PAGE>
3. LEASES:
The following is a schedule, by year, of combined future minimum rental
payments expected under executed operating leases of Landmark Mall, Mayfair
Complex, The Meadows, Northgate Mall, Oglethorpe Mall and Park City Center
that have initial or remaining noncancelable lease terms in excess of one
year, as of December 31, 1997.
<TABLE>
<S> <C>
1998.......................................................... $ 47,659,260
1999.......................................................... 43,238,731
2000.......................................................... 38,210,654
2001.......................................................... 32,726,133
2002.......................................................... 28,508,047
Thereafter.................................................... 97,022,481
------------
Total....................................................... $287,365,306
============
</TABLE>
F-12
<PAGE>
MEPC AMERICAN HOLDINGS INC., U.K.-AMERICAN PROPERTIES, INC.
AND CALEDONIAN HOLDINGS COMPANY, INC.
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR CERTAIN RETAIL PROPERTIES
FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 (UNAUDITED)
AND MARCH 31, 1998 (UNAUDITED)
F-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General Growth Properties, Inc.
We have audited the accompanying combined statement of revenues and certain
expenses for certain retail properties of MEPC American Holdings Inc., U.K.-
American Properties, Inc. and Caledonian Holding Company, Inc., wholly owned
subsidiaries of MEPC plc., a United Kingdom Company (the MEPC American Group)
(the combined statement) described in Note A for the year ended September 30,
1997. This combined statement is the responsibility of MEPC American Group
management. Our responsibility is to express an opinion on the combined
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation
of the combined statement. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying combined statement was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and for inclusion in the registration statement of General Growth
Properties, Inc. as described in Note B. The presentation is not intended to
be a complete presentation of the retail properties' revenues and expenses.
In our opinion, the aforementioned combined statement referred to above
presents fairly, in all material respects, the combined revenues and certain
expenses for certain retail properties for the year ended September 30, 1997,
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Dallas, Texas
May 8, 1998
F-14
<PAGE>
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR CERTAIN RETAIL PROPERTIES OF MEPC AMERICAN HOLDINGS INC.,
U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDING COMPANY, INC.
(MEPC AMERICAN GROUP)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
AND DECEMBER 31, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
THREE
MONTHS
THREE MONTHS ENDED YEAR ENDED
ENDED DEC. 31, SEPTEMBER
MARCH 31, 1998 1997 30, 1997
-------------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues:
Rental revenues........................ $15,869,770 $15,555,344 $59,570,310
Other real estate income............... 7,750,155 8,223,698 31,938,695
----------- ----------- -----------
23,619,925 23,779,042 91,509,005
----------- ----------- -----------
Certain Expenses:
Salaries and benefits.................. 1,062,357 1,145,663 3,834,805
Utilities.............................. 1,199,774 1,450,634 5,966,312
Repairs and maintenance................ 1,685,768 1,621,219 7,269,609
Real estate taxes...................... 2,169,147 1,921,710 8,233,418
Advertising and promotion.............. 321,208 797,589 2,021,929
Insurance.............................. 634,179 634,533 3,769,011
Other.................................. 1,505,570 1,988,377 5,667,387
----------- ----------- -----------
8,578,003 9,559,725 36,762,471
----------- ----------- -----------
Revenues in excess of certain expenses... $15,041,922 $14,219,317 $54,746,534
=========== =========== ===========
</TABLE>
See notes to combined statements of revenues and certain expenses.
F-15
<PAGE>
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR CERTAIN RETAIL PROPERTIES OF MEPC AMERICAN HOLDINGS INC.,
U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDING COMPANY, INC.
(MEPC AMERICAN GROUP)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
AND DECEMBER 31, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED SEPTEMBER 30, 1997
A. OPERATING PROPERTIES:
The combined statements of revenues and certain expenses for certain retail
properties, (the combined statements) for the three-month periods ended March
31, 1998 and December 31, 1997 and for the year ended September 30, 1997
relates to the operations of the following retail properties which are
expected to be acquired by General Growth Properties, Inc. (General Growth)
from the MEPC American Group:
<TABLE>
<CAPTION>
RETAIL PROPERTIES LOCATION
----------------- --------
<S> <C>
Apache Mall Rochester, Minnesota
Boulevard Mall Las Vegas, Nevada
Cumberland Mall Atlanta, Georgia
McCreless Mall San Antonio, Texas
Northridge Fashion Center Northridge, California
Regency Square Mall Jacksonville, Florida
Riverlands Shopping Center LaPlace, Louisiana
Valley Plaza Mall Bakersfield, California
</TABLE>
On April 17, 1998, GGP Limited Partnership, (of which General Growth is the
general partner), agreed to purchase the stock of MEPC American Holdings Inc.,
U.K.-American Properties, Inc. and Caledonian Holding Company, Inc. (wholly
owned subsidiaries of MEPC plc) from MEPC plc in a transaction anticipated to
close during the second quarter of 1998.
B. BASIS OF PRESENTATION:
The accompanying combined statements have been prepared on the accrual basis
of accounting. The combined statements have been prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and for inclusion in a registration statement for General Growth.
The combined statements are not intended to be a complete presentation of the
combined revenues and expenses of the retail properties listed above for the
three-month periods ended March 31, 1998 (unaudited) and December 31, 1997
(unaudited), and for the year ended September 30, 1997.
The combined statements exclude certain amounts, which would not be
comparable to the proposed future operations of the retail properties as
follows:
(a) depreciation of the buildings and improvements;
(b) amortization of other assets;
(c) interest expense;
(d) interest income;
(e) income taxes;
(f) gain from condemnation transaction at Cumberland Mall;
(g) loss from abandonment of renovation projects at Valley Plaza Mall;
and
(h) other income and expense items unique to MEPC American Group.
F-16
<PAGE>
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR CERTAIN RETAIL PROPERTIES OF MEPC AMERICAN HOLDINGS INC.,
U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDING COMPANY, INC.
(MEPC AMERICAN GROUP)--(CONTINUED)
C. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue Recognition
Rental income from leasing activities consists of lease payments earned from
tenants under lease agreements.
Capitalization Policy
Ordinary repairs and maintenance are expensed as incurred; major
replacements and betterments are capitalized.
Advertising and Promotion
The cost of advertising and promotion is expensed as incurred.
Use of Estimates
The preparation of the combined statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the combined statements and
accompanying notes. Actual results could differ from those estimates.
Unaudited Interim Combined Statements
The combined statements for the three-month periods ended March 31, 1998 and
December 31, 1997 are unaudited. In the opinion of management, all significant
adjustments necessary for a fair presentation of the combined statements for
the interim periods have been included. The results of operations for the
interim periods are not necessarily indicative of the results to be expected
for the full year for the retail properties.
F-17
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA FINANCIAL STATEMENTS
F-18
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
<TABLE>
<CAPTION>
1998 ACQUISITIONS
------------------------------------
HISTORICAL PROPERTY
GENERAL ACQUISITIONS
GROWTH PRO FORMA -------------------- TOTAL
PROPERTIES, FISCAL 1997 PRO FORMA FISCAL SOUTHWEST NORTHBROOK PRO FORMA PRO FORMA
INC.(1) ACQUISITIONS ADJUSTMENTS 1997 PLAZA COURT MEPC(2) USPPI ADJUSTMENTS COMBINED
----------- ------------ ----------- --------- --------- ---------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues... $291,147 $14,427 $ -- $305,574 $15,001 $20,254 $91,509 $85,129 $ -- $517,467
Expenses:
Property
operating....... 106,369 5,818 -- 112,187 5,829 9,391 36,762 35,172 -- 199,341
Management fees. 3,308 252 (46) 3,514 505 496 -- 2,388 (1,789)(a) 5,114
Depreciation and
amortization.... 48,509 -- 2,077 50,586 -- -- -- -- 39,591(b) 90,177
-------- ------- -------- -------- ------- ------- ------- ------- --------- --------
Total Expenses... 158,186 6,070 2,031 166,287 6,334 9,887 36,762 37,560 37,802 294,632
-------- ------- -------- -------- ------- ------- ------- ------- --------- --------
Operating Income. 132,961 8,357 (2,031) 139,287 8,667 10,367 54,747 47,569 (37,802) 222,835
Interest
expense, net.... (70,252) -- (8,459) (78,711) -- -- -- -- (97,520)(c) (176,231)
Equity in net
income/(loss)
unconsolidated
affiliates:
GGP/Homart,
Inc. ........... 16,506 -- -- 16,506 -- -- -- -- -- 16,506
Property Joint
Ventures........ 3,032 391 -- 3,423 -- -- -- -- -- 3,423
General Growth
Management,
Inc. ........... (194) -- -- (194) -- -- -- -- -- (194)
-------- ------- -------- -------- ------- ------- ------- ------- --------- --------
Income before
minority
interest......... 82,053 8,748 (10,490) 80,311 8,667 10,367 54,747 47,569 (135,322) 66,339
Minority interest
in Operating
Partnership...... (29,398) -- 37 (29,361) -- -- -- -- 12,785(d) (16,576)
-------- ------- -------- -------- ------- ------- ------- ------- --------- --------
Net income....... 52,655 8,748 (10,453) 50,950 8,667 10,367 54,747 47,569 (122,537) 49,763
Convertible
preferred stock
dividends(3)..... -- -- -- -- -- -- -- -- (21,750) (21,750)
-------- ------- -------- -------- ------- ------- ------- ------- --------- --------
Net income
available to
common
stockholders..... $ 52,655 $ 8,748 $(10,453) $ 50,950 $ 8,667 $10,367 $54,747 $47,569 $(144,287) $ 28,013
======== ======= ======== ======== ======= ======= ======= ======= ========= ========
Weighted average
shares
outstanding--
basic............ 32,623
Weighted average
shares
outstanding--
diluted.......... 32,840
Earnings per
share--basic..... $ 0.86
Earnings per
share--diluted... $ 0.85
<CAPTION>
TOTAL
PRO FORMA PRO FORMA
EQUITY ADJUSTED FOR
PARTNER POTENTIAL
ADJUSTMENTS EQUITY PARTNER
-------------- --------------
<S> <C> <C>
Total revenues... $(85,129)(e) $432,338
Expenses:
Property
operating....... (35,172)(f) 164,169
Management fees. (600)(g) 4,514
Depreciation and
amortization.... (14,063)(h) 76,114
-------------- --------------
Total Expenses... (49,835) 244,797
-------------- --------------
Operating Income. (35,294) 187,541
Interest
expense, net.... 33,916 (i) (142,315)
Equity in net
income/(loss)
unconsolidated
affiliates:
GGP/Homart,
Inc. ........... -- 16,506
Property Joint
Ventures........ 3,433 (j) 6,856
General Growth
Management,
Inc. ........... 3,405 (k) 3,211
-------------- --------------
Income before
minority
interest......... 5,460 71,799
Minority interest
in Operating
Partnership...... (2,030)(d) (18,606)
-------------- --------------
Net income....... 3,430 53,193
Convertible
preferred stock
dividends(3)..... -- (21,750)
-------------- --------------
Net income
available to
common
stockholders..... $ 3,430 $ 31,443
============== ==============
Weighted average
shares
outstanding--
basic............ 32,623
Weighted average
shares
outstanding--
diluted.......... 32,840
Earnings per
share--basic..... $ 0.96
Earnings per
share--diluted... $ 0.96
</TABLE>
- ----
(1) Amounts are from the statements and footnotes included in the Company's
1997 Form 10-K except that the non-recurring gain on sale of a portion of
the CenterMark stock and the extraordinary item are excluded.
(2) Reflects the results of MEPC operations for the fiscal year ended
September 30, 1997.
(3) Pro forma earnings have been reduced by the pro forma dividends on the
7.25% Preferred Income Equity Redeemable Stock, Series A.
The accompanying notes are an integral part of the Pro Forma Condensed
Consolidated Statement of Operations.
For alphabetical references, please refer to Note 3--Pro Forma Adjustments.
F-19
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
NOTE 1 PRO FORMA BASIS OF PRESENTATION
This unaudited pro forma condensed consolidated statement of operations is
presented as if (i) the sale of CenterMark Properties, Inc. ("CenterMark") and
the acquisitions made in 1997 (Market Place Mall, Century Plaza Shopping
Center, Town East Mall, Southlake Mall, Eden Prairie Mall, GGP/Ivanhoe
Portfolio Malls and Valley Hills Mall), (ii) the acquisitions made or to be
made in 1998 (Southwest Plaza, Northbrook Court (collectively the "Property
Acquisitions"), the MEPC Portfolio and the USPPI Portfolio) and (iii) the
Company's use of the net proceeds of the Offering to fund the acquisitions and
for other working capital purposes, had all occurred on January 1, 1997. The
total pro forma condensed consolidated statement of operations adjusted for a
potential equity partner reflects these transactions plus the effect of a
potential joint venture partner with respect to the USPPI Portfolio (as
described below). In management's opinion, all adjustments necessary to
reflect these transactions have been included. Such pro forma statement of
operations is based upon the historical information of General Growth
Properties, Inc. excluding the non-recurring gain on sale of a portion of
CenterMark stock and extraordinary item and the historical information of each
of the above-mentioned entities for the year ended December 31, 1997. The MEPC
Portfolio information reflects the results of operations for the fiscal year
ended September 30, 1997. This unaudited pro forma statement of operations
should be read in conjunction with the "Selected Consolidated Financial Data"
included elsewhere herein and is not necessarily indicative of what actual
results of General Growth Properties, Inc. would have been assuming such
transactions had been completed as of January 1, 1997 nor does it purport to
represent the results of operations for future periods.
NOTE 2 ACQUISITIONS/DISPOSITIONS
On June 28, 1996, Westfield U.S. Investments, Pty. Limited exercised its
option to acquire the remaining 30% of the outstanding CenterMark stock from
General Growth Properties, Inc. (the "Company") in two transactions. The first
payment in the amount of $87.0 million was received on July 1, 1996, and the
second payment in the amount of $130.5 million was received on January 2,
1997. As described above, the gain on this transaction has been excluded from
the continuing operations of the Company and its pro forma operations for the
year ended December 31, 1997.
On March 31, 1997, the Company acquired a 100% interest in Market Place Mall
for a cash purchase price of approximately $70.0 million which was funded by
an unsecured short-term facility. Market Place Mall is located in Champaign,
Illinois.
During the second quarter of 1997, the Company also acquired a 100%
ownership interest in three properties, Century Plaza Shopping Center,
Southlake Mall, Eden Prairie Mall and a 50% interest in Town East Mall.
Century Plaza Shopping Center located in Birmingham, Alabama was acquired on
May 1, 1997 for $31.8 million in cash. Southlake Mall was acquired on June 19,
1997, for a purchase price of $67.0 million. The purchase price consisted of
$45.1 million of mortgage debt assumption, $11.5 million (353,537 units) of
newly issued Operating Partnership Units, and $10.4 million in cash. Southlake
Mall is located in Atlanta, Georgia. The aggregate consideration paid for Eden
Prairie Center located in Minneapolis, Minnesota was $19.9 million. It
included the assumption of a $16.8 million mortgage, the payment of $1.1
million in cash and the assumption of $2.0 million in short-term liabilities.
On June 11, 1997, the Company acquired a 50% interest in Town East Mall,
located in Mesquite, Texas for $56.5 million. The consideration included
approximately $27.5 million in cash, the assumption of approximately $27.9
million of mortgage indebtedness and the assumption of $1.1 million in net
current liabilities.
On September 17, 1997, GGP/Ivanhoe, Inc. ("GGP/Ivanhoe") acquired both The
Oaks Mall in Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The
purchase price for the two properties was approximately
F-20
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS--(CONTINUED)
$206 million of which $125 million was financed through property level
indebtedness. The Company owns 51% of the ownership interest in GGP/Ivanhoe
for a net investment of approximately $43.8 million. Ivanhoe, Inc. of
Montreal, Quebec, Canada owns the remaining 49% ownership interest in
GGP/Ivanhoe.
On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership
interest in Southwest Plaza in Denver, Colorado and Northbrook Court in
Northbrook, Illinois, respectively.
On June 2, 1998, the Company acquired the U.S. retail property portfolio of
MEPC plc (the "MEPC Portfolio"), a United Kingdom based real estate company
("MEPC"). Through the purchase of the stock of the three U.S. subsidiaries of
MEPC that directly or indirectly own the MEPC Portfolio (the "MEPC U.S.
Subsidiaries"), the Company acquired for approximately $871 million in cash
(less certain adjustments) 100% of eight enclosed mall shopping centers
located throughout the United States.
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), which owns (or as of closing will
own) 100% of six enclosed mall shopping centers (and office buildings adjacent
to one of the malls)(the "USPPI Portfolio"). The Company expects to acquire
USPPI together with an approximately 50% joint venture partner. The purchase
price for the USPPI acquisition is approximately $625 million in cash (subject
to certain adjustments), less approximately $65 million of mortgage
indebtedness. This transaction is expected to close during the second quarter
of 1998.
NOTE 3 PRO FORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts
related to the periods from January 1, 1997 to the dates of acquisition for
the 1997 acquisitions and for the entire year of 1997 for the acquisitions
made or to be made in 1998.
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and
increased borrowings. In connection with the acquisitions described above, the
Company assumed $114.1 million of mortgage debt bearing interest at the
weighted average rate of 8.50%. The Company also issued approximately $1,320.7
million of secured and unsecured borrowings to fund the cash portion of the
acquisitions. The pro forma interest expense on new borrowings was calculated
using an interest rate of 6.65%.
(d) Minority Interest
The pro forma income statement has been adjusted to reflect the allocation
of earnings to the minority interest.
(e) Revenues
Revenues relating to the USPPI Portfolio have been eliminated to reflect on
an equity basis the potential inclusion of a joint venture partner.
F-21
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS--(CONTINUED)
(f) Property Operating
Property operating expenses relating to the USPPI Portfolio have been
eliminated to reflect on an equity basis the potential inclusion of a joint
venture partner.
(g) Management Fees
Management fees related to the USPPI Portfolio have been adjusted to reflect
the fee to be charged by General Growth Management, Inc., given the potential
inclusion of a joint venture partner.
(h) Depreciation and Amortization
Depreciation and amortization relating to the USPPI Portfolio has been
eliminated to reflect on an equity basis the potential inclusion of a joint
venture partner.
(i) Interest Expense
Interest expense has been adjusted to reflect the potential inclusion of a
joint venture partner related to the USPPI Portfolio.
(j) Equity in Property Joint Ventures
Reflects the reduction in ownership and the change to the equity method of
accounting for the pro forma operating results of the USPPI Portfolio during
the fiscal year ended December 31, 1997 due to the potential inclusion of a
joint venture partner.
(k) Equity in General Growth Management, Inc.
Reflects the increase in General Growth Management, Inc. net income for
management fees assuming the USPPI Portfolio is acquired with a joint venture
partner.
F-22
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
<TABLE>
<CAPTION>
1998 ACQUISITIONS
-----------------------------------------
PROPERTY ACQUISITIONS
------------------------ PRO FORMA
HISTORICAL ADJUSTED
GENERAL PRO FORMA FOR
GROWTH TOTAL EQUITY POTENTIAL
PROPERTIES, SOUTHWEST NORTHBROOK PRO FORMA PRO FORMA PARTNER EQUITY
INC.(1) PLAZA COURT MEPC USPPI ADJUSTMENTS COMBINED ADJUSTMENTS PARTNER
----------- ---------- ----------- ------- ------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues......... $ 80,447 $ 3,821 $ 5,138 $23,620 $21,263 $ -- $134,289 $(21,263)(e) $113,026
Expenses:
Property operating.... 29,647 1,519 2,341 8,578 8,561 -- 50,646 (8,561)(f) 42,085
Management fees....... 875 130 131 -- 652 (513)(a) 1,275 (150)(g) 1,125
Depreciation and
amortization......... 13,967 -- -- -- -- 9,898 (b) 23,865 (3,516)(h) 20,349
-------- ---------- ---------- ------- ------- -------- -------- -------- --------
Total Expenses........ 44,489 1,649 2,472 8,578 9,213 9,385 75,786 (12,227) 63,559
-------- ---------- ---------- ------- ------- -------- -------- -------- --------
Operating Income....... 35,958 2,172 2,666 15,042 12,050 (9,385) 58,503 (9,036) 49,467
Interest expense, net. (17,883) -- -- -- -- (24,381)(c) (42,264) 8,479 (i) (33,785)
Equity in
unconsolidated
affiliates:
GGP/Homart, Inc....... 1,735 -- -- -- -- -- 1,735 -- 1,735
Joint Venture
Properties........... 1,041 -- -- -- -- -- 1,041 967 (j) 2,008
General Growth
Management, Inc...... (7,969) -- -- -- -- -- (7,969) 851 (k) (7,118)
-------- ---------- ---------- ------- ------- -------- -------- -------- --------
Income before minority
interest.............. 12,882 2,172 2,666 15,042 12,050 (33,766) 11,046 1,261 12,307
Minority interest in
Operating Partnership. (4,427) -- -- -- -- 2,466 (d) (1,961) (441)(d) (2,402)
-------- ---------- ---------- ------- ------- -------- -------- -------- --------
Net income............. 8,455 2,172 2,666 15,042 12,050 (31,300) 9,085 820 9,905
Convertible preferred
stock dividends(2).... -- -- -- -- -- (5,438) (5,438) -- (5,438)
-------- ---------- ---------- ------- ------- -------- -------- -------- --------
Net income available to
common stockholders... $ 8,455 $ 2,172 $ 2,666 $15,042 $12,050 $(36,738) $ 3,647 $ 820 $ 4,467
======== ========== ========== ======= ======= ======== ======== ======== ========
Weighted average shares
outstanding--basic.... 35,689 35,689
Weighted average shares
outstanding--diluted.. 35,937 35,937
Earnings per share--
basic................. $ 0.10 $ 0.13
Earnings per share--
diluted............... $ 0.10 $ 0.12
</TABLE>
- --------
(1) Amounts are from the statements and footnotes included in the Company's
Form 10-Q for the quarter ended March 31, 1998.
(2) Pro forma earnings have been reduced by pro forma dividends on the 7.25%
Preferred Income Equity Redeemable Stock, Series A.
The accompanying notes are an integral part of the Pro Forma Condensed
Consolidated Statement of Operations.
For alphabetical references please refer to Note 3--Pro Forma Adjustments.
F-23
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(AMOUNTS IN THOUSANDS--UNAUDITED)
NOTE 1 PRO FORMA BASIS OF PRESENTATION
This unaudited condensed consolidated statement of operations is presented
as if (i) the acquisitions made or to be made in 1998 (Southwest Plaza,
Northbrook Court (collectively the "Property Acquisitions"), the MEPC
Portfolio and the USPPI Portfolio) and (ii) the Company's use of the net
proceeds of the Offering to fund the acquisitions and for other working
capital purposes, had all occurred on January 1, 1998. The total pro forma
condensed consolidated statement of operations adjusted for a potential equity
partner reflects these transactions plus the effect of a potential joint
venture partner with respect to the USPPI Portfolio (as described below). In
management's opinion, all adjustments necessary to reflect these transactions
have been included. Such pro forma statement of operations is based upon the
historical information of General Growth Properties, Inc. and the historical
information of each of the above-mentioned entities for the three months ended
March 31, 1998. This unaudited pro forma statement of operations should be
read in conjunction with the "Selected Consolidated Financial Data" included
elsewhere herein and is not necessarily indicative of what actual results of
General Growth Properties, Inc. would have been assuming such transactions had
been completed as of January 1, 1998 nor does it purport to represent the
results of operations for future periods.
NOTE 2 ACQUISITIONS
On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership
interest in Southwest Plaza in Denver, Colorado and Northbrook Court in
Northbrook, Illinois, respectively.
On June 2, 1998, the Company acquired the U.S. retail property portfolio of
MEPC plc (the "MEPC Portfolio"), a United Kingdom based real estate company
("MEPC"). Through the purchase of the stock of the three U.S. subsidiaries of
MEPC that directly or indirectly own the MEPC portfolio (the "MEPC U.S.
Subsidiaries"), the Company acquired for approximately $871 million in cash
(less certain adjustments) 100% of eight enclosed mall shopping centers
located throughout the United States.
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), which owns (or as of closing will
own) 100% of six enclosed mall shopping centers (and office buildings adjacent
to one of the malls)(the "USPPI Portfolio"). The Company expects to acquire
USPPI together with an approximately 50% joint venture partner. The purchase
price for the USPPI acquisition is approximately $625 million in cash (subject
to certain adjustments), less approximately $65 million of mortgage
indebtedness. This transaction is expected to close during the second quarter
of 1998.
NOTE 3 PRO FORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts
related to the three months ended March 31, 1998 for the acquisitions made or
to be made in 1998.
F-24
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS--(CONTINUED)
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and
increased borrowings. In connection with the acquisitions described above, the
Company assumed $114.1 million of mortgage debt bearing interest at the
weighted average rate of 8.50%. The Company also issued approximately $1,320.7
million of secured and unsecured borrowings to fund the cash portion of the
acquisitions. The pro forma interest expense on new borrowings was calculated
using an interest rate of 6.65%.
(d) Minority Interest
The pro forma income statement has been adjusted to reflect the allocation
of earnings to the minority interest.
(e) Revenues
Revenues relating to the USPPI Portfolio have been eliminated to reflect on
an equity basis the potential inclusion of a joint venture partner.
(f) Property Operating
Property operating expenses relating to the USPPI Portfolio have been
eliminated to reflect on an equity basis the potential inclusion of a joint
venture partner.
(g) Management Fees
Management fees related to the USPPI Portfolio have been adjusted to reflect
the fee to be charged by General Growth Management, Inc., given the potential
inclusion of a joint venture partner.
(h) Depreciation and Amortization
Depreciation and amortization relating to the USPPI Portfolio have been
eliminated to reflect on an equity basis the potential inclusion of a joint
venture partner.
(i) Interest Expense
Interest expense has been adjusted to reflect the potential inclusion of a
joint venture partner related to the USPPI Portfolio.
(j) Equity in Property Joint Ventures
Reflects the reduction in ownership and the change to the equity method of
accounting for the pro forma operating results of the USPPI Portfolio during
the three months ended March 31, 1998 due to the potential inclusion of a
joint venture partner.
(k) Equity in General Growth Management, Inc.
Reflects the increase in General Growth Management, Inc. net income for
management fees assuming the USPPI Portfolio is acquired with a joint venture
partner.
F-25
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(AMOUNTS IN THOUSANDS--UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
HISTORICAL PRO FORMA
GENERAL PRO FORMA ADJUSTED
GROWTH TOTAL EQUITY FOR POTENTIAL
PROPERTIES, PRO FORMA PRO FORMA PARTNER EQUITY
INC.(1) ADJUSTMENTS COMBINED ADJUSTMENTS PARTNER
----------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Investment in real
estate
Land................... $ 200,906 $ 173,400(a) $ 374,306 $ (62,500)(g) $ 311,806
Buildings and
equipment............. 1,615,222 1,583,600(a) 3,198,822 (562,500)(g) 2,636,322
Less accumulated
depreciation.......... (245,776) -- (245,776) -- (245,776)
Developments in
progress.............. 87,710 -- 87,710 -- 87,710
---------- ---------- ---------- --------- ----------
Net property and
equipment........... 1,658,062 1,757,000 3,415,062 (625,000) 2,790,062
Investment in
GGP/Homart............ 198,620 -- 198,620 -- 198,620
Investment in Property
Joint Ventures........ 91,151 -- 91,151 127,500 (g) 218,651
---------- ---------- ---------- --------- ----------
Net investment in
real estate......... 1,947,833 1,757,000 3,704,833 (497,500) 3,207,333
Cash and cash
equivalents............ 6,436 -- 6,436 -- 6,436
Tenant accounts
receivable, net........ 35,332 -- 35,332 -- 35,332
Deferred expenses, net.. 45,734 -- 45,734 -- 45,734
Investment in and note
receivable from GGMI... 67,439 -- 67,439 -- 67,439
Mortgage note
receivable............. 49,948 -- 49,948 -- 49,948
Prepaid expenses and
other assets........... 9,638 -- 9,638 -- 9,638
---------- ---------- ---------- --------- ----------
Total Assets......... $2,162,360 $1,757,000 $3,919,360 $(497,500) $3,421,860
========== ========== ========== ========= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
---------------------
Mortgage notes and other
debt payable........... $1,349,009 $1,434,760(b) $2,783,769 $(497,500)(g) $2,286,269
Distributions payable... 25,620 -- 25,620 -- 25,620
Accounts payable and
accrued expenses....... 40,514 16,553(c) 57,067 -- 57,067
---------- ---------- ---------- --------- ----------
Total Liabilities.... 1,415,143 1,451,313 2,866,456 (497,500) 2,368,956
Minority interest in
Operating Partnership.. 256,052 6,507 262,559 -- 262,559
Mandatory Redeemable
Preferred Stock, $100
par value; 300,000
shares issued and
outstanding on a pro
forma basis............ -- 300,000(e) 300,000 -- 300,000
Stockholder's equity
Common stock; $.10 par
value; 210,000,000
shares authorized;
35,769,454 shares
issued; 35,736,572
shares outstanding.... 3,577 -- 3,577 -- 3,577
Additional paid-in
capital............... 738,960 (820)(f) 738,140 -- 738,140
Retained earnings
(deficit)............. (250,218) -- (250,218) -- (250,218)
Treasury stock, at
cost; 32,882 shares
held.................. (1,154) -- (1,154) -- (1,154)
---------- ---------- ---------- --------- ----------
Total stockholders'
equity.............. 491,165 (820) 490,345 -- 490,345
---------- ---------- ---------- --------- ----------
Total Liabilities and
Equity................. $2,162,360 $1,757,000 $3,919,360 $(497,500) $3,421,860
========== ========== ========== ========= ==========
</TABLE>
- --------
(1) Amounts are from the statements included in the Company's Form 10-Q for the
quarter ended March 31, 1998.
The accompanying notes are an integral part of the Pro Forma Condensed
Consolidated Balance Sheet.
For alphabetical references, please refer to Note 2--Pro Forma Adjustments.
F-26
<PAGE>
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(AMOUNTS IN THOUSANDS--UNAUDITED)
NOTE 1 PRO FORMA BASIS OF PRESENTATION
This unaudited condensed consolidated balance sheet is presented as if (i)
the acquisitions or pending acquisitions of Southwest Plaza, Northbrook Court
(collectively the "Property Acquisitions"), the MEPC Portfolio and the USPPI
Portfolio and (ii) the Company's use of the net proceeds of the Offering to
fund the acquisitions and for other working capital purposes, had all occurred
on March 31, 1998. In management's opinion, all adjustments necessary to
reflect these transactions have been included.
NOTE 2 PRO FORMA ADJUSTMENTS
(a) Investment in Real Estate
<TABLE>
<S> <C>
Asset additions are as follows:
Property Acquisitions........................................ $ 261,000
MEPC Portfolio............................................... 871,000
USPPI Portfolio.............................................. 625,000
----------
$1,757,000
==========
Allocated to:
Land......................................................... $ 173,400
Buildings and equipment...................................... 1,583,600
----------
$1,757,000
==========
</TABLE>
(b) Mortgage Notes and other Debt Payable
Debt incurred was as follows:
<TABLE>
<S> <C>
Property Acquisitions (including debt assumed)................. $ 226,010
MEPC Portfolio................................................. 583,750
USPPI Portfolio (including debt assumed)....................... 625,000
----------
$1,434,760
==========
</TABLE>
(c) Working capital assumed by the Company at closing.
(d) Minority Interest
<TABLE>
<S> <C>
Operating Partnership Units issued for a portion of the Property
Acquisitions cost............................................... $18,437
Adjustment to minority interest for additional stockholders'
equity as determined by the relationship of the units to common
stock at March 31, 1998......................................... (11,930)
-------
$ 6,507
=======
</TABLE>
(e) Convertible preferred stock issued to fund acquisitions and for other
working capital purposes shown at liquidation value.
(f) Additional Paid-in Capital
<TABLE>
<S> <C>
Adjustment to additional paid-in capital for minority interest as
determined by the relationship of the units to common stock at
March 31, 1998.................................................. $11,930
Costs related to the issuance of convertible preferred stock..... (12,750)
-------
$ (820)
=======
</TABLE>
(g) Adjustments to reflect the inclusion of a joint venture partner related
to the USPPI Portfolio resulting in a change to the equity method of
accounting.
F-27
<PAGE>
Exhibit 2.4
SALE AND CONTRIBUTION AGREEMENT
BETWEEN
SOUTHWEST PROPERTIES VENTURE,
a Colorado joint venture
and
GGP LIMITED PARTNERSHIP
a Delaware limited partnership
April 2, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I Definitions
1.1 Definitions..................................................... 1
1.2 References...................................................... 13
ARTICLE II Contribution and Sale; Consideration
2.1 Contribution.................................................... 14
2.2 Consideration................................................... 14
2.3 Assumption of Liabilities....................................... 15
2.4 Matters Relating to Existing Indebtedness....................... 17
2.5 Termination of Existing Management Agreements and
Release of Property Management Liens............................ 18
2.6 Admission to Partnership; Redemption Rights; Etc................ 18
2.7 Guaranty Agreement.............................................. 19
2.8 Matters Relating to Gart Sports................................. 19
2.9 Other Leasing Matters........................................... 20
2.10 Matters Relating to Ground Lease................................ 22
2.11 Matters Relating to District.................................... 22
2.12 Matters Relating to Right of First Refusal...................... 22
2.13 Matters Relating to Tank........................................ 23
2.14 Matters Relating to Gift Certificates........................... 23
ARTICLE III Closing
3.1 Closing......................................................... 25
3.2 Contributor Closing Documents................................... 25
3.3 Partnership Closing Documents................................... 28
ARTICLE IV Prorations and Adjustments
4.1 Items to Be Prorated............................................ 30
4.2 Installment Payment of Assessments.............................. 31
4.3 Adjustable Tenant Charges....................................... 31
4.4 Advertising and Promotional Contributions....................... 32
4.5 Fixed and Other Tenant Charge Arrearage......................... 33
4.6 Sales Based Tenant Charges...................................... 34
4.7 Application of Rent Receipts.................................... 34
4.8 Security and Utility Deposits................................... 34
4.9 Collection of Rents............................................. 35
4.10 Settlement of Adjustments....................................... 37
ARTICLE V Title Insurance and Survey
5.1 Title Commitment................................................ 38
5.2 Survey.......................................................... 39
5.3 Title and Survey Defects........................................ 39
5.4 Title Insurance Premiums and Survey Costs....................... 40
ARTICLE VI Representations and Warranties
6.1 Partnership Representations and Warranties...................... 41
6.2 Contributor's Representations and Warranties.................... 42
-i-
<PAGE>
ARTICLE VII Access and Certain Rights of Early Termination
7.1 Due Diligence and Access...................................... 54
7.2 [Intentionally Deleted]....................................... 55
ARTICLE VIII Conditions to Closing
8.1 Conditions to Contributor's Obligations....................... 55
8.2 Conditions to Partnership's Obligations....................... 56
ARTICLE IX Condemnation and Destruction
9.1 Casualty or Condemnation in General........................... 57
9.2 Adjustment of Claims and Condemnation Proceedings............. 58
ARTICLE X Additional Covenants
10.1 Indemnification............................................... 59
10.2 Conduct of Business Pending Closing........................... 60
10.3 Supplemental Disclosure....................................... 62
10.4 [Intentionally Deleted]....................................... 62
10.5 Cooperation................................................... 62
10.6 Transfer and Other Taxes; Etc................................. 62
10.7 Estoppel Certificates......................................... 63
10.8 Record Retention.............................................. 63
10.9 Publicity..................................................... 63
10.10 Assistance Following Closing.................................. 64
10.11 Further Assurances............................................ 65
10.12 Restrictions on Certain Dispositions of Real Property......... 65
10.13 Debt Allocation; Etc.......................................... 66
10.14 Delivery of Certain Information............................... 68
10.15 Transfer of Units; Etc........................................ 68
10.16 Employees..................................................... 68
ARTICLE XI Miscellaneous
11.1 Survival...................................................... 69
11.2 Notices....................................................... 69
11.3 Counterparts.................................................. 70
11.4 Amendments.................................................... 70
11.5 Waiver........................................................ 70
11.6 Successors and Assigns........................................ 70
11.7 Third Party Beneficiaries..................................... 71
11.8 Partial Invalidity............................................ 71
11.9 Governing Law................................................. 71
11.10 Assignment.................................................... 71
11.11 Headings; Exhibits............................................ 71
11.12 Gender and Number............................................. 71
11.13 Entire Agreement; Construction................................ 71
11.14 Costs of Enforcement.......................................... 72
-ii-
<PAGE>
Exhibits/Schedule Description
- ----------------- -----------
Exhibit A Legal Description of Excluded Parcels
Exhibit B Legal Description of Land
Exhibit C Permitted Exceptions
Exhibit D [Intentionally Omitted]
Exhibit E Amendment to Partnership Agreement
Exhibit F Redemption Rights Agreement
Exhibit G Guaranty Agreement
Exhibit H Opinion or Opinions of Counsel for Contributor
Exhibit I Opinion of Counsel for the Partnership
Schedule 1.1(a) Anchors
Schedule 1.1(b) Personalty
Schedule 2.2(a) Allocation of Gross Asset Value
Schedule 2.9(a) Certain Leasing Matters (Contributor Responsibility)
Schedule 2.9(c) Certain Leasing Matters (Partnership Responsibility)
Schedule 2.13 Replacement Tank Specifications
Schedule 6.2(d) Permits and Licenses
Schedule 6.2(f) Rent Roll
Schedule 6.2(g-1) Leases
Schedule 6.2(g-2) Reciprocal Easement Agreements
Schedule 6.2(i) Lease Defaults
Schedule 6.2(k) Intellectual Property
Schedule 6.2(m) Contracts
Schedule 6.2(r) Legal Compliance
Schedule 6.2(s) Litigation
Schedule 6.2(t) Insurance Coverage
Schedule 6.2(w) Existing Indebtedness Documents
Schedule 6.2(x) Matters Relating to Promotional Association
Schedule 6.2(ai) District Documents
Schedule 6.2(z) Ownership or Lease of Land within One-Mile Radius
-iii-
<PAGE>
SALE AND CONTRIBUTION AGREEMENT
-------------------------------
Sale and Contribution Agreement, dated April 2, 1998, between Southwest
Properties Venture, a Colorado joint venture ("Contributor"), and GGP Limited
Partnership, a Delaware limited partnership (the "Partnership").
R E C I T A L S
---------------
WHEREAS, Contributor is the owner of a regional shopping center located
in Jefferson County, Colorado and commonly known as Southwest Plaza (the
"Mall"); and
WHEREAS, Contributor desires to sell to, and/or contribute to the
capital of, the Partnership all of the Property (as defined herein) and the
Partnership desires to acquire the Property.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
Definitions
-----------
1.1 Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"Adjustable Tenant Charges" shall mean common or mall area maintenance
(exterior and interior) charges, real estate taxes and assessments, property
insurance charges to the extent denominated or treated as such in the Leases and
the Reciprocal Easement Agreement.
"Advertising and Promotional Contributions" shall mean contributions by
Tenants, Anchors and the landlord to the Advertising and Promotional Fund.
"Affiliates" shall mean, with respect to the Partnership, any Person
controlling, controlled by or under common control with the General Partner or
the Partnership and, with respect to Contributor, the venturers of Contributor,
the partners of such venturers, the members of the families of such Persons,
trusts for the benefit of any of such Persons and any Person controlling,
controlled by or under common control with any of such Persons.
"Agreement" shall mean this Sale and Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"Anchor" shall mean each Person identified in Schedule 1.1(a).
<PAGE>
"Annual Financial Statements" shall have the meaning set forth in Section
6.2(j).
"Applicable Closing Fiscal Period" shall mean, with respect to any item
which is prorated under Article IV, the calendar year (or other fiscal period
for which such item is determined or assessed) during which the Closing Date
occurs.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
"Basic Information" shall have the meaning set forth in Section 6.2(f).
"Books and Records" shall mean all records, books of account and papers of
Contributor relating to the construction, ownership and operation of the
Property, whether on paper or electronic media, including without limitation
architect's drawings, blue prints and as-built plans, maintenance logs,
instruction books, licenses and permits, employee manuals, records and
correspondence relating to insurance claims, copies of guaranties and
warranties, financial statements, operating budgets, structural, mechanical,
geotechnical and other engineering studies, soil test reports, environmental
(including without limitation underground storage tank) reports, feasibility
studies, appraisals, ADA surveys or reports, marketing studies, lease summaries
and originals and/or copies of the Leases, the Reciprocal Easement Agreement and
the Contracts and correspondence related thereto.
"Cash Amount" shall mean $38,730,780.00. Contributor shall elect to
receive cash in respect of the portion of the Net Asset Value which is allocable
to any partner of the venturers of Contributor if such partner is not a
Qualified Investor and so that the number of Qualified Investors to whom Units
are indirectly issued pursuant hereto and who are not accredited investors (as
defined in Regulation D under the Securities Act) does not exceed 35.
" Casualty" shall mean any damage to or destruction of the Property or any
portion thereof caused by fire or other casualty, whether or not insured.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Closing Documents" shall mean the Contributor Closing Documents and
Partnership Closing Documents, collectively.
"Closing Price" shall have the meaning set forth in the Partnership
Agreement.
-2-
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock, $.10 par value per share, of
the General Partner.
"Contract Party Consents" shall have the meaning set forth in Section 10.5.
"Contracts" shall mean the service, maintenance and other contracts and
concessions that are currently in effect with respect to the Mall respecting the
use, maintenance, development, sale or operation thereof or any portion thereof
(but excluding this Agreement, the Ground Lease, the Leases, the Permitted
Exceptions and the Reciprocal Easement Agreement) which are listed on Schedule
6.2(m), together with any additions thereto, modifications thereof or
substitutions therefor hereafter entered into in accordance with the provisions
of this Agreement.
"Contributor Information" shall have the meaning set forth in Section
6.2(ag).
"Contributor's Liabilities" shall have the meaning set forth in Section
2.3.
"District" shall mean the Southwest Plaza Metropolitan District, a
governmental subdivision of the State of Colorado.
"District Documents" shall have the meaning set forth in Section 6.2(ai).
"District Financial Statements" shall have the meaning set forth in Section
6.2(j).
"Earnest Money" shall have the meaning set forth in Section 2.2(d).
"Earnest Money Escrow" shall have the meaning set forth in Section 2.2(d).
"Environmental Laws" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, guidelines, orders and decrees
regulating, relating to or imposing liability or standards concerning or in
connection with Hazardous Materials, underground or above-ground storage tanks
or the protection of human health or the environment, as any of the same may be
amended from time to time, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
(S) 9601 et. seq., as amended by the Superfund Amendments and Reauthorization
Act or any equivalent state or local laws or ordinances; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. (S) 6901 et seq., as amended
by the Hazardous and Solid Waste
-3-
<PAGE>
Amendments of 1984, or any equivalent state or local laws or ordinances; the
Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. (S) 136
et. seq. or any equivalent state or local laws or ordinances; the Hazardous
Materials Transportation Act (49 U.S.C. (S) 1801 et seq.); the Emergency
Planning and Community Right-to-Know Act ("EPCRA"), 42 U.S.C. (S) 11001 et. seq.
or any equivalent state or local laws or ordinances; the Toxic Substance Control
Act ("TSCA"), 15 U.S.C. (S) 2601 et. seq. or any equivalent state or local laws
or ordinances; the Atomic Energy Act, 42 U.S.C. (S) 2011 et. seq., or any
equivalent state or local laws or ordinances; the Clean Water Act (the "Clean
Water Act"), 33 U.S.C. (S) 1251 et. seq. or any equivalent state or local laws
or ordinances; the Clean Air Act (the "Clean Air Act"), 42 U.S.C. (S) 7401 et
seq. or any equivalent state or local laws or ordinances; the Occupational
Safety and Health Act, 29 U.S.C. (S) 651 et seq. or any equivalent state or
local laws or ordinances.
"Escrow Agent" shall have the meaning set forth in Section 2.2(d).
"Estoppels" shall mean the estoppel certificates to be obtained pursuant to
Section 10.7.
"Excluded Parcels" shall mean those certain parcels of land legally
described in Exhibit A and the improvements thereon owned by certain of the
Anchors or other Persons other than Contributor.
"Excluded Personalty" shall mean the personal items belonging to employees
of Existing Manager and, except as otherwise provided herein (including without
limitation Section 9.1(b) and Article IV), the cash, cash accounts and
receivables of Contributor.
"Existing Indebtedness" shall mean the loans listed on Schedule 6.2(w).
"Existing Indebtedness Documents" shall have the meaning set forth in
Schedule 6.2(w).
"Existing Indebtedness Consent Documents" shall have the meaning set forth
in Section 2.4.
"Existing Lender" shall mean Teacher Retirement System of Texas.
"Existing Management Agreements" shall mean that certain Management
Agreement dated July 20, 1983, between Contributor and the Existing Manager, as
amended by that certain Extension and Modification of Management Agreement dated
as of July 20, 1995, between Contributor and Existing Manager, and that certain
Agreement For Administrative and Operations Services dated May 3, 1982, between
the District and a predecessor in interest of Existing Manager.
-4-
<PAGE>
"Existing Manager" shall mean Jordon Perlmutter & Co.
"Fifth Anniversary Date" shall have the meaning set forth in Section 10.12.
"Financial Statements" shall have the meaning set forth in Section 6.2(j).
"Fixed and Other Tenant Charges" shall mean Rent other than Adjustable
Tenant Charges, Sales Based Tenant Charges and Advertising and Promotional
Contributions, including without limitation "environmental charges" as that term
is defined in the Leases.
"Fixed and Other Tenant Charge Arrearage" shall mean Fixed and Other Tenant
Charges due and payable prior to but unpaid as of the Closing Date.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated by
the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
"Gart Amendment" shall mean that certain Amendment to Lease dated January
1998, between Gart Bros. Sporting Goods Company and Contributor.
"Gart Work" shall have the meaning set forth in Section 2.8(b).
"Gart Work Contract" shall have the meaning set forth in Section 2.8(b).
"General Partner" shall mean General Growth Properties, Inc., a Delaware
corporation and the general partner of the Partnership.
"GGMI" shall mean General Growth Management, Inc., a Delaware corporation.
"Gift Certificate Accounts" shall have the meaning set forth in Section
2.14.
"Gift Certificate Bank" shall have the meaning set forth in Section 2.14.
"Gross Asset Value" shall mean $113,000,000.00.
"Ground Lease" shall mean that certain Lease dated August 10, 1978, between
Grant Properties I, Ltd. and Contributor, as amended by that certain First
Amendment of Lease dated July 14, 1980, that certain Second Amendment of Lease
dated February 16, 1981, that certain Third Amendment to Lease dated November
30, 1981, that certain Fourth Amendment of Lease dated December 7, 1986, that
-5-
<PAGE>
certain Fifth Amendment to Lease dated July 1, 1996 and that certain Memorandum
of Understanding dated June 14, 1986. Grant Properties I, Ltd. has assigned all
of its right, title and interest in and to the Ground Lease to Chanson LLC and
Chanson LLC has assigned all of its right, title and interest in and to the
Ground Lease to Ground Lessor.
"Ground Lessor" shall mean C-1 Partnership, a Colorado general partnership.
"Guarantors" shall have the meaning set forth in Section 2.7.
"Guaranty Agreement" shall have the meaning set forth in Section 2.7.
"Hazardous Materials" shall mean any substance, material, waste, gas or
particulate matter which (a) is regulated by the United States Government, the
State of Colorado, any other state with jurisdiction, or any local governmental
authority, (b) the exposure to, or manufacture, possession, presence, use,
generation, storage, transportation, treatment, release, disposal, abatement,
cleanup, removal, remediation or handling of is prohibited, controlled or
regulated by any Environmental Law, or (c) requires investigation or remediation
under any Environmental Law or common law, or (d) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous, or (e) causes or threatens to cause a nuisance upon the
Property or to adjacent properties or poses or threatens to pose a hazard to the
health or safety of persons on or about the Property. Such term includes,
without limitation, any material or substance which is (1) defined as a
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste" or any like or similar term under
any applicable Environmental Law; (2) oil and petroleum products; (3) asbestos
or asbestos-containing material as defined in the regulations of the
Occupational Safety and Health Administration at 29 C.F.R. (S) 1910.1001; (4)
polychlorinated biphenyls; (5) radioactive material; (6) designated as a "toxic
pollutant" or a "hazardous substance" pursuant to Sections 307 or 311 of the
Clean Water Act; (7) defined as a "hazardous waste" pursuant to Section 1004 of
RCRA; (8) defined as a "hazardous substance" pursuant to Section 101 of CERCLA;
(9) now designated as a "hazardous chemical" substance or mixture pursuant to
TSCA; (10) designated as an "extremely hazardous" substance under Section 302 of
EPCRA; (11) designated as a "priority pollutant" or "hazardous air pollutant"
pursuant to the Clean Air Act; (12) designated as a hazardous chemical under the
Occupational Safety and Health Act; (13) radon gas or other radioactive source
material, including special nuclear material, and byproduct materials regulated
under the Atomic Energy Act, 42 U.S.C. (S) 2011 et. seq.; (14) subject to
regulation under FIFRA; (15) natural gas, natural gas liquids, liquefied natural
gas, and synthetic gas usable for fuel; or (16) infectious wastes
-6-
<PAGE>
or materials and pathogenic bacteria or other pathogenic microbial agents.
"Improvements" shall mean all buildings, structures (surface and
subsurface), and other improvements located on the Land, including any fixtures
as shall constitute real property under applicable provisions of law.
"Improvements" shall not include any Tenant improvements which will not be a
part of the landlord's reversion upon expiration or termination of the Leases.
"Indemnified Partnership Persons" shall have the meaning set forth in
Section 10.1(a).
"Initial Earnest Money" shall have the meaning set forth in Section 2.2(d).
"Inspection Period Expiration Date" shall have the meaning set forth in
Section 7.2.
"Insurance Policy" shall have the meaning set forth in Section 3.2(d).
"Intellectual Property" shall have the meaning set forth in Section 6.2(k).
"IRS" shall have the meaning set forth in Section 10.13.
"Key Bank" shall mean Key Bank of Colorado.
"Key Bank Indebtedness" shall mean the unsecured indebtedness of
Contributor to Key Bank in the original principal amount of $3,150,000.
"Land" shall mean those certain parcels of real estate described on Exhibit
B, including without limitation Parcel B.
"Leases" shall mean those leases, tenancies, concessions, licenses and
occupancy agreements currently in effect affecting or relating to the Mall which
are listed on Schedule 6.2(g-1), together with any additions thereto,
modifications thereof or substitutions therefor hereafter entered into in
accordance with the provisions of this Agreement. Leases shall not include the
Ground Lease.
"Liens" shall mean mortgages, deeds of trust, liens, pledges, security
interests, options, rights of first refusal, charges, claims, restrictions and
other encumbrances of any nature whatsoever.
"Loss" shall have the meaning set forth in Section 10.1(a).
"Mall" shall have the meaning set forth in the recitals.
-7-
<PAGE>
"Memorandum" shall mean that certain Private Placement Memorandum dated
February 27, 1998 relating to the issuance of Units pursuant hereto, among other
things.
"Missing Parties" shall have the meaning set forth in Section 8.2(c).
"Net Asset Value" shall mean the excess of (a) the Gross Asset Value over
(b) the outstanding principal amount of the Existing Indebtedness and the Key
Bank Indebtedness on the Closing Date, as the same may be further adjusted in
accordance with the terms hereof.
"Net Operating Cash Flow" shall have the meaning set forth in the
Partnership Agreement.
"Other Deposits" shall have the meaning set forth in Section 4.8.
"P&P" shall mean P&P Southwest Partnership, a Colorado general partnership.
"Parcel B" shall mean that portion of the Land designated on Exhibit B as
"Parcel B".
"Parcel B Owners" shall mean Jordon Perlmutter, Samuel Primack, Michael
Cooper, Irving Hook and Sheldon Silverman.
"Partnership Agreement" shall mean the Amended and Restated Agreement of
Limited Partnership of the Partnership dated as of July 27, 1993, as amended by
that certain First Amendment thereto dated May 23, 1995, that certain Second
Amendment thereto dated June 13, 1995, that certain Third Amendment thereto
dated as of May 21, 1996, that certain Fourth Amendment thereto dated as of
August 30, 1996, that certain Fifth Amendment thereto dated as of October 4,
1996, that certain Sixth Amendment thereto dated as of November 27, 1996, that
certain Seventh Amendment thereto dated December 6, 1996, that certain Eighth
Amendment thereto dated June 19, 1997, that certain Ninth Amendment thereto
dated as of August 8, 1997, that certain Tenth Amendment thereto dated September
8, 1997, that certain Eleventh Amendment thereto dated as of September 11, 1997,
that certain Twelfth Amendment thereto dated October 15, 1997, that certain
Thirteenth Amendment thereto dated October 24, 1997 and that certain Fourteenth
Amendment thereto dated as of October 29, 1997 and as the same may be further
amended hereafter.
"Party" shall mean a party to the Reciprocal Easement Agreement, a Contract
or a Tenant under a Lease (or the successor or assignee thereof), in each case
other than Contributor or the Partnership or any predecessor in title with
respect to the Property.
-8-
<PAGE>
"Permitted Exceptions" shall mean the following:
(a) those title exceptions, defects and other matters that are shown
on Exhibit C;
(b) the terms, covenants and conditions of the Reciprocal Easement
Agreement;
(c) provided that Contributor knows of no violation thereof, zoning,
subdivision, environmental, municipal building and all other laws, rules,
regulations, ordinances, codes, restrictions or legal requirements
applicable to the ownership, use, occupancy or development of, or the right
to maintain or operate (including the construction of improvements on), the
Real Property and any other lawful action of any duly constituted public
authority or other body having or exercising jurisdiction over the Real
Property presently existing;
(d) the state of facts shown on the Survey;
(e) Liens for unpaid real property taxes and assessments, water rates
and charges, sewer taxes and rents and other governmental charges which are
not yet due and payable;
(f) the rights of the Tenants under the Leases as tenants only;
(g) mechanics' liens, lis pendens and notices of commencement of
action against Contributor in respect of the Real Property (or which affect
the interest of Contributor in the Real Property) provided that the same do
not exceed $25,000 in the aggregate and provided further that the Title
Company shall provide affirmative insurance with respect thereto insuring
the Partnership from loss with respect thereto in form and substance
acceptable to the Partnership in its reasonable discretion; and
(h) all other Liens and title exceptions the Partnership may accept
under Section 5.3.
No agreement to take title to the Real Property subject to Permitted Exceptions
shall be deemed a waiver of any representation or warranty of Contributor set
forth in Section 6.2 or the rights of the Partnership contained in Section 5.3,
it being understood and agreed that the Partnership's agreements regarding
Permitted Exceptions assume the truth and accuracy of all such representations
and warranties.
"Person" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
-9-
<PAGE>
"Personalty" shall mean all right, title and interest of Contributor or the
Existing Manager in and to the personal property, both tangible and intangible,
located in or upon and used in connection with the operation and maintenance of
the Mall, including without limitation fixtures; machinery; equipment; building
supplies and materials; consumables; inventories; names, logos, trademarks,
trade names and copyrights; all assignable licenses, permits and certificates of
occupancy; all assignable guaranties or warranties (including performance bonds
obtained by, or for the benefit of, Contributor pertaining to the ownership,
construction or development of the Real Property or any part thereof); the
Intellectual Property; the Books and Records; computer and peripheral equipment
and computer software; advertising materials and telephone exchange numbers.
Without limiting the foregoing, "Personalty" shall include the computer and
peripheral equipment located at the Mall and the property listed on Schedule
1.1(b) but shall not include the rights of Contributor in or under the Leases,
Reciprocal Easement Agreement, Contracts or Excluded Personalty.
"Pledge Agreement" shall have the meaning set forth in Section 2.7.
"Post-Signing Occupant Event" shall have the meaning set forth in Section
8.2(b).
"Prescribed Form" shall have the meaning set forth in Section 10.7.
"Prohibited Disposition" shall have the meaning set forth in Section 10.12.
"Promotional and Advertising Fund" shall have the meaning set forth in the
Leases.
"Promotional Association Waiver" shall have the meaning set forth in
Section 2.9.
"Property" shall mean (a) the Real Property, (b) the Personalty, (c) the
rights of Contributor under all Leases and the Ground Lease, (d) the rights of
the Ground Lessor under the Ground Lease and (e) the rights and interests of
Contributor under, in and to the Contracts to the extent assignable.
"Qualified Investor" shall mean a Person that (a) is either (i) an
"accredited investor" within the meaning of Regulation D under the 1933 Act or
(ii) a Person who, alone or together with his purchaser representative (as
defined in such regulation), has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of an
investment in the Units and (b) has provided to the Partnership a Questionnaire
establishing the same to the satisfaction of the Partnership.
-10-
<PAGE>
"Questionnaire" shall mean an investor questionnaire in the form prescribed
by the Partnership.
"Real Property" shall mean the Land and the Improvements, together with all
of the estate, right, title and interest of Contributor and the Ground Lessor
therein, and in and to (a) any land lying in the beds of any streets, roads or
avenues, open or proposed, public or private, in front of or adjoining the Land
to the center lines thereof, and in and to any awards to be made in lieu thereof
and in and to any unpaid awards for damage to the foregoing by reason of the
change of grade of any such streets, roads or avenues; and (b) all easements,
rights, licenses, privileges, rights-of-way, strips and gores, hereditaments and
such other real property rights and interests appurtenant to the foregoing
(including, without limitation, all rights of Contributor and Ground Lessor
under the Reciprocal Easement Agreement).
"Reciprocal Easement Agreement" shall have the meaning set forth in Section
6.2(g-2) and shall include those certain "Allocable Share Agreements" set forth
on Schedule 6.2(g-2).
"Recourse Liabilities" shall have the meaning set forth in Section 2.4.
"Regulations" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Rent Roll" shall have the meaning set forth in Section 6.2(f).
"Rents" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, environmental charges (as such term is
defined in the Leases), amounts payable with respect to real estate and other
taxes, and other amounts payable by the Parties under the Leases and the
Reciprocal Easement Agreement.
"Required Estoppels" shall mean (a) Estoppels from each Anchor and each
other individual Tenant which under its Lease occupies 20,000 or more square
feet of floor area, and (b) Estoppels from Tenants under not fewer than 70% of
the other Leases.
"Right of First Refusal" shall have the meaning set forth in Section 2.11.
"Sales Based Tenant Charges" shall mean Rent consisting of overage or
percentage rent.
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"Security Deposits" shall have the meaning set forth in Section 4.8.
"Share Price" shall mean the average of the Closing Price for the twenty
(20) Trading Days preceding the third Trading Day prior to the Closing Date.
"Substantial Casualty" or "Substantial Taking" shall mean, a Casualty or
Taking, as the case may be, where:
(a) the condemnation award, or the proceeds payable under the
applicable policy or policies of casualty insurance maintained by
Contributor, are insufficient by more than $100,000 to fully repair the
damage caused by such Casualty or Taking, unless Contributor shall (at its
sole option and without any obligation to do so) grant to the Partnership a
credit equal to such deficiency less One Hundred Thousand Dollars
($100,000.00); or
(b) an Anchor shall, by reason of such Casualty or Taking, either
terminate its Lease or its obligations under the Reciprocal Easement
Agreement, or cease operating at the Mall (other than temporarily due to
such damage and destruction, remodeling, renovation or any similar cause),
or cease operating at the Mall under the name under which it was operating
immediately prior to such Taking or Casualty or have the right to do any of
the foregoing (unless such right shall have expired or been waived) or the
same shall occur with regard to Tenants occupying more than 100,000
leasable square feet at the Property in the aggregate; or
(c) the estimated time for repair or restoration shall exceed three
(3) months; or
(d) in the case of a Taking, a Taking with respect to such portion of
the Real Property as, when so taken would, in the reasonable opinion of the
Partnership, leave remaining a balance of the Real Property, which, due
either to the area taken or the location of the part taken would not, under
applicable zoning laws, building regulations and economic conditions then
prevailing or otherwise, readily accommodate a new or restructured building
or buildings of a type and size generally similar to the building or
buildings existing on the date hereof, or would result in inadequate
parking or lack of reasonable access to public roads.
"Survey" shall mean have the meaning set forth in Section 5.2.
"Taking" shall mean a taking of all or any portion of the Real Property in
condemnation or by exercise of the power of eminent domain or by an agreement in
lieu thereof.
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"Tenants" shall mean tenants, concessionaires, licensees and/or occupants
under the Leases (but shall not include Contributor, in its capacity as ground
lessee under the Ground Lease).
"Tenant Services" shall mean all services supplied by or on behalf of
Contributor to Tenants for which Tenants are separately charged, other than
services in the nature of common area maintenance.
"Tank" shall mean the underground storage tank described in item 2 of
Schedule 6.2(r).
"Tank Work" shall have the meaning set forth in Section 2.13.
"Tank Work Contract" shall have the meaning set forth in Section 2.13.
"Termination of Property Management Documents" shall have the meaning set
forth in Section 2.5.
"Title Commitment" shall have the meaning set forth in Section 5.1.
"Title Company" shall mean Empire Title and Escrow Corporation as issuing
agent for First American Title Insurance Company.
"Title Policies" shall have the meaning set forth in Section 5.1.
"Trading Day" shall mean a day on which the New York Stock Exchange is open
for business.
"Transactions" shall mean the transactions contemplated by this Agreement.
"Units" shall mean units of limited partnership interest in the
Partnership.
"Unredeemed Gift Certificates" shall have the meaning set forth in Section
2.14.
"Unredeemed Gift Certificate Statement" shall have the meaning set forth in
Section 2.14.
"Wards" shall mean Montgomery Ward Development Corp. and Montgomery Ward &
Co., Incorporated, collectively.
1.2 References. All references in this Agreement to particular sections or
articles shall, unless expressly otherwise provided, or unless the context
otherwise requires, be deemed to refer to the specific sections or articles in
this Agreement, and
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and any references to "Exhibit" shall, unless otherwise specified, refer to one
of the exhibits annexed hereto and, by such reference, made a part hereof. The
words "herein", "hereof", "hereunder", "hereinafter", "hereinabove" and other
words of similar import refer to this Agreement as a whole and not to any
particular section, subsection or article hereof.
ARTICLE II
Contribution and Sale; Consideration
------------------------------------
2.1 Contribution and Sale. Upon the terms and subject to the conditions
contained herein, at the Closing, Contributor shall sell to, and/or contribute
to the capital of the Partnership, and the Partnership shall acquire, the
Property, free and clear of all Liens (except for the Liens created by the
Existing Indebtedness Documents and Permitted Exceptions). The Property is being
acquired hereunder only as an entirety, and not in separate parts, and all
portions of the Property shall be simultaneously conveyed to the Partnership
and/or one or more designees of the Partnership in accordance with this
Agreement.
2.2 Consideration.
(a) In exchange for the sale and/or contribution of the Property
(including without limitation all right, title and interest of the Ground
Lessor and the Parcel B Owners in and to the Real Estate) and in addition
to the assumption of liabilities and subject to adjustment as hereinafter
provided (including without limitation adjustment in accordance with
Section 2.4 and Article IV), at the Closing, the Partnership shall (i)
issue to Contributor the number of Units equal to the quotient of (A) the
excess of the Net Asset Value over the Cash Amount divided by (B) the Share
Price and (ii) pay to Contributor by wire transfer the Cash Amount. The
Gross Asset Value is allocated among the items of Property as set forth on
Schedule 2.2(a).
(b) Contributor shall not, and shall cause the Guarantors not to, buy
or sell or induce any Person to buy or sell (including without limitation
short sell) any shares of Common Stock during the twenty-five (25) Trading
Days prior to the Closing whether in the open market or in a negotiated
transaction.
(c) Notwithstanding anything contained herein to the contrary,
fractional Units shall not be issued hereunder; instead, the number of
Units to be issued hereunder shall be the number of Units issuable pursuant
to the other provisions of this Agreement rounded up to the nearest whole
Unit.
(d) The Partnership has deposited in an account (the "Earnest Money
Escrow") with Empire Title and Escrow
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Corporation (the "Escrow Agent") the sum of Five Hundred Thousand Dollars
($500,000.00), to be held as an earnest money deposit pursuant to that
certain Escrow Agreement dated January 8, 1998, as the same may be amended
from time to time (the "Earnest Money"). In the event that the Partnership
fails to close the acquisition of the Property in violation of this
Agreement (which failure is not cured within five business days after
written notice by Contributor to the Partnership) and Contributor also is
not in default hereunder, the Earnest Money shall be delivered to
Contributor as liquidated damages as its sole and exclusive remedy for any
such failure to close hereunder and all interest thereon shall be paid to
the Contributor. The parties agree that actual damages would be difficult
to ascertain and that the Earnest Money is a reasonable and good faith
estimate of Contributor's damages resulting from the Partnership's failure
to consummate the Transactions in violation of this Agreement. In the event
that the Closing shall not occur for any other reason, the full amount of
the Earnest Money, together with all interest thereon, shall be refunded to
the Partnership. All funds deposited in the Earnest Money Escrow shall be
invested in interest-bearing or money-market accounts. Upon and subject to
the occurrence of the Closing, all funds on deposit in the Earnest Money
Escrow shall be transferred to Contributor, such amount to be applied in
partial payment of the Cash Amount. The parties shall issue instructions to
the Escrow Agent to effectuate the provisions of this Section 2.2(d). The
provisions of this Section 2.2(d) shall survive the termination of this
Agreement, however caused.
(e) At Closing, the Partnership shall be entitled to credits of
$785,000.00 and $100,000.00 for potential inducement costs for Joslin's and
repair or replacement of the fire alarm and Office Centre I roof,
respectively, which credits shall reduce the Net Asset Value. Such credits
shall be final and not subject to adjustment based on actual costs.
2.3 Assumption of Liabilities.
(a) At Closing, the Partnership (or the Affiliate to which the ground
lessee's interest under the Ground Lease is conveyed) shall assume (i) the
obligations of Contributor under the Existing Indebtedness Documents, as
modified pursuant to Section 2.4 (including the obligation to repay the
principal owing thereunder and accrued and unpaid interest thereon but
excluding liabilities and obligations that arise out of any facts or
circumstances that exist or existed on or prior to the Closing Date and
that constitute a breach of a representation, warranty or covenant
contained in such Existing Indebtedness Documents or otherwise require the
indemnification of or other payment [other than regularly scheduled
payments of principal and interest] to the Existing
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Lender) (and the Partnership also shall assume the liabilities to be
assumed by any Affiliate of the Partnership pursuant to this clause (i) to
the extent that they are Recourse Liabilities), (ii) the liabilities and
obligations of Contributor arising from and after the Closing Date under or
in respect of the Leases, the Ground Lease, the Reciprocal Easement
Agreement and the assignable Contracts (with such liabilities being limited
to the same extent, if any, as the liability of Contributor is limited
thereunder) but (subject to the provisions of the second paragraph of
Section 2.3(b)) only to the extent that such liabilities and obligations do
not arise out of any event, circumstance, action, failure to act or
occurrence of any sort or type which occurred, existed or was taken prior
to the Closing Date, (iii) the obligation to repay the outstanding
principal amount of the Key Bank Indebtedness (but no other obligations in
respect of the Key Bank Indebtedness) and (iv) other liabilities and
obligations of Contributor herein described to the extent the Partnership
has agreed herein to pay the same or has received credit therefor. All of
the obligations to be assumed by the Partnership pursuant to this Section
2.3(a) are herein referred to as the "Assumed Liabilities".
(b) Except as provided in Section 2.3(a), from and after the Closing
and whether or not disclosed herein or elsewhere, neither the Partnership
nor any Affiliate of the Partnership shall be responsible for, and neither
the Partnership nor any Affiliate is assuming, any liabilities or
obligations of Contributor whether or not the same relate to the Property
or were incurred in connection with the ownership, use, management or
operation thereof by Contributor or by its agents (such liabilities,
exclusive of the Assumed Liabilities, collectively, the "Contributor's
Liabilities") and Contributor shall pay or otherwise satisfy Contributor's
Liabilities as and when due. Without limiting the foregoing, Contributor's
Liabilities shall include (a) all federal, state and local taxes of
whatever kind and nature of Contributor or Ground Lessor relating to the
period prior to Closing or the consummation of the Transactions (other than
real estate taxes and assessments on real property to the extent that the
Partnership has received credit under Article IV and transfer and other
taxes to the extent the Partnership is obligated to pay the same under
Section 10.6); (b) liabilities relating to any employees, employee benefit
plans or collective bargaining agreements of Contributor or the Existing
Manager, including without limitation severance pay and accrued vacation
pay obligations and other liabilities of Contributor, the Existing Manager
or others relating to the termination of such employees as the result of
the consummation of the Transactions (but not the termination by the
Partnership or any Affiliate thereof of any such employees who are employed
by the Partnership or such Affiliate following Closing); (c)
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any tort liability arising from any accident, injury, event, circumstance,
action or omission occurring prior to Closing (other than tort liability
resulting from the physical condition of the Property on the Closing Date
where the accident or injury occurs after the Closing Date), whether
asserted before or after the Closing, (d) any liability to a Party or the
Existing Lender for breach of, or other payment obligation under, a Lease,
Reciprocal Easement Agreement, Contract or Existing Indebtedness Document
that occurred, was due or accrued prior to Closing, whether asserted before
or after the Closing (including, without limitation, any claimed overcharge
of Adjustable Tenant Charges or claim relating to the substitution of
JCPenney for Adcor at the Mall), and (e) any fine, penalty or the like that
is imposed or assessed by a governmental authority for the period prior to
Closing, whether imposed or assessed before or after the Closing.
Notwithstanding anything to the contrary contained in this Section 2.3 but
subject to the last sentence of this Section 2.3(b), "Contributor's
Liabilities" shall not include the cost of repair, remediation or
correction of any physical defect in the Property or its systems (including
without limitation the matters specified in Section 2.2(e), the matter
disclosed in item number 5 on Schedule 6.2(r) and repair of the Central
Court gutter) or any environmental matter or Hazardous Substances affecting
the Real Property (but do include damages, fines or other amounts owing to
Parties, governmental authorities or others on account thereof as provided
in clauses (d) and (e) above), and Contributor shall have no obligation
under this Agreement to indemnify the Partnership for any of the same
(other than the damages, fines or other amounts referred to in the
immediately preceding parenthetical). Nothing contained in this Section 2.3
shall impair the rights of the Partnership for a breach of any
representation or warranty contained herein or in the Contributor Closing
Documents.
2.4 Matters Relating to Existing Indebtedness. Contributor shall use
reasonable best efforts (including, without limitation, the payment of the
transfer fees and other fees and costs imposed or required to be paid by the
Existing Lender, such as the attorneys' fees of Existing Lender) to obtain, at
or prior to Closing and at no cost to the Partnership, (i) the unconditional
consent of the Existing Lender to the consummation of the Transactions
(including, without limitation, the ownership of the Property following Closing
by one or more Affiliates of the Partnership and the management of the Property
following Closing by GGMI) and (ii) an agreement and confirmation by the
Existing Lender that (A) the Existing Indebtedness Documents shall not restrict
the issuance or transfer of Units or shares of Common Stock, (B) Existing Lender
shall have no recourse to the Partnership, the General Partner or other
Affiliates of the Partnership or the
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assets of any of them other than the Property except that the Existing Lender
may have recourse to the Partnership in those instances where the Existing
Lender has recourse (without giving effect to the Transactions) to the venturers
of Contributor (the liabilities for which such recourse against the venturers of
Contributor exists, the "Recourse Liabilities"), and (C) all rights of
Contributor under the Existing Indebtedness Documents shall inure to the benefit
of the Partnership or an Affiliate of the Partnership following Closing,
including without limitation the right not to make tax escrow deposits
thereunder. Contributor may request from Existing Lender a release of liability
of Contributor, its venturers and the partners of such venturers in respect of
the Recourse Liabilities to the extent such liability arises out of events or
matters which occur after the Closing, but the receipt of the same shall not be
condition to Contributor's obligation to close hereunder. The documents referred
to in this Section are hereinafter referred to as the "Existing Indebtedness
Consent Documents." Notwithstanding anything to the contrary contained herein,
Contributor shall not be obligated to prepay the Existing Indebtedness or to pay
a transfer fee of more than $495,000.00 (exclusive of costs, including without
limitation attorneys' fees of Existing Lender, and other nominal fees that the
Existing Lender shall require Contributor to pay) in order to obtain the consent
of Existing Lender pursuant to this Section 2.4. At the election of Contributor
or the Partnership, the Partnership shall, subject to the occurrence of the
Closing, assume the obligation to pay such transfer fee (which may not exceed
$495,000.00), and the Net Asset Value shall be reduced by the amount of such
fee. At Closing, the Partnership shall be entitled to a cash payment of
$1,925,000 to compensate the Partnership for the above-market interest rate and
prepayment fees in respect of the Existing Indebtedness.
2.5 Termination of Existing Management Agreements and Release of Property
Management Liens. On or prior to the Closing, Contributor shall cause the
Existing Management Agreements to be terminated and obtain from the Existing
Manager a release of Liens or other claims with respect to the property
management or leasing or other services performed by the Existing Manager in
respect of the Property through the Closing Date, including without limitation
any claim for leasing commissions relating to leases signed before or after the
Closing (except as provided in Section 2.9(c) and except for amounts owed under
the Gart Work Contract in accordance with Section 2.8). The document effecting
such termination and release is hereinafter referred to as the "Termination of
Property Management Documents".
2.6 Admission to Partnership; Redemption Rights; Etc.
(a) At the Closing, the General Partner and Contributor shall execute
and deliver an amendment to the Partnership Agreement substantially in the
form of Exhibit E (the "Amendment to Partnership Agreement"), pursuant to
which the
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Partnership issues to Contributor the number of Units to be issued to it in
accordance with this Agreement and Contributor is admitted as a limited
partner of the Partnership and agrees to be bound by the terms of the
Partnership Agreement, as amended by the Amendment to Partnership Agreement
(or the Partnership shall deliver to Contributor a certificate representing
such Units and Contributor shall execute a signature page to the
Partnership Agreement [provided that the Partnership Agreement has been
amended to include the provisions set forth in Section 4 of the Amendment
to Partnership Agreement]).
(b) At the Closing, the General Partner, the Partnership and
Contributor shall execute and deliver a Redemption Rights Agreement
substantially in the form of Exhibit F (the "Redemption Rights Agreement"),
pursuant to which Contributor is granted the right to require the
Partnership to redeem its Units from time to time as provided therein.
(c) Contributor acknowledges that, notwithstanding anything to the
contrary contained in the Partnership Agreement, Contributor will be
entitled to receive as a distribution only a pro rata portion of the Net
Operating Cash Flow which is distributed for the calendar quarter during
which the Closing occurs based on the number of Units issued to it pursuant
hereto relative to the total number of issued and outstanding Units and the
number of days in such quarter from and following the Closing Date relative
to the total number of days in such quarter (and Contributor will be
entitled to receive no distributions for previous quarters, including
without limitation the distribution for the first quarter of 1998, which is
scheduled to be paid in April 1998). Contributor acknowledges that the
distribution for a calendar quarter is made in the immediately succeeding
calendar quarter.
2.7 Guaranty Agreement. At the Closing, Contributor shall cause Jordon
Perlmutter, Samuel Primack and Michael Cooper (collectively, the "Guarantors")
to execute and deliver to the Partnership a Guaranty Agreement substantially in
the form of Exhibit G (the "Guaranty Agreement").
2.8 Matters Relating to Gart Sports.
(a) Contributor shall pay all amounts specified in Sections 3 and 6
of the Gart Amendment and, with respect to such amounts that have not been
paid in full prior to the Closing Date (other than amounts due under
Section 3 and subsection C of Section 6 of the Gart Amendment, which shall
be paid by Contributor when due), the Partnership shall be entitled to a
credit therefor at Closing (which credit shall reduce Net Asset Value),
including without limitation a credit of $81,000 for the amount referred to
in subsection B of Section 6 of the Gart Amendment, whether or not such
amounts are then payable. In the event the Partnership receives a
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credit of $81,000 at Closing in respect of subsection B of Section 6 of the
Gart Amendment and the amount owing under such subsection is finally
determined to be less than $81,000, the Partnership shall refund such
excess to Contributor promptly following determination of the same.
Contributor shall pay all leasing commissions, if any, relating to the Gart
Amendment and all legal fees and costs incurred by Contributor in
connection with the same.
(b) Contributor shall enter into a construction contract with
Existing Manager for the work (the "Gart Work") to be performed by
Contributor pursuant to the Gart Amendment (the "Gart Work Contract"),
which Gart Work Contract shall provide for a fixed price and otherwise be
reasonably satisfactory to the Partnership and, when fully executed, shall
be deemed a "Contract" hereunder. From the date hereof until Closing,
Contributor shall, at its sole cost and expense, cause the Gart Work to be
performed in accordance with the Gart Work Contract in a good and
workmanlike manner and otherwise in accordance with industry practice for
first-class regional malls and all applicable laws. At Closing, Contributor
shall (i) assign to the Partnership or, if any of the same shall not be
assignable, use reasonable best efforts to cause to be reissued to the
Partnership, any licenses, permits or governmental approvals issued with
respect to the performance of the Gart Work, (ii) deliver to the
Partnership a certificate setting forth the amount actually paid to the
Existing Manager by Contributor under the Gart Work Contract on or prior to
the Closing Date and any amounts retained pursuant to the provisions of any
such contract and (iii) lien waivers in respect of any amounts paid to the
Existing Manager thereunder on or prior to the Closing, and the Partnership
shall receive a credit (which shall reduce Net Asset Value) for the
remaining amount to be paid to the Existing Manager pursuant to the Gart
Work Contract (including without limitation any retainage). At Closing,
Contributor shall deliver, and shall cause the Existing Manager to deliver,
to the Title Company such certificates and other documentation as the Title
Company may reasonably request in order to issue the Title Policies without
exceptions for liens and/or claims with respect to that portion of the Gart
Work that is performed prior to Closing Date.
2.9 Other Leasing Matters.
(a) From the date hereof through Closing, Contributor shall use
reasonable best efforts to obtain signed Leases and Lease renewals for the
Tenants or potential Tenants listed on Schedule 2.9(a) upon the terms set
forth on Schedule 2.9(a) (but, with respect to The Gap, Contributor shall
use reasonable best efforts to renew The Gap Lease for one additional year
and otherwise upon the terms of the existing
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Gap Lease). Each such document executed prior to Closing shall be deemed to
be a "Lease" hereunder.
(b) Contributor shall pay all tenant allowances and other tenant
inducement costs which are specified on Schedule 2.9(a) (other than the
inducements specified for The Gap) and, except as set forth in Section
2.9(c), all tenant allowances and other tenant inducement costs which are
owing or become owing under Leases entered into prior to the date hereof;
and the Partnership shall be entitled to a credit at Closing for the
allowances and other costs that are specified on Schedule 2.9(a) that have
not been paid in full prior to the Closing Date (which credit shall reduce
the Net Asset Value), whether or not such allowances and other costs are
then payable or the Lease or Lease renewal to which they relate has been
consummated, delayed or abandoned (and following Closing the Partnership
shall be responsible for the costs for which it has received a credit).
Without limiting the foregoing, the Partnership shall be entitled to a
credit at Closing (which shall reduce Net Asset Value) for the allowance
and payment specified for The Gap on Schedule 2.9(a) notwithstanding that
the renewal described thereon shall not have been consummated. Contributor
shall pay all leasing commissions and legal costs incurred by it in respect
of the Leases and renewals described on Schedule 2.9(a). Without limiting
the foregoing, Contributor shall reimburse the Partnership for the cost of
the special order door for American National Insurance to the extent that
such cost is paid by the Partnership or one of its Affiliates.
(c) From and after and subject to the occurrence of Closing, the
Partnership shall pay the cost of the tenant allowances and other
inducements and leasing commissions (including leasing commissions payable
to Existing Manager) that are specified on Schedule 2.9(c) and, except as
provided in Section 2.9(b), all tenant allowances and other tenant
inducement costs that are owing or become owing under any Leases entered
into following the date hereof which are approved by the Partnership in
accordance with the terms hereof; and Contributor shall be entitled to a
credit at Closing for such amounts that have been paid prior to the Closing
Date (which credit shall increase the Net Asset Value).
(d) Contributor shall obtain the prior written approval of the
Partnership for any and all Leases relating to the matters described in
this Section 2.9, which approval shall not be unreasonably withheld or
delayed (and the terms of the Leases described in Schedule 2.9(c) are
hereby approved and Contributor shall use reasonable best efforts to
consummate the transactions contemplated thereby as soon as is
practicable). If the Partnership does not respond to a
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request for an approval under this subparagraph (c) within ten (10)
business days, such approval shall conclusively be presumed.
2.10 Matters Relating to Ground Lease.
(a) Contributor currently leases the Land (other than Parcel B)
pursuant to the Ground Lease, and the Ground Lease provides that it
terminates upon a sale of the "Developer's Interest" (as defined therein).
Prior to Closing, Contributor shall cause the Ground Lease to be amended to
provide that the Ground Lease shall not terminate upon or as the result of
any such sale and/or a sale of the Land.
(b) At or prior to Closing, Contributor shall, at Contributor's sole
cost, purchase from the Ground Lessor all of the Ground Lessor's right,
title and interest in and to the Real Estate and the Ground Lease pursuant
to the Ground Lease; and, at Closing, Contributor shall convey the same to
the Partnership or a designee of the Partnership as provided herein (or, at
the Partnership's election, Contributor shall cause Ground Lessor to convey
the same directly to the Partnership or such designee). The instrument or
instruments effecting any such transfer shall provide that the Ground Lease
shall not terminate on account of such transfer.
2.11 Matters Relating to District.
(a) At or prior to Closing, Contributor shall cause the Parcel B
Owners, who are the current directors of the District, to (i) appoint such
Persons as the Partnership shall designate in writing as replacement
directors of the District and (ii) resign as directors of the District in
such manner as the Partnership shall specify (which may include the
sequential resignation of the current directors). From the date hereof
until Closing, Contributor shall not permit any Person other than the
Parcel B Owners to serve as a director of the District.
(b) Prior to Closing, Contributor shall, at Contributor's sole cost
and expense, acquire from the Parcel B Owners all of the Parcel B Owner's
right, title and interest in and to Parcel B; and, at Closing, Contributor
shall convey the same to the Partnership or its designees as provided
herein (or, at the Partnership's election, Contributor shall cause Ground
Lessor to convey the same directly to the Partnership or such designee).
2.12 Matters Relating to Right of First Refusal. Contributor has delivered
to the Anchors a written notice pursuant to the right of first refusal (the
"Right of First Refusal") contained in Section 15.3 of the document referred to
as item number one on Schedule 6.2(g)-2. Contributor shall use reasonable best
efforts to obtain the approval by the bankruptcy or other court having
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jurisdiction over the Chapter 11 case of Wards to the election by Wards not to
exercise the Right of First Refusal.
2.13 Matters Relating to Tank.
(a) Contributor shall enter into a contract (the "Tank Work Contract")
with a contractor reasonably acceptable to the Partnership for the
abandonment of the Tank and the installation of a replacement tank therefor
(collectively, the "Tank Work"), which Tank Work Contract shall be
reasonably satisfactory to the Partnership and, when fully executed, shall
be deemed a "Contract" hereunder. The Tank Work Contract shall provide that
the Tank Work shall be performed in a good and workmanlike manner and
otherwise in accordance with industry practice, applicable law, that
certain letter dated February 19, 1998 from David Dansky to Michael
Zarlengo, Assistant Chief/Fire Marshall, West Metro Fire Protection and
Schedule 2.13(a). From the date hereof through Closing, Contributor shall
cause any Tank Work to be performed at its sole cost and expense and
otherwise in accordance with the Tank Work Contract and the specifications
described above. Contributor shall not be responsible for environmental
remediation relating to the Tank.
(b) At Closing, Contributor shall (i) assign to the Partnership or, if
any of the same shall not be assignable, use reasonable best efforts to
cause to be reissued to the Partnership, any licenses, permits or
governmental approvals issued with respect to the performance of the Tank
Work, (ii) deliver to the Partnership a certificate setting forth the
amount actually paid to the contractor by Contributor under the Tank Work
Contract on or prior to the Closing Date, if any, and any amounts retained
pursuant to the provisions of any such contract and (iii) deliver to the
Partnership lien waivers in respect of any amounts paid to the contractor
thereunder on or prior to the Closing and such certificates and other
documentation as the Title Company may reasonably request in order to issue
the Title Policies without exceptions for liens and/or claims with respect
to that portion of the Tank Work, if any, that is performed prior to
Closing Date; and the Partnership shall receive a cash credit for the
remaining amount to be paid to the contractor pursuant to the Tank Work
Contract, including without limitation any retainage (and Contributor shall
pay upon demand any other reasonable costs of completing the Tank Work in
accordance with the specifications described above).
2.14 Matters Relating to Gift Certificates. On the Closing Date,
Contributor shall deliver to the Partnership the following:
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(a) an assignment of all rights in and to the gift certificate
accounts (the "Gift Certificate Accounts") known as "Southwest Plaza Gift
Certificate Account", Account No. 2830906329, at Norwest Bank Colorado N.A.
(the "Gift Certificate Bank"), and "Southwest Plaza Management Certificate
Account," Account No. 283801086, at the Gift Certificate Bank, together
with a cash deposit by Contributor in an amount equal to the excess, if
any, of the amount of the Unredeemed Gift Certificates as shown on the
Unredeemed Gift Certificate Statement over the balance in the Gift
Certificate Accounts as of the Closing Date;
(b) any and all other documentation (including without limitation new
signature cards) as may be reasonably required by the Gift Certificate Bank
in order to accomplish the transfer of the Gift Certificate Accounts; and
(c) a statement (the "Unredeemed Gift Certificate Statement") setting
forth a list of the gift certificates issued prior to Closing in respect of
the Property which remain unredeemed as of the Closing Date (any gift
certificates issued and unredeemed prior to Closing, the "Unredeemed Gift
Certificates"), with such Unredeemed Gift Certificate Statement to be
itemized by gift certificate number and dollar amount (however, with
respect to Unredeemed Gift Certificates issued prior to January 1, 1996,
the Unredeemed Gift Certificate Statement need not be itemized by gift
certificate number and dollar amount but may show only the aggregate dollar
amount thereof).
On and after the Closing Date and subject to the occurrence of the Closing,
the Partnership shall cause the Gift Certificate Bank to honor the Unredeemed
Gift Certificates that are properly presented for payment against the Gift
Certificate Accounts. In the event that any Unredeemed Gift Certificate (other
than an Unredeemed Gift Certificate issued prior to January 1, 1996) is not
listed on the Unredeemed Gift Certificate Statement and is presented for
redemption (or the Partnership otherwise is required to pay the amount of such
Unredeemed Gift Certificate to the holder thereof or any other Person),
Contributor shall, within ten days after receipt of written notice from the
Partnership, reimburse the Partnership for the amount of such Unredeemed Gift
Certificate. In the event that any Unredeemed Gift Certificate issued prior to
January 1, 1996 is presented for redemption (or the Partnership otherwise is
required to pay the amount of such Unredeemed Gift Certificate to the holder
thereof or any other Person) and the aggregate amount theretofore paid by the
Partnership in respect of the Unredeemed Gift Certificates issued prior to
January 1, 1996 exceeds the amount therefor set forth on the Unredeemed Gift
Certificate Statement, Contributor shall, within ten days after receipt of
written notice from the Partnership, reimburse the Partnership for the amount of
such Unredeemed Gift Certificate.
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ARTICLE III
Closing
3.1 Closing. The closing of the Transactions (the "Closing") shall take
place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street,
Chicago, Illinois 60602, commencing at 8:00 a.m., local time, on April 2, 1998
(the "Closing Date") through a so-called "New York" style closing.
3.2 Contributor Closing Documents. At or prior to the Closing, Contributor
shall deliver, or cause to be delivered, to the Partnership (through an escrow
with the Title Company) the following documents (collectively, the "Contributor
Closing Documents"), duly executed by Contributor and the other parties thereto
(other than the General Partner and the Partnership) and in form and substance
reasonably acceptable to the Partnership and to Contributor unless the form
thereof is attached hereto:
(a) Special warranty deed or deeds in proper form for recording, so as
to convey the entire fee simple estate in the Land and Improvements and all
other items of Real Property.
(b) Assignment or assignments of all of the right, title and interest
of Contributor and/or Ground Lessor under the Leases and the Ground Lease,
all of which, to the extent the same relate to documents or memoranda
thereof which have been recorded in appropriate land records, shall be in
form suitable for recording.
(c) Assignment or assignments of all of the right, title and interest
of Contributor and Ground Lessor under the Reciprocal Easement Agreement in
form suitable for recording.
(d) Assignment of all of Contributor's right, title and interest in
and to the Contracts and the insurance policies listed as the first and
second items on Schedule 6.2(t) (the "Insurance Policy"), to the extent
assignable, and an insurance certificate evidencing that coverage under the
Insurance Policy is effective for the benefit of the Partnership and/or its
designees as of the Closing Date.
(e) Bill of Sale so as to transfer Contributor's right, title and
interest in and to the Personalty to the Partnership.
(f) The Termination of Property Management Documents.
(g) Searches conducted by an independent firm reasonably satisfactory
to the Partnership showing any Uniform Commercial Code, judgment,
bankruptcy, pending suit or tax lien filings against Contributor, Ground
Lessor and the Parcel B Owners in the jurisdictions designated by the
Partnership no later than
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twenty (20) days prior to the Closing Date but in any event in the state
and county or counties in which the Mall and the principal offices and
residences of Contributor, Ground Lessor and the Parcel B Owners are
located, which searches shall be dated not more than ten days prior to the
Closing Date.
(h) The instruments, documents or certificates as are required by the
Title Company as a condition to the issuance of a title insurance policies
and endorsements as described in the Title Commitment.
(i) An affidavit of Contributor stating its U.S. taxpayer
identification number and that it is a "United States person", as defined
by Sections 1445(f)(3) and 7701(b) of the Code.
(j) The Estoppels as required by Section 8.2(c).
(k) A written certificate executed on behalf of Contributor and
addressed to the Partnership to the effect that all of the representations
and warranties of Contributor herein contained in Section 6.2 are true and
correct in all material respects as of the Closing Date (as supplemented in
accordance with Section 10.3) with the same force and effect as though
remade and repeated in full on and as of the Closing Date (except for
actions taken in accordance with or as contemplated by this Agreement and
except for matters approved in writing or consented to in writing by the
Partnership) or stating the specific respects, if any, in which any of the
representations and warranties is untrue (and a similar certificate of P&P
as to the representations and warranties made by it herein).
(l) Written notices to the Parties to the Reciprocal Easement
Agreement, the Leases and the Contracts and other Owners of Excluded
Parcels advising them of the consummation of the Transactions and advising
them of the address to which Rent or other payments and notices are to be
sent and that the Partnership will be responsible for the return of the
Security Deposits in accordance with the Leases.
(m) Such documents and instruments as shall be reasonably required to
substitute the Partnership for Contributor as the plaintiff in legal
actions contemplated by Section 4.9.
(n) An opinion or opinions of counsel for Contributor dated as of the
Closing Date, in form attached hereto as Exhibit H.
(o) All Books and Records.
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(p) Keys and combinations to locked compartments within the Mall.
(q) an updated rent roll containing the items described in Section
6.2(f) as of the Closing Date or a date not more than 10 days prior
thereto.
(r) The statements referred to in Section 4.3 and 4.6.
(s) The Contract Party Consents.
(t) The Guaranty Agreement.
(u) The Amendment to Partnership Agreement or the other documents
referred to in Section 2.6(a).
(v) The Redemption Rights Agreement.
(w) The Existing Indebtedness Consent Documents.
(x) Pay-off letter for full repayment of the Key Bank Indebtedness.
(y) A copy of the certificate of limited partnership or assumed name
filing of each of Contributor and its venturers, as amended (if any),
certified by the Colorado Secretary of State or other applicable
governmental authority as of a date not more than 30 days prior to the
Closing Date and a copy of the partnership agreement of each of Contributor
and its venturers and any and all amendments thereto, together with a
certification by one of the general partners of such partnership that the
attached copies of the partnership agreement of such partnership, as
amended, and the certificate of limited partnership or assumed name filing
of such partnership, as amended, (if any), are true, accurate and complete
and have not been further amended, revised, restated, cancelled or
rescinded up to and including the Closing Date.
(z) Such certificates as the Partnership may reasonably request as to
the authorization on the part of Contributor of the execution, delivery and
performance of this Agreement, the authorization on the part of the
venturers of Contributor of the execution and delivery of this Agreement by
them in their capacities as venturers of the Contributor and the authority
of the Persons executing and delivering this Agreement and the Contributor
Closing Documents on behalf of the venturers of Contributor.
(aa) Such other documents, instruments or agreements which Contributor
is required to deliver to the Partnership pursuant to the other provisions
of this Agreement or which the Partnership reasonably may deem necessary or
desirable in
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order to consummate the Transactions or to vest or better vest in the
Partnership title to the Property; provided, however, that any such other
documents, instruments or agreements which the Partnership reasonably deems
necessary or desirable shall not impose upon Contributor any obligation or
liability other than an obligation or liability expressly imposed upon
Contributor pursuant to the terms of this Agreement or pursuant to the
terms of the other Contributor Closing Documents specified in this Section
3.2.
Notwithstanding any provision to the contrary set forth elsewhere in this
Agreement, if after the use of reasonable best efforts Contributor is unable to
deliver to the Partnership at Closing the Contract Party Consents, the Required
Estoppels, the consent of the Existing Lender pursuant to Section 2.4, and such
inability continues for five (5) days after the specified Closing Date, the
Partnership shall have the option, as the Partnership's sole and exclusive right
and remedy either (a) to terminate this Agreement by giving written notice of
such termination to Contributor on or before the Closing or (b) to complete
Closing without the delivery of such item or items and waive the requirement for
the delivery of such item or items. If the Partnership shall terminate this
Agreement pursuant to the provisions of this paragraph, this Agreement shall be
null and void and no party shall have any further rights or obligations under
this Agreement (other than any right or obligation that expressly survives the
termination of this Agreement).
3.3 Partnership Closing Documents. At or prior to the Closing, the
Partnership shall deliver to Contributor (through an escrow with the Title
Company) the following documents (herein referred to collectively as the
"Partnership Closing Documents"), duly executed by an authorized officer of the
General Partner and the other parties thereto (other than Contributor) and in
form and substance reasonably acceptable to Contributor and the Partnership
unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which the Partnership
assumes the Assumed Liabilities.
(b) A duly executed and acknowledged secretary's certificate,
certifying that the Board of Directors of the General Partner or committee
thereof has duly adopted resolutions authorizing the consummation of the
Transactions and certifying the authority of the officers of the General
Partner executing and delivering this Agreement and the Partnership Closing
Documents in their capacities as officers of the General Partner.
(c) A certificate issued by the Secretary of State of Delaware dated
not earlier than ten days prior to the Closing
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Date certifying the good standing of the Partnership as of the date of such
certificate.
(d) Copies of the certificate of limited partnership of the
Partnership and certificate of incorporation of the General Partner and any
amendments thereto, certified by the Secretary of State of the State of
Delaware as of a date not more than 30 days prior to the Closing Date,
together with a certificate of the secretary of the General Partner to the
effect that such certificate of limited partnership and certificate of
incorporation, as amended, have not been further amended, revised,
restated, cancelled or rescinded up to and including the Closing Date and
that the attached copies of the partnership agreement of the Partnership
and by-laws of the General Partner, in each case as amended, are true,
accurate and complete and have not been further amended, revised, restated,
cancelled or rescinded up to and including the Closing Date.
(e) An opinion of counsel for the Partnership dated as of the Closing
Date, in form attached hereto as Exhibit I.
(f) A written certificate addressed to Contributor to the effect that
all of the representations and warranties of the Partnership contained in
Section 6.1 are true and correct in all material respects on and as of the
Closing Date (as supplemented in accordance with Section 10.3) with the
same force and effect as though remade and repeated in full on and as of
the Closing Date (except for actions taken in accordance with or as
contemplated by this Agreement and except for matters approved in writing
or consented to in writing by Contributor) or stating the specific
respects, if any, in which any of the representations and warranties is
untrue.
(g) The Amendment to Partnership Agreement or the other documents
referred to in Section 2.6(a).
(h) The Guaranty Agreement.
(i) The Redemption Rights Agreement.
(j) Such other documents, instruments or agreements which the
Partnership may be required to deliver to Contributor pursuant to the other
provisions of this Agreement or which Contributor reasonably may deem
necessary or desirable to consummate the Transactions; provided, however,
that any such other document, instrument or agreement which Contributor
reasonably deems necessary or desirable shall not impose upon the
Partnership any obligation or liability other than an obligation or
liability expressly imposed upon the Partnership pursuant to the terms of
this Agreement or
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pursuant to the terms of the other Partnership Closing Documents specified
in this Section 3.3.
ARTICLE IV
Prorations and Adjustments
4.1 Items to Be Prorated. Subject to the other provisions of this Article
and this Agreement, the following items in respect of the Property shall be
apportioned or adjusted on a per diem basis (employing the actual number of
calendar days in the period involved and a 365-day year) between Contributor and
the Partnership at the Closing as of 11:59 p.m., Mountain Standard Time, on the
day immediately preceding the Closing Date and the net amount thereof shall be
settled as hereinafter provided:
(a) real property taxes and assessments (or installments thereof)
based on the most recent tax bills except those required to be paid
directly to the entity imposing the same by those Tenants who are current
in all of their Lease payment obligations on the Closing Date;
(b) water rents and charges, if any, except those required to be paid
directly to the entity imposing the same by Tenants who are current in all
of their Lease payment obligations on the Closing Date;
(c) sewer taxes and rents, if any, except those required to be paid
directly to the entity imposing the same by Tenants who are current in all
of their Lease payment obligations on the Closing Date;
(d) actually accrued interest, if any, required to be paid to a Party
on Security Deposits;
(e) amounts, if any, payable by or owed to Contributor under the
Reciprocal Easement Agreement;
(f) annual permit, license and inspection fees, if any, on the basis
of the fiscal year for which levied, if the rights with respect thereto
continue for the benefit of the Partnership following the Closing;
(g) fuel oil, diesel fuel and liquid propane gas, if any, at the cost
or costs per gallon or cubic foot most recently charged with respect to the
Mall, based on the supplier's measurements thereof, plus sales taxes
thereon;
(h) [INTENTIONALLY DELETED];
(i) amounts paid or payable by Contributor to the Promotional and
Advertising Fund;
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(j) Rents (subject to the other provisions of this Article IV);
(k) amounts paid or payable by Contributor under the Contracts to the
extent the same constitute Assumed Liabilities;
(l) interest on the Existing Indebtedness;
(m) the premium paid for the Insurance Policy for the current policy
year (and the Partnership shall pay any premium payments due after the
Closing); and
(n) all other items customarily apportioned in connection with the
sale of properties that are similar to the Property and similarly located.
Contributor shall cooperate with the Partnership in any transfer of
electricity, gas, water and other utility services if deemed necessary by the
Partnership.
Notwithstanding anything to the contrary contained herein, there shall be
no prorations or other adjustments in respect of amounts payable under the
Ground Lease.
4.2 Installment Payment of Assessments. In furtherance of Section 4.1(a),
if any real property assessment affects the Mall at the Closing Date and such
real property assessment is payable in installments (whether at the election of
Contributor or otherwise), the installment relating to, or payable over, the
Applicable Closing Fiscal Period shall be apportioned between Contributor and
the Partnership as of 11:59 p.m. Mountain Standard Time, on the day immediately
preceding the Closing Date, and the remaining installments shall be the
obligation of the Partnership.
4.3 Adjustable Tenant Charges.
(a) Notwithstanding anything to the contrary contained herein, no
adjustments or apportionments shall be made with respect to the expense
items listed in Section 4.1 hereof (other than real estate taxes and
assessments, as to which adjustment shall be made as set forth in Section
4.1) for the Applicable Closing Fiscal Period or any prior fiscal period to
the extent such expense items are payable or reimbursable from funds
collected as Adjustable Tenant Charges. Contributor shall be responsible
for the payment of all such expenses incurred by Contributor prior to
Closing (including without limitation real estate taxes and assessments for
which Contributor has received credit under Section 4.1), and the
Partnership shall pay or otherwise satisfy all such expenses incurred by it
following Closing (including without limitation
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real estate taxes and assessments for which the Partnership has received
credit under Section 4.1).
(b) From and after the Closing, the Partnership shall have the right
to receive and retain, subject to Section 4.3(c), below, any amounts
required to be paid as Adjustable Tenant Charges by Tenants which were due
and payable on or before, but remain unpaid on, the Closing Date, and there
shall be no adjustment at Closing with respect thereto. At the Closing,
Contributor shall deliver to the Partnership a true and correct statement
setting forth in reasonable detail and certifying the amount of Adjustable
Tenant Charges collected and expenditures for such items of expense made
(and any credits for real estate taxes given) by Contributor for the
portion of the Applicable Closing Fiscal Period through the Closing Date
and for any prior fiscal period.
(c) The Partnership shall, no less frequently than is set forth in
Section 4.10(d), remit to Contributor any amounts collected by it after the
Closing Date which relate to Adjustable Tenant Charges payable with respect
to any fiscal period ending prior to the Applicable Closing Fiscal Period.
Within 210 days following the end of the Applicable Closing Fiscal Period
and from time to time thereafter as amounts are received by the Partnership
from Parties, the aggregate amount of Adjustable Tenant Charges, if any,
collected by the Partnership on the one hand, and Contributor, on the other
hand, with respect to the Applicable Closing Fiscal Period shall be
apportioned and adjusted such that the total amount of such Adjustable
Tenant Charges received by the Partnership, on the one hand, and
Contributor, on the other hand, shall be in the same proportion as the
amount of the expense items to which such Adjustable Tenant Charges relate
which each of the Partnership, on the one hand, and Contributor, on the
other hand, have borne (including without limitation real estate taxes or
assessments for which either party has received credit under Section 4.1),
and, to the extent that either shall have received a greater amount of
Adjustable Tenant Charges, such party or parties shall promptly pay such
excess to the other.
4.4 Advertising and Promotional Contributions.
(a) Notwithstanding anything to the contrary contained herein, no
adjustments or apportionments shall be made with respect to the expense
items listed in Section 4.1 hereof for the Applicable Closing Fiscal Period
or any prior fiscal period to the extent such expense items are payable or
reimbursable from funds collected or held as Advertising and Promotional
Contributions. The Partnership shall be responsible for the payment of all
such expenses incurred by it and, to the extent of the funds paid by
Contributor to the Partnership pursuant to Section 4.4(b), expenses
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properly incurred by Contributor prior to Closing and Contributor otherwise
shall be responsible for the payment of all such expenses incurred by it.
(b) At the Closing, Contributor shall pay to the Partnership in cash
the aggregate of all funds, if any, then held by Contributor as Advertising
and Promotional Contributions (or, upon written notice from the
Partnership, Contributor shall assign and transfer to the Partnership all
of Contributor's right, title and interest in and to the bank account(s) in
which such funds are held) and, from and after the Closing, the Partnership
shall have the right to collect, receive and retain any amounts required to
be paid as Advertising and Promotional Contributions which were due and
payable on or before, but remain unpaid on, the Closing Date, and there
shall be no adjustment hereunder with respect thereto (other than an
adjustment pursuant to Section 4.1(i) for amounts paid or payable by
Contributor as Advertising and Promotional Contributions and Section
4.4(d)). At the Closing, Contributor shall deliver to the Partnership a
true and correct statement setting forth in reasonable detail and
certifying the amount of Advertising and Promotional Contributions
collected and expenditures for such items of expense made by Contributor
for the portion of the Applicable Closing Fiscal Period through the Closing
Date.
(c) Any amounts collected by the Partnership after the Closing Date
which constitute Advertising and Promotional Contributions shall be
retained by the Partnership and held and disbursed by the Partnership
according to the Leases.
(d) Whenever Fixed and Other Tenant Charge Arrearage are collected,
as contemplated by Section 4.5, the amount remitted to Contributor in
accordance with the provisions of Sections 4.5 and 4.7 shall be reduced or
Contributor shall make a payment to the Partnership from the amount
collected by Contributor to the extent the landlord is obligated under
Leases to, or by custom has in the past, made contributions or other
payments to the Promotional and Advertising Fund as Fixed and Other Tenant
Charge Arrearages are collected, and such withheld or remitted amounts
shall be paid to the Promotional and Advertising Fund.
4.5 Fixed and Other Tenant Charge Arrearage. Subject to the provisions of
Section 4.7, Fixed and Other Tenant Charge Arrearage (which, for purposes of
this Section 4.5, shall include, without limitation, any real estate taxes or
special assessments or other amounts otherwise required to be paid by a Party
directly to the taxing authority but actually paid by Contributor to the taxing
authority with respect to the amount of the taxes or special assessments
actually paid), if and when collected, shall be paid to the Partnership as to
Fixed and Other Tenant Charge Arrearages which relate to periods from and after
the Closing Date, and to Contributor with respect to all other Fixed and Other
Tenant Charge
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Arrearages. Upon payment by Enchanted Planet of deferred base rent due on
December 10, 1998 and notwithstanding anything to the contrary contained herein,
the Partnership shall promptly remit to Contributor a portion of the same equal
to the product of the amount of such deferred base rent collected multiplied by
a fraction the numerator of which is the number of days in 1998 preceding the
Closing Date and the denominator of which is 334 (and the Partnership may retain
the remainder).
4.6 Sales Based Tenant Charges. Sales Based Tenant Charges which are
payable with respect to any period prior to the Closing Date or which have been
accrued prior to the Closing Date shall not be apportioned as of the Closing
Date. In lieu thereof, such amounts shall be apportioned, after the Closing Date
and after final determination thereof, so that the amount thereof to which
Contributor shall be entitled shall be the entire amount thereof with respect to
any fiscal period ending prior to the Closing Date, and, for each Applicable
Closing Fiscal Period (it is recognized that there are different year ends for
different Tenants in computing Sales Based Tenant Charges), an amount which
bears the same ratio to the total Sales Based Tenant Charges for the Applicable
Closing Fiscal Period as the number of days in the Applicable Closing Fiscal
Period which have elapsed prior to the Closing Date bears to the total number of
days in the Applicable Closing Fiscal Period. At the Closing, Contributor shall
deliver to the Partnership a true and correct statement setting forth in
reasonable detail and certifying the amount of Sales Based Tenant Charges
collected for the portion of the Applicable Closing Fiscal Periods through the
Closing Date.
4.7 Application of Rent Receipts. Notwithstanding anything to the contrary
contained herein, in determining the adjustments and apportionments pursuant to
Sections 4.3, 4.4, 4.5 and 4.6, any payment of Rent shall be applied to the
payment of the item or items of Rent designated or indicated by the Party making
such payment (and the Partnership may not suggest in its billings or otherwise
that Tenants designate how a payment of rent is to be applied among the item or
items of Rent then due and payable). If not designated or indicated, any payment
of Rent shall be applied (a) first, to Fixed and Other Tenant Charge Arrearage,
(b) second, to Sales Based Tenant Charges, (c) third, to Adjustable Tenant
Charges, (d) fourth, to Advertising and Promotional Contributions and (e) last,
to other Rents; and within each such category, such payment shall be applied to
pay older arrearages prior to newer arrearages.
4.8 Security and Utility Deposits. At the Closing, Contributor shall
furnish the Partnership with a schedule setting forth and certifying, as of the
Closing Date, the unapplied and unreturned portion of any security deposits
which have been deposited with Contributor or its agents (or with any
predecessor-in-interest to Contributor or any such agent) by any Tenants
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through the Closing Date (the "Security Deposits") and the amount of any
deposits on account with any utility company servicing the Mall or Existing
Lender that will continue for the benefit of the Partnership following Closing
("Other Deposits"), and Contributor shall credit to the Partnership at Closing
the amount of the Security Deposits (together with all interest, if any, accrued
thereon and required to be paid to Tenants or actually paid in accordance with
past practices to Tenants). Contributor shall receive a credit at Closing for
the amount of the Other Deposits.
4.9 Collection of Rents.
(a) The Partnership shall use reasonable best efforts to collect the
Fixed and Other Tenant Charge Arrearage, Adjustable Tenant Charges, Sales
Based Tenant Charges and other Rents which are payable with respect to the
Applicable Closing Fiscal Period and any prior fiscal period (including
showing such outstanding amounts on any Tenant billings), but the
Partnership shall not be required to retain a collection agency, commence
litigation or file proofs of claim or commence an adversary proceeding in a
bankruptcy case, or terminate Leases or the Reciprocal Easement Agreement
in connection with such collection efforts. The Partnership shall not waive
or settle any claims for any such amounts in whole or in part to the extent
such amounts, if collected, would be payable to Contributor hereunder.
Reasonable collection costs shall be charged against amounts collected and
charged to the parties hereto in the proportion in which each is entitled
to the proceeds of such collection. The Partnership shall provide to
Contributor quarterly reports after Closing with respect to the collection
by the Partnership after Closing of any such amounts which are payable with
respect to the Applicable Closing Fiscal Period and any prior fiscal year.
Contributor shall have the right to pursue the collection of and retain any
amounts collected from Tenants on account of Rents who have relinquished
possession of their leased premises prior to the Closing Date, and
(notwithstanding anything to the contrary contained herein) the Partnership
shall have no responsibility with respect to the collection thereof.
(b) Contributor shall have the right to seek collection of any Fixed
and Other Tenant Charge Arrearage or other item of Rent owed to it
hereunder and not collected by the Partnership within six months following
the later of the Closing Date and the date such item of Rent is due and
payable (but Contributor otherwise shall not have the right to seek
collection of any Rents except as provided in the last sentence of Section
4.9(a)); provided, however, that in seeking to collect any such Fixed and
Other Tenant Charge Arrearage, Contributor shall not be entitled to
terminate any Lease or the Reciprocal Easement Agreement or otherwise seek
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any remedy other than a money judgment against the delinquent Party. Prior
to filing any such action, Contributor shall notify the Partnership and the
Partnership may join such action. The Partnership shall not be required to
join in any such actions or proceedings commenced by Contributor unless the
provisions of any law, rule or regulation at the time in effect shall
require that such actions or proceedings be brought by and/or in the name
of the Partnership, in which event the Partnership shall join and cooperate
in such actions or proceedings or permit the same to be brought by
Contributor in the Partnership's name but Contributor shall pay all costs
and expenses relating thereto, including without limitation the
Partnership's reasonable legal fees in reviewing pleadings and other
materials filed in connection with such litigation.
(c) Notwithstanding anything to the contrary contained herein, the
Partnership shall have the right at any time on or after the Closing, and
whether or not the joinder of the Partnership shall be required as a matter
of law, to cause the Partnership to join in, or to be substituted for
Contributor in, any proceedings for the eviction of Tenants and/or the
collection of Rent which may have been instituted by Contributor either
prior to or after the Closing, if the Tenant in question is still in
possession of the premises covered by its Lease and if, in connection
therewith, the Partnership intends to seek eviction of such Tenant,
cancellation of the Lease or repossession of the premises. If the
Partnership joins in, or is substituted for Contributor as plaintiff, in
any such litigation, the Partnership shall, thereafter, assume sole
liability for all costs and expenses of such litigation, including legal
fees and expenses, as may thereafter be incurred (except as provided below)
and shall thereafter control all aspects of such proceedings, except that
the Partnership shall not waive, reduce or otherwise compromise any claims
for Rent to the extent that the amount of such claims, if collected, would
be payable to Contributor hereunder. Contributor in any event may, at its
option, continue to participate in such litigation. In any event,
Contributor shall reimburse the Partnership for a pro rata portion of the
Partnership's out-of-pocket costs and expenses of such collection in
proportion to, but in no event in an amount greater than, the amount, if
any, actually received by Contributor after Closing as a result of such
proceedings; provided, however, Contributor shall be entitled to a credit
for legal fees and expenses incurred by Contributor prior to the
intervention by the Partnership in connection with the proceedings
previously instituted by Contributor in connection with such collection
efforts.
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4.10 Settlement of Adjustments.
(a) Contributor and the Partnership acknowledge that it may be
difficult to calculate, as of the day immediately preceding the Closing
Date, certain of the adjustments, apportionments and payments to be made
pursuant to this Article IV. Accordingly, Contributor and the Partnership
hereby agree that, except as provided in Section 4.1(a), any adjustments,
apportionments and payments otherwise required to be made as of the Closing
Date may to the extent necessary or desirable be estimated by the
Partnership and Contributor based on the most recent available data, and
additional adjustments, apportionments and payments shall be made to adjust
for any differences between the actual apportionment or adjustment and the
amount thereof estimated on the Closing Date. Any errors or omissions in
computing apportionments at the Closing shall be corrected promptly after
their discovery.
(b) Except as otherwise provided herein, net prorations and
adjustments made pursuant to this Article IV or other sections of this
Agreement on the Closing Date shall be settled in cash. From time to time
after the Closing as further adjustments are made as herein provided,
settlement thereon between Contributor and the Partnership shall be made in
cash.
(c) The Partnership, upon reasonable advance notice, shall provide
Contributor with access to the books and records of the Partnership,
including back-up calculations and information, relating to the calculation
of the adjustments required to be made pursuant to this Article IV.
(d) Any Rents that are payable to Contributor hereunder shall be paid
from time to time following the Closing as determined by the Partnership,
but in no event less frequently than quarterly.
(e) Notwithstanding anything to the contrary contained herein, a
final adjustment shall be made on December 31, 1999, with respect to
amounts owing under this Article IV as of such date, and the amounts owing
settled in cash no later than 10 days thereafter. No further adjustments or
payments shall be required to be made under this Article IV thereafter
(except with respect to legal proceedings for or bankruptcy claims in
respect of the collection of Rent which are pending on such date or legal
proceedings or bankruptcy claims brought by Contributor under Section
4.9(b)).
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ARTICLE V
Title Insurance and Survey
5.1 Title Commitment. Contributor has caused the Title Company to deliver
to the Partnership a commitment of the Title Company (the "Title Commitment") to
issue, at and as of Closing, its ALTA Owners Title Insurance Policy in its
current form as to Parcels A, B, D and E of the Land (the "Owner's Policy") and
an ALTA Owners Leasehold Title Policy in its current form as to Parcels C, D and
E of the Land (the "Leasehold Policy" and, together with the Owner's Policy, the
"Title Policies") in the aggregate amount of the Gross Asset Value with coverage
against matters relating to federal bankruptcy, state insolvency or similar
creditors' rights laws and with the following special endorsements:
(a) Full extended coverage over all general exceptions;
(b) An endorsement insuring against any and all liens and claims
arising out of or with respect to that portion of the Gart Work and Tank
Work, if any, performed prior to the Closing Date; provided, however, that
this provision shall be satisfied so long as neither of the Title Policies
include exceptions with respect to the portion of the Gart Work or Tank
Work, if any, performed prior to the Closing Date;
(c) An endorsement insuring legal access to the Real Property from
each of the streets bordering thereon, and insuring that all such streets
are dedicated public streets;
(d) An endorsement insuring against existing violations of covenants,
conditions or restrictions of record affecting the Property and loss of
title to the Real Property or the inability of the owner thereof to
maintain the improvements now located thereon by reason of any future
violation of any such covenant, condition or restriction of record;
(e) [INTENTIONALLY DELETED];
(f) Zoning endorsement (ALTA 3.1) (with parking);
(g) [INTENTIONALLY DELETED];
(h) [INTENTIONALLY DELETED];
(i) [INTENTIONALLY DELETED];
(j) [INTENTIONALLY DELETED].
The Partnership also may require the issuance at the Closing of such
additional endorsements at no additional cost to Contributor as the Partnership
deems appropriate, but the issuance
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thereof shall not be a condition to the Partnership's obligations hereunder.
Contributor shall cause the Title Company to reinsure portions of the
risk covered by its title insurance policies with reinsurance companies
reasonably satisfactory to the Partnership under standard reinsurance agreements
(providing, at a minimum, for direct access and enforcement of rights by the
insured party to and against the reinsurer) which have been approved by the
Partnership.
5.2 Survey. Contributor has delivered to the Partnership a survey for the
Real Property, dated not earlier than 90 days prior to the Closing Date, which
was prepared by a licensed or registered professional surveyor in the
jurisdiction in which such property is located (such survey, the "Survey"). The
Survey is an Urban ALTA/ACSM Land Title Survey made in compliance with and
meeting the accuracy standards under the "Minimum Standard Detail Requirements
for ALTA/ACSM Land Surveys" jointly established by the American Land Title
Association and American Congress on Surveying and Mapping then in effect;
contains Table A Optional Survey Responsibilities and Specifications 1, 2, 3, 4,
6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11 and 13; shows the boundaries of the Land;
discloses whether or not the Land comprises a single parcel of land with no
strips, gores or gaps within its boundaries; discloses any encroachments of any
Improvements located primarily on the Land onto adjoining premises or public
ways (and whether or not a valid easement for the benefit of such property
exists and is in place with respect to each such encroachment) or onto or over
setback or building or side yard lines located on the Land or of improvements
located primarily on adjoining premises onto any portion of the Land (and
whether or not a valid easement for the benefit of the adjoining premises exists
and be in place with respect to each such encroachment); locates all easements
created by recorded instruments (to the extent plottable) or visible on the Land
and discloses any encroachment by any of the Improvements located thereon, or
any other structures located on the Land, in violation of any such easements;
contains a legal description of the Land; shows the location of any adjacent
public streets, disclosing access, if any, to the Land therefrom; shows the
configuration and number of parking spaces on the Land; shows the area of the
Land; indicates whether the Land is located in an area designated by HUD as
having special flood risks and contains a certificate of the surveyor attesting
to the accuracy of the Survey and its conformity to the requirements of the
aforesaid Minimum Standard Detail Requirements, which certificate is directed to
the Partnership, the Existing Lender and the Title Company.
5.3 Title and Survey Defects.
(a) If any update to the Title Commitment or any update to the Survey
discloses exceptions to title other than the
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Permitted Exceptions, the Partnership shall notify Contributor in writing.
(b) Upon receipt of any such notice, Contributor shall (i) cause any
such exceptions which are monetary liens of a fixed and ascertainable
amount that may be removed and/or bonded solely by the payment of money,
including without limitation, judgment and mechanics' liens, to be removed
at or prior to the Closing and shall deposit with the Title Company
releases or other appropriate instruments, in recordable form, sufficient
to cause the removal of such items from the title; and (ii) use reasonable
best efforts to cause all other such title exceptions or matters to be so
released and removed from title and waived from the Title Commitment (or
insured over at its sole cost by the Title Company by an endorsement
reasonably satisfactory to the Partnership) or otherwise cured (but, with
respect to title exceptions and other matters referred to in clause (ii) of
this Section 5.3(b) that do not result from the intentional act or acts of
Contributor or the failure of Contributor to pay or otherwise satisfy
obligations incurred by it, Contributor shall not be obligated to expend
more the $10,000 in the aggregate, including without limitation the cost of
title company endorsements).
(c) Nothing contained in this Section 5.3 shall limit the rights of
the Partnership in respect of a breach by Contributor of Section 10.2.
(d) If, despite compliance by Contributor with its obligations
contained herein, title is not insurable at Closing as required by Section
5.1 and this Section 5.3 (including the removal of or issuance of insurance
over or other cure of all matters specified in any of the above notices),
then the Partnership may, as its sole remedy, (A) waive such defects and
accept title subject to all such defects (without any abatement or
reduction of the consideration hereunder) or (B) terminate this Agreement
by giving written notice of such termination to Contributor. In the event
that this Agreement is terminated, this Agreement shall be null and void
and the parties shall be released from all further rights and obligations
under this Agreement (other than any right or obligation that expressly
survives the termination of this Agreement).
5.4 Title Insurance Premiums and Survey Costs. Except as otherwise set
forth herein, Contributor shall pay the premiums and other charges in connection
with the issuance of the owner's title policies and endorsements complying with
the requirements of Section 5.1 (but each of Contributor and the Partnership
shall pay one-half the cost of the endorsement listed in clause (d) of Section
5.1) and the Survey.
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ARTICLE VI
Representations and Warranties
------------------------------
6.1 Partnership Representations and Warranties. The Partnership represents
and warrants to Contributor as follows as of the date hereof and as of the
Closing Date:
(a) The Partnership is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware with
full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Partnership of
this Agreement have been duly and validly authorized by all requisite
action on the part of the Partnership. This Agreement has been, and the
Partnership Closing Documents to which the Partnership is a party will be,
duly executed and delivered by the Partnership. This Agreement constitutes,
and when so executed and delivered such Partnership Closing Documents will
constitute, the legal, valid and binding obligations of the Partnership,
enforceable against it in accordance with their terms.
(c) None of the execution, delivery or performance of this Agreement
or the Partnership Closing Documents by the Partnership does or will, with
or without the giving of notice, lapse of time or both, violate, conflict
with, constitute a default or result in a loss of rights under or require
the approval or waiver of or filing with any Person (including without
limitation any governmental body, agency or instrumentality) under (i) the
organizational documents of the Partnership or any material agreement,
instrument or other document to which the Partnership is a party or by
which the Partnership is bound or (ii) any judgment, decree, order,
statute, injunction, rule, regulation or the like of a governmental unit
applicable to the Partnership.
(d) No broker, finder, investment banker or other Person is entitled
to any brokerage, finder's or other fee or commission in connection with
the Transactions based upon arrangements made by or on behalf of the
Partnership.
(e) No bankruptcy, insolvency, rearrangement or similar action
involving the Partnership, whether voluntary or involuntary, is pending or,
to the best of the Partnership's knowledge, threatened.
(f) The Partnership acknowledges and agrees that the Contributor has
made and makes no representation and warranty, whether implied or express,
as to: the physical condition of the Property; compliance of the Property
with Environmental Laws, regulations and ordinances relating to Hazardous
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Materials and toxic waste; the presence or absence of underground tanks,
pipelines or appliances; the susceptibility of the Property to flooding; or
any other matter of municipal, county, state or United States law regarding
the use and enjoyment of the Property or liability relating to the
ownership thereof, or any other matter or thing affecting or relating to
the Property, except as expressly set forth in this Agreement or the
Closing Documents. The Partnership acknowledges and agrees that no such
representation or warranty has been made other than as are expressly set
forth in this Agreement or the Closing Documents and, subject to other
provisions of this Agreement, agrees to take the Property "AS IS". The
Partnership acknowledges and agrees and represents that it has inspected
the Property (including the conditions outlined above). Nothing contained
in this section shall limit the liability of Contributor for breach of the
representations and warranties contained herein or in the Contributor
Closing Documents, such representations and warranties having been relied
upon by the Partnership in connection with its investigation of the
Property.
(g) As of the date hereof, the Memorandum and the documents
incorporated by reference therein do not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; provided, however, that the Partnership makes no
representations or warranties as to (i) the information contained in or
omitted from the Memorandum in reliance upon and in conformity with
information furnished by Contributor to the Partnership or (ii) the tax
consequences of the Transactions as more fully set forth in Section
6.2(ad).
6.2 Contributor's Representations and Warranties. Contributor represents
and warrants to the Partnership as follows (other than the representations and
warranties contained in Sections (aa) through (ag), which are made solely by P&P
in its individual capacity) as of the date hereof and as of the Closing Date:
(a) Contributor is a joint venture duly formed, validly existing and
in good standing under the laws of the State of Colorado with full power
and authority to execute, deliver and perform this Agreement. Each venturer
of Contributor is a partnership duly formed, validly existing and in good
standing (to the extent applicable) under the laws of the State of Colorado
with full power and authority to execute and deliver this Agreement in its
capacity as venturer of Contributor. The execution, delivery and
performance of this Agreement by Contributor has been authorized by all
necessary partnership action on the part of Contributor, and the execution
and delivery of this Agreement by each venturer of Contributor in
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its capacity as venturer of Contributor has been authorized by all
necessary partnership action. This Agreement has been, and when executed
and delivered the Contributor Closing Documents will have been, duly
executed and delivered by Contributor in its individual capacity and by
each venturer of Contributor in its capacity as venturer of Contributor.
This Agreement constitutes, and when so executed and delivered the
Contributor Closing Documents will constitute, the legal, valid and binding
obligations of Contributor, enforceable against it in accordance with their
terms.
(b) Subject to obtaining the consent of the Existing Lender in
accordance with Section 2.4 and obtaining the court approval referred to in
Section 2.12, none of the execution, delivery or performance of this
Agreement by Contributor or the consummation of the Transactions does or
will, with or without the giving of notice, lapse of time or both, violate,
conflict with, constitute a default, result in a loss of rights,
acceleration of payments due or creation of any Lien upon the Property or
require the approval or waiver of or filing with any Person (including
without limitation any governmental body, agency or instrumentality) under
(i) the organizational documents of Contributor or either of its venturers,
(ii) any agreement, instrument or other document to which Contributor or
either of its venturers is a party or by which any of them is bound or
(iii) any judgment, decree, order, statute, injunction, rule, regulation or
the like of a governmental unit applicable to any of them.
(c) At Closing, the Partnership (and/or its designees) will have good
and marketable title to the Property (other than the Land and the other
Real Property to the extent covered by the Title Policies), free and clear
of all Liens other than the Permitted Exceptions (including without
limitation Liens created pursuant to the Existing Indebtedness Documents)
and Liens created by, under or through the Partnership. The Property
comprises all of the assets and property necessary to operate the Mall as
now operated.
(d) Schedule 6.2(d) contains a list of all permits and licenses
currently maintained with respect to the Property and they are all of the
licenses and permits which are required for the present use of the
Property. Contributor has not received any notice of violation of any such
license or permit from any federal, state or municipal entity that has not
been cured or otherwise resolved to the satisfaction of such governmental
entity.
(e) To Contributor's knowledge and except as stated in Schedule
6.2(r), neither Contributor nor the District has received any notice from
any governmental unit or other Person (including without limitation any
consultant or engineer
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engaged by Contributor or any other Person) that it or the Real Property or
any occupant thereof is not in compliance with any Environmental Law, that
the Real Property or any portion thereof has been used as a storage or
disposal site for Hazardous Materials (other than the storage of substances
commonly present at or used in the operation and maintenance of shopping
centers in quantities commonly present at shopping centers and in
compliance with applicable laws) or that it has any liability with respect
thereto, and there are no administrative, regulatory or judicial
proceedings pending or, to Contributor's knowledge, threatened with respect
thereto pursuant to, or alleging any violation of, or liability under any
Environmental Law.
(f) Contributor has delivered a rent roll for the Mall (the "Rent
Roll") by memoranda dated March 19, 1998 and March 20, 1998 from Lana
Duensing to Joel Bayer and Avram Feldman. The Rent Roll shows
identification of each rentable space in the Mall by space number, whether
leased or not, and for each such space, the name of the Tenant, the minimum
or fixed annual rent payable for 1998, the percentage sales rate (all of
the foregoing information, the "Basic Information"), the sales breakpoint
for percentage rent, the commencement and expiration dates of the current
Lease term, the square footage of such space, the unapplied amount of any
security or other deposit held, all delinquencies in Rent, all outstanding
rent abatements, all outstanding tenant fit-out allowances and other tenant
concessions or inducements, all renewal options and "kick-out" clauses
(excluding cotenancy clauses). All information therein is accurate as of
March 19, 1998 (except that any of such information other than the Basic
Information is deemed to have been modified to the extent of conflicting
information contained in the Leases). Except as set forth in the Rent Roll,
no Tenant has paid any rent in advance except for the current month.
(g) Schedule 6.2(g)-1 contains a complete and correct list of all
existing Leases and modifications thereof and supplements thereto
(including without limitation side letters) regardless of whether the terms
thereof have commenced, setting forth with respect to each (i) the date
thereof and of each modification thereof and supplement thereto and (ii)
the names of the parties thereto (including the name of the current
assignee, if any, but only if and to the extent Contributor has actual
notice of any such assignment). The documents listed on Schedule 6.2(g)-2
constitute a complete and correct list of the reciprocal easement
agreements and allocable share agreements (which shall be deemed part of
the Reciprocal Easement Agreement for purposes of this Agreement) relating
to the Real Property and modifications thereof and supplements thereto
(including without limitation side letters) (the "Reciprocal Easement
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Agreement") setting forth with respect to each (i) the date thereof and of
each modification thereof and supplement thereto and (ii) the names of the
parties thereto. True and complete copies of the Reciprocal Easement
Agreement and Leases, including each written modification thereof and
supplement thereto and all material correspondence between the parties
thereto have heretofore been furnished or made available to the Partnership
for inspection. The Reciprocal Easement Agreement and each Lease
constitutes the entire agreement between the parties thereto and there are
no oral promises or agreements amending or modifying the same.
(h) There are no leases or other rights of occupancy or use relating
to the Real Property other than the Leases, the Ground Lease and the
Reciprocal Easement Agreement and other rights of Persons arising under
instruments or agreements which comprise Permitted Exceptions and/or the
Contracts, except subleases, concessions or license agreements which may
have been entered into by Tenants or by subtenants of Tenants. Contributor
has received no notice of the termination of any easement granted in the
Leases and the Reciprocal Easement Agreement.
(i) (i) No Party to the Reciprocal Easement Agreement or any Lease
has made any claim to Contributor (A) that Contributor has defaulted in any
extent in performing any of its obligations under the Reciprocal Easement
Agreement or such Lease which has not heretofore been cured, (B) that any
condition exists which with the passage of time would constitute any such
default, or (C) that such Party is entitled to any reduction in, refund of,
or counterclaim or offset against, or is otherwise disputing, any Rents or
other charges paid, payable or to become payable by such Party, to cancel
the Reciprocal Easement Agreement or such Lease or to be relieved of its
operating covenants thereunder.
(ii) Except for delinquencies in the payment of Rents disclosed
in the Rent Roll and except as set forth on Schedule 6.2(i), to
Contributor's knowledge, no default exists under the Reciprocal Easement
Agreement or any Lease on the part of the Party or Parties thereto.
Contributor is not in default (without giving effect to any applicable
notice and cure rights) in any respect with respect to any Lease or the
Reciprocal Easement Agreement.
(iii) There are no unsatisfied rent abatements or other tenant
concessions or inducements, including, without limitation, lease
assumptions or buy-outs, applicable to any of the Leases or any rights to
extend or renew any of the Leases except as set forth in the Rent Roll.
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(iv) No Party to any Lease or the Reciprocal Easement Agreement
has any rights, options or rights of first refusal of any kind which are
currently in effect, to purchase or to otherwise acquire the Real Property
or any part thereof or interest therein other than the rights of such
Tenant (as tenants only) under its Lease or such Party to the Reciprocal
Easement Agreement under the Reciprocal Easement Agreement with respect to
easements and the Right of First Refusal only.
(j) Contributor has furnished the Partnership with audited financial
statements for the Mall (consisting of balance sheets and income
statements) as of, and for the calendar years ended, December 31, 1995,
1996 and 1997 (the "Annual Financial Statements"), audited financial
statements for the District (consisting of balance sheets and income
statements) as of, and for the calendar years ended, December 31, 1996 and
1997 (the "District Financial Statements"), and unaudited financial
statements for the Mall (consisting of balance sheets and income
statements) as of and for the one-month period ended January 31, 1998 (the
"Interim Financial Statements" and, together with the Annual Financial
Statements and District Financial Statements, the "Financial Statements").
The Financial Statements are consistent with the books and records and
accounts of Contributor or the District, as the case may be, and fairly
present the financial condition and results of operations of Contributor or
the District, as the case may be, as of the dates thereof and for the
periods referred to therein, and, except for the absence of footnotes and
subject to normal year-end accruals as to the Interim Financial Statements,
the Financial Statements have been prepared in accordance with the income
tax basis method of accounting (or, in the case of the District Financial
Statements, generally accepted accounting principles as provided therein)
consistently applied throughout the periods indicated. Since December 31,
1997, the business or activities of the Mall and the District have been
conducted in the ordinary course consistent with past practice and there
have been no material adverse changes in the financial condition of the
Mall or the District, and Contributor has no knowledge of any circumstance
or event which, insofar as can be reasonably foreseen, is likely to result
in any such material adverse change (except for changes that might occur as
the result of general economic and market conditions).
(k) Schedule 6.2(k) lists the patents, trademarks (including
registrations thereof), and trade names which are used by Contributor in
connection with the operation of the Mall (the "Intellectual Property"). To
Contributor's knowledge, the conduct of the business of Contributor and the
use of the Intellectual Property do not infringe upon the patents,
trademarks, copyrights or other intellectual property rights of any third
party and no third parties are currently
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infringing upon the patents, copyrights, trademarks or other intellectual
property rights of Contributor. Contributor has not granted to any Person
or Persons the right to use the Intellectual Property or any portion
thereof.
(l) Neither Contributor nor Existing Manager is a party to or is
bound by any collective bargaining or union agreements with respect to the
Mall. Neither Contributor nor Existing Manager has encountered any labor
union organizing activity or experienced any actual or threatened employee
strikes, work-stoppages, slow-downs or lockouts. Contributor has no
employees and does not maintain or sponsor any employee benefit plan,
including, without limitation, any plans subject to the Employer Retirement
Income Security Act of 1974, as amended.
(m) Schedule 6.2(m) contains a true and complete list of all
Contracts with respect to the Mall, including all modifications thereof and
supplements thereto (including without limitation side letters and the
material terms of oral contracts). There has been no default (without
giving effect to any notice and cure rights) by Contributor or, to
Contributor's knowledge, any Party under any Contract which has not
heretofore been cured. Contributor has not received notice of any claim by
a Party of any such default, which has not heretofore been cured. A true
and complete copy of each written Contract, including any amendments or
supplements thereto, has been delivered or made available to the
Partnership. Such documents constitute the entire agreement between the
parties thereto and there are no oral promises or agreements amending,
modifying or supplementing the same.
(n) No condemnation proceeding or other proceeding or action in the
nature of eminent domain is pending with respect to all or any part of the
Real Property, and, to Contributor's knowledge, no condemnation proceeding
or other proceeding or action in the nature of eminent domain is pending
with respect to any property owned by a Party to the Reciprocal Easement
Agreement which is the subject of the Reciprocal Easement Agreement and no
Taking is threatened with respect to all or any part of the Real Property
or any property owned by a Party to the Reciprocal Easement Agreement which
is the subject of the Reciprocal Easement Agreement.
(o) The Real Property is an independent unit which does not now rely
on any facilities (other than facilities covered by Permitted Exceptions
[including, without limitation, the Reciprocal Easement Agreement] or
facilities of municipalities or public utility and water companies) located
on any property not included in the Real Property to fulfill any municipal
or governmental requirement or for the furnishing to the Real Property of
any essential building systems or utilities,
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including but not limited to, water, electrical, plumbing, mechanical and
heating, ventilating and air conditioning systems, drainage facilities,
catch basins and retention ponds, sewage treatment facilities and the like,
unless recorded easements or other rights are in effect for the benefit of
the Real Property (which run with the land) for the continued use and
benefit thereof. Except as may be covered by the Permitted Exceptions
(including, without limitation, the Reciprocal Easement Agreement), no
building or other improvement not included in any part of the Real Property
relies on any part of the Real Property to fulfill any governmental or
municipal requirement or to provide facilities to such building or
improvement for any essential building systems or utilities, including,
without limitation, electrical, plumbing, mechanical, sewage treatment or
heating, ventilating and air conditioning facilities or services.
(p) Copies of current real estate tax bills with respect to the Real
Property, other than tax bills sent to Tenants who have the obligation to
pay such taxes to the collecting authority, have been delivered to the
Partnership. No portion of the Real Property comprises part of a tax parcel
which includes property other than property comprising all or a portion of
the Real Property. No application or proceeding is pending with respect to
a reduction in or refund of or increase in such taxes. Contributor has no
knowledge of any special tax or assessment to be levied against the Real
Property or any change in the tax assessment of the Real Property.
(q) To Contributor's knowledge, Contributor has not received notice
that there is and, except as set forth on Schedule 6.2(i) and to
Contributor's knowledge, there does not now exist any violation of any
restriction, condition or agreement contained in any easement, restrictive
covenant or any similar instrument or agreement affecting the Real Property
or any portion thereof.
(r) Except as set forth in Schedule 6.2(r) and to Contributor's
knowledge, each of the Property and the District is in compliance with all
laws, statutes, rules, regulations, and ordinances (including without
limitation the ADA but excepting all Environmental Laws), and neither
Contributor nor the District has received any notice from any governmental
authority having jurisdiction over the Real Property, the Mall or the
District or from any other Person (including without limitation a
consultant or engineer or any insurance company or Board of Fire
Underwriters) (A) of any violation of any law, ordinance, order or
regulation (including without limitation the ADA) relating to the Mall or
the District which has not heretofore been complied with or (B) requiring
Contributor, the Ground Lessor or the District to make any
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alterations, improvements or changes in or about the Real Property or any
portion thereof which have not been completed. None of Contributor, the
Ground Lessor or the District has any obligation to any other governmental
authority for the performance of any capital improvements or other work to
be performed in or about the Real Property or donations of monies or land
(other than general real property taxes) which have not been completely
paid for or otherwise performed.
(s) Except as provided in Schedule 6.2(s), there is no litigation,
including any arbitration, investigation or other proceeding by or before
any court, arbitrator or governmental or regulatory official, body or
authority which is pending or, to Contributor's knowledge, threatened
against Contributor, the District or the Ground Lessor relating to the
Property or the Transactions and there are no unsatisfied arbitration
awards or judicial orders against Contributor, the District or the Ground
Lessor relating to the same. Copies of all pleadings and other documents
which have been requested with respect to the litigation described on
Schedule 6.2(s) have been furnished to the Partnership and are true,
accurate and complete in all respects.
(t) Schedule 6.2(t) contains a true and accurate list of all policies
of insurance relating to the Mall and the District, which policies are and
will be kept in full force to and including the Closing Date. All premiums
for such insurance have been paid in full. Neither Contributor nor the
District has received (and Contributor has no knowledge of) any notice or
request from any insurance company or Board of Fire Underwriters (or
organization exercising functions similar thereto) cancelling or
threatening to cancel any of said policies or denying or disputing coverage
thereunder. The Insurance Policy is freely assignable to the Partnership or
its designee and, except for the premiums therefor, contains the same terms
as the policy which it replaced. A true and complete copy of such replaced
policy, including any modifications thereof or supplements thereto, and the
premium information for the Insurance Policy have been furnished to the
Partnership.
(u) Except as set forth in Schedule 6.2(s) and to Contributor's
knowledge, none of the Tenants or Anchors is the subject of any bankruptcy,
reorganization, insolvency or similar proceedings or has ceased or reduced
or intends to cease or reduce operations at the Mall other than temporarily
due to casualty, remodeling, renovation or similar cause.
(v) [INTENTIONALLY DELETED].
(w) Schedule 6.2(w) accurately sets forth (i) a list of all
instruments, agreements and other documents relating to
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the Existing Indebtedness and all modifications or amendments thereof and
supplements thereto (including without limitation guaranties, indemnity
agreements and side letters) (the "Existing Indebtedness Documents"), (ii)
the date of the Existing Indebtedness Documents and of each modification or
amendment thereof and supplement thereto, (iii) the name of the holders of
the Existing Indebtedness as of the date hereof, (iv) the unpaid balances
thereof as of the date hereof, (v) the security therefor as of the date
hereof and (vi) the amount of any deposits or escrows held or established
in connection therewith. The Existing Indebtedness Documents are in full
force and effect, Contributor has not received any notice of default under
any Existing Indebtedness Document, and no default on the part of
Contributor or, to the Contributor's knowledge, any other Party thereto
exists thereunder (without regard to notice and cure provisions). A true
and complete copy of the Existing Indebtedness Documents, including without
limitation each written modification thereof and supplement thereto, have
heretofore been furnished to the Partnership. Such documents constitute the
entire agreement between the parties thereto, and there are no oral
promises or agreements amending or modifying the same. The outstanding
principal amount of the Key Bank Indebtedness is $2,936,905.00 as of the
date hereof, and the Key Bank Indebtedness may be repaid in full at Closing
without notice or penalty.
(x) Except as set forth on Schedule 6.2(x), neither Contributor nor
the Ground Lessor is under obligation to make contributions or otherwise
provide assistance to any promotional association or promotional fund and
has not customarily in the past made or provided any such contributions or
assistance. Contributor has paid or remitted to the Promotional and
Advertising Fund any amounts (including without limitation amounts received
by it from Tenants and other Parties that constitute contributions to such
promotional association or fund) that are required to be paid or remitted
by it to such promotional fund.
(y) To Contributor's knowledge, Contributor has delivered to the
Partnership true and complete copies of all environmental reports
(including without limitation asbestos surveys), engineering reports, ADA
surveys and other material reports or studies relating to the Mall or the
Property that were prepared at the request of or otherwise are in the
possession of Contributor, the Ground Lessor or any Affiliate of
Contributor. Contributor does not warrant the accuracy of any such report,
but Contributor does not have knowledge of any inaccuracy contained
therein.
(z) Except as indicated on Schedule 6.2(z), none of Contributor, the
Guarantors or any spouse or child of
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Guarantors directly or indirectly owns or leases any land within a one (1)
mile radius of the Real Property.
(aa) Each of Contributor and P&P has been advised that the Units to be
issued to Contributor hereunder shall not be registered under the 1933 Act
or under the securities laws of any state or other jurisdiction; that the
Partnership shall not have any obligation to register the same in
connection with the offering, sale or issuance thereof to it pursuant
hereto or at any time thereafter; that the Units are subject to
restrictions on transfer contained in the Partnership Agreement and herein
and, in any event, cannot be sold unless they are subsequently registered
under the 1933 Act or an exemption from such registration is available; and
that the Partnership, in issuing its Units in accordance with the
provisions hereof, is relying upon the representations contained herein and
in the Questionnaires.
(ab) Each of Contributor and P&P has received a copy of, has been
advised to read, and has read the Memorandum, including its exhibits, and
each of Contributor and P&P has become familiar with the Memorandum's terms
and provisions.
(ac) Each of Contributor and P&P has been provided with such other
information regarding the Partnership as it has requested and has had an
opportunity to meet with and ask questions of representatives of the
Partnership. No oral or written representations have been made to either
Contributor or P&P in connection with the Transactions which are in any way
inconsistent with the information contained in the Memorandum and this
Agreement, and, if any representations or warranties were made that do not
expressly state in writing that they supersede this disclaimer, neither
Contributor nor P&P is relying on or will rely on them.
(ad) Each of Contributor and P&P understands that the Transactions may
involve complex tax consequences, that it has been advised to consult with,
and has consulted with, independent tax counsel, regarding the tax
consequences of the Transactions and that each of Contributor and P&P is
relying solely upon the advice of its own tax advisors in evaluating such
consequences and that none of the Partnership, the General Partner or their
advisors have made (nor shall they be deemed to have made) any
representations as to the tax consequences of the Transactions.
(ae) Each of Contributor and P&P is an "accredited investor" within
the meaning of Regulation D under the 1933 Act and has knowledge and
experience in financial and business matters such that it is capable of
evaluating the merits and risks of receiving and owning the Units to be
issued to Contributor pursuant hereto, and each of Contributor and P&P
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is able to bear the economic risk of such ownership. Neither Contributor
nor P&P learned of the Units or was attracted or induced to enter into
this Agreement as a result of any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any seminar or
meeting, or any solicitation of a subscription by a person not previously
known to it in connection with investments in real estate generally.
(af) The Units to be acquired by Contributor pursuant to this
Agreement are being acquired by Contributor for its own account, for
investment purposes only and not with a view to, and with no present
intention of, selling or distributing the same (other than a distribution
of Units to the Qualified Investors in which no consideration is paid by
any of such Qualified Investors).
(ag) All information provided by Contributor or P&P to its venturers
or partners (or the partners of such venturers) in connection with the
issuance of the Units (the "Contributor Information") (other than the
Memorandum [except for information contained in or omitted from the
Memorandum in reliance upon and in conformity with information provided by
Contributor or P&P to the Partnership] and any other data supplied in
writing by the Partnership and expressly identified as information supplied
for inclusion in the Contributor Information and incorporated therein as
supplied by the Partnership) contained no untrue statement of material fact
and did not omit to state any material fact necessary in order to make the
statements therein not misleading. P&P has provided copies of all
Contributor Information to the Partnership for its review, but such review
shall not impose any liability on the Partnership for any untrue or
misleading statements or omissions in the Contributor Information.
(ah) Contributor acknowledges that the General Partner may be
obligated, under applicable securities laws, to disclose information
relating to the Transactions in registration statements or public reports
filed under such laws (which registration statements and reports may be
filed prior to or following the Closing Date). Contributor consents to the
inclusion by the General Partner in any such registration statements or
public reports of information provided to the Partnership by or on behalf
of Contributor in connection with this Agreement without further notice to
Contributor and confirms that none of such information contains any untrue
statement of material fact or omits to state any material fact necessary in
order to make the statements therein not misleading.
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(ai) The District is a duly organized and validly existing
governmental subdivision of the State of Colorado with full power and
authority to conduct its activities as they are currently being conducted.
Schedule 6.2(ai) accurately sets forth (i) a list of all organizational
documents of the District and indentures, evidences of indebtedness and
other agreements or instruments to which the District is a party or is
bound and all modifications or amendments thereof and supplements thereto
(the "District Documents"), (ii) the date of the District Documents and of
each modification or amendment thereof and supplement thereto, (iii) the
unpaid balances as of the date hereof of any indebtedness created pursuant
to the District Documents, (iv) the security therefor as of the date hereof
and (v) the amount of any deposits or escrows held or established in
connection therewith. The District Documents are in full force and effect,
neither Contributor nor the District has received any notice of default
under any District Document, and no default on the part of the District or,
to Contributor's knowledge, any other Party thereto exists thereunder
(without regard to notice and cure provisions). A true and complete copy of
the District Documents, including without limitation each written
modification thereof and supplement thereto, have heretofore been furnished
to the Partnership. Such documents constitute the entire agreement between
the parties thereto, and there are no oral promises or agreements amending
or modifying the same. The District has no liabilities (absolute, accrued,
contingent or otherwise) except liabilities arising under the District
Documents. The District has made no payments to, or reduced amounts due to
the District by, Contributor or any of its Affiliates except for amounts
paid in accordance with the Existing Management Agreement between a
predecessor in interest of the Existing Manager and the District and
reductions on account of reductions in the mill levy.
(aj) The Ground Lease is in full force and effect, there has been no
default by Contributor or the Ground Lessor under the Ground Lease,
Contributor has received no notice of default thereunder, the Ground Lease
contains the entire agreement between Contributor and the Ground Lessor and
there are no oral promises or agreements amending or modifying the same.
(ak) No broker, finder, investment banker or other Person is entitled
to any brokerage, finder's or other fee or commission in connection with
the Transactions based upon arrangements made by or on behalf of
Contributor (other than Marcus & Millichap Inc., whose fee or commission of
not more than $1,000,000 shall, upon and subject to the occurrence of
Closing, be paid by the Partnership and shall reduce Net Asset Value).
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For purposes of this Agreement, the phrase "to Contributor's knowledge" and
other phrases of similar import only shall refer to the actual, current,
subjective knowledge of the Guarantors, Shell Cook and Eileen Stembler.
Notwithstanding anything to the contrary contained herein, (a) the
liability of Contributor for a breach of the representations and warranties set
forth herein or in the Contributor Closing Documents other than the Estoppels
for a Missing Tenant (including the indemnification obligations of Contributor
under clause (i) of Section 10.1(a)) shall not exceed in the aggregate
$11,300,000.00 and (b) the liability of Contributor for breach of the Estoppels
for a Missing Tenant shall not exceed in the aggregate the sum of $250,000.00
(but nothing contained in this sentence shall affect or limit Contributor's
liability under this Agreement or the Contributor Closing Documents to the
extent that such liability also arises under other indemnities and covenants
contained herein or in the Closing Documents other than the Estoppels for a
Missing Tenant).
ARTICLE VII
Access and Certain Rights of Early Termination
----------------------------------------------
7.1 Due Diligence and Access.
(a) From the date hereof until the Closing, Contributor shall give
the Partnership and its representatives and consultants, during normal
business hours, upon reasonable notice and in a manner that does not
unreasonably interfere with the operation of Contributor's business, access
to and the right to inspect the Mall and the Property (including without
limitation for purposes of conducting environmental testing, the cost of
which shall be borne by the Partnership). From the date hereof until
Closing and upon request by the Partnership, Contributor promptly shall
provide the Partnership with other material information and data with
respect to the Mall and the Property which is in the possession of
Contributor or the Existing Manager, including without limitation copies of
Leases, the Reciprocal Easement Agreement and the Contracts and such
financial and other information as the Partnership reasonably requests with
respect thereto. The Partnership may contact Parties as the Partnership
deems appropriate in connection with its due diligence examination. The
Partnership shall bear all expenses associated with its due diligence
activities, promptly restore the Property to its former condition, and not
permit the Property to become subject to any Liens on account of such due
diligence activities.
(b) From the date hereof until the Closing, the Partnership shall
provide to Contributor such public information and data with respect to the
Partnership and the
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General Partner which is in the Partnership's possession and which
Contributor may request.
(c) The Partnership shall indemnify, defend and hold harmless
Contributor and its successors and assigns from and against any Loss
proximately caused by the exercise by the Partnership of its rights of
access and inspection pursuant to the provisions of this Section 7.1. The
indemnification obligations of the Partnership under this Section 7.1(c)
shall survive the termination of this Agreement.
7.2 [INTENTIONALLY DELETED]
ARTICLE VIII
Conditions to Closing
---------------------
8.1 Conditions to Contributor's Obligations. Contributor's obligation to
close is subject to satisfaction of each of the following conditions (any of
which may be waived by Contributor in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all of the
covenants and agreements to be complied with or performed by the
Partnership under this Agreement on or before the Closing shall have been
complied with or performed in all material respects.
(b) Accuracy of Representations and Warranties. The representations
and warranties made by the Partnership in this Agreement (without regard to
materiality qualifications contained therein and any supplementation in
accordance with Sections 3.3(f) or 10.3) shall be true and complete in all
material respects on and as of the Closing Date (without regard to events
or developments permitted hereunder or as to which Contributor has
otherwise consented in writing).
(c) No Other Termination. No termination of this Agreement by
Contributor or the Partnership shall have occurred pursuant to any other
provision hereof.
(d) Consent Obtained; Etc. The consent of the Existing Lender
pursuant to Section 2.4 shall have been obtained and the Anchors shall not
have exercised the Right of First Refusal.
(e) No Litigation. At Closing, there is no litigation, including any
arbitration, investigation or other proceeding, pending by or before any
court, arbitrator or governmental or regulatory official, body or authority
or any decree, order or injunction issued by any such court, arbitrator or
governmental or regulatory official, body or authority and remaining in
effect which does or is likely to prevent or
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hinder the timely consummation of the Closing by the Partnership.
8.2 Conditions to Partnership's Obligations. The Partnership's obligation
to close is subject to satisfaction of each of the following conditions (any of
which may be waived by the Partnership in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all of the
covenants and agreements to be complied with or performed by Contributor or
P&P under this Agreement on or before the Closing shall have been complied
with or performed in all material respects.
(b) Accuracy of Representation and Warranties. The representations
and warranties made by Contributor and P&P in this Agreement (without
regard to materiality qualifications contained therein and any
supplementation in accordance with Sections 3.2(k) or 10.3) shall be true
and complete in all material respects on and as of the Closing Date
(without regard to the bankruptcy or default of any Anchor or Tenant that
occurred following the date hereof which was not caused by the acts of
Contributor (a "Post-Signing Occupant Event") or events or developments
permitted hereunder or as to which the Partnership has otherwise consented
in writing). Notwithstanding anything to the contrary contained herein, the
Partnership shall have no right to assert a claim for breach of this
Agreement, to seek a reduction in the consideration payable hereunder or to
refuse to close hereunder on account of any Post-Signing Occupant Event.
(c) Estoppels Obtained. The Estoppels shall have been obtained in
accordance with Section 10.7 and such Estoppels shall contain no material
deviations from (i) the forms thereof provided by or approved by the
Partnership (or, where applicable, the Prescribed Form) or (ii) the
information contained in this Agreement and the schedules hereto (without
regard to the deemed modification of the rent roll pursuant to the
parenthetical contained in the second to last sentence of Section 6.2(f))
or the information otherwise furnished to the Partnership by Contributor
(without limiting the foregoing, the Estoppels shall contain no assertion
of default by Contributor as the result of the matter described on Schedule
6.2(i)). Notwithstanding any provision in this Agreement to the contrary,
if Contributor has not obtained Estoppels from all Anchors or Tenants (the
Parties from whom Estoppels have not been obtained being herein called the
"Missing Parties") but has obtained the Required Estoppels, Contributor
shall, in its own capacity, satisfy the condition of this Section 8.2(c)
with respect to the Estoppel from each Missing Party by executing and
delivering to the Partnership at Closing an Estoppel for such Missing Party
in the form prescribed by
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Section 10.7 (with appropriate changes to such form to reflect that
Contributor and not such Missing Party is signing such Estoppel and
containing no representation concerning environmental matters) and meeting
the requirements set forth in the first sentence of this Section 8.2(c) and
the Partnership shall accept same as if executed by the Missing Party.
(d) Consents Obtained; Gap Renewal. The Contract Party Consents and
the consent and agreement of the Existing Lender pursuant to Section 2.4
shall have been obtained, and the Anchors shall not have exercised the
Right of First Refusal (and, with respect to Wards, the court approval
referred to in Section 2.12 shall have been obtained).
(e) Issuance of Title Policies. The Title Company shall have issued,
or be irrevocably committed to issue, the Title Policies as herein
contemplated subject only to the Permitted Exceptions with respect thereto.
(f) No Other Termination. No termination of this Agreement by the
Partnership or Contributor shall have occurred pursuant to any other
provision hereof.
(g) No Litigation. At Closing, there is no litigation, including any
arbitration, investigation or other proceeding, pending by or before any
court, arbitrator or governmental or regulatory official, body or authority
or any decree, order or injunction issued by any such court, arbitrator or
governmental or regulatory official, body or authority and remaining in
effect which does or is likely to prevent or hinder the timely consummation
of the Closing or materially adversely affect the Mall or the operation
thereof. Nothing contained in this Article VIII shall relieve any party
hereto of responsibility for the breach by such party of a representation,
warranty or covenant of such party contained in this Agreement.
ARTICLE IX
Condemnation and Destruction
----------------------------
9.1 Casualty or Condemnation in General.
(a) If prior to the Closing Date the Property shall be the subject of
a Taking or Casualty, Contributor shall promptly inform the Partnership of
same.
(b) If prior to the Closing Date the Property shall be the subject of
a Substantial Taking or a Substantial Casualty,
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the Partnership may by written notice delivered to Contributor on or before
the Closing Date, elect as its sole remedy on account thereof, either (i)
to terminate this Agreement, and the rights of the parties hereto, in which
event this Agreement (other than any right or obligation that expressly
survives the termination of this Agreement) shall terminate as of the date
of delivery of such notice; or (ii) to continue this Agreement in effect,
in which event (A) the Partnership shall be entitled to receive and retain
any and all insurance proceeds, whether collected before or after Closing
(and Contributor shall pay in cash to the Partnership all deductibles paid
or payable in respect thereof), or condemnation awards with respect thereto
(less, in each such case, (i) reasonable costs of collection thereof (other
than the cost of deductibles), and (ii) amounts, if any, applied by
Contributor prior to Closing to preservation, repair or restoration), and
(B) Contributor shall cooperate in all reasonable respects with the
Partnership at the Partnership's sole cost and expense, in connection with
the collection thereof, to the extent not collected at the Closing.
(c) If prior to the Closing Date, the Property or any portion thereof
is (i) the subject of a Taking (other than a Substantial Taking) or (ii)
the subject of a Casualty (other than a Substantial Casualty), this
Agreement shall nevertheless remain in full force and effect with no
abatement of the consideration to be delivered to Contributor on account
thereof and the Transactions shall be consummated as provided herein. In
such event, any insurance proceeds or condemnation awards shall be applied
and paid in the same manner and subject to the same provisions set forth
above as are applicable in a case of a Substantial Casualty or a
Substantial Taking as to which the Partnership has elected nevertheless to
continue this Agreement in effect.
9.2 Adjustment of Claims and Condemnation Proceedings. If a Taking or
Casualty shall occur, Contributor shall initiate or cause to be initiated all
actions required to adjust, compromise and collect the awards payable by the
condemning authority or the proceeds payable under the applicable policy or
policies of casualty insurance. Contributor shall permit the Partnership to
participate with Contributor in the initiation of all such actions and, in any
event, Contributor shall consult with, and keep the Partnership advised of,
Contributor's progress in connection therewith. Contributor shall not agree to
any settlement of the awards or insurance proceeds payable in connection with
any such Taking or Casualty (or enter into any agreement in lieu of a Taking)
without the Partnership's approval, which approval shall not be unreasonably
withheld or delayed.
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ARTICLE X
Additional Covenants
--------------------
10.1 Indemnification.
(a) Indemnification by Contributor. From and after the Closing,
Contributor shall indemnify, defend and hold harmless the Partnership, its
successors and assigns and their members, shareholders, partners,
directors, officers, employees and agents (the "Indemnified Partnership
Persons") from and against any claim, action, demand, loss, cost, expense,
liability, penalty or damages, including, without limitation, reasonable
attorneys' fees and expenses (a "Loss"), incurred or suffered by any
Indemnified Partnership Person that results from, relates to or arises out
of (i) the breach or inaccuracy of any representation or warranty made by
Contributor in this Agreement or the Contributor Closing Documents, (ii)
the breach or non-fulfillment by Contributor of any of the covenants or
agreements of Contributor under this Agreement or the Contributor Closing
Documents, (iii) the Contributor's Liabilities, or (iv) the operation or
use of the Mall or the Property prior to the Closing Date (other than
Losses that constitute, result from or arise out of the Assumed Liabilities
or a breach of a representation, warranty or other covenant made by the
General Partner or the Partnership herein or in the Closing Documents).
(b) Indemnification by Partnership. From and after the Closing, the
Partnership shall indemnify, defend and hold harmless Contributor and its
constituent joint venturers and its successors and assigns and their
partners, employees and agents (the "Indemnified Contributor Persons") from
and against any Loss incurred or suffered by any Indemnified Contributor
Person that results from, relates to, or arises out of (i) the breach or
inaccuracy of any representation or warranty made by the Partnership in
this Agreement or the Partnership Closing Documents, (ii) the breach or
non-fulfillment by the Partnership of any of the covenants or agreements of
the Partnership under this Agreement or the Partnership Closing Documents,
(iii) the Assumed Liabilities, or (iv) the operation or use of the Property
on or after the Closing (other than Losses that constitute, result from or
arise out of the Contributor's Liabilities or a breach of a representation,
warranty or other covenant made by Contributor herein or in the Closing
Documents).
(c) Indemnification by P&P. From and after the Closing, P&P shall
indemnify, defend and hold harmless the Indemnified Partnership Persons
from and against any Loss incurred or suffered by any Indemnified
Partnership Person that results from, relates to or arises out of (i) the
breach or inaccuracy of any representation or warranty made by P&P in this
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Agreement or the Contributor Closing Documents or (ii) the breach or non-
fulfillment by P&P of any of the covenants or agreements of P&P under this
Agreement or the Contributor Closing Documents.
(d) Joint Cooperation. Upon obtaining knowledge of the institution
of any action or proceeding or other event which could give rise to a claim
for indemnity hereunder, the Person seeking indemnification shall promptly
give written notice thereof (but no later than 15 days after being served
with process in any litigation and 30 days after receiving any other
written claim which may be the subject of indemnification hereunder) to the
party from whom indemnification may be sought. If such claim or demand
relates to a claim or demand asserted by a third party, the indemnifying
party shall have the right, at its expense, to employ counsel to defend
such claim or demand and the indemnified Person shall have the right, but
not the obligation, to participate in the defense of any such claim or
demand at its own cost; provided, however, that counsel to be utilized in
defense of the matter by the indemnifying party shall be reasonably
approved by the indemnified Person, and provided further that the
indemnifying party shall not assume the defense for matters as to which
there is a conflict of interest or separate and inconsistent defenses, in
which case the indemnified Person will utilize counsel reasonably approved
by the indemnifying party and the indemnifying party will reimburse the
indemnified Person for any legal and other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action. The indemnified Person will not settle any
claim or demand for which indemnity is sought hereunder without the
indemnifying party's written consent (which consent shall not be
unreasonably withheld or delayed), and the indemnifying party may settle
such claim or demand with the written consent of the indemnified Person,
which consent may not be unreasonably withheld or delayed so long as the
indemnified Person receives an unconditional release. The indemnified
Person shall make available to the indemnifying party all records and other
materials reasonably required by it in contesting a claim or demand
asserted by a third party against the indemnified Person and shall
cooperate in the defense thereof. Notwithstanding anything to the contrary
contained herein, a failure to provide written notice to the party from
whom indemnification is sought within the time period specified above shall
not preclude the other party's right to indemnification except to the
extent the indemnifying party has been prejudiced by such failure.
10.2 Conduct of Business Pending Closing. From the date hereof until the
Closing and unless otherwise provided herein (including without limitation
Sections 2.8 and 2.9), Contributor
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shall (a) use reasonable best efforts to maintain, for the benefit of the
Partnership following the Closing, the goodwill of Tenants, prospective tenants
of the Property, vendors of the Property and other parties having business
relations with Contributor in respect of the Property; (b) pay its debts (or in
good faith contest the same) and perform its obligations in respect of the
Property as they become due; (c) maintain the Mall in good condition and repair,
as such condition shall be altered by reason of Casualty, Taking and/or normal
wear and tear; (d) without the express written consent of the Partnership, not
(i) enter into any new or additional Lease or ground lease, or extend, renew or
modify, consent to any assignment of or sublease or other matter in respect of,
or waive any material right under any Lease or the Ground Lease, other than
renewals or extensions resulting from the exercise by a Tenant of a currently
existing renewal or extension option, (ii) cancel or terminate the Ground Lease
or any Lease or take any action to enforce any Lease which would have the effect
of cancelling or terminating the same, (iii) enter into a new reciprocal
easement or similar agreement in respect of the Property or amend or modify,
consent to the assignment or any other matter in respect of or waive any
material right under the Reciprocal Easement Agreement, (iv) make any
alterations to the Mall or enter into any new contracts or extend or renew or
cancel any Contract relating to capital expenditures in respect of the Property,
(v) enter into any other new contracts in respect of the Property or extend,
renew or cancel, consent to the assignment or any other matter in respect of or
waive any material right under any other Contract, except in the ordinary and
usual course and business and in accordance with past practices and policies
(provided any such new extended or renewed contracts must be terminable without
penalty or payment on not more than 30 days' notice), (vi) sell, transfer,
exchange, further encumber or grant interests (including easements) in the
Property or any part thereof, (vii) extend, modify or amend any of the Existing
Indebtedness Documents or borrow additional funds thereunder, (viii) hire any
employees in respect of the Property, and (ix) otherwise take any action which
could or would render inaccurate any of the representations or warranties made
by Contributor in this Agreement; (e) not convert Contributor to, or permit any
venturer of Contributor or any partner of any such venturer to become, a limited
liability entity or otherwise to limit its liability as a venturer or general
partner of Contributor or any of such venturers; and (f) otherwise operate the
Mall in the ordinary course consistent with current practice. From the date
hereof until the Closing or the earlier termination of this Agreement,
Contributor shall not sell, transfer, exchange, encumber or grant any interest
in the Property or any part thereof, permit the sale, transfer, exchange,
further encumbrance or grant of any interest in the Property, or engage in
negotiations or discussions with, or otherwise solicit or assist, any third
party relating to the acquisition by such third party of the Property.
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10.3 Supplemental Disclosure. From the date hereof through Closing,
Contributor and the Partnership shall have the continuing obligation to promptly
supplement or amend the Schedules with respect to the representations and
warranties made by each of them to reflect any matter hereafter arising or
discovered which, if existing or known at the date hereof, would have been
required to be set forth herein or described thereon (but no such
supplementation shall relieve either party from liability for any breach of its
representations and warranties as of the date made). Without limiting the
foregoing, if any Leases or Contracts, or amendments thereto, are hereafter
entered into, Contributor shall give the Partnership prompt written notice
thereof and the appropriate exhibits or schedules hereto shall be updated and
amended accordingly. In addition, if, at any time prior to the Closing Date,
Contributor should learn of any information that is necessary to correct any
statement that is or becomes incorrect in any material respect (based upon
information, including financial information, supplied by or on behalf of
Contributor) made in, or to provide material information omitted from, the
Contributor Information or the Memorandum, or if Contributor obtains knowledge
of any material event that requires disclosure in the Contributor Information or
the Memorandum, Contributor shall promptly inform the Partnership and cooperate
with the Partnership so that the Contributor and the Partnership may each
prepare a supplement to the Contributor Information and Memorandum,
respectively, if the responsible party deems that a supplement is necessary.
10.4 [Intentionally Deleted]
10.5 Cooperation. Contributor shall use reasonable best efforts to obtain
a consent of the Parties to the Contracts marked with a "1" on Schedule 6.2(m),
if any (the "Contract Party Consents"). The Partnership shall cooperate with
Contributor in seeking to obtain all approvals, consents and estoppels of third
parties required by this Agreement (but shall not be obligated to pay money or
grant concessions therefor), including any Contract Party Consents, and shall
furnish to Contributor or to any Party such information as to the Partnership,
its capabilities, its experience in the ownership and management of real
property and as to such other matters as Contributor or any Party shall
reasonably request in connection therewith.
10.6 Transfer and Other Taxes; Etc. The Partnership shall pay the real
property transfer taxes, personal property sales taxes and recording fees, if
any, imposed by the state, county or municipality as the result of the
Transactions. Each of Contributor, on the one hand, and the Partnership, on the
other hand, shall pay one-half of the costs of any escrow established in
connection with the Closing of the Transactions. Each of Contributor, on the one
hand, and the Partnership, on the other hand, shall pay the legal costs incurred
by it in connection with the Transactions.
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10.7 Estoppel Certificates. Contributor shall request, and shall use
reasonable best efforts to obtain from each Party to the Reciprocal Easement
Agreement and each Tenant or other Party under a Lease an estoppel certificate,
dated not more than thirty (30) days prior to the Closing Date, in form
reasonably acceptable to the Partnership, and an estoppel certificate, dated not
more than thirty (30) days prior to the Closing Date, from the Existing Lender
in form reasonably satisfactory to the Partnership; provided, however, that if
the Reciprocal Easement Agreement or any Lease shall, by its terms, prescribe
the form or content of an estoppel certificate, Contributor only shall be
required to attempt to obtain an estoppel certificate from the Party thereto in
the form prescribed by the relevant document and containing only such
information as is required to be delivered thereunder (the "Prescribed Form").
Contributor shall complete the missing information in such form estoppel
certificates prior to sending them to Parties or the Existing Lender, as the
case may be. The Partnership shall not be deemed to have approved any matters
disclosed in the estoppel certificates delivered to the Partnership on or prior
to the date hereof and no such disclosure shall constitute a waiver by the
Partnership of any provision hereof. Notwithstanding anything to the contrary
contained herein, Contributor shall have no liability hereunder for breaches of
representations or warranties to the extent that the facts giving rise to such
breach are disclosed in the Estoppels (but nothing contained in this sentence
shall affect or limit Contributor's liability under this Agreement to the extent
that such liability also arises under other provisions hereof).
10.8 Record Retention. After the Closing, the Partnership shall provide
Contributor with reasonable access to the Books and Records and, at
Contributor's cost, copies of all or any portion thereof (and Contributor shall
retain copies of such records as shall be necessary to enable it to comply with
its obligations contained in the last sentence of Section 10.10). The
Partnership shall retain the Books and Records until the fifth anniversary of
the date hereof or notify Contributor of its desire to dispose of the Books and
Records or any portion thereof and turn the Books and Records or such portion
thereof over to Contributor if Contributor so requests.
10.9 Publicity. In no event shall Contributor, on the one hand, or the
Partnership, on the other hand, issue any press release or otherwise disclose
any non-public information regarding this Agreement or the Transactions
(including without limitation any information contained therein) unless the
other party or parties have consented thereto in writing and to the form and
substance of any such statement or disclosure (and Contributor and the
Partnership agree not unreasonably to withhold or delay such consent); provided,
however, that nothing herein shall be deemed to limit or impair in any way any
party's ability to disclose the details of or information concerning this
Agreement, the
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Transactions or the Property to such party's attorneys, accountants or other
advisors or to the extent such party reasonably deems necessary or desirable
pursuant to any court or governmental order or applicable securities or other
laws or regulations or financial reporting requirements, to obtain the Contract
Party Consents, the consent of the Existing Lender, Estoppels or financing for
the acquisition of the Property and to assess the Property in connection with
the Partnership's due diligence examination (including without limitation
contacting Tenants and other Parties). Further, the Partnership may disclose any
information regarding this Agreement or the Transactions to its direct or
indirect constituent partners or shareholders, as the case may be (and to
counsel for such constituent partners and shareholders) and as otherwise
necessary to comply with the terms of this Agreement. Any disclosure by a
party's advisors or direct or indirect constituent partners or shareholders or
their advisors shall be deemed a breach hereof by such party. If for any reason
the Transaction is not consummated, each party promptly shall return to the
other party all originals and copies of documents, reports and financial and
other information relating to such other party and/or the Property which such
other party has furnished to such party. The provisions of this Section 10.9
shall terminate upon the Closing.
10.10 Assistance Following Closing. From and after the Closing,
Contributor, at the Partnership's sole cost and expense, shall provide
reasonable assistance to the Partnership in connection with the preparation of
financial statements, securities filings and bills, the adjustment of losses and
claims, the enforcement or settlement of any such claims or the operation of the
Property. Without limiting the foregoing and upon the request of the Partnership
from time to time, Contributor shall (a) subject to applicable law and
contractual requirements, cause the lease and property management databases
relating to the Mall to be loaded onto the computer systems of the Partnership
or its designee or provide disks containing such databases on or prior to
Closing, (b) promptly provide to the Partnership or confirm any information
concerning Contributor or the Property or the operation thereof that the
Partnership or the General Partner reasonably determines is necessary or
desirable to be included in any registration statement or periodic report of the
General Partner that is filed or to be filed under applicable securities law and
(c) promptly provide signed representation letters with respect to revenues and
expenses relating to the Mall if required under GAAS to enable the Partnership's
certified public accountants to render an opinion on the financial statements of
the Partnership. Notwithstanding anything to the contrary contained herein,
Contributor shall, at Contributor's sole cost and expense, (a) calculate and
prepare (or cause to be calculated and prepared) Tenant invoices for Adjustable
Tenant charges for any period ending prior to the Closing Date and (b)
investigate, handle and, with the approval of the Partnership (which shall not
be unreasonably withheld or delayed), settle all
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inquiries and disputes relating to such Adjustable Tenant Charges (but any and
all amounts collected shall be paid to the Partnership and, to the extent
provided in Article IV, remitted to Contributor.
10.11 Further Assurances. Each of Contributor and the Partnership agree,
at any time and from time to time after the Closing, to execute, acknowledge
where appropriate and deliver such further instruments and other documents (and
to bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intents and purposes of this Agreement; provided, however, that neither of
Contributor nor the Partnership shall be obligated, pursuant to this Section
10.11, to incur any expense of a material nature and/or to incur any material
obligations in addition to those set forth in or contemplated by this Agreement
and/or the Closing Documents.
10.12 Restrictions on Certain Dispositions of Real Property.
(a) Without the written consent of Contributor, the Partnership
shall not voluntarily sell or otherwise dispose of all or a portion of the
Real Property prior to the fifth anniversary of the Closing Date (the
"Fifth Anniversary Date") if such sale or disposition would be treated as a
"sale" or "disposition" for federal income tax purposes or if gain would
otherwise be recognized to Contributor as the result thereof.
(b) The provisions of Section 10.12(a) shall not apply to (i)
transactions, such as like-kind exchanges, which would not result in the
recognition of income or gain to the Partnership for federal income tax
purposes that would be allocable to Contributor by reason of the
application of Section 704(c) or Section 737 of the Code (but, in the event
of any disposition permitted by the preceding clause, the disposition of
any carryover basis real property or other successor real property shall be
subject to the provisions of this Section 10.12), (ii) the conveyance of
the Real Property or any part thereof to any Person in connection with a
bona fide foreclosure proceeding or deed in lieu thereof, (iii) the
conveyance of all or a portion of the Real Property to a governmental
authority in connection with an eminent domain proceeding or conveyance in
lieu thereof or (iv) the grant of an easement or right-of-way for access,
parking or utilities but not for substantial consideration. In addition,
the provisions of Section 10.12(a) shall not apply to the sale, conveyance
or disposition of the Real Property when, in the reasonable judgment of the
Partnership, dire, immediate circumstances exist as to the business of the
Partnership and the General Partner taken as a whole which require the
disposition of the Real Property and similar measures are being taken with
respect to other properties of the
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Partnership or its subsidiaries. If the Partnership shall have obtained and
provided to the Contributor or its successors an unqualified opinion of
counsel with respect to the determination of whether a particular
transaction will result in income or gain for federal income tax purposes
by Contributor or is treated as a sale or disposition of all or part of the
Real Property for federal income tax purposes (although the Partnership
shall not be required to do so), the determination set forth in such
opinion shall be deemed conclusive for purposes of this Agreement. Any
transaction prohibited pursuant to the provisions of Section 10.12(a) is
hereinafter referred to as a "Prohibited Disposition."
10.13 Debt Allocation; Etc.
(a) The Partnership shall use commercially reasonable efforts to
refinance the Existing Indebtedness with nonrecourse indebtedness provided
that the cost and other terms thereof are not substantially less favorable
than the cost and other terms of other available financing alternatives,
including without limitation the use of internally generated funds.
(b) In accordance with paragraph (3)(a) under the heading "Analysis"
in Revenue Ruling 95-41, 1995-1 C.B. 32, "excess nonrecourse liabilities"
of the Partnership shall be allocated among the partners of the Partnership
by taking into account the share of Section 704(c) built-in gain of
Contributor with respect to the Real Property to the extent such gain is
not taken into account in making an allocation of nonrecourse liabilities
to it under Treasury Regs. (S)1.752-3(a)(2). Therefore, the parties agree
that the "excess nonrecourse liabilities" allocated to the Contributor will
be an amount equal to (1) the total nonrecourse liabilities attributable to
the contributed property reduced by (2) the first and second tier
allocations pursuant to Rev. Rul. 95-41. This treatment shall not be
binding on the Partnership in the event that the Internal Revenue Service
(the "IRS") revokes, amends or modifies Rev. Rul. 95-41 or in the event
that the IRS issues guidance which indicates that Rev. Rul. 95-41 cannot be
interpreted consistently with this Section.
(c) The Partnership shall notify Contributor prior to the repayment
or refinancing of any Contributor Property Indebtedness that occurs on or
before the tenth anniversary of the date hereof, which notice shall include
a good faith estimate of the amount by which the amount of Partnership
liabilities that Contributor may include in the tax basis of its Units
pursuant to Section 1.752 of the Treasury Regulations shall be reduced as
the result thereof.
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(d) In the event that any such repayment or refinancing or any other
event occurs prior to the tenth anniversary of the Closing Date and reduces
the amount of the Partnership liabilities that Contributor may include in
the tax basis of its Units pursuant to Section 1.752 of the Treasury
Regulations, the Partnership shall, upon receipt of written notice from
Contributor, use commercially reasonable efforts to make provision for
Contributor to guaranty one or more indebtednesses of the Partnership (but,
except as provided in subsection (a) above, the Partnership shall not be
obligated to incur additional indebtedness or retain the Existing
Indebtedness or to permit such guaranties if such guaranties shall have a
material adverse tax effect on the Partnership or the other partners
thereof) so as to enable Contributor to increase its "economic risk of
loss" (within the meaning of Section 1.752-2 of the Treasury Regulations)
with respect to liabilities of the Partnership to the extent of such
reduction but minimize the economic risk of such guaranties to Contributor
to the extent practicable by guarantying the "bottom" portion. The amount
of the "bottom" guaranties given by Contributor and others (whose
obligations shall be pari passu) in respect of any indebtedness shall not
exceed fifty percent of the fair market value of the collateral for that
indebtedness at the time of such guaranty, as determined in good faith by
the Partnership. To the extent that the amount to be "bottom" guaranteed
exceeds fifty percent of the fair market value (as determined above) of the
collateral for such indebtedness at the time of such guaranty, the
Partnership shall make commercially reasonable efforts to allow Contributor
to "bottom" guaranty one or more other indebtednesses of the Partnership
upon the terms and subject to the limitations contained in the other
sentences of this subsection (d). Any such guaranties shall be in form
reasonably acceptable to Contributor and the Partnership.
(e) The Partnership shall allocate the tax items arising from the
ownership of the Real Property, including items of depreciation,
amortization and gain or loss, using the "traditional method" provided in
Treasury Regulation (S)1.704-3(b)(1). The parties hereto expressly agree
and acknowledge that, notwithstanding anything to the contrary in the
Partnership Agreement, Contributor will bear the tax detriments associated
with any precontribution gain with respect to the Real Property to the
extent and in the manner required by Treasury Regulation (S)1.704-3(b)(1),
taking into account the "ceiling rule", and that the General Partner shall
not specifically allocate any other tax items of the Partnership to "cure"
for the effects of the ceiling rule as applied to the Real Property. The
parties agree that the built-in gain with respect to the Property (as
defined in Reg. (S)1.704-3(a)(3)(ii)) shall be determined in accordance
with the provisions of Reg. (S)1.704-1(b)(2)(iv)(g)(3).
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(f) Not later than sixty days prior to the end of each calendar year
(provided Contributor has submitted to the Partnership a written request
not less than thirty days nor more than sixty days prior thereto), the
Partnership shall provide written notice to Contributor of the
Partnership's good faith estimate of the amount of liabilities that will be
allocated to Contributor for such calendar year. If the Partnership acts in
good faith in calculating such estimate and the estimate referred to in
Section 10.13(c), the Partnership shall have no liability for mistakes in
the calculation of such estimates.
10.14 Delivery of Certain Information. The Partnership shall transmit to
Contributor (a) all periodic reports or statements furnished to the public
stockholders of the General Partner simultaneously with the transmission thereof
to such public stockholders, (b) promptly following written request by
Contributor or its successors or assigns, copies of all amendments to the
Partnership Agreement and (c) promptly following written request by Contributor
or its successors or assigns (but no more frequently than once each calendar
year), a list of the names and addresses of all partners of the Partnership.
10.15 Transfer of Units; Etc.
(a) The Units issued pursuant hereto may be distributed to the
venturers of Contributor or the partners of such venturers who are
Qualified Investors (without the payment of consideration by such venturers
or partners), and the General Partner shall acknowledge that such Persons
are substituted limited partners of the Partnership. The Units may not
otherwise be conveyed to any of such partners and no other Person may own
any direct or indirect interest in Units through Contributor or any
venturer of Contributor following Closing.
(b) Except as provided in Section 10.15(a), the Units may not be
sold, pledged or otherwise transferred prior to the first anniversary of
the Closing Date.
(c) There may be no more than 25 record owners at any time hereafter
of the Units that are issued pursuant hereto and indirectly owned as of the
Closing Date by Jordon Perlmutter or Samuel Primack, a member of the
families of either of them, a trust for the benefit of any of the foregoing
Persons or a Person controlled by one or more of the foregoing Persons.
10.16 Employees. Following Closing, either the Partnership or GGMI may,
in its discretion, offer to employ any or all Property employees (who
Contributor shall cause to be terminated prior to Closing) on such terms as it
deems advisable. Contributor shall pay or cause to be paid all amounts owing to
all
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Property employees through the Closing Date and accrued vacation pay through
the Closing Date.
ARTICLE XI
Miscellaneous
11.1 Survival. The representations, warranties and agreements of
Contributor, P&P and the Partnership set forth herein and in the Closing
Documents or an Estoppel for a Missing Tenant shall survive Closing
indefinitely. Notwithstanding the foregoing, the representations and warranties
of Contributor contained herein, in the Estoppels for a Missing Tenant and in
other Closing Documents (other than the representations and warranties contained
in Sections 6.2 (a), (b), (c) and (aa)-(ah) or that relate thereto), including
the indemnification obligations of Contributor set forth in clause (i) of
Section 10.1(a) to the extent that they relate to such representations and
warranties, shall survive Closing only until the eighteen month anniversary of
the Closing Date except as to Losses of which written notice has been given
prior to such anniversary date in accordance with Section 12.2 and the other
provisions of this Agreement (but nothing contained in this sentence shall
affect or limit Contributor's liability under this Agreement to the extent that
such liability also arises under other indemnities and covenants contained
herein or in the Closing Documents).
11.2 Notices. Notices must be in writing and sent to the party to
whom or to which such notice is being sent, by certified or registered mail,
return receipt requested, commercial overnight delivery service or delivered by
hand with receipt acknowledged in writing, as follows:
(a) To the Partnership:
55 West Monroe Street, Suite 3100
Chicago, Illinois 60603
Attention: Matthew Bucksbaum
with a copy thereof to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
(b) To Contributor:
1601 Blake Street-#600
Denver, Colorado 80202
Attention: Jordon Perlmutter
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with a copy to:
Silverman & Riley
1601 Blake Street-#310
Denver, Colorado 80202
Attention: William Silverman
with a copy to:
Michael Cooper/Irving Hook
Cooper Investments
3515 S. Tamarac
Denver, Colorado 80237
with a copy to:
Samuel Primack
6825 East Tennessee Ave, #201
Denver, Colorado 80224
Except as otherwise set forth herein, all notices (a) shall be deemed given when
received or, if mailed as described above with appropriate postage, after 5
business days and (b) may be given either by a party or by such party's
attorneys. The cost of delivery shall be borne by the party delivering the
notice.
11.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single document when at least one counterpart has
been executed and delivered by each party hereto. Facsimile signatures shall be
deemed to be the equivalent of original signatures for purposes hereof.
11.4 Amendments. Except as otherwise provided herein, this Agreement
may not be changed, modified, supplemented or terminated, except by an
instrument executed by the parties hereto.
11.5 Waiver. Each party shall have the right, exercisable in its
sole and absolute discretion, but under no circumstances shall be obligated, to
waive or defer compliance by any other party with its obligations hereunder or
to waive satisfaction of any conditions contained herein for its benefit. No
waiver by any party of a breach of any covenant or a failure to satisfy any
condition shall be deemed a waiver of any other or subsequent breach or failure
to satisfy any other condition. All waivers of any term, breach or condition
hereof must be in writing.
11.6 Successors and Assigns. Subject to the provisions of Section
11.10, the terms, covenants, agreements, conditions, representations and
warranties contained in this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
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11.7 Third Party Beneficiaries. The provisions of this Agreement are
made for the benefit of the parties hereto and their respective successors in
interest and assigns and are not intended for, and may not be enforced by, any
other person or entity.
11.8 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
11.9 Governing Law. This Agreement has been made pursuant to and shall be
governed by the laws of the State of Colorado (without regard to conflicts of
law rules).
11.10 Assignment. This Agreement may not be assigned or delegated by any
party without the written consent of the other party except that the Partnership
may assign this Agreement (or any rights hereunder) to an Affiliate of the
Partnership, it being acknowledged and agreed by the Partnership that no such
assignment shall relieve the Partnership of its obligations under this
Agreement.
11.11 Headings; Exhibits. The headings of the various Articles and
Sections of this Agreement have been inserted solely for purposes of
convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
11.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include
the plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
11.13 Entire Agreement; Construction. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes any prior written or oral understandings and/or agreement among
them with respect thereto, including without limitation that certain letter of
intent dated December 24, 1997, between Contributor and the General Partner, as
amended. Each party hereto hereby acknowledges that all parties hereto
participated equally in the negotiation and drafting of this Agreement and that,
accordingly, no court construing this Agreement shall construe it more
stringently against one party than against the other.
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11.14 Costs of Enforcement. In the event that any action is brought by
any party or parties to this Agreement or any Closing Document against any other
party or parties to enforce rights under this Agreement or any Closing Document,
the prevailing party's or parties' costs in such action, including reasonable
attorneys' fees, shall be paid by the other party or parties. Any amounts owing
hereunder or thereunder which are not paid when due shall bear interest at the
per annum rate equal to the prime rate of First Chicago NBD N.A. (or any
successor), as the same may change from time to time.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto (and P&P for purposes of binding itself under Section 6.2(aa) through
(ag), Section 10.1(c) and Section 3.2(k)) on the date and year first above
written.
CONTRIBUTOR:
SOUTHWEST PROPERTIES VENTURE,
a Colorado joint venture
By: P&P SOUTHWEST PARTNERSHIP, a
Colorado general partnership,
which is a joint venturer of Southwest
Properties Venture
By: /s/ Jordon Perlmutter
----------------------------
Jordon Perlmutter
Managing General Partner
By: /s/ Samuel Primack
----------------------------
Samuel Primack
Managing General Partner
By: WADSWORTH PARTNERSHIP, a Colorado
limited partnership, which is a joint
venturer of Southwest Properties Venture
By: The Wadsworth Holding Partnership,
a Colorado general partnership,
which is the sole general partner
of The Wadsworth Partnership
By: Cooper Investments, a Colorado
general partnership, which is a
general partner of The Wadsworth
Holding Partnership
By: /s/ Michael Cooper
-------------------------
Michael Cooper
General Partner
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P&P:
P&P SOUTHWEST PARTNERSHIP, a
Colorado general partnership
By: /s/ Jordon Perlmutter
-----------------------------------
Jordon Perlmutter
Managing General Partner
By: /s/ Samuel Primack
-----------------------------------
Samuel Primack
Managing General Partner
PARTNERSHIP:
GGP LIMITED PARTNERSHIP, a
Delaware limited partnership
By: GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation, its
general partner
By: /s/ Joel Bayer
--------------------------------
Its: Senior Vice President
----------------------------
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================================================================================
THE THIRTEEN ENTITIES IDENTIFIED ON EXHIBIT A HERETO
---------
as Issuers,
LASALLE NATIONAL BANK,
as Trustee
and
MIDLAND LOAN SERVICES, L.P.,
as Servicer
____________________
INDENTURE AND SERVICING AGREEMENT
Dated and effective as of November 25, 1997
____________________
Collateralized Fixed Rate Notes due November 15, 2004
Series A-1 Fixed Rate Notes
Series B-1 Fixed Rate Notes
Series C-1 Fixed Rate Notes
Series D-1 Fixed Rate Notes
Series E-1 Fixed Rate Notes
Collateralized Fixed Rate Notes due November 15, 2007
Series A-2 Fixed Rate Notes
Series B-2 Fixed Rate Notes
Series C-2 Fixed Rate Notes
Series D-2 Fixed Rate Notes
Series E-2 Fixed Rate Notes
================================================================================
<PAGE>
TABLE OF CONTENTS
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RECITALS OF THE ISSUERS.......................................................1
GENERAL COVENANT..............................................................1
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION
SECTION 1.1 Definitions.......................................................2
SECTION 1.2 Form of Documents Delivered to Trustee...........................21
SECTION 1.3 Acts of Holders..................................................22
SECTION 1.4 Computation of Principal Amount..................................23
SECTION 1.5 Notices..........................................................23
SECTION 1.6 Notice to Holders of Notes.......................................25
SECTION 1.7 Successors and Assigns...........................................26
SECTION 1.8 Separability Clause..............................................26
SECTION 1.9 Benefits of Indenture............................................27
SECTION 1.10 Governing Law...................................................27
SECTION 1.11 Legal Holidays..................................................27
SECTION 1.12 Security Agreement..............................................28
SECTION 1.13 Third-Party Beneficiary.........................................28
SECTION 1.14 Obligations are Without Recourse................................28
SECTION 1.15 Issuer Representative...........................................30
SECTION 1.16 Execution in Counterparts.......................................31
SECTION 1.17 Consolidation and Splitting of Prior Notes......................31
ARTICLE II FORMS OF THE NOTES
SECTION 2.1 Forms Generally..................................................32
SECTION 2.2 Form of Trustee's Certificate of Authentication..................33
SECTION 2.3 Form of the Notes................................................33
SECTION 2.4 Legends..........................................................35
SECTION 2.5 Restricted Notes.................................................38
SECTION 2.6 Global Notes.....................................................38
ARTICLE III THE NOTES
SECTION 3.1 Equal and Ratable Securities; Amount; Authorization..............40
SECTION 3.2 Denominations....................................................41
SECTION 3.3 Conditions Precedent to Issuance of Notes........................41
SECTION 3.4 Execution, Authentication and Delivery of the Notes..............43
SECTION 3.5 Payment Account; Holdover Account................................44
SECTION 3.6 Registration; Paying Agent.......................................47
SECTION 3.7 Holder Lists.....................................................49
SECTION 3.8 Transfer and Exchange............................................49
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SECTION 3.9 Mutilated, Destroyed, Lost and Stolen Notes.......................56
SECTION 3.10 Interest.........................................................57
SECTION 3.11 Payment of Principal and Interest................................58
SECTION 3.12 Interest on New Notes............................................60
SECTION 3.13 Cancellation.....................................................61
SECTION 3.14 Information......................................................61
SECTION 3.15 Paying Agent to Hold Money in Trust..............................61
ARTICLE IV SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 4.1 Satisfaction and Discharge of Indenture...........................62
SECTION 4.2 Defeasance of Notes...............................................63
SECTION 4.3 Application of Trust Money........................................64
SECTION 4.4 Repayment to Issuers..............................................64
SECTION 4.5 Reinstatement.....................................................65
SECTION 4.6 Partial Release of Collateral.....................................65
ARTICLE V REMEDIES
SECTION 5.1 Events of Default.................................................66
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment................67
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee...69
SECTION 5.4 Trustee May File Proofs of Claim..................................69
SECTION 5.5 Trustee May Enforce Claims Without Possession of Notes............70
SECTION 5.6 Application of Money Collected....................................70
SECTION 5.7 Limitation on Suits...............................................73
SECTION 5.8 Unconditional Right of Holders to Receive Principal and Interest..73
SECTION 5.9 Restoration of Rights and Remedies................................74
SECTION 5.10 Rights and Remedies Cumulative...................................74
SECTION 5.11 Delay or Omission Not Waiver.....................................74
SECTION 5.12 Control by Holders...............................................74
SECTION 5.13 Waiver of Past Defaults..........................................75
SECTION 5.14 Undertaking for Costs............................................75
ARTICLE VI THE TRUSTEE
SECTION 6.1 Certain Duties and Responsibilities...............................76
SECTION 6.2 Money Held in Trust...............................................82
SECTION 6.3 Notice of Defaults................................................82
SECTION 6.4 Certain Rights of Trustee.........................................83
SECTION 6.5 Compensation and Reimbursement....................................84
SECTION 6.6 Confidentiality...................................................85
SECTION 6.7 Corporate Trustee Required; Eligibility...........................86
SECTION 6.8 Representations and Warranties of the Trustee.....................86
</TABLE>
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SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.......88
SECTION 6.10 Resignation and Removal; Appointment of Successor................88
SECTION 6.11 Acceptance of Appointment by Successor...........................89
SECTION 6.12 Conflicting Interests............................................90
SECTION 6.13 Self Dealing.....................................................90
SECTION 6.14 Investments......................................................91
SECTION 6.15 Unclaimed Funds..................................................93
SECTION 6.16 Illegal Acts.....................................................94
SECTION 6.17 Communications to be Sent to the Rating Agency, Holders and the
Initial Purchasers...............................................94
SECTION 6.18 Separate Trustees and Co-trustees................................95
SECTION 6.19 Streit Act.......................................................97
SECTION 6.20 Withholding and Information Reporting............................97
ARTICLE VII THE SERVICER
SECTION 7.1 Servicer to Act as Servicer.......................................97
SECTION 7.2 Sub-Servicing Agreements..........................................98
SECTION 7.3 Certain Duties and Responsibilities...............................99
SECTION 7.4 Payment of Impositions, etc. ....................................100
SECTION 7.5 Maintenance of Insurance and Errors and Omissions and Fidelity
Coverage.........................................................101
SECTION 7.6 Collection Account...............................................102
SECTION 7.7 Realization upon Mortgaged Property..............................104
SECTION 7.8 Trustee to Cooperate; Release of Original Security Documents.....106
SECTION 7.9 Title and Management of Foreclosed Property......................107
SECTION 7.10 Sale of Foreclosed Property.....................................108
SECTION 7.11 Servicing Compensation..........................................110
SECTION 7.12 Reports to the Trustee; Statements to the Issuer................110
SECTION 7.13 Annual Statement as to Compliance...............................111
SECTION 7.14 Annual Independent Public Accountants' Servicing Report.........111
SECTION 7.15 Access to Certain Documentation Regarding the Loan..............112
SECTION 7.16 Inspections.....................................................112
SECTION 7.17 Advances........................................................112
SECTION 7.18 Rights of the Issuers with Respect to the Servicer..............114
SECTION 7.19 Limitation on the Liability of the Servicer and Others..........115
SECTION 7.20 Servicer Not to Resign; Termination of Servicer by Holders......117
SECTION 7.21 Merger or Consolidation of the Servicer.........................118
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SECTION 7.22 Servicer Default................................................119
SECTION 7.23 Remedies of Trustee.............................................121
SECTION 7.24 Directions by Holders and Duties of Trustee During Servicer
Default.........................................................122
SECTION 7.25 Trustee to Act as Servicer; Appointment of Successor............122
SECTION 7.26 Notification to Holders.........................................124
SECTION 7.27 Waiver of Past Events of Default................................124
SECTION 7.28 Representations and Warranties of the Servicer..................124
ARTICLE VIII THE ISSUERS
SECTION 8.1 Reports by the Issuers...........................................126
SECTION 8.2 Representations and Warranties of the Issuers....................126
ARTICLE IX SUPPLEMENTAL INDENTURES; AMENDMENTS
SECTION 9.1 Supplemental Indentures or Amendments Without Consent of Holders.128
SECTION 9.2 Supplemental Indentures With Consent of Holders..................130
SECTION 9.3 Delivery of Supplements..........................................131
SECTION 9.4 Opinion of Counsel...............................................131
ARTICLE X COVENANTS; WARRANTIES
SECTION 10.1 Payment of Principal and Interest...............................132
SECTION 10.2 Maintenance of Office or Agency.................................132
SECTION 10.3 Paying Agents; Transfer Agent; Money for Note Payments to be
Held in Trust...................................................132
SECTION 10.4 Withholding; Payment of Additional Amounts......................133
SECTION 10.5 Corporate Existence.............................................135
SECTION 10.6 Payment of Taxes and Other Claims...............................136
SECTION 10.7 Maintenance of Lien and Recording...............................136
SECTION 10.8 Performance and Enforcement.....................................137
SECTION 10.9 Negative Covenants..............................................137
SECTION 10.10 Statement as to Compliance.....................................138
SECTION 10.11 Notices to Rating Agency.......................................138
SECTION 10.12 Resale of Certain Securities...................................138
SECTION 10.13 Completion of Capital/Environmental Items......................139
ARTICLE XI REDEMPTION OF NOTES
SECTION 11.1 Applicability of Article........................................139
SECTION 11.2 Election to Redeem; Notice to Trustee...........................141
SECTION 11.3 Selection by Trustee of Notes to be Redeemed....................142
SECTION 11.4 Notice of Redemption............................................143
SECTION 11.5 Deposit of Redemption Price.....................................144
SECTION 11.6 Notes Payable on Redemption Date................................144
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SECTION 11.7 Notes Redeemed in Part..........................................144
ARTICLE XII LIQUIDATION OF COLLATERAL
ARTICLE XIII MEETINGS OF HOLDERS OF NOTES
SECTION 13.1 Purposes for Which Meetings May Be Called.......................145
SECTION 13.2 Call, Notice and Place of Meetings..............................145
SECTION 13.3 Persons Entitled to Vote at Meetings............................146
SECTION 13.4 Quorum; Action..................................................146
SECTION 13.5 Determination of Voting Rights; Conduct and Adjournment of
Meetings........................................................147
SECTION 13.6 Counting Votes and Recording Action of Meetings.................148
</TABLE>
ARTICLE XIV ASSUMPTION OF OBLIGATIONS UNDER THE NOTES
EXHIBITS
Exhibit A Issuers/Shopping Centers
Exhibit A-1 Schedule of Issuer Affiliates
Exhibit B Form of Note
Exhibit C-1 Owner Securities Certification
Exhibit C-2 Depositary Securities Certification
Exhibit C-3 Transferee Securities Certification
Exhibit C-4 Form of Certification for Transfer or Exchange of Restricted Note
to Global Note
Exhibit C-5 Form of Certification for Transfer or Exchange of Restricted Global
Note to Regulation S Temporary Global Note
Exhibit C-6 Form of Certification for Transfer or Exchange of Restricted Global
Note to Unrestricted Global Note
Exhibit C-7 Form of Instruction for Exchange; Exchange Instructions
Exhibit C-8 Transferee Certification
Exhibit D Form of Certification Requesting Documentation Pursuant to
Agreement Section 6.17
Exhibit E Authorized Persons
Exhibit F Request for Release of Documents
Exhibit G Deferred Maintenance and Other Capital and Environmental Items
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INDENTURE AND SERVICING AGREEMENT, dated and effective as of November 25,
1997 (this "Indenture"), among THE THIRTEEN ENTITIES IDENTIFIED ON EXHIBIT A
HERETO, each having an address c/o GGP Limited Partnership, 55 West Monroe
Street, Suite 3100, Chicago, Illinois 60603, Attention: Mr. Bernard Freibaum,
LaSalle National Bank, a nationally chartered bank, as trustee (defined herein,
together with its successors and any separate or co-trustee appointed pursuant
to Section 6.18, as the "Trustee"), having an address at 135 South LaSalle
Street, Chicago, Illinois 60603, Attention: Asset-Backed Securities Trust
Services: General Growth Properties, and Midland Loan Services, L.P., a Missouri
limited partnership, having an address at 210 West 10th Street, 6th Floor,
Kansas City, Missouri 64105, Attention: Alan L. Atterbury (defined herein as the
"Servicer").
RECITALS OF THE ISSUERS
The Issuers have duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of their notes or other
evidences of indebtedness (herein individually called a "Note" and collectively
called the "Notes") to be issued as provided in this Indenture in the form of
Collateralized Fixed Rate Notes due November 15, 2004 and Collateralized Fixed
Rate Notes due November 15, 2007 in an aggregate principal amount of up to
$560,000,000 and in such additional forms as may be permitted hereunder.
All things necessary to make the Notes, when executed by each Issuer and
authenticated and delivered by the Trustee hereunder and duly issued by each
Issuer, the valid and legally binding obligations of each Issuer enforceable in
accordance with their terms, and to make this Indenture a valid and legally
binding agreement of each Issuer, the Servicer and the Trustee enforceable in
accordance with its terms, except in each case as such enforcement may be
limited by bankruptcy, fraudulent conveyance or transfer, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law), have been done.
GENERAL COVENANT
IT IS HEREBY COVENANTED AND DECLARED that the Notes are to be
authenticated and delivered by the Trustee (or any Authenticating Agent), and
the Collateral is to be held and applied by the Trustee, subject to the further
covenants, conditions and trusts hereinafter set forth, and each Issuer does
hereby represent and warrant, and covenant and agree, to and with the Trustee,
for the equal and proportionate benefit and security of the Trustee for the
benefit of the Holders of the Notes as follows:
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
1.1 SECTION 1.1 Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles in the United States of America;
(c) the word "including" shall be construed to be followed by the words
"without limitation";
(d) Section headings are for the convenience of the reader and shall not
be considered in interpreting this Indenture or the intent of the parties
hereto;
(e) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(f) the words "immediately available funds" shall have the same meaning as
"same day funds" when used herein.
2004 Fixed Rate Notes means the Collateralized Fixed Rate Notes due
November 15, 2004 issuable hereunder, which are designated as Series A-1 Fixed
Rate Notes, Series B-1 Fixed Rate Notes, Series C-1 Fixed Rate Notes, Series D-1
Fixed Rate Notes and Series E-1 Fixed Rate Notes.
2007 Fixed Rate Notes means the Collateralized Fixed Rate Notes due
November 15, 2007 issuable hereunder, which are designated as Series A-2 Fixed
Rate Notes, Series B-2 Fixed Rate Notes, Series C-2 Fixed Rate Notes, Series D-2
Fixed Rate Notes and Series E-2 Fixed Rate Notes.
Acceleration means that the principal of and interest on the Notes shall
become and thereafter be immediately due and payable in full in accordance with
their respective terms and the terms of this Indenture, whether automatically or
by action of the Servicer, the Trustee or the Holders.
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Accepted Servicing Practices has the meaning stated in Section 7.1.
Act has the meaning stated in Section 1.3.
Additional Amounts has the meaning stated in Section 10.4(b).
Additional Notes means any Notes (including any Global Notes) representing
obligations of the Issuers that are secured by the Collateral and are issued
pursuant to a supplemental indenture hereto as set forth in Section 9.1(6).
Advance means any Interest Advance or Carrying Cost Advance.
Advance Interest Rate has the meaning stated in Section 7.17(c).
Affiliate means a Person or Persons, directly or indirectly, through one or
more intermediaries, controlling, controlled by or under common control with the
Person or Persons in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled Person.
Agent means any Registrar, Paying Agent or Transfer Agent.
Agent Members has the meaning stated in Section 2.6(e).
Allocated Amount has the meaning stated in the Mortgage.
Applicable Procedures has the meaning stated in Section 3.8(d)(iii).
Assignment of Leases has the meaning stated in the Mortgage.
Assignment of Contracts has the meaning stated in the Mortgage.
Authenticating Agent means the Trustee and/or any Person authorized by
the Trustee to act on behalf of the Trustee to authenticate and deliver the
Notes. Written notice of such authorization shall be transmitted to the Issuers
by the Trustee in a timely manner.
Authorized Newspaper means, so long as the Notes are listed on a securities
exchange and the rules of such exchange so require, a newspaper published in the
city in which such securities exchange is located; provided, however, that for
so long as the Notes are listed on the Bourse de Luxembourg, "Authorized
Newspaper" shall include the
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Luxembourg Wort (subject to the next sentence). If, because of temporary or
permanent suspension of publication or general circulation of any newspaper or
for any other reason, it is impossible or, in the opinion of the Trustee,
impracticable to make reasonable publication of any notice required herein in a
newspaper published in the city in which the securities exchange is located,
"Authorized Newspaper" shall mean any publication in an English language
newspaper of general circulation in Europe.
Authorized Person, when used with respect to an Issuer, has the meaning
stated in Section 3.4 and, when used with respect to the Servicer, means a
Servicing Officer.
Basic Carrying Costs means the sum of the following costs with respect to
the Mortgaged Properties (computed on a monthly basis): (i) Impositions, (ii)
insurance premiums, (iii) all ground rent and other charges due by any of the
Issuers pursuant to any lease or Operating Agreement relating to any Mortgaged
Property, (iv) the fees payable to the Servicer under the Servicer Fee Agreement
and the fees payable to the Trustee under the Trustee Fee Agreement, (v) the
costs and expenses of the Servicer (including, without limitation, reasonable
attorneys' fees and expenses) incurred in connection with a release of a
Mortgaged Property or any portion thereof from the lien of the Mortgage and any
other Security Documents and (vi) all other costs and expenses reimbursable by
any Issuer to the Trustee and the Servicer pursuant to this Indenture.
Board of Directors means, with respect to each Issuer, the board of
directors of the entity identified on Exhibit A-1 for such Issuer, or, to the
extent such board of directors has authorized any committee thereof such
committee.
Board Resolution means, with respect to each Issuer, a copy of a resolution
certified by the Secretary or an Assistant Secretary of the entity identified on
Exhibit A-1 for such Issuer or, in the case of a transferee Issuer, the direct
or indirect owner of such transferee Issuer having a comparable relationship to
such Issuer, to have been duly adopted by the Board of Directors of such Issuer
and to be in full force and effect on the date of such certification.
Business Day means, any day (i) other than a Saturday or a Sunday or (ii)
other than a day on which banking institutions are authorized or required by
law, regulation or executive order to close in New York, New York and in the
city in which the Corporate Trust Office then is located.
Carrying Cost Advance means, subject to the next succeeding sentence, (A)
all customary, reasonable and necessary "out of pocket" costs and expenses
incurred by the Servicer in the performance of its servicing obligations,
including, but not limited to, costs and expenses incurred in connection with
(i) the operation, preservation, restoration and protection of any of the
Mortgaged Properties which, in the Servicer's judgment and discretion, are
necessary to prevent an immediate or material loss to the Holders' interest in
such Mortgaged Property, (ii) the payment of Basic Carrying Costs and any other
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amounts necessary to preserve the priority of the liens created by the Mortgage
and the other Security Documents, if unpaid by the Issuers, (iii) any
enforcement, foreclosure or other judicial proceedings, including, but not
limited to, court costs, reasonable attorneys' fees and expenses, and costs for
environmental and engineering consultants and any other third-party experts, and
(iv) the management and liquidation of any of the Mortgaged Properties if any of
the Mortgaged Properties are acquired in full or partial satisfaction of the
Secured Obligations, including Liquidation Expenses, and (B) to the extent not
covered by clause (A) above, all costs and expenses incurred by the Servicer for
any deferred maintenance with respect to a Mortgaged Property which has not been
completed at the time the Servicer, in the name of the Trustee, for the benefit
of the Holders, takes possession of such Mortgaged Property by foreclosure or
otherwise. In no event shall the term "Carrying Cost Advance" include (a) any
principal due on the Notes, (b) any loss due to an Uninsured Cause, (c) amounts
disbursed to pay capital improvements to any Mortgaged Property, other than
those necessary to prevent an immediate or material loss to the Holders'
interest in the Mortgaged Properties or as otherwise described in clause (B)
above with respect to deferred maintenance or (d) any amounts required to cure a
failure of any of the Mortgaged Properties to comply with any applicable
Environmental Law, or (except in connection with the foreclosure or other
acquisition of a Mortgaged Property upon the occurrence of an Event of Default)
to investigate, test, monitor, contain, clean-up or remedy an environmental
condition present at any of the Mortgaged Properties.
Cash means coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
Casualty Account has the meaning stated in Section 10.8(b).
CEDEL means Cedel Bank, societe anonyme.
CERCLA means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
Class means the Notes of any two series having the same initial letter
designation. For example, all Notes designated as Series A-1 Fixed Rate Notes
and Series A-2 Fixed Rate Notes belong to the same Class (i.e. "Class A").
Class A Notes means the Series A-1 Notes and the Series A-2 Notes,
collectively.
Class B Notes means the Series B-1 Notes and the Series B-2 Notes,
collectively.
Class C Notes means the Series C-1 Notes and the Series C-2 Notes,
collectively.
Class D Notes means the Series D-1 Notes and the Series D-2 Notes,
collectively.
Class E Notes means the Series E-1 Notes and the Series E-2 Notes,
collectively.
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Closing Date means November 25, 1997.
Code means the United States Internal Revenue Code of 1986, as amended, and
applicable Treasury Department regulations thereunder.
Collateral means the Security Documents and all monies, accounts,
instruments and other property (other than the proceeds of the issuance of the
Notes), including the interest of the Trustee in the Mortgaged Properties as
mortgagee or beneficiary under the Security Documents (including, without
limitation, all rent, revenues, issues, Proceeds, profits, security and other
monies payable or receivable thereunder or with respect thereto and the after-
acquired property clauses thereof) subject or intended to be subject to this
Indenture or constituting a part of the security for the Holders of the Notes
for the performance by each Issuer of its obligations thereunder or hereunder as
of any particular time, and the proceeds of the foregoing, or evidenced and
assigned to the Trustee after the date hereof (whether by the Issuers or any
other Person) and all amounts in the Payment Account and any other property that
is conveyed to the Trustee in trust for the benefit of the Holders of the Notes.
Collateral Value means as of any date with respect to Eligible Investments
theretofore delivered to the Trustee, the aggregate amount of payments of
principal of U.S. Government Securities and Debt Securities and the
predetermined and certain income therefrom that will be paid or payable to the
Trustee on or before the Business Day prior to each day on which payments are
due on the obligations in respect of which such Eligible Investments were
delivered, without consideration of any reinvestment of such income, plus the
face amount of any Cash, all as certified in writing to the Trustee by a
recognized and reputable independent certified public accounting firm or
investment banking firm selected by the Issuers (unless reasonably disapproved
by the Trustee).
Collection Account has the meaning stated in Section 7.6.
Confidential Information has the meaning stated in Section 6.6.
Corporate Trust Office means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
as of the Closing Date is 135 South LaSalle Street, Chicago, Illinois 60603,
Attention: Asset-Backed Securities Trust Services: General Growth Properties,
and, with respect to presentations of the Notes, the New York presenting office
of the Trustee shall be IBJ Schroder Trust Bank Stock Transfer Department, One
State Street Plaza, New York, New York 10015 for the account of LaSalle National
Bank, ABS Trust Services Group.
Custodian means LaSalle National Bank, and any successor custodian, as
custodian of the Global Notes for DTC under custody agreements, or any similar
successor agreement or agreements.
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Debt Securities means debt obligations, other than U.S. Government
Securities, of any Person, whether evidenced by bonds, notes, debentures,
certificates, book entry deposits, certificates of deposit, commercial paper,
bankers acceptances, reinvestment letters, funding agreements or other
instruments, which (x) are not subject to prepayment or redemption prior to
maturity and (y) are rated not less than the then Required Rating; or any
combination of the foregoing.
Debt Service Coverage Ratio has the meaning stated in the Mortgage.
Debt Service Reports means, with respect to the most recently completed
quarter and calendar year, reports, prepared by the Servicer within thirty (30)
days after the receipt from the Issuers of the financial reports to be delivered
by them under Section 18 of the Mortgage for such quarter or year, providing (a)
the debt service owed and paid by the Issuers on the Notes for the relevant
period (in the aggregate and broken out by Series), (b) the average principal
amount of the Notes outstanding during the relevant period (in the aggregate and
broken out by Series), (c) the aggregate Debt Service Coverage Ratio for the
relevant period and (d) a schedule identifying each of the Mortgaged Properties,
if any, that has been released from (or encumbered by) the lien of the Mortgage
since the Closing Date.
Default Interest has the meaning stated in Section 3.11(b).
Default Rate has the meaning stated in Section 3.11(b).
Defeasance Portion has the meaning stated in Section 4.2.
Defeasance Property has the meaning stated in Section 4.2.
Depositary means, with respect to the Global Notes, DTC or such other
Person as shall be designated as Depositary by the Issuers pursuant to Section
2.6(a) of this Indenture.
Depositary Securities Certification has the meaning stated in Section
2.3(b)(ii).
Dollars, U.S.$ and $ mean such coin or currency of the United States
as, at the time, shall be legal tender for the payment of public or private
debts.
DTC means The Depository Trust Company, a New York corporation.
Eligible Account means either (i) an account or accounts maintained with a
federal or state-chartered depository institution or trust company which
complies with the definition of Eligible Institution (as defined below) or (ii)
a segregated trust account or accounts maintained with the corporate trust
department of a federal depository institution or state-chartered depository
institution subject to regulations regarding fiduciary funds on deposit similar
to Title 12 of the Code of Federal Regulations Section 9.10(b) which, in
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either case, has corporate trust powers, acting in its fiduciary capacity. No
Eligible Account shall be evidenced by a certificate of deposit, passbook or
other instrument. Each Eligible Account (x) shall be a separate and identifiable
account from all other funds held by the holding institution, (y) shall be
established and maintained in the name of the Trustee (and shall bear a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Holders of the Notes), and (z) shall be under the sole dominion
and control of the Trustee or the Servicer, as applicable, and should contain
only funds held for its benefit. With respect to clause (i) above, if at any
time the rating assigned by the Rating Agency to the depository institution at
which any Eligible Account is held falls below the lowest rating permitted in
the definition of "Eligible Institution", the Trustee or the Servicer, as
applicable, shall move any amounts held by it in such account to another
Eligible Account within thirty (30) days of the date the Trustee or Servicer, as
applicable, first learns of the downgrading of such Eligible Institution.
Eligible Institution means an institution whose (i) commercial paper,
short-term debt obligations or other short-term deposits are rated at least
"P-1" (or the equivalent) by the Rating Agency, if the deposits are to be held
in the account for less than 35 days, or (ii) long-term senior unsecured debt
obligations are rated at least "Aa3" (or the equivalent) by the Rating Agency,
if the deposits are to be held in the account for more than 30 days. Following a
rating downgrade, withdrawal, qualification or suspension of any such
institution's rating, each account with that institution must promptly (and in
any case within not more than 30 calendar days) be moved to a qualifying
institution or to one or more segregated trust accounts in the trust department
of such institution, if permitted.
Eligible Investments has the meaning stated in Section 6.14.
Environmental Indemnity has the meaning stated in the Mortgage.
Environmental Laws has the meaning stated in the Mortgage.
Euroclear means Morgan Guaranty Trust Company of New York, Brussels Office,
as operator of the Euroclear System.
Event of Default has the meaning stated in Section 5.1.
Exchange Act means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute thereto.
Exculpated Persons has the meaning stated in Section 1.14(a).
Excusable Delay has the meaning stated in the Mortgage.
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FHLMC means Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
First Interest Period means the period commencing on the Closing Date and
ending on but excluding the first Interest Payment Date.
Fixed Rate Notes means the 2004 Fixed Rate Notes together with the 2007
Fixed Rate Notes.
FNMA means Federal National Mortgage Association, a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act or any successor thereto.
Foreclosed Property means any Mortgaged Property if acquired by the
Servicer in the name of the Trustee for the benefit of the Holders by
foreclosure or acceptance of a deed in lieu of foreclosure or otherwise.
Foreclosure Proceeds means proceeds, net of any related expenses of the
Servicer or the Trustee, received in respect of any Foreclosed Property
(including, without limitation, proceeds from the rental of such Foreclosed
Property) prior to the final liquidation of the Foreclosed Property.
General Growth means General Growth Properties, Inc., a Delaware
corporation, and its successors and assigns.
GGP means GGP Limited Partnership, a Delaware limited partnership, and its
successors and assigns.
Global Note means any Regulation S Temporary Global Note, any Restricted
Global Note or any Unrestricted Global Note, as the case may be, and Global
Notes means any two or more of such Notes.
Hazardous Substances has the meaning stated in the Mortgage.
Holder means, with respect to any Note, the Person in whose name such Note
is registered in the Register.
Holdover Account has the meaning stated in Section 3.5(d).
Impositions has the meaning stated in the Mortgage.
Independent when used with respect to any specified Person means such a
Person who (i) does not have any direct financial interest or any material
indirect financial interest
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in any Issuer, the Trustee or the Servicer or in any of their respective
Affiliates and (ii) is not connected with any Issuer, the Trustee or the
Servicer or any of their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
Indenture has the meaning stated in the introductory paragraph hereto.
Initial Purchasers means Goldman, Sachs & Co., a Delaware limited
partnership, and Goldman Sachs International, a company organized under the laws
of the United Kingdom.
Insurance Proceeds has the meaning stated in the Mortgage.
Interest Advance means, with respect to any Servicer Advance Date, an
advance of interest with respect to the Notes equal to the Interest Advance
Amount.
Interest Advance Amount means, with respect to any Interest Payment Date,
an amount equal to the amount of interest that was to have been deposited by the
Issuers in the Payment Account for payment to Holders on such Interest Payment
Date (but excluding any Default Interest in excess of the regular non default
interest payable on the Notes and excluding Additional Amounts), less any
amounts then already on deposit in the Payment Account.
Interest Installment means an installment of interest payable with respect
to any Note issued hereunder in accordance with the terms of this Indenture.
Interest Payment Date means, with respect to the Notes, the fifteenth
(15th) day of each calendar month beginning in December 1997, except as
otherwise provided in Section 1.11 hereof.
Interest Period means, with respect to the Notes, (i) the period beginning
on (and including) the Closing Date and ending on (but excluding) the first
Interest Payment Date and (ii) each successive period beginning on (and
including) the preceding Interest Payment Date and ending on (but excluding) the
next succeeding Interest Payment Date.
Interested Person means, as of any date of determination, each Issuer, the
Servicer, the Manager, the Trustee and any Holder, or, in each such case, any of
their respective Affiliates.
Investment Grade means having a long term unsecured debt rating (or, with
respect to the providers of insurance, claims paying ability rating) not lower
than Baa3 (or its equivalent) by the Rating Agency.
Issuer means any one or more of the Issuers or all Issuers taken together,
as the context may require.
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Issuer Action has the meaning stated in Section 1.15.
Issuer Representative has the meaning stated in Section 1.15.
Issuer Request or Issuer Order means a written request or order signed in
the name of any Issuer by any Authorized Person.
Issuers means, collectively, the thirteen entities described in Exhibit A,
and any permitted successors or assigns thereto permitted hereunder and under
the terms of the other Security Documents.
Ivanhoe Entities has the meaning stated in the Mortgage.
Lease has the meaning stated in the Mortgage.
Liquidated Mortgaged Property means a Mortgaged Property that has been
liquidated and, with respect to which the Servicer, has determined that all
amounts which it expects to recover from or on account of such Mortgaged
Property have been recovered.
Liquidation Expenses means reasonable and customary expenses (other than
expenses actually covered by insurance and reimbursed by the insurer to the
Servicer or the Trustee) incurred by the Servicer or the Trustee in connection
with the liquidation of a Mortgaged Property, such expenses including, without
limitation, legal fees and expenses, appraisal fees, the costs of any
environmental reports, receivership fees, brokerage fees, trustee and co trustee
fees, if any, fees and expenses in connection with the maintenance and
preservation of such Mortgaged Property, any unreimbursed amount expended by the
Servicer and any unreimbursed expenditures for Basic Carrying Costs or for
property restoration or preservation relating to such Mortgaged Property.
Liquidation Expenses shall not include any expenses actually incurred by the
Trustee or the Servicer that were subsequently reimbursed to the Servicer or the
Trustee or that were netted against income from the Foreclosed Property and were
considered in the calculation of the amount of Foreclosure Proceeds pursuant to
the definition thereof.
Liquidation Proceeds means amounts received by the Servicer in connection
with the liquidation of a Mortgaged Property, whether through judicial
foreclosure, sale or otherwise, other than amounts required to be paid to any
Issuer pursuant to law or the terms of this Indenture or the other Security
Documents.
Loan means the indebtedness evidenced by the Notes and secured by the
Mortgage and the other Security Documents.
Make Whole Payment means, with respect to any Fixed Rate Note being prepaid
hereunder in whole or in part, the excess, if any, of (i) the sum of (A) the
aggregate respective present values of all scheduled interest payments in
respect of such Fixed Rate
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Note (or the portion of all such interest payments corresponding to the portion
of such Fixed Rate Note to be prepaid or redeemed) for the period from the date
of such prepayment or acceleration to the applicable Scheduled Maturity Date,
discounted monthly at a rate equal to the Treasury Constant Yield and based on a
360-day year of twelve 30-day months and (B) the present value of the then
current outstanding principal amount of such Fixed Rate Note (or the then unpaid
portion thereof to be prepaid or accelerated) were such amount paid in full on
the applicable Scheduled Maturity Date, discounted monthly at a rate equal to
the Treasury Constant Yield and based on a 360-day year of twelve 30-day months
over (ii) the then current outstanding principal amount of such Fixed Rate Note
(or the then unpaid portion thereof to be prepaid or accelerated). The
calculation of a Make-Whole Amount shall be made by the Trustee and shall,
absent manifest error, be final, conclusive and binding upon the Issuers and the
Holders. As used in this definition, the Treasury Constant Yield means, with
respect to each Series of Fixed Rate Notes, the sum of the Make-Whole Spread
applicable to such Series plus the arithmetic mean of the monthly equivalents of
the rates published as "Treasury Constant Maturities" as of 5:00 p.m., New York
time, for the five Business Days preceding the date on which acceleration has
been declared or the five Business Days preceding the date on which notice of
prepayment shall be furnished to the Trustee and the Servicer by the Issuers
pursuant to Section 11.2, as shown on the USD screen of the Telerate service or,
if such service is not available, the Bloomberg service, or if neither the
Telerate nor the Bloomberg service is available, under Section 504 in the weekly
statistical release designated H.15(519) (or any successor publication)
published by the Board of Governors of the Federal Reserve System, for "On the
Run" U.S. Treasury obligations corresponding to the remaining life to the
applicable Scheduled Maturity Date; if no such maturity shall so exactly
correspond, yields for the two most closely corresponding published maturities
shall be calculated pursuant to the foregoing sentence and the Treasury Constant
Yield shall be interpolated or extrapolated (as applicable) from such yields on
a straight-line basis (rounding, in the case of relevant periods, to the nearest
month). If the Make-Whole Payment as calculated pursuant to the above provisions
of this definition would not be a positive number, the Make-Whole Payment is
zero. The Make-Whole Payment, if any, to be paid in connection with any
prepayment, shall be determined by the Trustee and written notice of the amount
thereof shall be furnished to the Issuers and the Servicer by the Trustee five
(5) Business Days prior to the date fixed for such prepayment or redemption or,
in the case of an acceleration, promptly after such acceleration.
Make-Whole Spread means, with respect to each Series as follows:
<TABLE>
<CAPTION>
Make-Whole
Series Spread
------ ----------
<S> <C>
Series A-1/A-2 .15%
Series B-1/B-2 .25%
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Series C-1/C-2 .35%
Series D-1/D-2 .50%
Series E-1/E-2 .60%
</TABLE>
Management Fee means, as to any Foreclosed Property, a fee payable out of
the Collateral to the Manager for managing such property while it is owned by or
on behalf of the Trustee, which shall be reasonable and customary in the market
in which such Foreclosed Property is located.
Manager has the meaning stated in Section 7.9(a).
Maturity means, with respect to any of the Notes, the date on which the
principal of such Notes shall become due and payable as herein provided, whether
at the Scheduled Maturity Date, or by acceleration, call for redemption or
otherwise.
Maturity Date means, with respect to any Notes, the date on which the
principal of such Notes shall become due and payable as herein provided, whether
at the Scheduled Maturity Date, as applicable, or by acceleration, call for
redemption or otherwise.
Mortgage means that certain Mortgage, Deed of Trust, Security Agreement,
Assignment of Leases and Rents, Fixture Filing and Financing Statement, dated as
of the date hereof, among the Issuers, First American Title Insurance Company,
as deed trustee solely with respect to the Mortgaged Property located in the
State of California, Robert Meckfessel, as deed trustee solely with respect to
the Mortgaged Property located in the State of Missouri, First American Title
Insurance Company, as deed trustee solely with respect to the Mortgaged Property
located in the State of Nebraska, and the Trustee, granting the Trustee, for the
benefit of the Holders, first priority mortgage liens on each Issuer's interests
in the Mortgaged Properties, as the same may be amended or supplemented from
time to time.
Mortgaged Properties means the Issuers' respective fee, leasehold (where
applicable) and other ownership interests in the shopping center properties
known as Colony Square Mall, Columbia Mall, Fallbrook Square Mall, Fox River
Shopping Center, Lockport Mall, Market Place Shopping Center, Rio West Mall,
River Hills Mall, Sooner Fashion Mall, Southlake Mall, The Oaks Mall, Westroads
Mall and Westwood Mall, which have been pledged to the Trustee for the benefit
of the Holders pursuant to the Mortgage.
Mortgagee has the meaning stated in the Mortgage.
Mortgagor has the meaning stated in the Mortgage.
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Mortgagors has the meaning stated in the Mortgage.
New Note has the meaning stated in Section 3.9.
Nonrecoverable Advance means any portion of an Advance proposed to be made
or previously made which has not been previously reimbursed to the Servicer or
the Trustee, as applicable, and which, in the good faith business judgment of
the Servicer or the Trustee, as applicable, will not or, in the case of a
proposed Advance, would not be ultimately recoverable from late payments,
Insurance Proceeds, Liquidation Proceeds and other collections on or in respect
of the Secured Obligations. The judgment or determination by the Servicer or the
Trustee, as applicable, that it has made a Nonrecoverable Advance or that any
proposed Advance, if made, would constitute a Nonrecoverable Advance shall be
evidenced, in the case of the Servicer, by a certificate of a Servicing Officer
delivered to the Trustee and the Issuers, and, in the case of the Trustee, by a
certificate of a Responsible Officer of the Trustee delivered to the Issuers,
which in each case sets forth such judgment or determination and the procedures
and considerations of the Servicer or Trustee, as applicable, forming the basis
of such determination (including, but not limited to information selected by the
Person making such judgment or determination in its good faith discretion, such
as related income and expense statements, rent rolls, occupancy status, property
inspection reports, the written responses to any Servicer or Trustee inquiries
and third party engineering and environmental reports). Notwithstanding the
above, the Trustee shall be entitled to rely upon any determination by the
Servicer that any Advance previously made is a Nonrecoverable Advance or that
any proposed Advance would, if made, constitute a Nonrecoverable Advance.
Note means any physical note issued hereunder, including, without
limitation, each Global Note; provided, however, that with respect to any Global
Note, the term "Note" also includes, when appropriate within the context of any
Section of this Indenture, any interest in such Global Note in the authorized
denomination as provided herein of any Person as shown on the records of
Euroclear, CEDEL or the Depositary.
Offering Circular has the meaning stated in Section 3.3(g).
Officer's Certificate means a certificate signed on behalf of each
applicable Issuer by an Authorized Person.
Operating Agreements has the meaning stated in the Mortgage.
Opinion of Counsel means, when required to be delivered by any Issuer, a
written opinion of counsel selected by such Issuer, which shall be delivered at
the expense of such Issuer, and when required to be delivered by any other
Person, a written opinion of counsel reasonably acceptable to the Trustee and to
any other party hereto to whom such opinion is to be delivered pursuant to the
applicable terms of this Indenture, who may be regular counsel to such Person.
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Outstanding, when used with respect to the Notes, means, as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture (including, as of such date, all Notes represented by Global Notes
authenticated and delivered under this Indenture), except the reduced portion or
portions of any Global Note, as such reduction or reductions shall have been
endorsed on such Global Note by the Trustee as provided herein and except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation (other than any Note as to which any amount that
has become due and payable in respect thereof has not been paid in full);
(ii) Notes for the payment or redemption of which Cash and/or
Eligible Investments in the necessary amount have been deposited with the
Trustee in trust for the Holders of such Notes in accordance with this
Indenture; provided that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, other than any such
Notes in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser in whose
hands such Notes are valid obligations of the Issuer;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes are present at a meeting of Holders
for quorum purposes or have given any request, demand, authorization, vote,
direction, notice, consent or waiver hereunder, any Notes owned by any Issuer,
or any Affiliate of any Issuer, shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, vote, direction,
notice, consent or waiver or upon any such determination as to the presence of a
quorum, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the sole satisfaction of
the Trustee the pledgee's right to act with respect to such Notes and that the
pledgee is not an Issuer, or an Affiliate of any Issuer.
Owner Securities Certification has the meaning stated in Section
2.3(b)(ii).
Paying Agent means any Person authorized by the Issuers pursuant to Section
3.6(b) hereof to pay the principal of and interest on any Notes on behalf of the
Issuers, and shall include the Principal Paying Agent unless otherwise
specified.
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Payment Account means the segregated trust account or accounts established
by the Trustee pursuant to Section 3.5.
Permitted Exceptions has, with respect to each Mortgaged Property, the
meaning stated in the Mortgage.
Person means any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
Predecessor Note of any particular Note means every previous Note
evidencing all or a portion of the same indebtedness as that evidenced by such
particular Note.
Principal Paying Agent means the Trustee, until replaced in accordance with
Section 3.6(b), and thereafter shall mean such successor.
Prior Advances means, as of any date, all unreimbursed Advances and all
accrued but unpaid interest thereon at the Advance Interest Rate.
Proceeds has the meaning stated in the Mortgage.
Purchase Agreement means the Purchase Agreement, dated as of November 20,
1997, among GGP, each Issuer and Goldman, Sachs & Co. and any related pricing
agreement or agreements.
QIB means a "qualified institutional buyer" within the meaning of Rule
144A.
Rated Maturity Date means, with respect to the Notes of any Series, the
third anniversary of the Maturity Date applicable to such Series.
Rating Agency means Moody's Investors Service, Inc., and any successor
thereto, and, if such corporation shall for any reason no longer perform the
functions of a securities rating agency, "Rating Agency" shall be deemed to
refer to any other nationally recognized rating agency selected by the Issuers
(and not reasonably disapproved by the Trustee).
Rating Confirmation, with respect to the matter in question, means that as
a condition thereto the Rating Agency shall have confirmed in writing that such
investment, replacement, transfer, or other action, in and of itself, will not
result in a reduction, withdrawal or qualification of any rating then assigned
by the Rating Agencies to any Outstanding Notes.
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Redemption Date, when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to this Indenture in
accordance with Article XI.
Redemption Price, when used with respect to any Note to be redeemed, means
the price at which such Note is to be redeemed calculated pursuant to Article
XI.
Register has the meaning stated in Section 3.6(a).
Registrar has the meaning stated in Section 3.6(a).
Regular Record Date means the fifth (5th) Business Day immediately prior to
the related Interest Payment Date.
Regulation S means Regulation S under the Securities Act.
Regulation S Restricted Period means, with respect to any Series, the
period of 40 consecutive days beginning on and including the later of (i) the
day that Goldman, Sachs & Co. (acting on behalf of Goldman Sachs International)
advises the Issuers and the Trustee in writing is the day on which Notes of such
Series are first offered to Persons (other than distributors) in reliance upon
Regulation S, and (ii) the Closing Date.
Regulation S Temporary Global Note has the meaning stated in Section
2.3(b)(i).
Release Property has the meaning stated in Section 4.6.
Required Rating means the higher of (i) the highest rating then assigned by
the Rating Agency to any of the outstanding Notes, and (ii) "A2" (or its
equivalent) by the Rating Agency.
Responsible Officer means any officer of the Trustee customarily performing
functions with respect to corporate trust matters and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Restricted Global Note has the meaning stated in Section 2.3(c).
Restricted Global Notes has the meaning stated in Section 2.3(c).
Restricted Notes has the meaning stated in Section 2.5.
Rule 144 means Rule 144 under the Securities Act.
Rule 144A means Rule 144A under the Securities Act.
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Rule 144A Information means such information as is specified pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision thereto).
Scheduled Maturity Date means November 15, 2004 with respect to the 2004
Fixed Rate Notes and November 15, 2007 with respect to the 2007 Fixed Rate
Notes, except as otherwise provided in Section 1.11 hereof; provided, that if
either such date is not a Business Day, the applicable Scheduled Maturity Date
shall be the next succeeding Business Day and no further interest or other
payment shall be due any Holder as a result of such adjustment.
Secured Obligations has the meaning stated in the Mortgage.
Securities Act means the Securities Act of 1933, as amended, and the rules
and regulations of the United States Securities and Exchange Commission
promulgated thereunder from time to time.
Security Documents means the Mortgage, the Assignment of Leases, the
Environmental Indemnity, the Assignment of Contracts, the Subordination of
Management Agreement, the Notes, the Indenture, the Trustee Fee Agreement, the
Servicer Fee Agreement, the financing statements now or hereafter executed in
connection herewith and any and all other agreements, certificates (including,
without limitation, Officer's Certificates), instruments or documents executed
by the Issuers or any of them evidencing, securing or delivered in connection
with the Loan and/or the transactions contemplated hereby.
Series means any group of Notes having the same letter and number
designation. For example, all Notes designated as Series A-1 Fixed Rate Notes
belong to the same Series. The Notes are issuable in each of the following ten
Series: A-1, A-2, B-1, B-2, C-1, C-2, D-1, D-2, E-1 and E-2.
Series A-1 Note means a Note executed by the Issuers and authenticated by
the Trustee or the Authenticating Agent in substantially the form set forth in
Exhibit B hereto and designated as a Series A-1 Fixed Rate Note.
Series A-2 Note means a Note executed by the Issuers and authenticated by
the Trustee or the Authenticating Agent in substantially the form set forth in
Exhibit B hereto and designated as a Series A-2 Fixed Rate Note.
Series B-1 Note means a Note executed by the Issuers and authenticated by
the Trustee or the Authenticating Agent in substantially the form set forth in
Exhibit B and designated as a Series B-1 Fixed Rate Note.
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Series B-2 Note means a Note executed by the Issuers and authenticated
by the Trustee or the Authenticating Agent in substantially the form set
forth in Exhibit B and designated as a Series B-2 Fixed Rate Note.
Series C-1 Note means a Note executed by the Issuers and authenticated
by the Trustee or the Authenticating Agent in substantially the form set
forth in Exhibit B and designated as a Series C-1 Fixed Rate Note.
Series C-2 Note means a Note executed by the Issuers and authenticated
by the Trustee or the Authenticating Agent in substantially the form set
forth in Exhibit B and designated as a Series C-2 Fixed Rate Note.
Series D-1 Note means a Note executed by the Issuers and authenticated
by the Trustee or the Authenticating Agent in substantially the form set
forth in Exhibit B and designated as a Series D-1 Fixed Rate Note.
Series D-2 Note means a Note executed by the Issuers and authenticated
by the Trustee or the Authenticating Agent in substantially the form set
forth in Exhibit B and designated as a Series D-2 Fixed Rate Note.
Series E-1 Note means a Note executed by the Issuers and authenticated
by the Trustee or the Authenticating Agent in substantially the form set
forth in Exhibit B and designated as a Series E-1 Fixed Rate Note.
Series E-2 Note means a Note executed by the Issuers and authenticated
by the Trustee or the Authenticating Agent in substantially the form set
forth in Exhibit B and designated as a Series E-2 Fixed Rate Note.
Servicer means Midland Loan Services, L.P., a Missouri limited
partnership, or its successor in interest, or, if any successor servicer is
appointed as herein provided, such successor servicer.
Servicer Advance Date means, with respect to each Interest Payment
Date, the Business Day preceding such Interest Payment Date.
Servicer Default has the meaning stated in Section 7.22.
Servicer Fee Agreement means the letter agreement regarding fees for
services under this Indenture from the Servicer to the Issuers dated the
date hereof.
Servicing Officer means any officer or employee of the Servicer
involved in, or responsible for, the administration and servicing of the
Loan whose name and specimen signature appear on a written list of
servicing officers furnished to the Trustee on the
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Closing Date by the Servicer, as such list may from time to time be amended by
the Servicer.
Special Record Date has the meaning stated in Section 3.11(b).
Subordination of Management Agreement has the meaning stated in the
Mortgage.
Taking Proceeds has the meaning stated in the Mortgage.
Transfer Agent means the Trustee or such other person as the Trustee may
appoint from time to time to act as a transfer agent for any Series of the
Notes.
Transferee Securities Certification has the meaning stated in Section
3.8(d)(ii).
Trustee means (i) LaSalle National Bank, a nationally chartered bank, until
a successor Person or successor Persons shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and (ii) any separate or co-
trustee appointed pursuant to Section 6.18.
Trustee Fee Agreement means the letter agreement regarding fees for
services under this Indenture from the Trustee to the Issuers dated the date
hereof.
Uninsured Cause means any cause of damage to a Mortgaged Property such that
the complete restoration of the property is not fully reimbursable (but without
regard to any applicable deductible provisions) by any insurance policy required
to be maintained with respect thereto under the Mortgage, and any uninsured loss
arising from defect in title to a Mortgaged Property.
United States means the United States of America, the District of Columbia,
Puerto Rico, the United States Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
United States Alien means any person not subject to United States federal
income tax on a net income basis with respect to the Notes who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust, or
a foreign partnership one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust.
Unrestricted Global Note has the meaning stated in Section 2.3(b)(i).
Unrestricted Global Notes has the meaning stated in Section 2.3(b)(i).
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U.S. Government Securities means securities evidencing an obligation to pay
principal and interest in a full and timely manner that are (y) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged, or (z) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of and guaranteed as a
full faith and credit obligation by the United States of America, which in
either case are not callable or redeemable at the option of the issuer thereof
(including a depository receipt issued by a bank (as defined in Section 3(a)(2)
of the Securities Act) as custodian with respect to any such securities or a
specific payment of principal of or interest on any such securities held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the securities or the
specific payment of principal of or interest on the securities evidenced by such
depository receipt.
SECTION I.2 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by any
specified Person, it is not necessary that all such matters be certified by only
one such Person, or that they be so certified by only one document, but one such
Person may certify with respect to some matters and one or more other such
Persons may certify with respect to other matters, and any such Persons may
certify as to such matters in one or several documents.
Any certificate of an officer of any Issuer may be based, insofar as it
relates to legal matters, upon an opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the opinion or representations with respect to the matters upon which the
certificate is based are erroneous. Any such opinion of counsel may be based,
insofar as it relates to factual matters relating to any Issuer, upon a
certificate of, or representations by, an officer or officers of such Issuer
stating that the information with respect to such factual matters is in the
possession of such Issuer unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION I.3 Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by the Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor
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signed by such Holders in person or by an agent duly appointed in writing. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders shall be
embodied in and evidenced by the record of Holders voting in favor thereof in
person at any meeting of Holders duly called and held in accordance with the
provisions of Article XIII. Except as herein otherwise expressly provided, such
action will become effective when such instrument or instruments of record or
both are delivered to the Trustee, and, where it is expressly required by this
Indenture, to the Issuers. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments
and so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agency or proxy, or of the holding by any
Person of a Note, shall be sufficient for any purpose of this Indenture or any
other Security Document and (subject to Section 6.1) conclusive in favor of the
Servicer, Trustee and the Issuers if made in the manner provided in this Section
1.3. The record of any meeting of Holders of Notes shall be proved in the manner
provided in this Section 1.3. With respect to authorization to be given or taken
by Holders of Notes, the Trustee shall be authorized to follow the written
directions or the vote of Holders of Notes of not less than 66 2/3% of
Outstanding Notes (or a particular Series thereof, if the vote in question only
affects Holders of Notes of such Series) unless any greater or lower percentage
is required or permitted by the terms hereof.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any Person,
and the date of holding the same, shall be proved by the Register for the Notes.
(d) Any request, demand, authorization, direction, notice, consent,
election, declaration, waiver or other act of the Holder of any Note shall bind
every future Holder of the same Note and the Holder of every Note issued upon
the transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Servicer, Trustee or the
Issuers in reliance thereon, whether or not notation of such action is made upon
such Note.
(e) Any provision of this Indenture which permits or requires Holders of
Notes to make any request, demand, authorization, direction, notice, consent,
election, declaration, waiver or any other act, shall, unless otherwise provided
in such provision,
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require (i) the specified percentage of Holders of Notes of a particular Series
or group of Series, if Holders of such Series or group of Series shall be
affected thereby, or (ii) the specified percentage of all Holders if Holders of
Notes of all Outstanding Series shall be affected thereby.
SECTION I.4 Computation of Principal Amount.
Whenever this Indenture states that any action may be taken by a specified
percentage of Holders, such statement shall mean that such action may be taken
by the Holders of such specified percentage of the aggregate principal amount of
the Outstanding Notes to which such vote relates.
SECTION I.5 Notices.
Any notice, direction, request, consent, election, waiver or demand which
by any provision of this Indenture is required or permitted to be given may be
served by national overnight courier service or may be given or served by
facsimile only during business hours (9 a.m. - 5 p.m.) of the addressee on a
Business Day (with a confirmation copy sent by certified or registered mail,
return receipt requested, or by national overnight courier) or by certified or
registered mail, in each case return receipt requested, postage prepaid, to the
address or addresses set forth below or such other address or addresses in the
continental United States as such Person may designate in accordance with the
provisions hereof.
If to any Issuer, addressed to such Issuer at:
c/o GGP Limited Partnership
55 West Monroe Street, Suite 3100
Chicago, Illinois 60603
Facsimile No. (312) 551-5463
Attention: Bernard Freibaum,
with a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Facsimile No. (312) 269-1747
Attention: Marshall E. Eisenberg, Esq.;
and
Ivanhoe Equities V L.P.
World Trade Centre Montreal
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413 St. Jacques Street
Montreal, Quebec H2Y 3Z4
CANADA
Facsimile No. (514) 841-7762
Attention: Legal Affairs
if to the Servicer, addressed to it at:
Midland Loan Services, L.P.
210 West 10th Street, 6th Floor,
Kansas City, Missouri 64105
Facsimile No. (816) 435-2326
Attention: Alan L. Atterbury,
with a copy to the Trustee and to:
Morrison & Hecker, L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108
Facsimile No. (816) 474-4208
Attention: William A. Hirsch;
if to the Trustee, addressed to it at:
LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Facsimile No. (312) 904-2084
Attention: Asset-Backed Securities Trust Services:
General Growth Properties,
with a copy to:
The Servicer, at the address provided above;
if to the Rating Agency, addressed to:
Moody's Investors Service, Inc.
99 Church Street
4th Floor
New York, New York 10007
Facsimile No. (212) 553-7820
Attention: Commercial Mortgage Monitoring Group --
Structured Finance;
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if to the Initial Purchasers, addressed to them at:
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Facsimile No. (212) 357-5505
Attention: Commercial Mortgage Trading Desk,
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile No. (212) 558-3588
Attention: Arthur S. Adler, Esq.
SECTION I.6 Notice to Holders of Notes.
Where this Indenture provides for notice to the Holders of the Notes from
the Trustee, the Trustee, subject to reimbursement by the Issuers, shall (i)
publish such notice (excluding, for publication purposes, any documents required
to accompany such notice) in an Authorized Newspaper (if applicable), (ii) in
the case of a Global Note, mail such notice by overnight mail to the Depositary,
(iii) in the case of Notes other than the Global Notes, mail such notice by
first class mail, postage prepaid (except with respect to any redemption notice,
which shall be sent by overnight mail) to the Holders thereof at the addresses
appearing on the Register and (iv) give notice to the Luxembourg Stock Exchange
(for so long as the Notes are listed thereon), with a copy of all such notices
delivered (by mail or otherwise) to the Issuers. Any such notice so sent shall
be conclusively presumed to have been received by such Holders.
In case by reason of the suspension of regular mail service or overnight
mail service, as the case may be, or by reason of any other cause it shall be
impracticable to give any notice in the manner required above, then any other
method of notification found satisfactory in the reasonable judgment of the
Trustee shall constitute a sufficient notification for every purpose hereunder.
In any case where notice to the Holders of Notes is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders of the Notes.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders
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of Notes shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
All requests, demands, authorizations, directions, notices, consents,
waivers and other communications required or permitted under this Indenture
shall be in writing in the English language. Notice to any Holder will be deemed
to have been given on the date of such publication or mailing.
SECTION I.7 Successors and Assigns.
All covenants and agreements in this Indenture by any party shall bind such
party and its successors and assigns, whether so expressed or not.
SECTION I.8 Separability Clause.
In case any provision of this Indenture or of the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION I.9 Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto, their successors hereunder, and
the Holders of the Notes, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION I.10 Governing Law.
(a) THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
(b) Any action or proceeding against any of the parties hereto relating in
any way to this Indenture or any Note or the Collateral may be brought and
enforced in the courts of the State of New York or of the United States for the
Southern District of New York located in the borough of Manhattan, The City of
New York, and each Issuer irrevocably submits to the jurisdiction of each such
court in respect of any such action or proceeding. Each Issuer hereby waives any
right to remove any such action or proceeding by reason of improper venue. As
long as any of the Notes remain Outstanding, each Issuer will at all times have
an authorized agent in New York City upon whom process may be served in any
legal action or proceeding relating in any way to this Indenture or any Note.
Service of process upon such agent and written notice of such notice mailed or
delivered to any Issuer shall, to the fullest extent permitted by law, be deemed
in every respect effective service upon such Issuer in any such legal action or
proceeding. Each Issuer's authorized
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agent for service of process shall initially be Corporation Service Company at
80 State Street, Albany, New York 12207-2543, or such other person as such
Issuer shall identify in a notice to the Trustee and the Servicer in accordance
with Section 1.5.
SECTION I.11 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Servicer
Advance Date, Maturity Date or the Maturity of any of the Notes shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or of
the Notes) payment of interest on and/or principal of such Note need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, Redemption Date,
Servicer Advance Date or Maturity Date; provided, however, that no interest
shall accrue on the amount so payable with respect to such Interest Payment
Date, Redemption Date or Maturity Date for the period from and after such
Interest Payment Date, Redemption Date or Maturity Date, as the case may be, if
paid on the next succeeding Business Day.
SECTION I.12 Security Agreement.
This Indenture shall constitute a security agreement under the Uniform
Commercial Code as in effect in the states where the Payment Account, the
Holdover Account and any other similar account established by the Trustee or the
Servicer in furtherance of such entity's responsibilities under this Indenture
or any other Security Document are located (with respect to the liens and
security interests granted in Section 3.1(c)). Upon the occurrence of any Event
of Default, and in addition to any other rights available under this Indenture,
the Security Documents or any other instruments included in the Collateral or
otherwise available at law or in equity, the Trustee shall have all rights and
remedies of a secured party under the Uniform Commercial Code to enforce the
assignments and security interests contained herein and, in addition, shall have
the right, subject to compliance with any mandatory requirements of applicable
law, to sell at public or private sale or apply, as appropriate, all monies or
other property then on deposit in the Payment Account, the Holdover Account and
any other similar account established by the Trustee or the Servicer in
furtherance of its rights or responsibilities under this Indenture or any other
Security Document and any other rights and other interests assigned or pledged
hereby in accordance with the terms of this Indenture. All amounts received
hereunder and under the other Security Documents and any other instruments
included in the Collateral shall be applied in accordance with the priorities
established in Section 5.6.
SECTION I.13 Third-Party Beneficiary.
This Indenture shall inure to the benefit of and be binding upon the
parties hereto and their respective successors. Except as otherwise provided in
this Article I, no other Person shall have any right or obligation hereunder.
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SECTION I.14 Obligations are Without Recourse. (a) The obligations of the
Issuers under this Indenture are joint and several. Anything contained in this
Indenture or the other Security Documents to the contrary notwithstanding, the
recourse for the satisfaction of the indebtedness due under the Notes and for
the payment and performance of all of the obligations and liabilities of the
Issuers under the Indenture or the other Security Documents shall be limited
(x) solely to each Issuer's interest in the Pledged Assets (as defined
in the Mortgage), and none of the Issuers, General Growth, GGP, the Ivanhoe
Entities or any of their respective successors or assigns, or any partner
(general or limited, or a subpartner at any level), member tenant in
common, officer, director, trustee, beneficiary, shareholder, controlling
person, employee, agent, contractholder or policyholder, or any Affiliate
of any of the foregoing (collectively, "Exculpated Persons"), shall be
liable in any other respect for (i) the payment of the principal of or
interest or Make-Whole Payment, if any, or Additional Amounts, if any, on
the Notes, or (ii) the payment of any other amount due under the Notes,
this Indenture or the other Security Documents, or (iii) damages for the
breach of, or any costs or expenses associated with the performance of or
failure to perform, any of the covenants, obligations, representations,
warranties or indemnifications contained herein or in the Notes or the
other Security Documents, and
(y) with respect to each Issuer, such that the total liability of that
Issuer under the Notes, this Indenture, the Mortgage and each other
Security Document shall not
(i) at any time during the period from the date hereof to a date
one year and a day after the date hereof exceed the sum of (A) the
Allocated Amount for the Mortgaged Property identified on Exhibit A as
being owned by such Issuer plus (B) such Issuer's Net Worth on the
date hereof, less (C) $1,000, and
(ii) at any time after the period referred to in clause (i) above
exceed the sum of (A) the Allocated Amount for the Mortgaged Property
identified on Exhibit A as being owned by such Issuer plus (B) the
greater of such Issuer's Net Worth on the date hereof and such
Issuer's Net Worth on the date such determination is being made (it
being understood that for purposes of determining such Issuer's Net
Worth on any date subsequent to the date that is one year and a day
after the date hereof, such Issuer's liabilities shall only include
liabilities that are permitted under the terms of the Security
Documents), less (C) $1,000.
For purposes of the foregoing, "Net Worth" of an Issuer shall mean the
positive net worth of such Issuer, based on the sum of (x) the fair
saleable value of its
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assets (determined after giving effect to distributions, if any, by such
Issuer to such Issuer's partners, members or other equity investors, as
applicable, of the proceeds of the Loan received by such Issuer on account
of the issuance of the Notes and determined in accordance with applicable
laws governing determinations of the insolvency of debtors), less (y) its
liabilities (determined as in (x) above), including for purposes of this
clause (y) a portion of the Loan equal to the Allocated Amount for the
Mortgaged Property identified on Exhibit A as being owned by such Issuer,
but excluding amounts payable under the Notes, this Indenture, the Mortgage
and any other Security Documents in excess of such Allocated Amount.
Each document that is executed by any Issuer and/or any other Exculpated Persons
pursuant to or in connection with this Indenture and/or any other Security
Documents shall either expressly incorporate, or shall be deemed to incorporate,
the non-recourse provisions contained in this Section 1.14. For purposes of this
Section 1.14(a), each and every reference to "the Issuers" (including the
possessory thereof) shall mean the Issuers, their successors and assigns, and
all persons and/or entities whose rights under this document arise by, through
or under the Issuers, their successors and/or assigns.
(b) In furtherance of the foregoing, it is expressly understood and agreed
that nothing herein nor any act of any Issuer nor any document or instrument
executed by the Issuers (or any of them) in connection herewith shall create or
impose on any Issuer or any other Exculpated Persons any personal liability, and
this Indenture is executed by each Issuer with the express understanding and
agreement that nothing contained herein, in the Notes or under any of the other
Security Documents (including the Mortgage and the Notes) shall be construed as
creating any liability on the part of the Issuers or any other Exculpated
Persons personally, to pay the principal obligation or any interest that may
accrue thereon or any indebtedness that may accrue hereunder or under any of the
other Security Documents or to perform any covenant, either express or implied,
herein contained, and that every Person now or hereafter claiming any right or
security hereunder shall look solely to the Pledged Assets for the payment
thereof and the enforcement of any lien hereby created or the enforcement of any
covenant, condition or agreement contained herein or under any of the other
Security Documents.
(c) The provisions of Section 1.14(a) and (b) hereof shall not (i)
constitute a waiver, release or impairment of any obligation of any Issuer
(without recourse to its partners, members or other equity investors) evidenced
or secured by the Notes, this Indenture, the Mortgage or any other Security
Document to the extent that it would impair the Trustee's right or ability to
declare an Event of Default or accelerate the maturity of the Notes, (ii)
constitute a waiver of the Trustee's right under Section 1111(b) of the United
States Bankruptcy Code to claim against any Issuer (without recourse to its
partners, members or other equity investors) the full amount of the indebtedness
evidenced by the Notes or incurred pursuant to any of the other Security
Documents or (iii) impair the right of the Trustee to obtain a deficiency
judgment (without recourse to any partner,
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member or other equity investor in any Issuer) in any action or proceeding in
order to preserve its rights and remedies against Collateral as to which a lien
is granted hereunder, including, without limitation, foreclosure, nonjudicial
foreclosure or the exercise of a power of sale, under the Mortgage.
SECTION I.15 Issuer Representative.
Each of the Issuers hereby designates and appoints Lockport L.L.C. as the
representative of the Issuers (the "Issuer Representative") which shall be and
hereby is authorized to make any and all elections and to grant any and all
consents, waivers or approvals and to take any such other actions as may be
required or permitted to be taken by the Issuers under this Indenture, the
Mortgage or any other Security Document (each an "Issuer Action") for and on
behalf of the Issuers as a group, and the Trustee and the Servicer shall be
entitled to rely on any instruction or request made by the Issuer Representative
as if the same had been made by each of the Issuers. In addition, whenever, in
this Indenture, the Mortgage or any of the other Security Documents, the Trustee
or the Servicer is authorized to make any payment or return any funds or
instruments to the Issuers without specifying any particular Issuer, the Trustee
and Servicer shall have satisfied their obligations hereunder and thereunder by
delivering such funds or instruments to the Issuer Representative. The Issuer
named above shall continue as the Issuer Representative throughout the term of
this Indenture, and any Issuer Action taken by such Issuer Representative shall
be binding upon and shall inure to the benefit of each of the Issuers and their
successors until such time as the Issuers deliver to the Trustee and the
Servicer an Officer's Certificate signed by or on behalf of each of the Issuers
notifying the Trustee and the Servicer of the appointment of another Issuer as
the replacement Issuer Representative. Any Issuer Representative hereunder shall
not be released from its obligations under this Indenture, nor shall its
Mortgaged Property be released from the lien of the Mortgage, unless the
entities that will be Issuers after such release have appointed a replacement
Issuer Representative in accordance with the foregoing. The Issuers covenant and
agree to maintain the appointment of an Issuer Representative at all times
during the term of this Indenture, and the Trustee and the Servicer shall not be
required to accept or act upon any Issuer Action, unless such action is taken by
an Issuer Representative or is otherwise evidenced by a written instrument
signed by or on behalf of every Issuer.
SECTION I.16 Execution in Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION I.17 Consolidation and Splitting of Prior Notes.
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Concurrently with the execution and delivery hereof, certain of the Issuers
and the Trustee are executing and delivering (i) a Consolidation and Splitting
Agreement with respect to that certain Amended and Restated Promissory Note
dated as of October 15, 1996 in the original principal amount of $7,000,000.00
(the "First Note") made payable to the order of Goldman Sachs Mortgage Company
("GSMC") and that certain Demand Note in the original principal amount of
$5,200,000.00 dated the date hereof (the "Second Note") and made payable to the
order of GSMC, and (ii) a Consolidation and Splitting Agreement with respect to
that certain Promissory Note dated as of June 9, 1997 in the original principal
amount of $19,200,000.00 and made payable to the order of GSMC (the "Third
Note") and that certain Promissory Note dated as of June 11, 1997 in the
original principal amount of $19,200,000.00 and made payable to the order of
GSMC (the "Fourth Note"). Pursuant to such Consolidation and Splitting
Agreements (a) the First Note, the Second Note, the Third Note and the Fourth
Note are being consolidated and renewed, and replaced by, that certain single
Consolidated Demand Note in the original principal amount of $560,000,000.00,
dated the date hereof, executed by the Issuers and made payable to the order of
the Trustee (the "Consolidated Note"), (b) the Consolidated Note is being split
into the Notes, and (c) the lien of the mortgages or trust deeds securing the
First Note, the Second Note, the Third Note and the Fourth Note are being
consolidated and renewed, and amended and restated, into the Mortgage, and by
their acceptance of the Notes, the Holders acknowledge, ratify and confirm, and
are deemed to authorize, acknowledge, ratify and confirm, the execution and
delivery of the Consolidation and Splitting Agreements by the Trustee on behalf
of the Holders, and the taking of all other actions by the Trustee, in
connection with said agreement (including, without limitation, the Trustee's
acceptance of an assignment of each of the First Note, the Second Note, the
Third Note, the Fourth Note and the respective mortgages or trust deeds securing
such notes.
ARTICLE II
FORMS OF THE NOTES
SECTION II.1 Forms Generally.
(a) The Notes and the Trustee's certificate of authentication shall be in
substantially the form set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification or designation and such legends or endorsements placed thereon
as may be required to comply with any law or with any rules made pursuant
thereto or with the rules of any securities exchange on which any of the Notes
may be listed, any depositary or any governmental agency or as may, consistent
herewith, be determined by the officers executing any Notes, as evidenced by
their execution of such Notes.
(b) Notes that are Restricted Notes (including each Restricted Global
Note) shall bear a legend as set forth in Section 2.4(a) and as required by
Section 2.5. Notes that are
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Global Notes shall bear a legend as set forth in Section 2.4(b). Each Regulation
S Temporary Global Note shall bear a legend as set forth in Section 2.4(c). Each
Note shall be dated the date of its authentication.
(c) The definitive Notes shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Notes, as evidenced by their execution of such
Notes. Any Note may have such letters, numbers or other marks of identification
or designation and such legends or endorsements printed, lithographed or
engraved thereon as the Trustee may deem appropriate and as are not inconsistent
with this Indenture, or as may be required to comply with any law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
securities exchange on which the Notes may be listed, or to conform to market
practice.
SECTION II.2 Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication for the Notes shall be in
substantially the following form:
This Note is one of the Notes referred to in the above-mentioned Indenture.
LaSalle National Bank,
as Trustee
By:____________________________________
Authorized Officer
or
LaSalle National Bank,
as Trustee
By:____________________________________,
as Authenticating Agent
By:______________________________
Authorized Officer
SECTION II.3 Form of the Notes.
(a) Except as otherwise provided pursuant to this Section 2.3, the Notes
are issuable in definitive, fully registered form without coupons in
substantially the form of
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Exhibit B hereto, with such applicable legends as are provided for in Sections
2.4 and 2.5. The Notes are not issuable in bearer form.
(b) (i) Notes of any fixed rate Series that are to be offered and
sold in reliance on Regulation S shall be issued initially in the form of a
single temporary Global Note (a "Regulation S Temporary Global Note") in
fully registered form without interest coupons, substantially in the form
of Exhibit B hereto, with such applicable legends as are provided for in
Section 2.4. Any Regulation S Temporary Global Note shall be duly executed
by each Issuer and authenticated by the Trustee, as provided herein, and
shall be registered in the name of the Depositary or its nominee and
deposited with the Trustee, as Custodian, at its Corporate Trust Office,
for credit to the accounts of the Agent Member then acting for Euroclear or
CEDEL, as the case may be, for credit to the respective beneficial owners
of such Note in accordance with the rules thereof. On or after the
termination of the relevant Regulation S Restricted Period, interests in
any Regulation S Temporary Global Note will be exchangeable for
corresponding interests in an unrestricted Global Note (individually, an
"Unrestricted Global Note" and, collectively, "Unrestricted Global Notes"),
respectively, each in definitive, fully registered form without interest
coupons, substantially in the form of Exhibit B hereto, and each with such
applicable legends as are provided for in Section 2.4 and in clause (ii)
below. The aggregate principal amount of a Regulation S Temporary Global
Note and an Unrestricted Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian
for the Depositary, as hereinafter provided.
(ii) A holder of a beneficial interest in a Regulation S Temporary
Global Note of any Series may arrange to receive Interest Installments
through Euroclear or CEDEL on such Regulation S Temporary Global Note only
after delivery by such Person to Euroclear or CEDEL, as the case may be, of
a written certification (an "Owner Securities Certification") substantially
in the form of Exhibit C-1 hereto, and upon delivery by Euroclear or CEDEL,
as the case may be, to the Principal Paying Agent of a certification or
certifications (each, a "Depositary Securities Certification")
substantially in the form of Exhibit C-2 hereto. The delivery by such
holder of a beneficial interest in such Regulation S Temporary Global Note
of such certification shall constitute an irrevocable instruction by such
holder to Euroclear or CEDEL, as the case may be, to exchange (1) such
holder's beneficial interest in the Regulation S Temporary Global Note for
a beneficial interest in the Unrestricted Global Note of the same Series
upon the expiration of the relevant Regulation S Restricted Period in
accordance with the next succeeding paragraph. No interest shall be paid to
any holder of a beneficial interest in a Regulation S Temporary Global Note
until the foregoing Owner Securities Certification has been provided to
Euroclear or CEDEL, as the case may be, by such holder and no interest
shall be paid to Euroclear or CEDEL in respect of such holder's interest in
a Regulation S Temporary Global Note unless Euroclear or CEDEL, as the case
may be, has provided a Depositary Securities Certification to the Principal
Paying Agent with respect to such interest.
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Upon
(A) the expiration of the relevant Regulation S Restricted Period,
(B) receipt by Euroclear or CEDEL, as the case may be, and the
Principal Paying Agent of the certificates described in the
preceding paragraph,
(C) receipt by the Depositary of
(1) written instructions given in accordance with the Applicable
Procedures from an Agent Member directing the Depositary to
credit or cause to be credited to a specified Agent Member's
account a beneficial interest in an Unrestricted Global Note
in a principal amount equal to that of the beneficial
interest in a corresponding Regulation S Temporary Global
Note for which the necessary certificates have been
delivered, and
(2) a written order given in accordance with the Applicable
Procedures containing information regarding the account of
the Agent Member, and the Euroclear or CEDEL account for
which such Agent Member's account is held, to be credited
with, and the account of the Agent Member to be debited for,
such beneficial interest, and
(D) receipt by the Trustee of notification from the Depositary of the
transactions described in (C) above,
the Trustee, as Registrar, shall instruct the Depositary to reduce the principal
amount of such Regulation S Temporary Global Note and to increase the principal
amount of such Unrestricted Global Note, by the principal amount of the
beneficial interest in such Regulation S Temporary Global Note to be so
transferred, and to credit or cause to be credited to the account of the person
specified in such instructions a beneficial interest in such Unrestricted Global
Note having a principal amount equal to the amount by which the principal amount
of such Regulation S Temporary Global Note was reduced upon such transfer.
(c) Notes of any Series that are to be offered and sold to QIBs in
accordance with Rule 144A shall be issued in definitive, fully registered
form without interest coupons, substantially in the form of Exhibit B
hereto, with such applicable legends as are provided for in Section 2.4.
The Notes of any such Series may be issued in the form of a single Global
Fixed Rate Note (individually, a "Restricted Global Note" and,
collectively, the "Restricted Global Notes"). Restricted Global Notes shall
be duly executed by each Issuer and authenticated by the Trustee as
provided herein and shall be registered in the name of a nominee of the
Depositary and deposited with the Trustee, as Custodian, at its Corporate
Trust Office, for credit to the respective account of the Depositary's
Agent Members who
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hold interests in such Restricted Global Notes. The aggregate principal amount
of a Restricted Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary,
as hereinafter provided.
SECTION II.4 Legends.
(a) Restricted Notes (including Restricted Global Notes) shall bear a
legend substantially in the following form:
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT, EXCEPT (A)(I) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION (IF AVAILABLE)
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
OR (III) IN A TRANSACTION OUTSIDE OF THE UNITED STATES IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT AND (B) IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF
THE UNITED STATES. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE
ISSUERS THAT THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
THIS NOTE WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE
REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER
SET FORTH ABOVE HAVE BEEN COMPLIED WITH, ALL AS PROVIDED IN THE INDENTURE.
(b) So long as DTC is acting as Depositary, Global Notes shall bear a
legend substantially in the following form:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO EACH ISSUER OR
ITS RESPECTIVE
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AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO
HEREIN. THIS GLOBAL NOTE MAY NOT BE EXCHANGED, IN WHOLE OR IN PART, FOR A
NOTE REGISTERED IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES SET FORTH IN THE INDENTURE.
BENEFICIAL INTERESTS IN THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE INDENTURE.
(c) Regulation S Temporary Global Notes shall bear a legend
substantially in the following form:
THIS NOTE IS A REGULATION S TEMPORARY GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS REGULATION S TEMPORARY
GLOBAL NOTE MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT
OR BENEFIT OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE REGULATION S
RESTRICTED PERIOD (AS DEFINED IN THE INDENTURE), AND NO TRANSFER OR
EXCHANGE OF AN INTEREST IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY BE
MADE FOR AN INTEREST IN A RESTRICTED GLOBAL NOTE OR IN AN UNRESTRICTED
GLOBAL NOTE UNTIL AFTER THE LATER OF THE DATE OF TERMINATION OF THE
REGULATION S RESTRICTED PERIOD AND THE DATE ON WHICH THE OWNER SECURITIES
CERTIFICATION AND THE DEPOSITARY SECURITIES CERTIFICATION RELATING TO SUCH
INTEREST HAVE BEEN PROVIDED IN ACCORDANCE WITH THE TERMS OF THE INDENTURE,
TO THE EFFECT THAT THE BENEFICIAL OWNER OR OWNERS OF SUCH INTEREST ARE NOT
U.S. PERSONS.
(d) Notes, other than Global Notes, will bear a legend substantially
in the following form:
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THIS NOTE WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE UNLESS THE HOLDER OF THIS NOTE, SUBSEQUENT TO SUCH EXCHANGE,
WILL HOLD A MINIMUM AGGREGATE BENEFICIAL INTEREST IN SUCH GLOBAL NOTE OF AT
LEAST ONE HUNDRED THOUSAND DOLLARS ($100,000).
SECTION II.5 Restricted Notes.
During the period beginning on the Closing Date and ending on the date
two years from the Closing Date, all Notes offered and sold to QIBs in reliance
on Rule 144A shall be deemed "Restricted Notes" and shall bear on their face,
and be subject to the restrictions on transfer provided in, the legend set forth
in Section 2.4(a); provided, however, that the term "Restricted Notes" shall not
include Notes as to which restrictions have terminated in accordance with
Section 3.8(c).
SECTION II.6 Global Notes.
(a) (i) Any Note issued in exchange for a Global Note or any portion
thereof shall be a Global Note, provided, however, that any such Note so issued
that is registered in the name of a Person other than the Depositary or a
nominee thereof shall not be a Global Note. Notwithstanding any other provision
of this Indenture, a Global Note shall not be exchanged in whole or in part for
a Fixed Rate Note registered in the name of any person other than the Depositary
or one or more nominees thereof, unless (1) the Depositary (A) notifies the
Issuers that it is unwilling or unable to continue as Depositary for such Global
Note or (B) ceases to be a clearing agency registered under the Exchange Act,
and in either case the Issuers fail to appoint a successor Depositary (as
described below) or (2) there shall have occurred and be continuing an Event of
Default with respect to the Notes. Any Global Note exchanged pursuant to clause
(1) above shall be so exchanged from time to time in whole and not in part and
any Global Note exchanged pursuant to clause (2) above may be exchanged from
time to time in whole or in part as directed by the Depositary.
(ii) The Issuers hereby designate DTC as the Depositary with respect
to the Global Notes. If at any time DTC notifies the Issuers that it is
unwilling or unable to continue as Depositary for the Global Notes or if at any
time DTC has ceased to be a clearing agency registered under the Exchange Act if
so required by applicable law or regulation, the Issuers shall be entitled to
appoint a successor depositary with respect to each Global Note and provide
notice to the Trustee of such appointment. If (x) a successor depositary for
such Global Note is not appointed by the Issuers within 90 days after the
Issuers receive such notice or become aware of such unwillingness, inability or
ineligibility, (y) an Event of Default has occurred and is continuing and the
beneficial owners representing a majority in principal amount of the Notes
represented by such Global Note advise DTC, with a copy to the Trustee and the
Issuers, to cease acting as
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depositary for such Global Note or (z) the Issuers, in their sole discretion,
determine at any time that all (but not less than all) Outstanding Notes issued
or issuable in the form of a Global Note shall no longer be represented by such
Global Note and advise the Trustee and DTC of such determination, then the
Issuers shall execute, and the Trustee shall authenticate and deliver,
definitive Notes of like series, rank, tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of such Global Notes.
On or after the earliest date on which such interests may be so exchanged as
described above, each Global Note shall be surrendered for exchange by DTC to
the Trustee; provided, however, that such exchange is subject to the terms of
Section 3.8(b) herein.
(b) Notes issued in exchange for a Global Note or any portion thereof
shall be issued in definitive, fully registered form, shall have an aggregate
principal amount equal to that of such Global Note or portion thereof to be so
exchanged, shall be registered in such names and be in such authorized
denominations as the Depositary shall designate and shall bear the applicable
legends provided for herein. Any Global Note to be exchanged in whole shall be
surrendered by the Depositary to the Transfer Agent located in the Borough of
Manhattan, The City of New York, to be so exchanged. With regard to any Global
Note to be exchanged in part, either such Global Note shall be so surrendered or
exchanged or, if the Trustee is acting as custodian for the Depositary or its
nominee with respect to such Global Note, the principal amount thereof shall be
reduced, by an amount equal to the portion thereof to be so exchanged, by means
of an appropriate adjustment made on the records of the Trustee. Upon any such
surrender or adjustment, the Trustee shall authenticate and deliver the Note
issuable on such exchange to or upon the order of the Depositary or an
authorized representative thereof. Any Note delivered in exchange for the Global
Note or any portion thereof shall, except as otherwise provided by Section 3.8,
bear the legend regarding transfer restrictions required by Section 2.5.
(c) Subject to the provisions in the legends required by Section 2.4
above, the registered Holder may grant proxies and otherwise authorize any
Person, including any Agent Member and any Person who may hold an interest in an
Agent Member, to take any action that such Holder is entitled to take under this
Indenture.
(d) In the event of the occurrence of any of the events specified in
paragraph (a) of this Section 2.6, the Issuers will promptly make available to
the Trustee a reasonable supply of certificated Fixed Rate Notes of each Series
in definitive, fully registered form.
(e) Neither members of, or participants in, the Depositary ("Agent
Members" and each an "Agent Member") nor any other Person on whose behalf Agent
Members may act shall have any rights under this Indenture with respect to any
Global Note held on their behalf by the Depositary or under any such Global
Note, and the Depositary may be treated by the Issuers, the Trustee and any
agent of any of the Issuers or the Trustee (including, without limitation, the
Servicer) as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent any Issuer, the
Trustee or any agent of any Issuer or the Trustee from giving effect to any
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written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note. With respect to any Global Note deposited on behalf of the subscribers for
the Notes represented thereby with the Trustee as custodian for the Depositary
for credit to their respective accounts (or to such other accounts as they may
direct) at Euroclear or CEDEL, the provisions of the "Operating Procedures of
the Euroclear System" and the "Terms and Conditions Governing Use of Euroclear"
and the "Management Regulations" and "Instructions to Participants" of CEDEL,
respectively, shall be applicable to Global Notes.
ARTICLE III
THE NOTES
SECTION III.1 Equal and Ratable Securities; Amount; Authorization.
(a) The Issuers may issue Notes from time to time in one or more
Series which may be in the form of Fixed Rate Notes, as more particularly
set forth herein or, with respect to any Additional Notes, in the
applicable indenture supplement. Each Note of each Class shall rank pari
passu with each other Note of such Class (except, with respect to
Additional Notes, to the extent set forth in the applicable supplemental
indenture). The Notes of all Classes shall be equally and ratably secured
by the Collateral, provided that (i) payment of principal and interest on
the Notes of any Class shall be subject to the priorities of distributions
set forth in Section 3.5 and Section 5.6 and (ii) payments of Additional
Amounts, if any, on any Notes and payments of Make-Whole Payments, if any,
on any Fixed Rate Note shall be subordinate to any payment of principal and
interest on any Outstanding Note, also as set forth in Section 3.5 and
Section 5.6. The aggregate principal amount of the Notes that may be
authenticated, delivered and Outstanding under this Indenture and which may
be Outstanding at any time is limited to $560,000,000 (except for Notes
authenticated and delivered upon registration of, transfer of, or in
exchange for, or in lieu of, other Notes pursuant to the provisions of this
Indenture or the Notes) or such greater amount as may be specified in any
supplemental indenture hereto in connection with the issuance of Additional
Notes. All Notes shall be substantially identical except as to
denominations and tenor and except as expressly permitted in this Indenture
and, with respect to any Additional Notes, any applicable supplemental
indenture.
(b) (i) The 2004 Fixed Rate Notes shall be known and designated as
the "Collateralized Fixed Rate Notes Due November 15, 2004" and shall be
issuable hereunder in the following Series: Series A-1 Fixed Rate Notes;
Series B-1 Fixed Rate Notes; Series C-1 Fixed Rate Notes; Series D-1 Fixed
Rate Notes; and Series E-1 Fixed Rate Notes. The Scheduled Maturity Date
for the 2004 Fixed Rate Notes shall be November 15, 2004.
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(ii) The 2007 Fixed Rate Notes shall be known and designated as the
"Collateralized Fixed Rate Notes Due November 15, 2007" and shall be
issuable hereunder in the following Series: Series A-2 Fixed Rate Notes;
Series B-2 Fixed Rate Notes; Series C-2 Fixed Rates Notes; Series D-2 Fixed
Rate Notes; and Series E-2 Fixed Rate Notes. The Scheduled Maturity Date
for the 2007 Fixed Rate Notes shall be November 15, 2007.
(c) Each Issuer hereby grants, and this Indenture shall evidence, a
continuing lien and security interest in the Payment Account, the Holdover
Account and any other similar account established by the Trustee or the Servicer
in furtherance of its rights or responsibilities under this Indenture or any
other Security Document to secure the full payment of the principal of and
interest, and all other amounts payable, on all the Notes, which shall in all
respects be equally and ratably secured hereby without preference, priority or
distinction on account of the actual time or times of the authentication and
delivery of the Notes; provided, however, that Additional Notes may be
subordinate to other Notes to the extent so provided in any supplemental
indenture.
(d) Notes may be transferred at the option of the Holder thereof to the
Depositary for credit to the account of any Agent Member in accordance with this
Indenture. Thereafter, the Depositary or its nominee shall be the Holder of the
portion of the Global Note evidencing any Notes so transferred and the
beneficial ownership thereof.
SECTION III.2 Denominations.
The Notes shall be issuable in fully registered form, without coupons, in
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
SECTION III.3 Conditions Precedent to Issuance of Notes.
On the date hereof, Notes may be executed by the Issuers and authenticated
and delivered by the Trustee to the specified parties upon an Issuer Request
(directing the Trustee to authenticate the Notes and designating to whom the
Trustee shall deliver the authenticated Notes) only if each Issuer shall have
delivered the following to the Trustee:
(a) A copy of the certificate of formation, certificate of limited
partnership, certificate of incorporation or any other charter or organizational
document (as applicable) of such Issuer, and any amendments thereto, certified
by the appropriate government official of its jurisdiction of incorporation or
organization.
(b) A certificate of the Secretary or Assistant Secretary of the entity
identified on Exhibit A-1 hereto with respect to such Issuer, given under its
corporate seal stating that:
(i) the copy of the applicable charter or organizational document, as
amended, provided under clause (a) above is true and complete;
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(ii) the attached copy of resolutions of such Issuer's Board of
Directors: (A) authorizing the issuance of the Notes and (B) authorizing
the officers (or classes of officers) identified therein to execute
documents on such Issuer's behalf, is true and complete and that such
resolutions remain in full force and effect and have not been modified or
amended; and
(iii) the persons who, as officers of such entity (acting on behalf of
such Issuer), executed this Indenture, the Notes, the Mortgage and each other
Security Document, and any certificates or other papers delivered to the Trustee
in connection with the execution and delivery of this Indenture, the Mortgage
and each other Security Document and the issuance of the Notes, were validly
elected to, and the incumbents of, the offices they purported to hold at the
time of such execution, delivery and issuance, and that their signatures set
forth on such certificate are genuine.
(c) Executed counterparts of this Indenture, the agreements between the
Issuers and the Agents referred to in the penultimate paragraph of Section
3.6(b), the Notes, the Mortgage, the Assignment of Leases, the Environmental
Indemnity, the Subordination of Management Agreement and the Assignment of
Contracts (as defined in the Mortgage).
(d) Copies of any orders of any governmental body or any other third party
consents identified in any opinion of counsel to any Issuer as being required in
connection with the issuance of the Notes or the execution and delivery of this
Indenture and each other Security Document.
(e) Opinions of Counsel for such Issuer addressed to the Trustee and the
Initial Purchasers and substantially to the effect set forth in the Purchase
Agreement.
(f) Executed counterparts of the Trustee Fee Agreement and the Servicer
Fee Agreement.
(g) An Officer's Certificate from the Issuers, dated the Closing Date,
stating that, to the best knowledge of the signer(s) thereof, (i) there is no
Event of Default continuing under this Indenture, (ii) no Issuer has sustained
since the date of the latest unaudited financial statements included in the
final offering circular, dated November 20, 1997 and relating to the offering
and sale of the Notes (the "Offering Circular"), any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, in each case that could reasonably be expected to have a
material adverse effect on any Issuer or any of the Mortgaged Properties and
(iii) since the respective dates as of which information is given in the
Offering Circular, there has not been any change in the long-term debt of any
Issuer or any material change, or any development involving a
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prospective change in, or affecting, the general affairs, management, financial
position, equity or results of operations of any Issuer.
(h) Executed UCC-1 financing statements naming each Issuer as debtor and
the Trustee as secured party hereunder (to be filed by or on behalf of the
Issuer in the appropriate filing offices in Illinois).
(i) ALTA form title insurance policies (or fully effective, "marked-up"
commitments therefor) insuring the Mortgagee's interest in each of the Mortgaged
Properties, in each case in an amount at least equal to the Allocated Amount
applicable to such Mortgaged Property (and, in the case of the Mortgaged
Properties known as Lockport Mall and The Oaks Mall, at least equal to the fair
market value of each such property, as reasonably estimated by the Issuers as of
the Closing Date) in form and substance and with such endorsements and
affirmative insurance as may be satisfactory to the Issuers and the Initial
Purchasers, such approval to be conclusively evidenced by the delivery thereof
to the Trustee.
(j) Such other opinions, certificates, letters, and documents as the
Trustee shall reasonably request.
SECTION III.4 Execution, Authentication and Delivery of the Notes.
Each Note shall be executed manually or in facsimile on behalf of each
Issuer by any person so authorized and listed on Exhibit E hereto to sign
documents on behalf of such Issuer in connection with the performance of such
Issuer's obligations under this Indenture and the other Security Documents
(each, an "Authorized Person"), notwithstanding that such persons, or any of
them, shall have ceased, for any reason, to be so authorized prior to the
authentication and delivery of such Note or was not so authorized at the date of
any such Note. Each Issuer shall have the right to add to or delete from the
names listed on Exhibit E upon written notice to the Trustee and the Servicer
signed by an Authorized Person and, in the case of additions to the list of
Authorized Persons, accompanied by a specimen signature of each newly designated
Authorized Person. The Notes may also have such additional provisions,
omissions, variations or substitutions as are not inconsistent with the
provisions of this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with any law or with any rules made pursuant thereto or with
the rules of any securities exchange or governmental agency or as may,
consistently herewith, be determined by an Authorized Person executing such
Notes, as conclusively evidenced by their execution of such Notes. All Notes
shall be otherwise substantially identical except as to denomination and as
provided herein.
The Trustee is hereby authorized, upon receipt of Notes duly executed on
behalf of each Issuer for the purposes of the original issuance of such Notes
and receipt of the other documents set forth in Section 3.3, to authenticate
such Notes in an aggregate
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principal amount not in excess of $560,000,000 and to deliver such Notes to the
Issuers or any other Person designated by the Issuers and, thereafter, to
authenticate and deliver Notes in accordance with the provisions hereinafter set
forth.
The Trustee may, with the consent of the Issuer, appoint by an instrument
or instruments in writing one or more Authenticating Agents (which may include
the Trustee itself) for the authentication of Notes and, with such consent, vary
or terminate any such appointment upon written notice and approve any change in
the office through which any Authenticating Agent acts. The Issuers (by written
notice to the Trustee and the Authenticating Agent whose appointment is to be
terminated) may also terminate any such appointment at any time; provided,
however, that if the Trustee is acting as the Authenticating Agent, it may be
terminated as Authenticating Agent if it is also being terminated as Trustee.
The Trustee hereby agrees to solicit written acceptances from the entities
concerned (in form and substance satisfactory to the Issuers) of such
appointments; provided, however, that the Trustee shall not be required to
solicit such written acceptances from any of its affiliates who act in the
capacity of Paying Agent. In its acceptance of such appointment, each
Authenticating Agent shall agree to act as an authenticating agent pursuant to
the terms and conditions of this Indenture. The Principal Paying Agent and
Paying Agent shall also be Authenticating Agents.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for in Section 2.2, executed
by the Trustee or an Authenticating Agent by manual signature, and such
certificate of authentication upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
SECTION III.5 Payment Account; Holdover Account.
(a) On or prior to the date hereof, the Trustee shall establish one or more
segregated trust accounts, or in the case of an account established in
Luxembourg, segregated accounts (collectively, the "Payment Account"), in the
Trustee's name, each of which shall be an Eligible Account, each bearing a
designation clearly indicating that such account and all funds deposited therein
(including all investments of such deposited funds and all income or other gain
from such investments) are held for the exclusive benefit of the Holders. The
Issuers shall deposit, or cause to be deposited in the Payment Account, on or
before the close of business (in the city in which the Corporate Trust Office
then is located) on the fourth (4th) Business Day preceding each Interest
Payment Date, any amount needed to make the payment of all interest that will be
required to be paid by the Issuers in respect of any Notes Outstanding on such
Interest Payment Date, and if such deposit shall have not been made on or before
12:00 noon (New York time) the second (2nd) Business Day prior to each Interest
Payment Date, then the same shall constitute an Event of Default hereunder and
the Issuers shall owe interest on such amount as set forth in Section 3.11(b).
The Trustee will promptly advise the Servicer by facsimile of all
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amounts received hereunder. The Trustee shall have exclusive control and sole
right of withdrawal with respect to the Payment Account for the purpose of
making withdrawals from the Payment Account in accordance with this Indenture.
Funds in the Payment Account shall not be commingled with any other monies. All
monies deposited from time to time in the Payment Account and all investments
made with such monies, including all income or other gain from such investments,
shall be held by the Trustee in the Payment Account for the benefit of the
Holders as provided herein and, to the extent specified in Section 6.14, the
Issuers.
(b) So long as no Event of Default shall have occurred and be continuing,
all of the funds on deposit in the Payment Account shall be invested and
reinvested by the Trustee in one or more Eligible Investments specified in an
Issuer Request (or, if no Issuer Request is delivered to the Trustee, in
accordance with the priorities established in Section 6.14) if such funds are
reasonably expected to be on deposit for a period in excess of two days, subject
to the following requirements:
(i) such Eligible Investments shall not mature later than the Business
Day prior to the date such amounts are required to be applied under this
Indenture;
(ii) securities purchased with the monies in the Payment Account shall
be deemed a part of the Payment Account;
(iii) each such Eligible Investment shall be made in the name of the
Trustee (in its capacity as such) or in the name of a nominee of the
Trustee under its complete and exclusive dominion and control (or, if
applicable law provides for perfection of pledges of an instrument not
evidenced by a certificate or other instrument through registration of such
pledge on books maintained by or on behalf of the issuer of such
investment, such pledge may be so registered);
(iv) the Trustee shall have the sole control over such investment, the
income thereon and the proceeds thereof;
(v) other than the investments described in clause (iii) above, any
certificate or other instrument evidencing such investment, if any, shall
be delivered directly to the Trustee or its agent; and
(vi) the proceeds of each investment (which shall be made as provided
in Section 6.14) shall be remitted by the purchaser thereof (if not the
Trustee) directly to the Trustee.
All net income or other gain from investments of monies deposited in the
Payment Account shall be applied in accordance with the last sentence of Section
6.14 and any net loss resulting from such investments shall be charged to the
Payment Account. The Trustee shall not be liable to the Holder of any Note, any
Issuer or any other Person for
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any loss resulting from any such investment or sale in accordance with this
Indenture, whether by depreciation in value or otherwise, unless such loss
results from the Trustee's negligence or willful misconduct.
(c) Except as otherwise provided in Sections 5.6 and 11.3 hereof, on each
Interest Payment Date, Redemption Date or Maturity Date, as applicable, the
Trustee shall apply all amounts on deposit in the Payment Account to pay,
pursuant to Section 3.11, the following amounts in the following order of
priority:
(i) any interest due and payable on the Notes (excluding Additional
Amounts) shall be paid to the Holders, first, to the Holders of Class A
Notes, then to the Holders of Class B Notes, then to the Holders of Class C
Notes, then to the Holders of Class D Notes and then to the Holders of
Class E Notes, until, in each case, all such interest has been paid in
full; provided, however, that if there are not sufficient funds in the
Payment Account to pay all interest then due and payable on the Notes of
any Class, any amounts available shall be allocated between the Holders of
the Notes of such Class so that the amount paid to Holders of Notes of each
Series within such Class is equal to the total amount available multiplied
by the ratio of (x) the amount of interest then due and payable on the
Notes of such Series over (y) the total amount of interest then due and
payable to all Holders of Notes of such Class;
(ii) any principal (excluding Make-Whole Payments, if any) due and
payable on any Notes shall be paid to the Holders thereof in the order of
priority described in clause (i) above with respect to payments of
interest, until, in each case, all such principal due and payable on each
Class of Notes has been paid in full; provided, however, that if there are
not sufficient funds in the Payment Account to pay all principal then due
and payable on the Notes of any Class, the amounts available shall be
allocated among the Holders of such Class pro rata according to the
principal amounts of Notes of such Class owned by such Holders immediately
prior to any such payments of principal hereunder;
(iii) Additional Amounts due and payable on any Notes shall be paid to
the Holders thereof in the order of priority described in clause (i) above
with respect to payments of interest, until, in each case, all Additional
Amounts due and payable on each Class have been paid in full provided,
however, that if there are not sufficient funds in the Payment Account to
pay all Additional Amounts then due and payable on the Notes of any Class,
the amount available shall be allocated among the Holders of such Class to
whom such Additional Amounts are payable so that the amount paid to each
such Holder is equal to the total amount available multiplied by the ratio
of (x) the amount of Additional Amounts then due and payable to such Holder
in respect of the Notes of such Class over (y) the total amount of
Additional Amounts then due and payable to all Holders of Notes of such
Class;
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(iv) any Make-Whole Payments due and payable on any of the Notes shall
be paid to the Holders thereof, in the order of priority described in
clause (i) above with respect to payments of interest, until, in each case,
all such principal due and payable on each Class of Notes has been paid in
full; provided, however, that if there are not sufficient funds in the
Payment Account to pay all Make-Whole Payments then due and payable on the
Notes of any Class, any amounts available shall be allocated among the
Holders of such Class pro-rata based on the principal amounts of Notes of
such Class owned by such Holders immediately prior to any such payments of
principal hereunder; and
(v) the balance, if any, except amounts representing unclaimed funds
which shall be deposited in the Holdover Account, shall be returned to the
Issuers.
(d) Funds in the Payment Account for payments of amounts due and payable
and not claimed in accordance with this Indenture on any Outstanding Note shall
be deposited by the Trustee in a segregated trust account (the "Holdover
Account") in the Trustee's name with the Trustee and shall be held for the
account of the Holder or Holders of such Notes pursuant to Section 6.15. Upon
the written request of the Issuers, the Trustee shall invest such funds pursuant
to Section 6.14, but the Trustee shall not otherwise be under any obligation to
do so. Any investment income earned on amounts held in the Holdover Account
shall be held for the benefit of the Issuers as provided in the last sentence of
Section 6.14.
SECTION III.6 Registration; Paying Agent.
(a) General. The Issuers shall cause to be kept at the Corporate Trust
Office a register (the "Register"), within the meaning of Section 163(f) of the
Code and any regulations thereunder, for the registration or transfer of the
Notes. The Register shall be maintained by the Trustee, which is hereby
appointed as "Registrar" for the purpose of registering Notes and transfers of
Notes as provided herein. The name and address of the Holder of each Note,
records of any transfers of the Notes and the name and address of any transferee
of a Note shall be entered in the Register under such reasonable regulations as
the Trustee may prescribe. There shall be no more than one Holder for each Note,
including all beneficial interests therein. The Trustee may appoint one or more
co-registrars, and the term "Registrar" includes any such co-registrar. The
Registrar shall (i) at all reasonable times during office hours make the
Register available to any Issuer or any Person authorized by any Issuer in
writing for inspection and the making of copies thereof or extracts therefrom
and (ii) mail a copy of the Register to any Issuer or any other such Person
promptly after request therefor from any Issuer.
Upon surrender for registration of transfer of any Note at the Corporate
Trust Office, accompanied by a written instrument of transfer in the form
approved by the Issuers and the Trustee (it being understood that, until notice
to the contrary is given to Holders, the Issuers and the Trustee shall each be
deemed to have approved the form of instrument of transfer, if any, printed on
the Notes), executed by the registered owner, in
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person or by such Holder's attorney thereunto duly authorized in writing, such
Note shall be transferred upon the Register, and each Issuer shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more newly registered Notes of any authorized
denominations and of a like aggregate principal amount. Transfers and exchanges
of Notes shall be subject to the restrictions set forth in this Section 3.6 and
in the text of the Notes and such reasonable regulations as may be prescribed by
the Issuers. Successive registrations of transfers as aforesaid may be made from
time to time as desired, and each such registration shall be noted on the
Register.
Any Note (subject, in the case of a Regulation S Temporary Global Note, to
the requirements of Section 2.3(b)) may be exchanged for two or more Notes of
any authorized denominations and of a like aggregate principal amount in
accordance with the provisions of Section 3.2 hereof if the Note to be so
exchanged is surrendered for cancellation at the Corporate Trust Office
accompanied by the written request of the Holder thereof specifying the
denominations of the new Notes to be issued in exchange therefor. New Notes,
executed by each Issuer and payable to such Holder in the denominations so
requested (but in denominations not less than the principal amount of $100,000
and integral multiples of $100,000 in excess thereof, except as such amounts may
be adjusted following a partial redemption and related elections under Article
XI or elsewhere in this Indenture), and in an aggregate principal amount equal
to the principal amount of the surrendered Notes, shall be authenticated and
delivered by the Trustee to such Holder in exchange for the surrendered Note and
any exchange of a Note, Global Note, Restricted Global Note or Regulation S
Temporary Global Note provided for in this Indenture shall only be permitted
between Notes of the same Series.
No provision of this Indenture permitting the exchange of any Note, Global
Note, Restricted Global Note, Restricted Note, Regulation S Temporary Global
Note or Regulation S Global Note shall ever be interpreted as permitting
exchanges between Notes of different Series.
(b) In addition to the Principal Paying Agent, the Trustee may, at its
discretion, appoint one or more Paying Agents and Transfer Agents, and the
Paying Agent, Registrar, Transfer Agent and Authenticating Agent may be the same
Person. If, at any time, and then only so long as any Notes are listed on the
Luxembourg Stock Exchange and such exchange shall so require, the Trustee (on
behalf of the Issuers) shall maintain a Paying Agent and Transfer Agent in
Luxembourg. The Trustee shall promptly notify each Issuer of the name and
address of each Paying Agent appointed by it and of the country or countries in
which a Paying Agent may act in that capacity, and will notify each Issuer of
the resignation or termination of any Paying Agent. Subject to the provisions of
this Section 3.6 and the third paragraph of Section 3.4, the Issuers may vary or
terminate the appointment of any Agent at any time and from time to time upon
giving notice to such Agent and to the Trustee. Each Paying Agent shall have a
long-term unsecured debt rating of not less than Investment Grade or be a
wholly-owned subsidiary of an entity that is so
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rated. Each Paying Agent hereunder shall be entitled to the same protections and
exculpations as are available to the Trustee under Article VI hereof.
In respect of the Notes, the Trustee (on behalf of the Issuers) shall cause
notice of any resignation, termination or appointment of any Paying Agent
(including the Principal Paying Agent) or of the Trustee, and of any change in
the office outside the United States through which any such Agent will act, to
be given to the Holders as provided in Section 1.6 hereof.
Each Issuer (or the Trustee on each Issuer's behalf) shall enter into an
appropriate agency agreement with any Agent not a party to this Indenture and
shall provide a copy of any such agreement to the Trustee. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Issuers shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Issuers fail to maintain a Registrar, Transfer
Agent or Paying Agent, the Trustee shall act as such.
Each Issuer initially appoints the Trustee as Registrar, Principal Paying
Agent, Transfer Agent and Authenticating Agent.
SECTION III.7 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Issuers or any other obligor
upon the Notes shall furnish to the Trustee in writing at least four Business
Days before each Interest Payment Date and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably request of the names and addresses of the Holders.
SECTION III.8 Transfer and Exchange.
(a) General. At the option of each Holder but subject to the provisions of
this Section 3.8, Notes of any Series may be exchanged for other Notes of that
Series of any authorized denomination or denominations and of the same aggregate
principal amount, upon surrender of the Notes to be exchanged at any office or
agency of the Trustee appointed in or pursuant to Section 3.6 for such purpose.
Subject to the terms of this Section 3.8, upon surrender for registration of
transfer of any Note at any such office or agency of the Trustee, the Issuers
shall prepare and each Issuer shall execute, and the Trustee or an
Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations and of the same aggregate principal amount. The
Trustee will, throughout the term of this Indenture, retain in its permanent
records executed originals of all retired Notes delivered to it in connection
with any exchanges or replacements hereunder.
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All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of each Issuer evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Issuers or the Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Registrar (it being understood that, until
notice to the contrary is given to Holders of Notes, each Issuer and the
Registrar shall each be deemed to have approved the form of instrument of
transfer, if any, printed on any definitive Note), duly executed by the Holder
or such Holder's attorney duly authorized in writing.
No service charge shall be made for any registration, registration of
transfer or exchange of Notes, but the Issuers and the Trustee shall have the
right to require payment from the Holder requesting any such registration of
transfer or exchange of an amount in United States Dollars sufficient to pay or
discharge any stamp duty, tax or other governmental charge or insurance charge
that may be imposed in connection with such registration of transfer or
exchange.
Neither the Issuers nor the Trustee shall be required to register the
transfer of, or exchange, any Note called for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(b) Redemption Period. Neither the Issuers nor the Trustee shall issue
Notes, register the transfer of Notes or exchange Notes during a period
beginning at the opening of business fifteen (15) days before any selection of
Notes to be redeemed and ending on the relevant Redemption Date if the Global
Note for which exchange is requested may be among those selected for redemption.
(c) Restricted Notes. Every Restricted Note, including any Note issued upon
transfer or exchange thereof, shall be subject to the restrictions on transfer
provided in the legend required to be set forth on the face of such Restricted
Note pursuant to Section 2.5, unless such restrictions on transfer shall be
waived by the written consent of the Issuers, and the Holder of each Restricted
Note, by such Holder's acceptance thereof, agrees to be bound by such
restrictions on transfer. Whenever any Restricted Note is presented or
surrendered for registration of transfer or for exchange for a Note registered
in a name other than that of the Holder, such Restricted Note must be
accompanied by a transferor's certificate in substantially the form set forth in
Exhibit C-4 and, in the case of transfers of Restricted Notes being effected in
reliance on the exemption from registration provided by Rule 144A, a
transferee's certificate substantially in the form set forth in Exhibit C-8.
Neither the Registrar nor any Transfer Agent shall be required to accept for
such registration of transfer or exchange any Restricted Note unless such
Registrar or Transfer Agent
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is satisfied that such transfer or exchange is being effected in compliance with
the restrictions on transfer as set forth in this Indenture.
The restrictions imposed by this Section 3.8(c) and Section 2.5 upon the
transferability of any particular Restricted Note shall cease and terminate when
such Restricted Note has been (i) sold pursuant to an effective registration
statement, (ii) transferred pursuant to Rule 144 (or any successor provision
thereto), unless the transferor in such transfer is an affiliate of any Issuer
within the meaning of Rule 144 (or such successor provision), or (iii)
transferred pursuant to Regulation S. Any Restricted Note as to which such
restrictions on transfer shall have expired in accordance with their terms or
shall have terminated may, upon surrender of such Restricted Note for exchange
to the Registrar or any Transfer Agent in accordance with the provisions of this
Section 3.8 (accompanied, in the event that such restrictions on transfer have
terminated by reason of a transfer pursuant to Rule 144 or any successor
provision, by an opinion of counsel having substantial experience in practice
under the Securities Act and otherwise reasonably acceptable to the Issuers,
addressed to each Issuer and in form acceptable to the Issuers, to the effect
that the transfer of such Restricted Note has been made in compliance with Rule
144 or such successor provision) be exchanged for a new Note, of like aggregate
principal amount, which shall not bear the restrictive legend required by
Section 2.5. The Issuers shall inform the Trustee of the effective date of any
registration statement registering the Notes under the Securities Act. The
Trustee shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the aforementioned opinion of counsel or
registration statement.
As used in the preceding two paragraphs of this Section 3.8(c), the term
"transfer" encompasses any sale, pledge, transfer or other disposition of any
Restricted Note.
(d) Transfer of Global Notes and Interests Therein. Notwithstanding any
other provision of this Indenture or the Notes, transfers of a Global Note, in
whole or in part, and transfers of interests therein of the kind described in
clauses (iii), (iv) or (v) below, shall be made only in accordance with this
Section 3.8(d), and all transfers of an interest in a Regulation S Temporary
Global Note shall comply with Sections 3.8(d)(ii), (v) and (vi) below.
(i) General. A Global Note may not be transferred, in whole or in
part, to any person other than the Depositary or a nominee thereof, and no
such transfer to any such other person may be registered; provided,
however, that this clause (i) shall not prohibit any transfer of a Note
that is issued in exchange for a Global Note but is not itself a Global
Note. No transfer of a Note to any person shall be effective under this
Indenture or the Notes unless and until such Note has been registered in
the name of such person. Nothing in this Section 3.8(d)(i) shall prohibit
or render ineffective any transfer of a beneficial interest in a Global
Note effected in accordance with the other provisions of this Section
3.8(d).
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(ii) Regulation S Temporary Global Note. If the holder of a beneficial
interest in a Regulation S Temporary Global Note wishes at any time to
transfer such interest to a person who wishes to take delivery thereof in
the form of a beneficial interest in such Regulation S Temporary Global
Note, such transfer may be effected, subject to Applicable Procedures (as
defined below), only in accordance with this Section 3.8(d)(ii). Upon
delivery (i) by a beneficial owner of an interest in a Regulation S
Temporary Global Note to Euroclear or CEDEL, as the case may be, of an
Owner Securities Certification, (ii) by the proposed transferee of such
beneficial interest in the Regulation S Temporary Global Note to Euroclear
or CEDEL, as the case may be, of a written certification (a "Transferee
Securities Certification") substantially in the form of Exhibit C-3 hereto
and (iii) by Euroclear or CEDEL, as the case may be, to the Trustee of a
Depositary Securities Certification, the Trustee may direct either
Euroclear or CEDEL, as the case may be, to reflect on its records the
transfer of a beneficial interest in the Regulation S Temporary Global Note
from the beneficial owner providing the Owner Securities Certification to
the Person providing the Transferee Securities Certification.
(iii) Restricted Global Note to Regulation S Temporary Global Note. If
the holder of a beneficial interest in a Restricted Global Note wishes at
any time to transfer such interest to a person who wishes to take delivery
thereof in the form of a beneficial interest in a Regulation S Temporary
Global Note, such transfer may be effected, subject to the rules and
procedures of the Depositary, Euroclear or CEDEL and the Agent Member who
acts on behalf of Euroclear and CEDEL, in each case to the extent
applicable (the "Applicable Procedures"), only in accordance with the
provisions of this Section 3.8(d)(iii). Upon receipt by (1) the Depositary
of (A) written instructions given in accordance with the Applicable
Procedures from an Agent Member directing the Depositary to credit or cause
to be credited to a specified Agent Member's account a beneficial interest
in a Regulation S Temporary Global Note in a principal amount equal to that
of the beneficial interest in such Restricted Global Note to be
transferred, (B) a written order from the Agent Member and/or Euroclear or
CEDEL, as applicable, given in accordance with the Applicable Procedures
containing information regarding the Euroclear or CEDEL account, as the
case may be, to be credited with, and the account of the Agent Member to be
debited for, such beneficial interest and (C) a certificate in
substantially the form of Exhibit C-5 attached hereto given by the
transferor of such beneficial interest in the Restricted Global Note and
(2) the Trustee, as Registrar, at its Corporate Trust Office of (A)
notification from the Depositary of the transaction described in (1) above
and (B) the certificate described in (1)(C) above, then the Trustee, as
Registrar, shall instruct the Depositary to reduce the principal amount of
a Restricted Global Note, and to increase the principal amount of a
Regulation S Temporary Global Note by the principal amount of the
beneficial interest in the Restricted Global Note to be so transferred, and
to credit or cause to be credited to the account of the person specified in
such instructions (which shall be the Agent Member for Euroclear and/or
CEDEL or both, as the case may be) a beneficial interest in such Regulation
S Temporary Global Note
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having a principal amount equal to the amount by which the principal amount
of the Restricted Global Note was reduced upon such transfer.
(iv) Restricted Global Note to Unrestricted Global Note. If the holder
of a beneficial interest in a Restricted Global Note wishes at any time to
transfer such interest to a person who wishes to take delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note, such
transfer may be effected, subject to the Applicable Procedures, only in
accordance with this Section 3.8(d)(iv). Upon receipt by (1) the Depositary
of (A) written instructions given in accordance with the Applicable
Procedures from an Agent Member directing the Depositary to credit or cause
to be credited to a specified Agent Member's account a beneficial interest
in an Unrestricted Global Note in a principal amount equal to that of the
beneficial interest in such Restricted Global Note, (B) a written order
given in accordance with the Applicable Procedures containing information
regarding the account of the Agent Member (and, in the case of any such
transfer pursuant to Regulation S, the Euroclear or CEDEL account for which
such Agent Member's account is held) to be credited with, and the account
of the Agent Member to be debited for, such beneficial interest and (C) a
certificate in substantially the form of Exhibit C-6 attached hereto given
by the holder of such beneficial interest to be transferred and (2) the
Trustee, as Registrar, at its Corporate Trust Office of (A) notification
from the Depositary of the transaction described in (1) above and (B) the
certificate described in (1)(C) above, the Trustee, as Registrar, shall
instruct the Depositary to reduce the principal amount of a Restricted
Global Note, and to increase the principal amount of an Unrestricted Global
Note by the principal amount of the beneficial interest in the Restricted
Global Note to be so transferred, and to credit or cause to be credited to
the account of the person specified in such instructions a beneficial
interest in such Unrestricted Global Note having a principal amount equal
to the amount by which the principal amount of the Restricted Global Note
was reduced upon such transfer.
(v) Regulation S Temporary Global Note or Unrestricted Global Note to
Restricted Global Note. If the holder of a beneficial interest in a
Regulation S Temporary Global Note on or after the termination of the
Regulation S Restricted Period, or the holder of a beneficial interest in
an Unrestricted Global Note at any time, wishes to transfer such interest
to a person who wishes to take delivery thereof in the form of a beneficial
interest in a Restricted Global Note, such transfer may be effected only in
accordance with the Applicable Procedures and this Section 3.8(d)(v);
provided, that with respect to any transfer of a beneficial interest in a
Regulation S Temporary Global Note (except a transfer pursuant to Section
3.8(d)(vii)(2)) the transferor and Euroclear or CEDEL, as the case may be,
also must have previously delivered the certificates described in the first
paragraph of Section 2.3(b)(ii) with respect to such beneficial interest.
Upon receipt by (1) the Depositary of (A) written instructions given in
accordance with the Applicable Procedures from an Agent Member, directing
the Depositary to credit or cause to be credited to a specified Agent
Member's account a beneficial interest in the Restricted Global Note equal
to that of
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the beneficial interest in a Regulation S Temporary Global Note or an
Unrestricted Global Note to be so transferred and (B) a written order given
in accordance with the Applicable Procedures containing information
regarding the account of the Agent Member to be credited with, and the
account of the Agent Member (and, if such account is held for Euroclear or
CEDEL, the Euroclear or CEDEL account, as the case may be) to be debited
for, such beneficial interest, and (2) the Trustee, as Registrar, at its
Corporate Trust Office of notification from the Depositary of the
transaction described in (1) above, the Trustee, as Registrar, shall
instruct the Depositary to reduce the principal amount of such Regulation S
Temporary Global Note or Unrestricted Global Note as the case may be and
increase the principal amount of the Restricted Global Note, by the
principal amount of the beneficial interest in such Regulation S Temporary
Global Note or Unrestricted Global Note to be so transferred, and to credit
or cause to be credited to the account of the person specified in such
instructions a beneficial interest in such Restricted Global Note having a
principal amount equal to the amount by which the principal amount of such
Regulation S Temporary Global Note or Unrestricted Global Note was reduced
upon such transfer.
(vi) Interests in Regulation S Temporary Global Note to be Held
Through Euroclear or CEDEL. Until the later of the termination of the
Regulation S Restricted Period and the delivery of the certifications
required by Section 2.3(b)(ii), (A) interests in any Regulation S Temporary
Global Note may be held only through Agent Members acting for and on behalf
of Euroclear and CEDEL, and (B) any purchaser of Notes in a sale made in
reliance on Regulation S may not sell or offer to sell such Notes within
the United States or to a U.S. Person or for the account or benefit of a
U.S. Person within the meaning of Regulation S.
(vii) Other Exchanges. (1) In the event that a Global Note or any
portion thereof is exchanged for Notes other than Global Notes, such other
Notes may in turn be exchanged (on transfer or otherwise) for Notes that
are not Global Notes or for beneficial interests in a Global Note of the
same Series as the definitive Note to be so exchanged (if any is then
Outstanding) only in accordance with such procedures, which shall be
substantially consistent with the provisions of clauses (i) through (vi)
above (including the certification requirements intended to insure that
transfers of beneficial interests in a Global Note comply with Rule 144A,
Rule 144 or Regulation S, as the case may be) and any Applicable
Procedures, as may be from time to time adopted by the Issuers and the
Trustee; provided, that, except as permitted in paragraph (2) hereof, no
beneficial interest in a Regulation S Temporary Global Note shall be
exchangeable for a definitive Note until the expiration of the Regulation S
Restricted Period and then only if the certifications described in Section
2.3(b)(ii) have been provided in respect of such interest.
(2) Notwithstanding any other provision of this Section 3.8, an
Initial Purchaser may exchange beneficial interests in a Regulation S
Temporary Global Note held by
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it for one or more Restricted Notes (including an interest in a Restricted
Global Note) upon delivery by such Initial Purchaser of instructions for
such exchange substantially in the form of Exhibit C-7. Upon receipt of the
instruction described in the preceding sentence, the Trustee shall instruct
the Depositary to reduce the principal amount of a Regulation S Temporary
Global Note by the principal amount of the beneficial interest in such
Regulation S Temporary Global Note to be so transferred and either (A) the
Trustee shall instruct the Depositary to increase the principal amount of
the Restricted Global Note and credit or cause to be credited to the
account of the Initial Purchasers a beneficial interest in such Restricted
Global Note having a principal amount equal to the amount by which the
principal amount of the Regulation S Temporary Global Note was reduced upon
such transfer or (B) authenticate and deliver one or more Restricted Notes
in definitive form and in the aggregate principal amount of the beneficial
interest in the Regulation S Temporary Global Note to be so transferred,
pursuant to the instructions described in the first sentence of this
subclause (2).
(e) Transfer of Restricted Notes (Other Than a Restricted Global Note) to a
Global Note. If the holder of a Restricted Note (other than a Restricted Global
Note) wishes at any time to transfer such Note to a person who wishes to take
delivery thereof in the form of a beneficial interest in a Restricted Global
Note, a Regulation S Temporary Global Note or an Unrestricted Global Note, such
transfer may be effected, subject to the other provisions of this Indenture and
the Applicable Procedures, only in accordance with this Section 3.8(e). Upon
receipt by (1) the Depositary of (A) written instructions given in accordance
with the Applicable Procedures from an Agent Member directing the Depositary to
credit or cause to be credited to a specified Agent Member's account a
beneficial interest in a Restricted Global Note, a Regulation S Temporary Global
Note or an Unrestricted Global Note, as the case may be, in a principal amount
equal to the principal amount of the Restricted Note to be so transferred, (B) a
written order given in accordance with the Applicable Procedures containing
information regarding the account of the Agent Member (and, in the case of any
transfer pursuant to Regulation S, the Euroclear and CEDEL account for which
such Agent Member's account is held, or if such account is held for Euroclear or
CEDEL, the Euroclear or CEDEL account, as the case may be) to be credited with
such beneficial interest and (C) an appropriately completed certificate
substantially in the form of Exhibit C-4 hereto and (2) the Trustee of (A) the
Restricted Note to be transferred, (B) notification from the Depositary of the
transaction described in (1) above and (C) the certificate described in (1)(C)
above, the Trustee shall cancel the Restricted Note and instruct the Depositary
to increase the principal amount of a Restricted Global Note, Regulation S
Temporary Global Note or Unrestricted Global Note, as the case may be, by the
principal amount of the Restricted Note so transferred, and to credit or cause
to be credited to the account of the person specified in such instructions
(which, in the case of any increase in the principal amount of such Regulation S
Temporary Global Note, shall be the Agent Member for Euroclear or CEDEL or both,
as the case may be) a corresponding principal amount of such Restricted Global
Note, such Regulation S Temporary Global Note or such Unrestricted Global Note.
Any transfer of
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a Restricted Note to a person who wishes to take delivery thereof in the form of
a beneficial interest in a Global Note other than a Restricted Global Note may
only be effected in accordance with Regulation S or Rule 144.
(f) Notwithstanding any other provision of this Section 3.8, transfers of
any Note or a beneficial interest in a Global Note made in reliance on Rule 144A
may be effected only after delivery to the Depositary or the Trustee by the
proposed transferee of an appropriately completed certificate substantially in
the form of Exhibit C-8.
(g) Successive registrations and registrations of transfers and exchanges
as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the Register. No service charge shall be made for
any registration of transfer or exchange of the Notes, but the Trustee may
require payment of a sum sufficient to cover any stamp duty, tax or other
governmental charge or insurance charge payable in connection therewith and any
other amounts required to be paid by the provisions of the Notes.
(h) All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of each Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
SECTION III.9 Mutilated, Destroyed, Lost and Stolen Notes.
If any mutilated Note is surrendered to the Trustee, each Issuer shall
execute, and the Trustee shall authenticate and deliver in exchange therefor, a
new Note (a "New Note") of like tenor and principal amount and bearing a number
not contemporaneously outstanding. Each New Note issued pursuant to this Section
in exchange for, in substitution for, or in lieu of a Predecessor Note shall be
dated the date of, and be in the form of, such Predecessor Note.
If there shall be delivered to the Issuers and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Note and (ii) such
security or indemnity as may be required by each of them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Issuers or the Trustee that such Note has been acquired by a bona fide
purchaser, each Issuer shall execute and upon their request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
New Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding. In every case of mutilation or defacement, the
applicant shall surrender to the Trustee the Note so mutilated or defaced. Upon
the issuance of any substitute Note, the Issuers may require the payment by the
applicant of a sum sufficient to cover any stamp duty, tax or other governmental
charge or insurance charge that may be imposed or incurred in relation thereto
and any other expenses connected therewith.
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Every New Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of each Issuer evidencing the same debt as the Predecessor Note,
whether or not the destroyed, lost or stolen Note shall be at any time
enforceable by anyone having rights in such New Note thereunder and hereunder,
and any such New Note shall be entitled to all the benefits of this Indenture
and of the other Security Documents to the same extent as such Predecessor Note.
All Notes shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen Notes or
negotiable instruments without their surrender.
SECTION III.10 Interest.
(a) Each Note shall bear interest from and including its date of issuance
until its respective Maturity Date. Such interest shall accrue during each
Interest Period for the Notes and be payable by the Issuers in arrears for such
Interest Period on the related Interest Payment Date and upon the redemption or
maturity thereof. Interest on each Note shall, except to the extent that funds
are not available in the Payment Account, cease to accrue from Maturity or, if
earlier, the date of redemption.
(b) (i) For the period from the initial issuance to, but not including, the
Maturity Date, or earlier redemption, the per annum interest rate for each
Interest Period applicable to the Notes shall be: for the Series A-1 Notes,
6.537%; for the Series B-1 Notes, 6.635%; for the Series C-1 Notes, 6.762%;
for the Series D-1 Notes, 6.917%; for the Series E-1 Notes, 7.052%; for the
Series A-2 Notes, 6.602%; for the Series B-2 Notes, 6.728%; for the Series C-2
Notes, 6.806%; for the Series D-2 Notes, 6.992%; and for the Series E-2 Notes,
7.224%.
(ii) Interest on each Note shall, from the Closing Date to, but not
including, the applicable Maturity Date, be payable monthly on each Interest
Payment Date commencing December 15, 1997. Interest on the Fixed Rate Notes
shall be computed based on a year of 360 days comprised of twelve 30-day
months.
SECTION III.11 Payment of Principal and Interest.
(a) Each Issuer hereby authorizes and directs the Trustee to make or cause
to be made payment, from funds available in the Payment Account and any other
funds made available to the Trustee for such purpose, of the principal of and
any interest (and Make-
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Whole Payment and Additional Amounts, if any) on the Notes as set forth in this
Indenture.
(b) Subject to the provisions set forth below with respect to Default
Interest, any interest on the Notes shall be paid on each Interest Payment Date
to the Person who was the Holder thereof at the close of business on the Regular
Record Date for such Interest Payment Date; provided, however, that interest
payable at Maturity of the Notes of any Series shall be payable to the Person to
whom principal shall be payable. Payments of principal of (and Make-Whole
Payments, if any, on) the Notes shall be payable at Maturity against surrender
thereof at the Corporate Trust Office and at the offices of such other Paying
Agents as the Trustee shall have appointed pursuant to Section 3.6(b).
So long as the Notes are held through the Depositary's book-entry system,
payments of interest and principal (and Additional Amounts and Make-Whole
Payments, if any) on the Notes will be made, subject to applicable laws and
regulations, by wire transfer from the Trustee to the Depositary and will be
forwarded to investors in accordance with the payment procedures of the
Depositary and the Agent Members thereof. If any Note is not held through the
Depositary, payments of principal (and Make-Whole Payment, if any) with respect
to the Notes shall be made at Maturity upon surrender of such Notes and payments
of any interest (and Additional Amounts, if any) on such Notes shall be made on
the applicable Interest Payment Date, in accordance with the foregoing and
subject to applicable laws and regulations, by check mailed on or before the due
date for such payment to the Person entitled thereto at such Person's address
appearing on the Register, or, in the case of payments of principal, to such
other address as the Holder shall provide in writing at the time of such
surrender (or, in the case of a Holder that provides the Trustee with wire
instructions and complies with any other reasonable requirements of the
Principal Paying Agent, by wire transfer to such account as such Holder shall
designate by written instruction received by the Principal Paying Agent not less
than five (5) Business Days prior to the Regular Record Date).
If, for any reason, interest on any Note is not paid or provided for by the
Issuers on or prior to 12:00 noon on the date which is two (2) Business Days
prior to the Interest Payment Date on which such interest is due, or the
principal of any Notes is not repaid or provided for by the Issuers on or prior
to 12:00 noon on the Maturity Date applicable to such Notes, the Issuers will be
required to pay default interest at a per annum rate equal to the higher of (i)
the regular per annum interest rate applicable thereto plus 400 basis points or
(ii) the Advance Interest Rate (such rate, the "Default Rate", and such
interest, "Default Interest") for every day that such nonpayment continues until
the Issuers have paid all such amounts, all Default Interest incurred by the
Issuers in connection therewith as provided below and all other amounts then due
and payable under this Indenture and the other Security Documents. The portion
of such Default Interest equal to the product of the relevant aggregate
principal balance and the Advance Interest Rate will be payable to the Servicer
(or the Trustee, as back-up Servicer, if applicable), to the extent, but only to
the extent, that the Servicer (or the Trustee) has advanced the regular interest
payment in
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question, as reimbursement for the Interest Advance in accordance with Section
5.6 and the excess, if any, of the Default Interest payable over the product of
relevant aggregate principal balance and the Advance Interest Rate will be
payable to the Holders of the Notes; provided, however, that payments of any
such amounts payable to Holders will be subordinate to payments of principal and
interest as set forth in Section 5.6. If the Issuers default in the timely
payment of interest or principal on any Notes and the Servicer (and the Trustee,
as back-up Servicer) is not required to make, or defaults in its obligation to
make, an Interest Advance, the Holders of such Notes will be entitled to receive
100% of the Default Interest payable by the Issuers in respect of such default.
Upon a default by the Issuers in the payment of interest or principal on the
Notes, any Default Interest payable in connection therewith shall forthwith
cease to be payable to the Holders on the relevant Regular Record Date, and
Default Interest (to the extent payable to Holders under this Section 3.11, as
opposed to the Servicer or the Trustee as back-up Servicer) shall be paid by the
Issuers to the Person or Persons registered as Holders at the close of business
on a Special Record Date for the payment of such Default Interest, which shall
be fixed in the following manner. The Issuers shall notify the Trustee in
writing of the amount of Default Interest proposed to be paid on each such Note
and the date of the proposed payment, and at the same time the Issuers shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Default Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Default Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date (the "Special
Record Date") for the payment of such Default Interest which shall be not more
than ten (10) Business Days and not less than five (5) Business Days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify each Issuer and the Servicer of such Special Record Date and, in
the name and at the expense of the Issuers, shall cause notice of the proposed
payment of such Default Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at the address of such
Holder as it appears in the Register, not less than five (5) Business Days prior
to such Special Record Date. Notice of the proposed payment of such Default
Interest and the Special Record Date therefor having been so mailed, such
Default Interest shall be paid to the Person in whose name each respective Note
(or their respective Predecessor Note) is registered at the close of business on
such Special Record Date.
At the Maturity Date of each Note, the Trustee shall pay the principal
amount of such Note, and any unpaid interest thereon in immediately available
funds from funds in the Payment Account as promptly as possible after
presentation to the Trustee of such Note but shall initiate such payment no
later than 3:00 p.m. (New York time) on the day of such presentation, provided
that such presentation has been made no later than 11:00 a.m. (New York time).
If presentation is made after 11:00 a.m. (New York time) on any day, such
presentation shall be deemed to have been made not later than 11:00 a.m. (New
York time) on the immediately succeeding Business Day.
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In the event that a Note is not presented for payment by 11:00 a.m. (New
York time) at its Maturity Date, the Trustee shall transfer any principal
thereof and interest thereon to the Holdover Account. If the Holder of such Note
shall present such Note to the Trustee within two (2) years after its Maturity
Date, the Trustee shall pay such Note from funds in the Holdover Account. In no
event (other than following a default by any of the Issuers) shall such Note
earn interest after its Maturity Date. If such Note is not presented for payment
within two (2) years after its Maturity Date, the Trustee shall not honor a
demand for payment of such Note and the Trustee shall act in accordance with
Section 6.15 in respect of the unclaimed funds in the Holdover Account in
respect of such Note.
If at 4:00 p.m. (New York time) of any day, any funds remain in the Payment
Account after (i) the payment of each Note with a Maturity Date of such day
which are presented by 11:00 a.m. (New York time) for payment on such date and
(ii) the transfer of funds to the Holdover Account for each Note with a Maturity
Date of such day which is not presented for payment on such date (or is
presented after 11:00 a.m. (New York time) on such date), then such remaining
funds shall be transferred by the Trustee to the Issuers in accordance with
written wire transfer instructions given by the Issuers to the Trustee.
SECTION III.12 Interest on New Notes.
Interest shall be deemed to have been paid on each New Note issued pursuant
to Section 3.9 hereof in exchange for, in substitution for, or in lieu of a
Predecessor Note to the date to which interest was paid on such Predecessor
Note.
SECTION III.13 Cancellation.
All Notes surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Issuers may
at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which any Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
canceled as provided in this Section 3.13, except as expressly permitted by this
Indenture. All canceled Notes held by the Trustee shall be retained by the
Trustee in accordance with Section 3.8(a).
SECTION III.14 Information.
For so long as any of the Notes remain Outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, each
of the Issuers will, during any period in which such Issuer is neither subject
to Section 13 or 15(d) under the
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Exchange Act nor exempt from reporting under the Exchange Act pursuant to Rule
12g3-2(b) thereunder, make available to any Holder of a Restricted Note or any
owner of a beneficial interest in a Restricted Global Note, to a prospective
purchaser of such Note or beneficial interest therein who is a QIB, or to the
Trustee for delivery to such Holder or beneficial owner or prospective
purchaser, as the case may be, in connection with any sale thereof, in each case
at a Holder's or the Trustee's written request to the Issuers, the Rule 144A
Information; provided, that the Issuers shall not be required to furnish such
information at any time to a prospective purchaser located outside the United
States who is not a "U.S. person" within the meaning of Regulation S if such
Note may then be sold to such prospective purchaser in accordance with Rule 904
under the Securities Act (or any successor provision thereto).
SECTION III.15 Paying Agent to Hold Money in Trust.
The Trustee shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
and the Trustee all money held by the Paying Agent for the payment of principal
of or interest on the Notes, and will notify the Trustee of any default by any
Issuer or any other obligor upon the Notes in making any such payment or in
depositing the funds to make such payment with the Paying Agent. While any such
default continues, the Trustee may require a Paying Agent to pay all money and
other property, if any, held by it to the Trustee. The Issuers at any time may
require a Paying Agent to remit all money and other property, if any, held by it
to the Trustee (for deposit into the Payment Account). Upon payment over to the
Trustee, the Paying Agent shall have no further liability for such funds so
remitted. If any Issuer acts as Paying Agent, it shall segregate and hold as a
separate trust fund all money and other property, if any, held by it as Paying
Agent.
ARTICLE IV
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION IV.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon an Issuer Request cease to be of further effect
(except as to any surviving rights of transfer or exchange of Notes herein
expressly provided for and except, in the case of clause (1)(b) below, for the
rights of the Holders of the Notes hereunder to receive payment of the principal
of and interest on the Notes, and any Additional Amounts or Make-Whole Payments,
if any, and any other rights of the Holders of the Notes hereunder with respect
to amounts deposited with the Trustee), and the Trustee, at the expense of the
Issuers, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture and release of the collateral to the Issuers, when
(1) either
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(a) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 3.9 and (ii) Notes for which payment money
has theretofore been deposited in trust or segregated and held in trust by
the Trustee and thereafter repaid to the Issuers or discharged from such
trust, as provided in Section 6.15) have been delivered to the Trustee for
cancellation; or
(b) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Maturity Date within
one (1) year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Issuers,
and, in the case of (i), (ii) or (iii) above, the Issuers have deposited or
caused to be deposited with or delivered to the Trustee as trust funds in trust
for these purposes Cash and Eligible Investments with Collateral Value
sufficient, without consideration of any reinvestment of interest therefrom, to
pay and discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, or principal and any interest (and
Additional Amounts, if any) to the date of such deposit (in the case of Notes
that have become due and payable) or to the Maturity Date or Redemption Date, as
the case may be; provided, however, that, in the case of (ii) or (iii) above
with respect to Notes that are not yet due and payable, the Issuers shall direct
by Issuer Order how any Cash received pursuant to this Section 4.1 will be
invested and no satisfaction and discharge will be permitted unless the Issuers
deliver to the Trustee an Opinion of Counsel addressed to each Issuer and the
Trustee from counsel experienced in federal income tax matters to the effect
that, based on such stipulations of the Issuers, any action taken pursuant to
this Section 4.1 will not (a) result in any payments to Holders being subject to
United States federal withholding taxes or (b) be treated as an exchange
pursuant to Section 1001 of the Code;
(2) the Issuers have paid or caused to be paid all other sums payable
hereunder and under the other Security Documents by any Issuer to the Trustee,
and each of the Holders; and
(3) each of the Issuers has delivered to the Trustee an Officer's
Certificate stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the foregoing, but subject to the provisions of Section
1.12 and Section 1.14 hereof, each Issuer's obligations under this Indenture and
in respect of the
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Notes shall survive the discharge of this Indenture if and to the extent that
any payment of any amount paid by any Issuer to the Trustee or any Holder is
avoided as a preferential transfer or otherwise rescinded or required to be
restored under applicable law. Upon the payment of all of the Outstanding Notes
in full, the Trustee shall notify the Rating Agency of such event.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of each Issuer to the Trustee under Section 6.5 hereof and of the
Trustee to the Holders of Notes under Section 4.2 hereof shall survive.
SECTION IV.2 Defeasance of Notes.
The Issuers may elect, at any time and from time to time, to be released
from part or all of their obligations under the Notes (and thereby effect a
reduction of the principal amount secured by the Mortgage and the other Security
Documents) by notifying the Trustee in writing of the specific Notes to be
defeased and irrevocably conveying to the Trustee, in trust for the payment of
any interest (and Additional Amounts, if any) then due and the principal amount
(or any part thereof) of the Notes that the Issuers wish to defease, Eligible
Investments with Collateral Value sufficient, without consideration of any
reinvestment of interest therefrom, to pay (i) all amounts then due under such
Notes, (ii) the outstanding principal amount of such Notes (the "Defeasance
Portion") and (iii) the portion of the interest (and Additional Amounts, if any
are then known) that will become due under such Notes on any date prior to and
including the Scheduled Maturity Date (all such interest as described in this
clause (iii) together with the Defeasance Portion and any and all other amounts
previously conveyed to the Trustee pursuant to clauses (ii) and (iii) of this
Section 4.2 being hereinafter referred to as the "Defeasance Property");
provided, however, that each Issuer's right to proceed as aforesaid shall be
subject to the delivery by the Issuers of an Opinion of Counsel, from counsel
experienced in the relevant subject matter, to the effect that (a) the delivery
of such Eligible Investments will not (x) result in any Issuer or the Trustee
being regarded as an investment company under the Investment Company Act of
1940, (y) result in any payments to Holders being subject to United States
federal withholding taxes or (z) be treated as an exchange pursuant to Section
1001 of the Code, and (b) the Trustee will have a perfected security interest in
such Eligible Investments and (c) the delivery of the Eligible Investments shall
not constitute a voidable preference under the Bankruptcy Code (the last of
which opinion may rely on the fact that the appraised values of the Mortgaged
Properties being released are equal to or greater than the value of the
Defeasance Property being conveyed to the Trustee in respect of the Notes being
defeased). When specifying Notes to be defeased, the Issuers may only defease
Notes in the order of priority that would apply if the Issuers were seeking to
redeem those Notes pursuant to Article XI. All Eligible Investments conveyed by
the Issuers to the Trustee pursuant to this Section 4.2, and any interest
accruing thereon, shall be owned by the Trustee free and clear of any claim of
the Issuers, and not as security for repayment of obligations under the Notes.
In the event of a release in part of the obligations of any Issuer under one or
more of the Notes, the Mortgage may be enforced against the Mortgaged Properties
only to the extent of the amount of the principal balance remaining outstanding
on the Notes at the time of enforcement (after giving effect to any partial
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releases granted by the Mortgagee as a result of the delivery of the Defeasance
Property) and the amount of the other obligations under this Indenture, the
Mortgage and the other Security Documents. The defeasance by the Issuers of 100%
of the Outstanding Notes shall not, in and of itself, relieve the Trustee of its
obligations to the Holders hereunder.
SECTION IV.3 Application of Trust Money.
Subject to Section 4.5, the Trustee shall hold in trust Cash or Eligible
Investments deposited with it pursuant to Section 4.1 or Section 4.2 of this
Indenture, as the case may be, and shall apply the deposited Cash and the money
from Eligible Investments in accordance with this Indenture to the payment
either directly or through any Paying Agent as the Trustee may determine, to
Persons entitled thereto, of principal of and interest (and Additional Amounts,
if any, and, in the case of a redemption pursuant to Section 4.1(1)(b)(iii),
Make-Whole Payments, if any) on the Notes.
SECTION IV.4 Repayment to Issuers.
Subject to the other provisions of this Indenture and any other applicable
Security Documents, the Trustee shall promptly pay to the Issuers upon written
request any excess money held by it in the Payment Account or any other account
established by the Trustee in furtherance of its rights or obligations under
this Indenture of any other Security Document (exclusive of money to be held by
the Trustee pursuant to Section 6.15) at any time and thereupon shall be
relieved from all liability with respect to such money.
SECTION IV.5 Reinstatement.
If the Trustee is unable to apply any Cash or Eligible Investments in
accordance with Section 4.1 or Section 4.2 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, each Issuer's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 4.1 or Section 4.2 until
such time as the Trustee has received the final order or decree of such court or
governmental authority permitting it to apply all such Cash or Eligible
Investments in accordance with Section 4.1 or Section 4.2, as applicable;
provided that, if any of the Issuers has made any payment of principal of or
interest on any Notes because of the reinstatement of its obligations, such
Issuers shall be subrogated to the rights of the Holders of the Notes to receive
such payment from the Cash or Eligible Investment held by the Trustee.
SECTION IV.6 Release of Collateral.
Upon the release of any Mortgaged Property from the lien of the Mortgage or
any portion of the other Collateral from the lien and security interest of this
Indenture, the Mortgage or any other Security Document in accordance with the
relevant provisions
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hereof and thereof, the Trustee and the Servicer (if applicable) shall execute
such instruments as may be reasonably requested and presented by the Issuers to
effect and/or acknowledge such release. The above-referenced instruments may
include, at the Issuers' election, (i) one or more amendments and/or
restatements of the Mortgage, the Assignment of Leases and/or any other Security
Document (in each case, without any representation or warranty by or recourse to
the Trustee or the Servicer) as may be appropriate to separate the Liens created
thereby against the Mortgaged Property to be released (as used herein, the
"Release Property") from the Liens encumbering the remaining Mortgaged
Properties and, thereafter, one or more assignments of the resulting Security
Documents relating to the Release Property to any designee or nominee of the
Issuers and (ii) such uniform commercial code financing statements, each in
customary form and as may be mutually agreed upon by the Issuers and the
Trustee; provided, however, that neither the Trustee nor the Servicer shall be
required to take any action or execute any instruments pursuant to the foregoing
unless such entity is satisfied, in its reasonable judgment, that such action or
instrument will not compromise in any way the validity or enforceability of the
Lien of any Security Document with respect to any of the Mortgaged Properties
that are not Release Property. Concurrently with any release transaction
contemplated hereby the Trustee and Servicer shall return to the Issuer that
owns the Release Property the duplicate originals of any amendment or
restatement of any collateral agreement to which it is a party which relates
solely to the Release Property and in which the Trustee or Servicer, as
applicable, will no longer have any interest after such release.
ARTICLE V
REMEDIES
SECTION V.1 Events of Default.
"Event of Default", wherever used herein with respect to Notes, means the
occurrence of any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) an Event of Default as described in the second sentence of Section
3.5(a) hereof; or
(2) a default in the payment of the principal of any Note at Maturity
or any payment of the Make-Whole Payment, if any, owing in respect of any Fixed
Rate Note when the same becomes due and payable to the Holders of such Notes; or
(3) a default in the performance of any material covenant, or breach
of any material representation or warranty, of any Issuer in this Indenture, in
any other Security
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Document or in any certificate delivered pursuant to this Indenture (other than
a material covenant, representation or warranty a default in whose performance
or whose breach is elsewhere in this Section 5.1 specifically dealt with), and
continuance of such default or breach for a period of thirty (30) Business Days
after there has been given, by registered or certified mail, to the Issuers by
the Trustee (or the Servicer on the Trustee's behalf) a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; provided that in the case
of any such failure that is susceptible of cure but that cannot with diligence
be cured within such thirty (30) Business Day period, if the Issuer shall have
promptly commenced to cure the same within such thirty (30) Business Day period
and shall thereafter prosecute the curing thereof with diligence, the period
within which such failure may be cured shall be extended for such further period
as shall be reasonably necessary for the curing thereof, although such extended
period shall not exceed one hundred and eighty (180) days unless, in the case of
a cure that requires construction or remedial work, such cure cannot with
diligence reasonably be achieved within one hundred and eighty (180) days, in
which case such period shall be extended for an additional one hundred and
eighty (180) days, subject to Excusable Delays; or
(4) the entry by a court having jurisdiction over any Issuer of (A) a
decree or order for relief in respect of such Issuer in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, rehabilitation or other similar law or (B) a decree or order
adjudging such Issuer a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, rehabilitation, arrangement, adjustment or
composition of or in respect of such Issuer under any applicable federal or
state bankruptcy, insolvency, reorganization, rehabilitation or other similar
law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of such Issuer or of any substantial part
of its property, or ordering the winding up or liquidation of its affairs; or
(5) the commencement by any Issuer of a voluntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by any Issuer to the entry of a decree or order for
relief in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of any Issuer or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by any Issuer in furtherance of any such action; or
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(6) an "Event of Default" as defined in the Mortgage shall have
occurred and be continuing.
SECTION V.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default specified in Section 5.1(4) or 5.1(5) hereof occurs
and is continuing, the amounts specified in the next sentence shall
automatically become and be due and payable immediately without any action
whatsoever on the part of the Trustee, the Servicer or the Holders. If an Event
of Default specified in Section 5.1(1), 5.1(2), 5.1(3), or 5.1(6) (other than an
Event of Default which arises thereunder solely by virtue of the occurrence of
an Event of Default arising under Section 5.1(4) or Section 5.1(5) of this
Indenture) occurs and is continuing, then in every such case the Trustee may and
at the direction of the Holders of not less than 66-2/3% in aggregate principal
amount of the Outstanding Notes shall, by a notice in writing to the Issuers and
the Servicer, declare the sum of (i) the principal amount of all Outstanding
Notes and (ii) any other amounts, including but not limited to, accrued
interest, Additional Amounts, if any, and Make-Whole Payments, if any, payable
to the Holders under the Notes, to the extent such amounts are permitted by law
to be paid, to be due and payable immediately, and upon any such declaration
such amounts shall become immediately due and payable.
At any time after such an automatic acceleration or a declaration of
acceleration of the Notes has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee or the Servicer as
hereinafter provided in this Article, the Holders of not less than 66-2/3% in
aggregate principal amount of the Outstanding Notes, by written notice to the
Issuers, the Trustee and the Servicer, may rescind and annul such declaration
and its consequences if
(1) the Issuers have paid or caused to be deposited with the Trustee a
sum sufficient to pay:
(a) all interest (and Additional Amounts, if any) due and payable on
all Outstanding Notes,
(b) the principal of and Make-Whole Payment, if any, on any
Outstanding Notes that have become due, if any, otherwise than by such
declaration of acceleration, and interest and all other amounts due thereon
at the rate or rates or in the amount prescribed therefor in such Notes,
(c) all sums paid or advanced by the Trustee or the Servicer hereunder
and the reasonable compensation, expenses, disbursements and advances of
the Trustee and the Servicer and their respective agents and counsel, and
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(d) any other amounts then due and payable under the Indenture or any
other Security Document (other than principal that became due solely as a
consequence of such acceleration;
and
(2) all Events of Default, other than the non-payment of the principal
of the Outstanding Notes which has become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
If the Issuers fail to make a payment when due, and then deliver to
the Trustee funds sufficient to make all payments current, absent acceleration,
and the Trustee on behalf of the Holders agrees in writing to accept that
payment and to rescind the declaration of an Event of Default or acceleration,
or Holders of not less than 66-2/3% in aggregate principal amount of the
Outstanding Notes, prior to an acceleration, agree to rescind the declaration of
an Event of Default, in either case, the Holders shall also be deemed to waive
the right to claim that the failure to make the payment when due was an Event of
Default and is continuing.
SECTION V.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
If the Issuers fail to pay all amounts due upon an acceleration under
Section 5.2 forthwith upon demand, the Trustee (and the Servicer on its behalf),
in its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and, subject to the provisions of Section
1.12 and Section 1.14 hereof, may enforce the same against the Issuers and
collect the monies adjudged or decreed to be payable in the manner provided by
law out of the Collateral and pursuant to the Security Documents, wherever
situated, or may institute such non-judicial proceedings in lieu of judicial
proceedings as are then permitted by applicable law, and may take such actions
through a mortgage trustee if necessary or advisable under applicable law.
If an Event of Default with respect to the Notes occurs and is continuing,
subject to the provisions of Section 1.12 and Section 1.14 hereof, the Trustee
(and the Servicer on its behalf) may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of the Notes by such
appropriate judicial proceedings as the Trustee (or the Servicer) shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
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SECTION V.4 Trustee May File Proofs of Claim.
In the case of pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, rehabilitation, arrangement, adjustment, composition
or other judicial proceeding relative to any Issuer, or the property of any
Issuer or its creditors, the Trustee (irrespective of whether the principal of
the Notes shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Issuers for the payment of overdue principal or interest) shall be
entitled and empowered, to the extent not prohibited by applicable law, by
intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of the principal of
and any interest (and Make-Whole Payment and Additional Amount, if any) on
the Notes owing and unpaid and all other sums owing and unpaid under the
Notes, the Mortgage, this Indenture, or any other Security Document, if
any, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel), except as a result of its or their
gross negligence or bad faith, and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any monies, notes or other property
payable or deliverable on any such claims and to distribute the same in
accordance with this Indenture;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee hereunder.
Nothing contained in this Article V shall be interpreted as limiting the
right or responsibility of the Servicer to take any actions on behalf of the
Trustee in furtherance or fulfilment of the Servicer's responsibility to service
the Loan as set out in Article VII. In addition, nothing herein contained shall
be deemed to limit each Holder's right to file and prove its claim with respect
to Notes held by it and to collect and receive any award in any such proceeding,
or to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, rehabilitation, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION V.5 Trustee May Enforce Claims Without Possession of Notes.
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All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee (consistent with those paid under the Trustee Fee Agreement), its
agents and counsel, be for the ratable benefit of the Holders of the Notes, if
any, in respect of which such judgment has been recovered.
SECTION V.6 Application of Money Collected.
Upon the occurrence and during the continuance of an Event of Default,
money collected by the Trustee hereunder (including, without limitation, all
money deposited by any Issuer or the Servicer into the Payment Account) shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of the principal of (and
Make-Whole Payments, if any), or interest (and Additional Amounts, if any) on,
the Notes, upon presentation of the Notes (to the extent not held in global
form), and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
(i) to the payment of all amounts due the Trustee, under the Trustee
Fee Agreement, and the Servicer, under the Servicer Fee Agreement, and each
Paying Agent, under their respective fee agreements (including reasonable
amounts payable in respect of the Trustee's and the Servicer's agents and
counsel fees and expenses, but excluding repayment of Advances, which are
covered by item (ii) below);
(ii) to the payment (first to the Trustee and then to the Servicer) of
Advances made (and any accrued and unpaid interest thereon) and (if not
already covered by item (i) above) other liabilities owed under this
Indenture (including, without limitation, indemnification payment
obligations of the Issuers under Section 7.19) and the other Security
Documents (including, without limitation, payment of any indemnification
obligations), the cost and expenses of any foreclosure proceedings and any
other enforcement proceedings (including, without limitation, reasonable
counsel fees and disbursements, advertising costs and expenses,
Impositions, and receivers' and trustee's fees and commissions in
connection therewith);
(iii) to the payment of accrued interest (excluding Additional
Amounts, if any, and interest payable in connection with a default in
excess of the regular interest payments owed, if any) and then principal
(excluding Make-Whole Payments, if any) due and payable on any Notes, in
each case, first, to the Holders of the Class A Notes, then to the Holders
of the Class B Notes, then to the Holders of the Class C Notes, then to the
Holders of the Class D Notes and then to the Holders of the Class E Notes;
provided, however, that (A) if there are not sufficient funds in the
Payment Account to pay all interest accrued on the Notes of any Class, any
amount available will be
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allocated between the Holders of each Series of such Class so that the amount
paid to Holders of Notes in each such Series is equal to the total amount
available multiplied by the ratio of (x) the amount of interest then due and
payable on the Notes of such Series in such Class over (y) the amount of
interest then due and payable to all Holders of Notes of such Class and (B) if
there are not sufficient funds in the Payment Account to pay all principal then
due and payable on the Notes of any Class, the amounts available shall be
allocated among the Holders of such Class pro rata according to the principal
amounts of Notes of such Class owned by such Holders immediately prior to any
payments of principal hereunder;
(iv) to the payment of any Additional Amounts due and payable on any Notes
in the order of priority described above with respect to payments of interest;
provided, however, that if there are not sufficient funds in the Payment Account
to pay all Additional Amounts then due and payable on the Notes of any Class,
the amount available shall be allocated among the Holders of such Class to whom
such Additional Amounts are payable so that the amount paid to each such Holder
is equal to the total amount available multiplied by the ratio of (x) the amount
of Additional Amounts then due and payable to such Holder in respect of the
Notes of such Class over (y) the total amount of Additional Amounts then due and
payable to all Holders of Notes of such Class;
(v) to the payment of any Make-Whole Payment due and payable on any Notes
in the following order: first, to the Holders of the Class A Notes, then to
Holders of Class B Notes, then to Holders of Class C Notes, then to Holders of
Class D Notes and then to Holders of Class E Notes; provided, however, that if
there are not sufficient funds in the Payment Account to pay all Make-Whole
Payments then due and payable on the Notes of any Class, the amounts available
therefore shall be allocated among the Holders of such Class pro rata based on
the principal amounts of Notes of such Class owned by such Holders immediately
prior to any such payments of principal hereunder;
(vi) to the payment of any other sums (including interest payable in
connection with a default in excess of the regular interest payments owed on any
Note), if any, due to the Holders under any Security Documents; and
(vii) to the payment of the remainder, if any, to the Issuers, their
respective successors or assigns, to whomever may lawfully be entitled thereto
or as a court of competent jurisdiction may determine.
For purposes of Section 10.4 and clauses (iii) through (vi) of this Section
5.6, amounts withheld on account of taxes from money collected by the Trustee or
the Servicer as a result of the identity, the jurisdiction of organization,
residence or citizenship or any other characteristic of a Holder or beneficial
owner of any Note shall be treated as having
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been distributed by the Trustee to such Holder or to the Holder through which
such beneficial owner holds such Note, or to any successor to any such Holder.
Payment of the Outstanding Notes of any Class shall be on a pro rata basis
and shall be based, with respect to interest, on the relative proportions of the
accrued interest on any Note of such Class to the aggregate amount of accrued
interest on all Outstanding Notes of such Class and, with respect to principal,
on the relative proportions of the unpaid principal amount of any Outstanding
Notes of such Class to the aggregate unpaid principal amount of all Outstanding
Notes of such Class. Notwithstanding the foregoing, to the extent that principal
on Outstanding Notes is not then due, the pro rata allocated amount with respect
to the principal of such Outstanding Notes that is not then due shall be
deposited by the Trustee into the Payment Account, to be held by the Trustee for
application to the payment of principal on such Outstanding Notes upon their
Maturity.
SECTION V.7 Limitation on Suits.
Except as provided in Section 5.8, no Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, any Note or any other Security Document, or for the appointment of a
receiver or trustee, or for any other remedy hereunder or thereunder, unless:
(1) such Holder has previously given written notice to the Trustee
and the Servicer of a continuing Event of Default;
(2) the Holders of not less than 66 2/3% in aggregate principal
amount of the Outstanding Notes have made written request to the Trustee and the
Servicer to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee and the
Servicer reasonable indemnity or security against any potential losses, expenses
and liabilities to be incurred in connection with such request;
(4) both the Trustee and the Servicer for sixty (60) days after their
receipt of such notice, request and offer of indemnity or security have failed
to institute any such proceeding;
(5) no direction inconsistent with such written request has been
given to the Trustee or the Servicer during such sixty (60) day period by the
Holders of 66 2/3% in aggregate principal amount of the Outstanding Notes; and
(6) an Event of Default shall have occurred and be continuing;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to
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affect, disturb or prejudice the rights of any other of such Holders, or to
obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all of such Holders.
The Holders may exercise their rights under this Section 5.7 independently
without being subject to Section 1.3.
SECTION V.8 Unconditional Right of Holders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note at the Scheduled Maturity
Date expressed in such Note (or in the case of redemption, to receive payment of
the principal of and interest and Make-Whole Payment, if any, on such Note, on
the Redemption Date) and such rights shall not be impaired without the consent
of such Holder.
SECTION V.9 Restoration of Rights and Remedies.
If the Trustee (or the Servicer on the Trustee's behalf) or any Holder has
instituted any proceeding to enforce any right or remedy under this Indenture or
under any other Security Document and such proceeding has been discontinued,
waived, rescinded, or abandoned for any reason, or has been determined adversely
to the Trustee, the Servicer or to such Holder, then and in every such case,
subject to any determination in such proceeding, each Issuer, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee, the
Holders and the Issuers shall continue as though no such proceeding had been
instituted.
SECTION V.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in Section 3.9, no right or remedy
herein conferred upon or reserved to the Trustee, the Servicer or to the Holders
of Notes is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION V.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee, the Servicer or any Holder of any Note
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence
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therein. Every right and remedy given by this Indenture or by any of the
Security Documents or by law to the Trustee, the Servicer or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, to the
extent permitted by applicable law, by the Trustee, the Servicer or by the
Holders entitled to exercise such remedies, as the case may be.
SECTION V.12 Control by Holders.
The Holders of not less than 66 2/3% in aggregate principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or the
Servicer, or exercising any trust or power conferred on the Trustee or the
Servicer or any right otherwise granted to the Holders; provided that any such
direction shall not be in conflict with any rule of law or with this Indenture
or any Security Document and that the Trustee or the Servicer may take any other
action deemed proper by the Trustee or the Servicer, as applicable, which is not
inconsistent with such direction or expressly prohibited hereunder.
Notwithstanding anything herein to the contrary, if in connection with any
Event of Default the Servicer has recommended the commencement of foreclosure or
any proceedings or actions which relate to the realization against any of the
Mortgaged Properties, or the Servicer has recommended the sale or liquidation of
any Foreclosed Property, and, in either case, the requisite Holders have
disapproved or have not approved such action pursuant to this Indenture, the
Servicer shall nevertheless be entitled to commence such foreclosure proceedings
or actions and sell or liquidate such Foreclosed Property, as the case may be,
in accordance with Accepted Servicing Practices, upon but only upon a
determination by the Servicer or the Trustee that any previously made and
unreimbursed Advances with interest thereon constitute Nonrecoverable Advances.
SECTION V.13 Waiver of Past Defaults.
The Holders of not less than 66 2/3% in aggregate principal amount of the
Outstanding Notes may on behalf of the Holders of all the Notes waive any past
default hereunder and its consequences, except a default:
(1) in the payment of principal of or interest on any Note, which
shall require the waiver by the Holders of 100% in aggregate principal
amount of the Outstanding Notes directly affected thereby; or
(2) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected thereby.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture,
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but no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
SECTION V.14 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by its
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture or any other Security Document, or in any suit against the
Trustee or the Servicer for any action taken, suffered or omitted by the Trustee
or the Servicer, the filing by any party litigant in such suit of an undertaking
to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees and expenses, against any
party litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by any Issuer, or to any suit
instituted by the Trustee, or to any suit instituted by the Servicer, or to any
suit instituted by any Holder, or group of Holders, holding in the aggregate at
least 25% in aggregate principal amount of Outstanding Notes, or to any suit
instituted by any Holder of any Note for the enforcement of the payment of the
principal of or interest or Make-Whole Payment, if any, on any Note on or after
any Maturity of such Note (or, in the case of redemption, on or after the
Redemption Date).
ARTICLE VI
THE TRUSTEE
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SECTION VI.1 Certain Duties and Responsibilities.
(a) The duties, responsibilities and liabilities of the Trustee in respect
of the Security Documents and the other duties and liabilities of the Trustee
under this Indenture shall be as follows:
(1) The Trustee (and the Servicer on its behalf) shall have the full
power and authority to do all things not inconsistent with the provisions
of this Indenture or any other Security Document that it may deem advisable
in order to enforce the provisions hereof or thereof or to take any action
with respect to a default or an Event of Default hereunder or thereunder,
or to institute, appear in or defend any suit or other proceeding with
respect hereto or thereto, or to protect the interests of the Holders.
Neither the Trustee nor any of its directors, officers, shareholders,
agents or employees (each, a "Trustee Indemnified Party" and, collectively,
the "Trustee Indemnified Parties") shall be answerable to or accountable
for, except for its or their own bad faith, willful misconduct or
negligence, and each Issuer agrees to indemnify and save harmless the
Trustee Indemnified Parties from, any costs, expenses, liabilities and
damages that any of them may incur or sustain, in good faith and without
willful misconduct or negligence, in the exercise and performance of the
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Trustee's powers and duties hereunder, including the cost and expense of
defending themselves against any claim or liability in connection with the
exercise or performance thereof; provided, however, that if it is found
that any such claim or liability has resulted from the bad faith, willful
misconduct or negligence of any Trustee Indemnified Party in the
performance of its duties hereunder, such Trustee Indemnified Party shall
repay such portion of the reimbursed amounts that is attributable to
expenses incurred in relation to that portion of its acts or omissions that
is the subject of such finding. If any Trustee Indemnified Party is
entitled to receive indemnification hereunder with respect to any such
action or proceeding brought by a third party, the Issuers or any of them
shall be entitled to assume the defense of any such action or proceeding
with counsel reasonably satisfactory to such Trustee Indemnified Party who
shall not, except with the consent of such Trustee Indemnified Party, be
counsel to any Issuer or any Affiliate thereof. Upon assumption by any
Issuer of the defense of any such action or proceeding, such Trustee
Indemnified Party shall have the right to participate in such action or
proceeding and to retain its own separate counsel, but the Issuers shall
not be liable for any legal fees or expenses of such a separate counsel
subsequently incurred by such Trustee Indemnified Party in connection with
the defense thereof unless (i) the Issuers have agreed to pay such fees and
expenses or (ii) counsel provided by any Issuer pursuant to the foregoing
is counsel to one or more of the Issuers and such Trustee Indemnified Party
shall have been advised by such counsel that representation of such Trustee
Indemnified Party by such counsel provided by the Issuer pursuant to the
foregoing would be inappropriate due to actual or potential conflicting
interests between the Issuers and such Trustee Indemnified Party, including
situations in which there are one or more legal defenses available to such
Trustee Indemnified Party that are different from or additional to those
available to any Issuer; provided, however, that the Issuers shall not, in
connection with any such action or proceeding, or separate but
substantially similar action or proceeding arising out of the same general
allegations, be liable for the fees and expenses of more than one separate
firm of attorneys at any time, in addition to any local counsel, for any
such Trustee Indemnified Party. No Issuer shall consent to the terms of any
compromise or settlement of any action defended by any Issuer in accordance
with the foregoing without the prior consent of the Trustee Indemnified
Party. No Issuer shall be required to indemnify any Trustee Indemnified
Party for any amount paid or payable by such Trustee Indemnified Party in
settlement of any action, proceeding or investigation without the prior
written consent of the Issuers, which consent shall not be unreasonably
withheld. Promptly after receipt by any Trustee Indemnified Party of notice
of its involvement (or the involvement of any of its affiliates or such
affiliate's directors, officers, shareholders, agents or employees) in any
action, proceeding or investigation, such Trustee Indemnified Party shall,
if a claim for indemnification in respect thereof is to be made against the
Issuers hereunder, notify the Issuers in writing of such involvement, but
the failure of such Trustee Indemnified Party to provide such notice shall
neither cause the forfeiture of the right to receive indemnity hereunder
nor limit such right, except to the extent, if any, that any Issuer is
prejudiced by the failure of the Trustee Indemnified Party to
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promptly give such notice. The Issuers' indemnification obligations under
this Section 6.1(a)(1) shall survive payment of the Notes and any
resignation, removal or replacement of the Trustee.
The Trustee shall be authorized to make, at the expense of the
Issuers, all required refilings of any Security Document to preserve the
liens created thereby to the extent not so done by the Issuers or the
Servicer as provided herein or therein, but shall have no obligation to
take any action to protect, preserve or enforce any rights or interests in
the Security Documents or towards the execution or enforcement of the
trusts hereby or thereby created which, in its opinion, shall be likely to
involve expense or liability to the Trustee, unless the Trustee shall have
received an agreement satisfactory to the Trustee in its sole discretion to
indemnify it against such liability and expense. The Trustee shall not be
required to ascertain or inquire as to the performance or observance of any
of the covenants or agreements contained herein, or in any other Security
Document or in any other instruments to be performed or observed by any
Issuer or any other party to any Security Document (including, without
limitation, the necessity or desirability under any applicable state law to
re-record, re-register or re-file any Security Document). In accepting the
trusts hereunder and under the Security Documents, the Trustee is acting
solely as Trustee hereunder and not in its individual capacity and all
Persons, other than the Issuers and the Holders, having any claim against
the Trustee arising by reason hereof shall look only to the Collateral for
payment or satisfaction thereof except as provided herein.
(2) The Trustee shall incur no liability in acting upon any signature,
notice, request, consent, certificate, opinion, or other instrument
reasonably believed by it to be genuine. In administering the trusts, the
Trustee may exercise any of the powers hereof directly or through its
agents or attorneys and may, at the expense of the Issuers, consult with
counsel, accountants and other skilled Persons to be selected and employed
by it, and the reasonable expenses thereof shall be paid by the Issuers,
and the Trustee shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice of any such Person nor
for any error of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts.
(3) The Trustee shall have no duty to make, arrange or ensure the
completion of any recording, filing or registration of any Security
Document, any instrument of further assurance, any instrument constituting
part of any of the Mortgaged Properties, or any amendments or supplements
to any of said instruments and the Trustee shall have no duty to make,
arrange or ensure the completion of the payment of any fees, charges or
taxes in connection therewith (and the Trustee may act with respect to the
Security Documents and pay out deposited monies without regard thereto), or
to give any notice thereof, or to make, arrange or ensure the completion of
the payment of or be under any duty in respect of any tax, assessment or
other governmental charge that may be levied or assessed on any of the
Mortgaged
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Properties or any part thereof or against any of the Issuers.
Notwithstanding the foregoing, the Trustee agrees that it will notify the
Issuers in writing of any filings, fees, taxes or other payments required
in connection with the satisfaction of any Issuer's obligations hereunder
and under the other Security Documents known to any Responsible Officer of
the Trustee assigned to its Corporate Trust Department and actively
involved in the administration of the Loan.
(4) Whenever, in administering the trust, the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee may, in the
absence of bad faith on the part of the Trustee, request and rely upon
(unless other evidence in respect thereof be specifically prescribed herein
or in any Security Document) an Officer's Certificate of any one or more of
the Issuers, and such Officer's Certificate shall be full warrant to the
Trustee for any action taken, suffered or omitted by it on the faith
thereof, but in its discretion the Trustee may in lieu thereof accept other
evidence of such fact or matter or may require such further or additional
evidence as it may deem reasonable.
(5) Whenever, in administering the trust, the Trustee shall be
permitted, whether pursuant to the terms of this Indenture or any other
Security Document, to determine to grant or withhold its consent to or
waiver or approval of any matter described herein or therein or to take or
omit to take any action or course of conduct permitted or required
hereunder or thereunder, the Trustee shall be fully protected in making
such determination based solely upon the written direction of the Servicer
or, absent such direction, (a) on the basis of the related submission
required by this Indenture or by such other Security Document, as the case
may be, or (b) if a standard for such determination is specified herein or
therein, on the basis of its determination in good faith as to whether or
not such standard has been satisfied, or (c) if no such standard is
specified, on the basis of its determination in good faith as to (x) with
respect to any act, omission or course of conduct, whether such act,
omission or course of conduct is reasonable (which determination may be
made solely on the basis of advice from professionals selected by the
Trustee with reasonable care) and (y) with respect to the selection of any
professional, whether the party proposing the engagement of such
professional is motivated primarily by interests contrary to those of the
Holders in making such proposal, provided, in each case, that the Trustee
grants or withholds its consent or approval or takes any other action on a
timely basis. The Trustee shall not be required to seek the individual
consents or approvals of the Holders with respect to any such consent or
approval unless the same shall be explicitly required by the terms of this
Indenture or such other Security Document, as the case may be. Without
limiting the generality of the foregoing, in the event the approval of the
Trustee is requested with respect to a settlement of an insurance claim
pursuant to Article 15 of the Mortgage, the Trustee shall be fully
protected in granting such approval if the Trustee has selected with
reasonable care and retained a qualified independent insurance adjuster who
has advised the Trustee that the proposed settlement is reasonable, and the
Trustee determines in good faith, solely on the basis
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of such advice, that such settlement is reasonable and approves the same.
Notwithstanding anything to the contrary herein or in any of the other
Security Documents, neither the Trustee nor the Servicer on its behalf
shall consent to any transfer of any of the Mortgaged Properties or any
beneficial interest therein, any modification or waiver of the other
Security Documents or the terms of this Indenture (other than modifications
or waivers that may be made unilaterally (within the meaning of Prop.
Treas. Reg. (S) 1.1001-3, or any successor provision) as provided herein or
in the other Security Documents), any release or substitution of any
property pledged pursuant to this Indenture or the other Security
Documents, or any release of any Issuer from its obligations hereunder or
under the other Security Documents (other than any actions expressly
contemplated by this Indenture or the other Security Documents in
connection with payments on the Notes (including any redemptions) or
otherwise), unless the Issuers have obtained and delivered to the Trustee
an Opinion of Counsel from counsel experienced in federal income tax
matters that such consent or modification, or waiver, as the case may be,
will not be treated as an exchange of any Note for a newly issued
obligation pursuant to Section 1001 of the Code and provided, further, that
in the case of a transfer of any portion of any of the Mortgaged Properties
without release of such transferred portion a further opinion shall be
furnished to the Trustee to the effect that (i) such transfer shall not
adversely affect the status of the Notes as debt for federal income tax
purposes or (ii) result in the creation of a "taxable mortgage pool" within
the meaning of Section 7701 of the Code.
(6) The Trustee shall have no obligation to see to the payment or
discharge of any liens (other than the liens of the Security Documents, and
then only to the extent therein provided), or to see to the application of
any payment of the principal of or interest on any Note secured thereby or
to the delivery or transfer to any Person of any property released from any
such lien, or to give notice to or make demand upon any mortgagor,
mortgagee, trustor, beneficiary or other Person for the delivery or
transfer of any such property.
(7) The Trustee shall not be concerned with or accountable to any
Person for the use or application of any deposited monies that shall be
released or withdrawn in accordance with the provisions hereof or of any
other Security Document or of any property or securities or the proceeds
thereof that shall be released from the lien hereof or thereof in
accordance with the provisions hereof or thereof and the Trustee shall have
no liability for the acts of other parties hereto that are not in
accordance with the provisions hereof.
(8) The Trustee shall not be charged with knowledge of any Event of
Default hereunder or under any other Security Document (except default in
the payment of monies to the Trustee that the Issuers are required to pay
or cause to be paid to the Trustee on or before a specified date and except
default in the delivery of any certificate, opinion or other document
expressly required to be delivered to the Trustee by any provision hereof
or any Security Document) or any condition which
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after notice and/or the passage of time would constitute an Event of
Default or any other fact, circumstance or event the occurrence of which
would require the Trustee to give any notice or otherwise take any action
(any such Event of Default, condition, circumstance or other event, an
"Event"), unless either (i) a Responsible Officer of the Trustee assigned
to its Corporate Trust Department shall have actual knowledge of such Event
or (ii) written notice of such Event shall have been given to and received
by the Trustee, by the Issuers, the Servicer or any Holder or Holders of at
least 25% in aggregate principal amount of the Notes then Outstanding.
(9) The Trustee shall not be responsible for any act or omission of
the Servicer.
The Trustee and the Servicer each may, without the consent of the Holders,
but subject to subparagraph (5) above, give any consent, waiver or authorization
under, and agree to any modification of, the Notes, this Indenture or any other
Security Document, but shall not (i) without the consent of the Holders of not
less than 66 2/3% (or such greater amount as may be required thereunder) in
aggregate principal amount of the Outstanding Notes consent to any amendment or
modification of any Security Document in any respect having a material adverse
effect on the interests of the Holders generally, except as expressly permitted
by the terms thereof or hereof, (ii) consent to any amendment or modification of
any Security Document in any respect having a material adverse effect on the
interests of any individual Holder apart from the effect on the interests of the
Holders generally without the consent of each individual Holder that would be
affected thereby, or (iii) without the prior written consent of all the Holders,
consent to or accept any cancellation or termination of any Security Document,
or any change in the timing or amount of payment of the Notes, except as
contemplated by the terms thereof or hereof.
(b) Except during the continuance of an Event of Default with respect
to the Notes, the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee.
(c) In the absence of actual knowledge of a Responsible Officer to the
contrary or bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of any
such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform
on their face to the requirements of this Indenture.
(d) In case an Event of Default known to the Trustee with respect to
the Notes has occurred and is continuing, the Trustee shall exercise, with
respect to the Notes, such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent Person would exercise or use under the circumstances
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in the conduct of his own affairs. The Trustee may agree, without the consent of
the Holders, inter alia, to any modification (subject to certain exceptions) of,
or to the waiver or authorization of any breach or proposed breach of, any of
the Notes or any provisions of this Indenture which shall not, in the opinion of
the Trustee, materially prejudice the interests of the Holders, or to any
modification which is of a formal, minor or technical nature or which is made to
correct a manifest error or is otherwise not materially prejudicial to the
interests of the Holders.
(e) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(1) this Subsection (e) shall not be construed to limit the effect of
Subsections (a) or (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved by a court of
competent jurisdiction that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith and without negligence in
accordance with the directions of the Holders of not less than 66 2/3% in
aggregate principal amount of the Outstanding Notes relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Notes or the Security Documents.
SECTION VI.2 Money Held in Trust.
Accounts established by the Trustee hereunder shall be subject to
regulations regarding fiduciary funds on deposit substantially similar to those
described in 12 C.F.R. (S) 9.10(b). Money held by the Trustee hereunder shall be
held in trust for the purposes for which it was paid, and shall be segregated
from any other monies held by the Trustee, and may be deposited by the Trustee,
under such general conditions as may be prescribed by law, in the trust
department of the Trustee. The Trustee shall be under no liability for interest
on any money received by it hereunder except as provided in this Indenture or as
otherwise agreed with the Issuers. Within a reasonable time after the end of
each calendar year or portion thereof during the term of the Notes, the Trustee
shall cause the depository for any accounts referred to in this Article to
deliver to the Issuers, the Servicer and the Trustee and, upon request, to the
Holder of any Note a statement of any amounts received or disbursed by the
Trustee in respect of the Collateral during such calendar year or portion
thereof.
SECTION VI.3 Notice of Defaults.
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The Trustee, promptly after a Responsible Officer of the Trustee acquires
actual knowledge of the occurrence of an Event of Default or any event that with
notice or lapse of time or both would become an Event of Default, shall notify
all Holders of then-Outstanding Notes (pursuant to the procedures as set forth
in Section 1.6), the Rating Agency and the Issuers of any such Event of Default
or other event, unless all such defaults or potential defaults known to the
Trustee shall have been cured before the giving of such notice or unless, with
respect to an Event of Default, the same is waived by the Trustee pursuant to
Section 6.1.
SECTION VI.4 Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Issuers referred to herein shall
be sufficiently evidenced by an Issuer Request or an Issuer Order and any
resolution of any Issuer's Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting to take any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the
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Trustee shall determine to make such further inquiry or investigation, it shall
be entitled to examine the books, records and premises of any Issuer personally
or by agent or attorney (any such examination to be made upon reasonable advance
notice and at reasonable times, except that if an Event of Default has occurred
and is continuing such examination shall be permitted at such times, with or
without notice, as the Trustee may select in its sole discretion); and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION VI.5 Compensation and Reimbursement.
Each Issuer agrees:
(a) to pay to the Trustee amounts due from time to time pursuant to
the Trustee Fee Agreement, to the extent fees have been fixed, and if fees have
not been fixed then reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in carrying out its duties and responsibilities
under this Indenture or under the other Security Documents (including the
reasonable compensation, expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence, willful misconduct or bad faith; and
(c) that the Trustee Indemnified Parties shall not be answerable to or
accountable for, except in the case of their own bad faith, willful misconduct
or negligence, and, each Issuer agrees to indemnify, consistent with the
provisions set forth in Section 6.1(a)(1) hereof, each of the Trustee
Indemnified Parties for, and to hold them harmless against, any loss, liability,
damage or expense that it may incur or sustain without negligence, willful
misconduct, or bad faith on its part, arising out of or in connection with the
exercise and performance of the Trustee's powers and duties hereunder and the
acceptance or administration of the trust or trusts hereunder, under the
Mortgage or under any other instrument included in the Collateral, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of the Trustee's powers or
duties hereunder. The indemnification obligation of the Issuers under this
Section 6.5(c) shall survive payment of the Notes and any resignation, removal
or replacement of the Trustee.
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The Trustee shall have, as security for the performance of each Issuer
under this Section 6.5, a lien ranking senior to the lien of the Notes upon all
property and funds held or collected as part of the Collateral for such Notes by
the Trustee in its capacity as such or to be distributed to the Holders in any
bankruptcy or insolvency proceeding, which lien shall only be enforced as set
forth herein, including in Article V. The expenses and the compensation for the
services rendered by the Trustee after an Event of Default as specified in
Section 5.1(4) or Section 5.1(5) hereof in connection herewith are intended to
constitute expenses of administration under any bankruptcy proceeding; provided
that this sentence shall not affect the lien described in the preceding
sentence. The Trustee shall not institute any proceeding seeking the enforcement
of such lien against the Collateral unless (i) such proceeding is in connection
with a proceeding in accordance with Article V hereof for enforcement of the
lien of this Indenture for the benefit of the Holders after the occurrence of an
Event of Default (other than an Event of Default due solely to a breach of this
Section 6.5) and a resulting declaration of acceleration of Maturity of such
Notes that has not been rescinded and annulled, or (ii) such proceeding does not
result in or cause a sale or other disposition of such Collateral.
SECTION VI.6 Confidentiality.
Unless an Event of Default has occurred and is continuing, the Holders
(each in their individual capacities only) shall not have any right to obtain
any information relating to the Mortgaged Properties, including information
regarding lease rents, any rent rolls or copies of any leases, except as
expressly provided for herein. The Holders, the Trustee and the Servicer agree
to keep confidential, and to cause their respective directors, officers,
employees, agents, attorneys, accountants, financial advisors and other
representatives to keep confidential, all leases, lease abstracts, rent rolls,
financial statements, appraisals and other financial information, including
information relating to lease terms and identities of tenants, furnished to, or
obtained by, the Holders, the Trustee or the Servicer hereunder (the
"Confidential Information") and to use reasonable efforts, if such material is
not marked "Proprietary" or "Confidential", and to use special efforts, if such
material is so marked, to not, without the prior written consent of the Issuers,
disclose such Confidential Information in whole or in part in any manner
whatsoever; provided, however, that the Trustee shall be permitted to fulfill
its responsibilities under Section 6.17 hereof and the Trustee, the Servicer and
the Holders, and their representatives shall be permitted to disclose
Confidential Information if (i) required by law (or regulations thereunder) or
(ii) such disclosure is necessary for either the Trustee or the Servicer to
perform its duties hereunder or (iii) an Event of Default shall have occurred
and be continuing and such disclosure is made in connection with the enforcement
of the provisions of the Notes, this Indenture or any other Security Document.
This Section shall not apply to any provisions of the Confidential Information
that are or become generally available to the public or to information in or
incorporated by reference in offering memoranda prepared in connection with the
sale of the Notes.
SECTION VI.7 Corporate Trustee Required; Eligibility.
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There shall at all times be a Trustee hereunder which shall be a trust
company, an association or a banking corporation, in each case organized and
doing business under the laws of the United States of America, any state thereof
or the District of Columbia, authorized under such laws to exercise corporate
trust powers, having a long-term unsecured debt rating not less than Aa3 (or its
equivalent) from the Rating Agency, and a combined capital and surplus of at
least $100,000,000, and subject to supervision or examination by federal or
state authority. If such corporation or national banking association publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation or national
banking association shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION VI.8 Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the other parties hereto
that, as of the Closing Date:
(i) the Trustee has been duly organized and is validly existing under
the laws of the United States of America and is qualified under the laws of
each jurisdiction in which any Mortgaged Property is located to the extent
necessary to perform its obligations in accordance with the terms of this
Indenture;
(ii) the execution and delivery of this Indenture and the other
Security Documents to which it is a party by the Trustee have been duly
authorized by all necessary corporate action on the part of the Trustee;
the Trustee is duly authorized under applicable law, its articles of
incorporation and its by-laws to authenticate the Notes, to accept the
delivery of the Collateral and to perform its obligations under this
Indenture and each of the other Security Documents to which it is a party,
and all corporate action necessary or required therefore has been duly and
effectively taken or obtained; none of the execution, delivery and
performance of this Indenture, or the consummation of the transactions
herein contemplated, nor the compliance with the provisions hereof, will
conflict with or result in a breach of, or constitute a default under (A)
the terms of any agreement or instrument to which the Trustee is a party or
by which it is bound; (B) the certificate of incorporation or bylaws of the
Trustee; or (C) to the Trustee's knowledge, the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the
Trustee or its properties; neither the Trustee nor any of its Affiliates is
a party to, bound by, or in breach of or in violation of any material
indenture or other agreement or instrument, or subject to or in violation
of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it,
which
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materially and adversely affects or to the knowledge of the Trustee may in
the future materially and adversely affect (X) the ability of the Trustee
to perform its obligations under this Indenture or (Y) the business,
operations, financial condition, properties or assets of the Trustee;
(iii) the execution and delivery by the Trustee of this Indenture and
the consummation of the transactions contemplated hereby (with the benefit
of the provisions hereof) do not require any consent, approval,
authorization, order, registration or qualification of or with any court or
any regulatory authority or other governmental agency or body, except such
as has been obtained and is in full force and effect;
(iv) this Indenture has been duly executed and delivered by the
Trustee and, assuming due authorization, execution and delivery by the
other parties hereto, constitutes a valid and legally binding obligation of
the Trustee enforceable against it in accordance with its terms, subject to
(A) applicable bankruptcy, fraudulent conveyance or transfer, insolvency,
reorganization, moratorium or similar laws of general applicability
relating to or affecting the rights and remedies of creditors generally and
(B) the application of principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law);
(v) there are no actions, suits or proceedings pending or, to the
Trustee's knowledge, threatened against the Trustee, before or by any
court, administrative agency, arbitrator or governmental body (A) with
respect to any of the transactions contemplated by this Indenture or (B)
with respect to any other matter which could, if determined adversely to
the Trustee, materially and adversely affect it or its business, assets,
operations or condition, financial or otherwise, or adversely affect its
ability to perform its obligations under this Indenture; and
(vi) the Trustee is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Trustee or its properties or might have
consequences that would materially and adversely affect its performance
hereunder.
Within thirty (30) days of the earlier of discovery by the Trustee or
receipt of notice by the Trustee of the breach of any representation or warranty
of the Trustee set forth in this Section 6.8, the Trustee shall cure such breach
in all material respects.
SECTION VI.9 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion
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or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article, and
shall be deemed to have assumed all of the liabilities and obligations of the
Trustee hereunder without the execution or filing of any paper or any further
act on the part of any of the parties hereto (other then such Person). In case
any Notes shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion, consolidation or succession to
such authenticating Trustee may adopt such authentication and deliver the Notes
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
SECTION VI.10 Resignation and Removal; Appointment of Successor.
(a) The Trustee may resign at any time by giving written notice
thereof to the Servicer and the Issuers. No resignation or removal of the
Trustee and no appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 6.11.
(b) If the instrument of acceptance by a successor Trustee required by
Section 6.11 shall not have been delivered to the Trustee within thirty (30)
days after the giving of a notice of resignation as contemplated in clause (a)
above, the resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the Notes by
the Holders of 66 2/3% in principal amount of the Outstanding Notes and notice
of such action by such Holders shall be delivered to the Trustee, the Issuers
and the Servicer.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.6 or shall fail
to comply with Section 6.12 after written request for compliance by any Issuer
or any Holder who has been a bona fide Holder for at least six (6) months, or
(2) the Trustee shall cease to be eligible under Section 6.7, or the
representations in Section 6.8 shall prove to be untrue, and the Trustee shall
fail to resign after written request therefor by the Issuers or any such Holder
referred to in clause (1) above, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation;
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then, in any such case, (i) the Issuers, upon the order of each of their
respective Boards of Directors, may remove the Trustee with respect to the
Notes, or (ii) subject to Section 5.14, any Holder of a Note may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to the Notes and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Notes, the Issuers, upon the order of each of their respective Boards of
Directors, shall promptly appoint a successor Trustee or Trustees satisfying the
requirements of Section 6.7 with respect to the Notes and shall comply with the
applicable requirements of Section 6.11. If, within sixty (60) days after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall not have been appointed by the Issuers or, if appointed,
shall not have accepted such appointment in accordance with the applicable
requirements of Section 6.11, then a successor Trustee shall be appointed by Act
of the Holders of not less than 66 2/3% in aggregate principal amount of the
Outstanding Notes delivered to the Issuers and the retiring Trustee, and the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 6.11,
become the successor Trustee with respect to the Notes. Upon such resignation,
removal, incapacity or other vacancy, the Trustee shall forward all documents
relating to the Notes to the successor Trustee at the address provided by the
Issuers.
If, within one hundred and twenty (120) days after such resignation,
removal or incapability, or the occurrence of such vacancy, no successor Trustee
shall have been so appointed and accepted appointment in the manner required by
Section 6.11, any bona fide Holder may, on behalf of such Holder and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Issuers shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by giving notice of such
event to each of the Holders and the Rating Agency in accordance with Section
1.6. Each notice shall include the name of the successor Trustee and the address
of its Corporate Trust Office.
SECTION VI.11 Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, the successor
Trustee so appointed shall execute, acknowledge and deliver to the Issuers and
to the retiring Trustee an instrument accepting such appointment and assuming
the responsibilities of the Trustee hereunder, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of any Issuer or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring
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to such successor Trustee all the rights, powers and trusts of the retiring
Trustee, shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder, shall take such
action as may be necessary to provide for the appropriate interest in the
Collateral to be vested in such successor Trustee, and shall execute and deliver
any amendments to the Security Documents necessary in connection therewith, but
shall not be responsible for the recording of such documents and instruments as
may be necessary to give effect to the foregoing (which responsibility shall be
borne by the successor Trustee).
Upon request of any such successor Trustee, the Issuers shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in this
Section.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION VI.12 Conflicting Interests.
If the Trustee has or shall acquire any conflicting interest (as defined
in Section 310 of the Trust Indenture Act of 1939, as amended, applied as if
this Indenture were an Indenture to be qualified under such Act), such Trustee
shall, within ninety (90) days after ascertaining that it has such conflicting
interest and if the default (as defined in Section 310 of such Act) has not been
cured or duly waived or otherwise eliminated before the end of such ninety day
period, either eliminate such conflicting interest or resign, such resignation
to become effective upon the appointment of a successor Trustee and such
successor's acceptance of such appointment, and the Issuers shall take prompt
steps to have a successor appointed in the manner provided in Section 6.10
hereof.
SECTION VI.13 Self Dealing.
The Trustee may purchase Eligible Investments through the Trustee, in its
individual capacity, and through its Affiliates, and such Persons may retain any
charges or commissions customarily imposed for such purchases.
SECTION VI.14 Investments.
The Trustee shall invest any amounts held in the Payment Account (pursuant
to Section 3.5), pending their application to the purposes herein provided, in
one or more of the following investments (the "Eligible Investments") as
directed by the Issuers or, in the absence of any such direction, in one or more
investments described in clause (i) below:
(a) obligations of, or obligations guaranteed as to principal and interest
by, the U.S. government or any agency or instrumentality thereof, when
such
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obligations are backed by the full faith and credit of the
U.S. These obligations include, but are not limited to:
. U.S. Treasury obligations
All direct or fully guaranteed obligations
. Farmers Home Administration
Certificates of beneficial ownership
. General Services Administration
Participation certificates
. U.S. Maritime Administration
Guaranteed Title XI financing
. Small Business Administration
Guaranteed participation certificates
Guaranteed pool certificates
. U.S. Department of Housing and Urban Development
Local authority bonds
. Washington Metropolitan Area Transit Authority
Guaranteed transit bonds;
(b) Federal Housing Administration debentures when such obligations are
backed by the full faith and credit of the U.S.;
(c) obligations of government-sponsored agencies that are not backed by the
full faith and credit of the U.S., where the obligation is limited to
those instruments that have a predetermined fixed dollar amount of
principal due at maturity that cannot vary or change. These obligations
are limited to:
. Federal Home Loan Mortgage Corp. (FHLMC)
Debt obligations
. Farm Credit System (formerly: Federal Land Banks, Federal
Intermediate Credit Banks, and Banks for Cooperatives)
Consolidated systemwide bonds and notes
. Federal Home Loan Banks (FHL Banks)
Consolidated debt obligations
. Federal National Mortgage Association (FNMA)
Debt obligations
. Student Loan Marketing Association (SLMA)
Debt obligations
. Financing Corp. (FICO)
Debt obligations
. Resolution Funding Corp. (REFCORP)
Debt obligations;
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(d) Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities of
not more than 365 days of any bank, the short-term debt obligations of
which are rated "P-1" (or the equivalent) by the Rating Agency;
(e) deposits that are fully insured by the Federal Deposit Insurance Corp.
(FDIC);
(f) debt obligations maturing in 365 days or less that are rated "Aaa" or
higher (or the equivalent) by the applicable Rating Agency;
(g) commercial paper rated by the Rating Agency as follows:
<TABLE>
<CAPTION>
Minimum long- and
Maximum Maturity Short-Term Ratings
---------------- ------------------
<S> <C>
One Month A2 or P-1
Three Month A1 and P-1
Six Months Aa3 and P-1
Over Six Months Aaa and P-1
</TABLE>
(h) investments in certain short-term debt of issuers rated "P-1" (or the
equivalent) by the Rating Agency may be permitted with certain
restrictions. The total amount of debt from "P-1" (or the equivalent)
issuers must be limited to the investment of an amount equal to the
debt service payment amount due in any month for all then Outstanding
Notes. The total amount of "P-1" (or the equivalent) investments
should not represent more than 20% of the rated issuer's outstanding
principal amount and each investment should not mature beyond 30 days.
Investments in "P-1" (or the equivalent) rated securities are not
eligible for reserve accounts, cash collateral accounts, or other
forms of credit enhancement. Short-term debt for purposes of this
definition includes: commercial paper, federal funds, repurchase
agreements, unsecured certificates of deposit, time deposits and
banker's acceptances;
(i) investment in money market funds rated "Aaa" (or the equivalent) by
the Rating Agency; and
(j) such other investments as shall be affirmed by means of a Rating
Confirmation.
Notwithstanding the foregoing, "Eligible Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or the Rating Agency's
corresponding symbol, if any) attached to the rating (indicating high volatility
or dramatic fluctuations in their expected returns because of market risk), as
well as any mortgage-backed securities; (ii) shall not have maturities in excess
of one year; (iii) as to the investments described in (a), (c), (d), (e), (f),
(g) and (h): the obligations shall be limited to those instruments that have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change; interest
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may either be fixed or variable; and any variable interest should (other than
with respect to investments described in (i)) be tied to a single interest rate
index plus a single fixed spread (if any), and move proportionately with that
index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provides a yield
to maturity in excess of 120 percent of the yield to maturity at par of such
underlying investment. No investment shall be made which requires a payment
above par for an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall mature or be
redeemable upon the option of the holder thereof on or prior to the earlier of
(x) three (3) months from the date of their purchase or (y) the Business Day
preceding the day before the date such amounts are required to be applied
hereunder. The Trustee shall not be responsible for its inability to invest
funds received after 12:00 p.m. New York City time. After application to the
purposes for which any amounts invested pursuant to this Section 6.14 are held
and so long as no Event of Default has occurred and is continuing hereunder, the
Trustee shall pay any net investment income earned from Eligible Investments
(after any expenses associated with those investments) promptly to the Issuers.
SECTION VI.15 Unclaimed Funds.
At the expiration of two (2) years following the date of Maturity of any
Notes issued hereunder, any monies deposited in the Holdover Account for such
Notes then remaining on deposit and unclaimed by the lawful owner thereof shall
be paid to the Issuers (or in accordance with any directions previously given to
the Trustee by the Issuers) and the Person entitled to receive such monies
thereafter shall look only to the Issuers for payment thereof as an unsecured
general creditor (without regard to any limitation on recourse contained herein
or in the Notes or any other Security Document), and all liability of the
Trustee with respect to such trust money shall thereupon cease; provided that
the Trustee, before being required to make any such repayment, may, at the
expense of the Issuers, cause to be published at least once but not more than
three times in any Authorized Newspaper (if the Notes were, as of the Trustee's
receipt of such payment, listed on a securities exchange) and in two newspapers
in the English language customarily published on each Business Day and of
general circulation, one in New York, New York and the other in London, England,
a notice to the effect that said monies remain unclaimed and have not been
applied for the purpose for which they were deposited, and that after a date
specified therein, which shall be not less than thirty (30) days after the date
of first publication of said notice, any unclaimed balance of said monies then
remaining in the hands of the Trustee will be paid to the Issuers upon their
written directions. Any successor to any Issuer through merger, consolidation or
otherwise or any recipient of substantially all the assets of any Issuer in a
liquidation of such Issuer shall remain liable for the amount of any unclaimed
balance paid to such Issuer pursuant to this paragraph.
SECTION VI.16 Illegal Acts.
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No provision of this Indenture or any amendment or supplement hereto shall
be deemed to impose any duty or obligation on the Trustee to do any act in the
performance of its duties hereunder or to exercise any right, power, duty or
obligation conferred or imposed on it, which under any present or future law
shall be unlawful, or which shall be beyond the corporate powers, authorization
or qualification of the Trustee.
SECTION VI.17 Communications to be Sent to the Rating Agency, Holders and
the Initial Purchasers.
(a) The Trustee shall send to the Rating Agency (with copies to the Issuers
and the Servicer) copies of each supplement, notice, certificate, request,
demand, report and financial statement sent by it or received by it pursuant to
or in connection with this Indenture, the other Security Documents or the
Mortgaged Properties, and any other quarterly or annual materials in the
Trustee's possession, relating to the Notes or the obligations of the Issuers
under the Security Documents and requested by the Rating Agency in accordance
with their monitoring activities; provided, that the foregoing shall not apply
to statements of the Trustee's fees and expenses sent by it to the Issuers and
other communications determined by the Trustee to be of a similarly solely
administrative nature. The Trustee shall also provide copies of the documents
delivered to it by the Issuers pursuant to Section 18.2 and Sub-sections
18.3(c), 18.3(f), 18.3(g) (if then applicable) and 18.3(h) (if then applicable)
of the Mortgage and copies of Debt Service Reports to the Initial Purchasers and
to any Holder (or beneficial owner of Notes) requesting delivery of all or part
of such information in writing, upon receipt by the Trustee, in the case of any
Holder (or beneficial owner of Notes), of a certificate from the requesting
Holder (or beneficial owner of Notes) in substantially the form set forth in
Exhibit D, it being understood that the Trustee shall be entitled to
conclusively rely upon the accuracy of the information provided to it in such
certificate.
(b) The Trustee shall
(i) send to the Issuers, within five (5) days after the date on which any
installment of interest on the Notes (including Additional Amounts, if any,
and Make-Whole Payments, if any) becomes due and payable hereunder and is
not paid, a written demand for payment thereof;
(ii) send to the Issuers, within five (5) days after any amount other
than principal or interest becomes due and payable hereunder and is not
paid, a written demand for payment of such amount;
(iii) send to the Issuers, within five (5) Business Days after a
Responsible Officer of the Trustee acquires actual knowledge that any
mechanic's or other lien (other than Permitted Exceptions) shall have been
filed against the Mortgaged Property or any part thereof, a written demand
that the Issuers bond
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or otherwise satisfy such lien unless the Servicer shall have already
delivered such notice and demand to the Issuers; and
(iv) send to the Issuers, within seven (7) Business Days after a
Responsible Officer of the Trustee acquires actual knowledge of (A) any
failure to perform or comply with any of the terms of this Indenture, the
Mortgage or any other Security Document, or (B) any breach, in any material
respect, of a representation or warranty made by any Issuer in this
Indenture, written notice of such default, failure or breach and demand for
cure in accordance with the Agreement.
(c) The Trustee may attach a notice to any document to be delivered by it
under clause (a) above disclaiming any responsibility for the contents thereof.
SECTION VI.18 Separate Trustees and Co-trustees.
(a) If at any time the Trustee reasonably shall deem it necessary for the
purpose of meeting any legal requirements applicable to it in the performance of
its duties hereunder (including any legal requirements of any jurisdiction in
which any of the Collateral is located), the Trustee shall have the power to,
and shall, execute and deliver any and all instruments necessary to appoint one
or more Persons to act as separate trustees or co-trustees hereunder, jointly
with the Trustee, of any of the Collateral, including any of the Mortgaged
Properties, subject to this Indenture, and any such Persons shall be such
separate trustee or co-trustee, with such powers and duties consistent with this
Indenture and the other Security Documents as shall be specified in the
instrument appointing such Person but without thereby releasing the Trustee from
any of its duties hereunder. If the Trustee shall request the Issuers so to do,
each Issuer shall join with the Trustee in the execution of such instrument, but
the Trustee shall have the power to make such appointment without making such
request.
(b) Every separate trustee and co-trustee shall, to the extent not
prohibited by law, be subject to the following terms and conditions:
(1) the rights, powers, duties and obligations conferred or imposed upon
such separate or co-trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate or co-trustee jointly, as shall be
provided in the appointing instrument, except to the extent that under any law
of any jurisdiction in which any particular act is to be performed any
nonresident trustee shall be incompetent or unqualified to perform such act, in
which event such rights, powers, duties and obligations shall be exercised and
performed by such separate trustee or co-trustee; provided, however, that in the
event of a conflict between the instructions or directions of the Trustee and
any separate or co-trustee, the directions of the Trustee shall govern;
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(2) all powers, duties, obligations and rights conferred upon the
Trustee, in respect of the custody of all cash and other securities to be
deposited with or otherwise held by the Trustee hereunder shall be exercised
solely by the Trustee; and
(3) the Trustee may at any time by written instrument accept the
resignation of or remove any such separate trustee or co-trustee, and, upon the
request of the Trustee, each Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to make effective such resignation or removal, but the Trustee shall
have the power to accept such resignation or to make such removal without making
such request. A successor to a separate trustee or co-trustee so resigning or
removed may be appointed in the manner otherwise provided herein.
(c) Such separate trustee or co-trustee, upon acceptance of such trust,
shall be vested with the estates or property specified in such instrument,
jointly with the Trustee and the Trustee shall take such action as may be
necessary to provide for the appropriate interest in the Collateral, including
the Mortgaged Properties, to be vested in such separate trustee or co-trustee,
the execution and delivery of any amendments to the Security Documents necessary
in connection therewith, and the recording of such documents and instruments as
may be necessary to give effect to the foregoing. Any separate trustee or co-
trustee may, at any time, by written instrument constitute the Trustee, his
agent or attorney in fact with full power and authority, to the extent permitted
by law, to do all acts and things and exercise all discretion authorized or
permitted by him, for and on behalf of him and in his name. If any separate
trustee or co-trustee shall be dissolved, become incapable of acting, resign, be
removed or die, all the estates, property, rights, powers, trusts, duties and
obligations of said separate trustee or co-trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee, without the appointment of a
successor to said separate trustee or co-trustee, until the appointment of a
successor to said separate trustee or co-trustee is necessary as provided in
this Indenture. The appointment of a co-trustee shall in no way release the
Trustee from any of its duties or responsibilities hereunder.
(d) Any notice, request or other writing, by or on behalf of any Holder,
delivered to the Trustee shall be deemed to have been delivered to all separate
trustees and co-trustees.
SECTION VI.19 Streit Act.
Any provisions required to be contained in this Indenture by Section 126 of
Article 4-A of the New York Real Property Law are hereby incorporated, and such
provisions shall be in addition to those conferred or imposed by this Indenture,
provided, however, that to the extent that such Section 126 shall not apply to
this Indenture, said Section 126 shall not have any effect, and if said Section
126 should at any time be repealed or cease to apply to
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this Indenture, or be construed by judicial decision to be inapplicable, said
Section 126 shall cease to have any further effect upon the provisions of this
Indenture. In case of a conflict between the provisions of this Indenture and
any mandatory provisions of Article 4-A of the New York Real Property Law, such
mandatory provisions shall prevail, provided that if said Article 4-A shall not
apply to this Indenture, should at any time be repealed, or cease to apply to
this Indenture, or should be construed by judicial decision to be inapplicable,
such mandatory provisions of such Article 4-A shall cease to have any further
effect upon the provisions of this Indenture.
SECTION VI.20 Withholding and Information Reporting.
The Trustee agrees with each Issuer that the Trustee will comply with all
applicable United States federal income tax withholding and informational
reporting requirements in respect of payments on the Notes.
ARTICLE VII
THE SERVICER
SECTION VII.1 Servicer to Act as Servicer.
The Servicer, as an independent contract servicer, shall service and
administer the Loan on behalf of the Trustee and in the interests of (as
determined by the Servicer in its reasonable judgment) and for the benefit of
the Holders in accordance with the terms of this Indenture and the other
Security Documents and, to the extent consistent with such terms, giving due
consideration to customary and usual standards of practice of prudent
institutional commercial mortgage loan servicers utilized with respect to assets
comparable to those securing the Loan, with a view toward maximizing the timely
recovery of principal and interest on the Loan, but without regard to:
(i) any relationship that the Servicer or any Affiliate of the
Servicer may have with any Issuer or any Affiliate of any Issuer;
(ii) the ownership of any Note by the Servicer or any Affiliate of
the Servicer;
(iii) Servicer's obligations to make Advances or to incur servicing
expenses with respect to the Loan; or
(iv) the adequacy of the Servicer's compensation for its services
hereunder or with respect to any particular transaction.
Subject to the above-described servicing standards (hereinafter referred to as
"Accepted Servicing Practices") and the terms of this Indenture and of the other
Security Documents, the Servicer shall have full power and authority to do or
cause to be done any and all
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things in connection with such servicing and administration which it may deem
necessary or desirable. The Servicer shall service and administer the Loan in
accordance with applicable state and federal law. At the written request of the
Servicer, accompanied by the form of powers or other documents being requested
and a certificate that such power of attorney or document is necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder, the Trustee shall furnish to the Servicer any powers of
attorney and other documents and the Trustee shall not be held responsible for
any acts by the Servicer in its uses of any such powers of attorney or other
documents. Where the terms of the Mortgage or any other Security Document
provide that the consent or approval of the Mortgagee is required, then (unless
otherwise provided therein) such consent or approval shall be granted or
withheld by the Servicer on behalf of the Mortgagee in accordance with Accepted
Servicing Practices. In the event the Servicer is administering any consent,
approval or other request by any Issuer pursuant to the Notes, this Indenture or
any of the other Security Documents, and such consent, approval or request
requires a Rating Confirmation, the Servicer shall not be obligated to make any
recommendation or provide any opinion to the Rating Agency as to whether such
consent, approval or request should be granted or withheld, unless such
recommendation or opinion is expressly required to be made or provided pursuant
to the terms and provisions of this Indenture.
SECTION VII.2 Sub-Servicing Agreements.
The Servicer, at its own expense without a right of reimbursement from the
Issuers under this Indenture or the Servicer Fee Agreement, may enter into sub-
servicing agreements with sub-servicers for the servicing and administration of
the Mortgaged Properties, provided that, (i) each Issuer shall have consented in
writing to the appointment of such sub-servicer, unless (x) such sub-servicer is
a wholly owned subsidiary of the Servicer named herein and has substantially the
same Servicing Officers as the Servicer, or (y) the Servicer has determined, in
good faith, that the appointment of such sub-servicer is necessary for the
purpose of meeting any legal requirements applicable to it in the performance of
its duties hereunder (including any legal requirements of any jurisdiction in
which any of the Collateral is located) (ii) any such sub-servicing agreement
will be upon such terms and conditions as are not inconsistent with this
Indenture and as the Servicer and the sub-servicer have agreed, and (iii) no
sub-servicer retained by the Servicer shall grant any modification, waiver, or
amendment to the Security Documents without the written approval of the
Servicer. References in this Indenture to actions taken or to be taken, and
limitations on actions permitted to be taken, by the Servicer in servicing the
Mortgaged Properties include actions taken or to be taken by a sub-servicer on
behalf of the Servicer. Each sub-servicer shall be (i) authorized to transact
business in the applicable state(s), if, and to the extent, required by
applicable law to enable the sub-servicer to perform its obligations hereunder
and under the applicable sub-servicing agreement, and (ii) qualified to service
mortgage loans comparable to the Loan. For purposes of this Indenture, the
Servicer shall be deemed to have received any amount when the sub-servicer
receives such amount and actions taken by the sub-servicer shall be deemed to be
actions
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of the Servicer. The Servicer shall notify the Trustee and the Issuers in
writing promptly upon the appointment of any sub-servicer and promptly furnish
the Trustee and the Issuers with a copy of the sub-servicing agreement.
Notwithstanding any sub-servicing agreement, any of the provisions of this
Indenture relating to agreements or arrangements between the Servicer and a sub-
servicer or reference to actions taken through a sub-servicer or otherwise, the
Servicer shall remain obligated and liable to the Trustee and the Holders for
the servicing and administering of the Loan in accordance with the provisions of
Section 7.1 without diminution of such obligation or liability by virtue of such
sub-servicing agreement or arrangements or by virtue of indemnification from a
sub-servicer and to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Loan.
SECTION VII.3 Certain Duties and Responsibilities.
Until the principal and interest on each Note is paid in full, the Servicer
shall proceed diligently to collect all payments called for under the terms and
provisions of the Security Documents, including payments from the Issuers'
Insurance Proceeds and Taking Proceeds, and in doing so the Servicer shall
follow such collection procedures as are in accordance with Accepted Servicing
Practices. The foregoing responsibilities shall include, without limitation,
making, at the expense of the Issuers, timely filings of any Uniform Commercial
Code continuation statements and any refilings of any Security Document as
necessary to preserve the liens created thereby to the extent not so done by the
Issuers as provided herein or in the other Security Documents. The Servicer
agrees that it will notify the Issuers and the Trustee in writing of any
filings, fees, taxes or other similar payments required in connection with the
satisfaction of the obligations of the Issuers under this Indenture and the
other Security Documents known to any officer or employee of the Servicer
actively involved in the administration of the Loan. Upon receiving notice of an
acceleration of the Notes pursuant to Section 5.2, the Servicer may, unless the
Event of Default preceding such acceleration is an Event of Default in the
payment of interest (including Additional Amounts, if any) or principal or Make-
Whole Payments, if any, under the Notes, in which case the Servicer shall,
initiate foreclosure proceedings with respect to the Mortgaged Properties;
provided, however, that the Servicer will not convert ownership of any Mortgaged
Property to the Trustee on behalf of the Holders unless and until the Servicer
has complied with the terms of this Indenture and the Servicer has notified the
Trustee in writing and the Trustee, in turn, has notified each Holder. After an
Event of Default with respect to the payment of amounts due under the Notes or
the Security Documents has occurred, if the Servicer determines that a
modification, waiver or amendment of the terms of any Security Document is
reasonably likely to produce a greater recovery on a present value basis than
liquidation of one or more of the Mortgaged Properties, then the Servicer may,
but is not required to, agree to a modification, waiver or amendment of any of
the terms of such Security Document in accordance with its terms; provided,
however, that the Servicer shall not permit any modification that would change
the interest rate payable on any of the Notes, extend the maturity date of any
Note or
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forgive any principal or interest thereof, unless (i) the Servicer has notified
the Trustee in writing and the Trustee has notified the Holders in writing of
such proposed modification and such modification has been approved in writing by
Holders of 100% in aggregate principal amount of the Outstanding Notes affected
by such modification and (ii) any such modification will be made in compliance
with the terms of this Indenture (including Section 6.1(a)(5)) and any other
applicable Security Documents.
SECTION VII.4 Payment of Impositions, etc. The Servicer shall maintain
accurate records with respect to the Mortgaged Properties reflecting the status
of Impositions and other similar items that are or may become a lien thereon and
the status of insurance premiums payable in respect of any of the insurance
policies required to be maintained by the Issuers (in their capacities as
Mortgagors) under Article 13 of the Mortgage. The Issuers shall supply to the
Servicer evidence of the payment of such amounts at least three (3) Business
Days prior to the applicable penalty or termination dates. To the extent the
Servicer has obtained notice of any Impositions that have not been paid by the
Issuers as required by the immediately preceding sentence and no Issuer is
contesting such items pursuant to Article 12 of the Mortgage, the Servicer shall
obtain all bills for the payment of such items (including renewal premiums) and
shall instruct the Issuers in writing to effect payment thereof prior to the
applicable penalty or termination date, provided that failure of the Servicer to
provide such instruction shall in no way limit the obligation of the Issuers to
timely pay such Impositions nor shall it be a condition for the Servicer to make
an advance from its own funds as set forth below. If evidence of such payment is
not promptly received by the Servicer, the Servicer shall Advance from its own
funds (without having any obligation to give any prior notice to the Issuers but
subject to the Servicer's determination that such Advance will not, if made,
constitute a Nonrecoverable Advance) amounts payable with respect to all such
items related to the Mortgaged Properties when and as the same shall become due
and payable, which advance shall constitute a Carrying Cost Advance. The
Servicer shall not be obligated to advance from its own funds any amounts
required to cure, or pay any other amounts due by reason of, any failure of any
Mortgaged Property to comply with any applicable Legal Requirements (as defined
in the Mortgage), including any Environmental Law (as defined in the Mortgage),
or to investigate, test, monitor, contain, clean up or remedy an environmental
condition present at any Mortgaged Property, except to the extent provided in
Section 7.7.
SECTION VII.5 Maintenance of Insurance and Errors and Omissions and
Fidelity Coverage. (a) The Servicer shall use its best efforts to cause the
Issuers to maintain for each Mortgaged Property all insurance required by the
terms of the Mortgage in the amounts, with the terms and provisions, and from
the insurers set forth therein. If the Issuers fail to maintain the insurance
policies required by the Mortgage, the Servicer shall obtain such required
insurance policies (which may be through the Servicer's master force-placed
insurance policy) to the extent available and to the extent the Trustee, as
Mortgagee, has an insurable interest (as determined by the Servicer in
accordance with Accepted Servicing Practices). The cost (including any
deductible relating to such
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insurance) of such required insurance policies (or, in the case of the
Servicer's master force-placed policy, the incremental cost (including any
related deductible) of such insurance related to the specific Mortgaged
Property) shall be paid by the Servicer as a Carrying Cost Advance. In carrying
out the foregoing, the Servicer shall monitor each Issuer's compliance with the
requirements of Article 13 of the Mortgage and shall advise the Issuers of any
instance where the Servicer believes that any Issuer is no longer in compliance
with Article 13 of the Mortgage. The Servicer shall also cause to be maintained
on each Mortgaged Property after it becomes a Foreclosed Property all such
insurance, to the extent the same is then available at reasonable cost and
maintaining such insurance would be in the interest of the Holders in accordance
with Accepted Servicing Practices. Pursuant to Section 7.6, any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of a Mortgaged Property or property so
acquired or amounts released to the Mortgagor in accordance with the terms of
the Mortgage) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 7.6. Any costs incurred by the Servicer pursuant
to this Section shall be reimbursable to the Servicer pursuant to Section 7.6.
Nothing in this Section shall be deemed to require the Servicer to make a
Nonrecoverable Advance.
(b) The Servicer shall obtain and maintain at its own expense, and keep in
full force and effect throughout the term of this Indenture, a blanket fidelity
bond and an errors and omissions insurance policy from a provider that is rated
at least Investment Grade and covering the Servicer's officers and employees and
agents acting on behalf of the Servicer in connection with its activities under
this Indenture (to the extent such agents are under the supervision, direction
and control of the Servicer). The amount of coverage shall be such as is
commercially reasonable given the Servicer's role hereunder and at least equal
to the coverage that is required by applicable governmental authorities having
regulatory power over the Servicer and the insurer or insurers providing such
coverage shall be assigned a rating of at least Investment Grade. If no such
coverage amounts are imposed by such regulatory authorities, the amount of
coverage shall be at least equal to the coverage that would be required by FNMA
or FHLMC with respect to the Servicer if the Servicer were servicing and
administering the Loan for FNMA or FHLMC. In the event that any such bond or
policy ceases to be in effect, the Servicer shall obtain a comparable
replacement bond or policy. Coverage of the Servicer under a policy or bond
obtained by an Affiliate of the Servicer and providing the coverage and
continuing for the term required by this Section 7.5 shall satisfy the
requirements of this Section 7.5.
No provision of this Section 7.5 requiring such fidelity bond and errors
and omissions insurance shall diminish or relieve the Servicer from its duties
and obligations as set forth in this Indenture. Concurrently with the execution
hereof, the Servicer shall deliver or cause to be delivered to the Trustee a
certificate of insurance from the surety, insurer or insurance broker. The
Servicer shall immediately provide notice to the Trustee and the Rating Agency
of any cancellation, termination, expiration, reduction in amount
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of, or material change (other than an increase) in, coverage under any such
fidelity bond or policy of errors and omissions insurance.
(c) The Servicer shall approve adjustments and settlements of insurance
claims on behalf of the Trustee as Mortgagee.
SECTION VII.6 Collection Account.
(a) Upon the occurrence and continuation of an Event of Default, the
Servicer shall establish one or more accounts (collectively, the "Collection
Account") in the name of the Trustee in an Eligible Account bearing a
designation clearly indicating that such account and all funds deposited therein
(including all investments of such deposited funds and all income or other gain
from such investments) are held for the exclusive benefit of the Holders. The
Servicer shall deposit, or cause to be deposited, in the Collection Account
within one (1) Business Day after receipt all revenues received from any
Foreclosed Property and all other amounts received by the Servicer with respect
to the Security Documents and the Mortgaged Properties. The Servicer shall have
exclusive control and the right of withdrawal with respect to the Collection
Account for the purpose of making deposits to and withdrawals from the
Collection Account in accordance with this Indenture. Funds in the Collection
Account shall not be commingled with any other funds of the Servicer. All monies
deposited from time to time in the Collection Account and all investments made
with such monies, including all income or other gain from such investments,
shall be held by the Servicer in the Collection Account for the benefit of the
Holders as herein provided.
(b) The Servicer may make withdrawals from the Collection Account only as
described below (the order set forth below constituting an order of priority for
such withdrawals):
(i) to withdraw any sums deposited in error in the Collection
Account and pay such sums to Persons entitled thereto;
(ii) to pay to the Servicer and the Trustee (pro rata, based on the
relative amounts, if any, then owed) the fees due under the terms of the
Servicer Fee Agreement and the Trustee Fee Agreement, respectively;
(iii) to pay or reimburse the Trustee and the Servicer, in that
order, for Advances made by it and not previously reimbursed, including any
Advance previously made that the Trustee or the Servicer, as applicable,
determines in good faith to be a Nonrecoverable Advance, and all accrued
but unpaid interest on such Advances computed as set forth in Section 7.17;
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(iv) to pay costs and expenses (not previously advanced by the
Servicer) necessary for the proper operation, maintenance and management of
any Foreclosed Property pursuant to Section 7.9(c).
(v) to pay or reimburse the Servicer and the Trustee for any other
amounts reimbursable pursuant to the terms of this Indenture and not
previously paid or reimbursed pursuant to subsections (iii) or (iv) above
or any other Security Document (including satisfaction of any
indemnification obligations of the Issuers hereunder or thereunder);
(vi) following the appointment of a Manager, to pay the Manager the
Management Fee;
(vii) to transfer to the Payment Account on the fourth (4th) Business
Day preceding an Interest Payment Date, any amounts remaining in the
Collection Account for the purpose of making payments pursuant to Section 5.6
hereof; and
(viii) to clear and terminate the Collection Account following
liquidation of all of the Collateral.
(c) Money held by the Servicer hereunder shall be held in trust for the
purposes for which it was paid, and shall be segregated from any other monies
held by the Servicer, and may be deposited by the Servicer under such general
conditions as may be prescribed by law. The Servicer shall invest any amounts
held in the Collection Account pending their application to the purposes herein
provided in one or more Eligible Investments in the manner described in Section
6.14 with respect to the Payment Account. The Servicer shall not be under any
liability to the Issuers, the Holders or any other Person for interest or other
earnings (or losses) on any money received by it hereunder or Eligible
Investments made by it in accordance herewith, except for such losses as may be
caused by the negligence or willful misconduct of the Servicer. Within a
reasonable time after the end of each calendar year or portion thereof during
the term of the Notes, the Servicer shall deliver to the Issuers and the Trustee
and, upon request, to the Holder of any Note a statement of any amounts received
or disbursed by the Servicer out of the Collection Account in respect of the
Collateral during such calendar year or portion thereof.
SECTION VII.7 Realization upon Mortgaged Property. (a) Upon an Event of
Default (i) the Servicer shall exercise the remedies available under Article V
hereof, and under the Mortgage and the Assignment of Leases, including
foreclosing on all or some of the Mortgaged Properties, and (ii) the Servicer
shall deliver such notices as may be required by any Leases or Operating
Agreements to the parties entitled thereto. Except in the case of rescission of
acceleration in accordance with Article V, the Servicer shall liquidate the
Collateral and transfer the payments to the Payment Account for disbursement
pursuant to Section 5.6 hereof. In determining whether or not to foreclose on
any
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Mortgaged Property, the Servicer may obtain a full narrative appraisal of the
Mortgaged Property from an appraiser the cost of which shall constitute a
Carrying Cost Advance. In addition, upon an Event of Default, or an event which
with the giving of notice or the passage of time would become an Event of
Default, the Servicer may obtain advice from persons with expertise in the field
of distressed real estate, bankruptcy or other relevant fields the cost of which
shall constitute a Carrying Cost Advance. Notwithstanding the foregoing but
subject to Section 7.7(c), the Servicer shall promptly commence foreclosure
following the Maturity Date with respect to any Series, unless prior to that
time the term of the Mortgage has been extended with approval of the Holders of
not less than 100% in aggregate principal amount of the Notes at the time
Outstanding as described in Section 7.3. Within sixty (60) days after an Event
of Default and acceleration of the Loan, the Servicer shall prepare, or cause to
be prepared, a liquidation plan for the Collateral and shall deliver a copy of
such plan to the Trustee for distribution to each Holder. Nothing in such plan
shall conflict with or alter in any way any of the obligations of the parties to
this Indenture. Such liquidation plan shall be deemed approved by the Holders
unless, within sixty (60) days after its delivery, Holders of more than 50% in
aggregate principal amount of the Notes then Outstanding object by writings
filed with the Trustee to such liquidation plan. In connection with such
foreclosure or other conversion, the Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be consistent
with Accepted Servicing Practices. At the time the Servicer on behalf of the
Trustee for the benefit of the Holders takes possession of a Mortgaged Property
by foreclosure or otherwise, the Servicer may, but shall have no obligation
whatsoever to, pay the cost of any capital improvements to the Mortgaged
Property if the Servicer determines that such expenditures are advisable to
protect or, if permitted by Section 33 of the Mortgage, enhance the value of
such Mortgaged Property and are in the best interests of the Holders, and any
such payment by the Servicer shall constitute a Carrying Cost Advance hereunder.
The foregoing is subject to the condition that the Servicer shall not be
required to expend its own funds to restore any property damaged by an Uninsured
Cause.
(b) Notwithstanding Section 7.7(a), the Servicer shall not, on behalf of
the Trustee, obtain title to any Mortgaged Property as a result or in lieu of
foreclosure or otherwise, and shall not otherwise acquire possession of, or take
other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Servicer or the Trustee would be considered to hold title to,
be a "mortgagee-in-possession" of, or be an "owner" or "operator" of such
Mortgaged Property within the meaning of CERCLA or any applicable comparable
federal, state or local law, or a "discharger" or "responsible party" thereunder
unless the Servicer has also previously determined, based on an environmental
report prepared at the direction of the Servicer by a person having the
qualifications set forth in Section 7.7(c) (a copy of which report shall have
been delivered to the Trustee), that such Mortgaged Property does not contain an
"unacceptable environmental condition" as defined in Section 501.04 (or any
successor provision) of Part II of the Fannie Mae Multifamily Guide, or that, if
any such unacceptable environmental condition exists, taking
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such actions as are necessary to bring such Mortgaged Property into compliance
with applicable Environmental Laws, or taking such actions as are necessary to
contain, clean-up, remove or remediate Hazardous Substances affecting such
Mortgaged Property is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions.
If the Servicer has so determined based on satisfaction of the criteria in
this Section 7.7(b) that it would be in the best economic interest of the
Holders to take any such actions and foreclose or otherwise acquire possession
of such Mortgaged Property, the Servicer shall notify the Trustee in writing
setting forth in reasonable detail the reasons for its determination, and the
Trustee, in turn, shall send a copy of the related environmental report and
notification to the Holders notifying them of their right to object to such
proposed action. Such proposed action shall be taken unless the Trustee (i)
shall have received and delivered to the Servicer, within thirty (30) days after
such notification from the Servicer, written instructions from the Holders of
not less than 66 2/3% in aggregate principal amount of the Outstanding Notes
directing it not to take such action or (ii) has given the Servicer similar
written instructions based upon the Trustee's reasonable opinion that there
would be a likelihood of the Trustee's individual liability resulting from such
action against which it would not be indemnified hereunder.
(c) Any environmental report contemplated by Section 7.7(b) shall be
prepared by any Independent Person who regularly conducts environmental site
assessments for purchasers of comparable properties, as determined by the
Servicer in a manner consistent with Accepted Servicing Practices. The cost of
preparation of any environmental site assessment shall qualify as a Carrying
Cost Advance and shall be advanced by the Servicer, and the Servicer shall be
reimbursed therefor from the Payment Account, as provided in Section 5.6, or the
Collection Account pursuant to Section 7.6.
(d) If the Servicer determines, pursuant to Section 7.7(b), that taking
such actions as are necessary to bring a Mortgaged Property into compliance with
applicable Environmental Laws, or taking such actions with respect to the
containment, clean-up, removal or remediation of Hazardous Substances affecting
such Mortgaged Property, is not reasonably likely to produce a greater recovery
on a present value basis than not taking such actions, the Servicer shall notify
the Trustee in writing setting forth in reasonable detail the reasons for its
determination and any action which it determines to take, and the Trustee, in
turn, shall send a copy of such notification to the Holders notifying them of
their right to give contrary direction. The Servicer shall take such alternative
action as it deems to be in the best economic interests of the Holders,
consistent with Accepted Servicing Practices including, without limitation,
releasing the lien of the Mortgage with respect to such Mortgaged Property,
unless the Trustee has received and delivered to the Servicer within thirty (30)
days after such notification from the Servicer, contrary directions from the
Holders of not less than 66 2/3% in aggregate principal amount of the
Outstanding Notes. Neither the Trustee nor the Servicer shall be obligated to
take any
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action, or refrain from taking any action at the direction of Holders pursuant
to this Section 7.7(d) unless the Holders offer to the Trustee or the Servicer,
as the case may be, security or indemnification satisfactory to the Trustee or
the Servicer against the costs, expenses and liabilities that may be incurred
with respect to such actions or inaction.
SECTION VII.8 Trustee to Cooperate; Release of Original Security Documents.
From time to time and as appropriate for the servicing or foreclosure of the
Mortgaged Properties, the Trustee shall, upon written request of the Servicer
and delivery to the Trustee of a trust receipt in the form of Exhibit F hereto,
release or cause to be released originals of any Security Documents being held
by it to the Servicer and shall execute such documents furnished to it as shall,
according to an Officer's Certificate of the Servicer, be necessary to the
prosecution of any such proceedings. The Servicer shall promptly return such
items to the Trustee (or the Custodian) when the need therefor by the Servicer
no longer exists.
SECTION VII.9 Title and Management of Foreclosed Property.
(a) In the event that title to any Mortgaged Property is acquired by the
Servicer for the benefit of the Holders in foreclosure or by deed-in-lieu of
foreclosure or otherwise, the deed or certificate of sale shall be taken in the
name of the Trustee, or its nominee, on behalf of the Holders or as otherwise
contemplated pursuant to Section 6.18. The Servicer, on behalf of the Holders,
shall sell any Foreclosed Property as expeditiously as possible in accordance
with the provisions of Section 7.10. Subject to Section 7.9(d), the Servicer
shall retain the entity or entities that were acting as the Property Manager (as
defined in the Mortgage) with respect to the Mortgaged Properties immediately
prior to the Event of Default, or such other property managers as the Servicer
shall deem appropriate (the "Manager"), to provide property management services
at each of the Foreclosed Properties. In connection with such management, the
property manager selected by the Servicer shall be entitled to the related
Management Fees from the Collateral, and such fees shall be payable in
accordance with Section 7.6.
(b) The Servicer and the Manager shall segregate and hold all funds
collected and received in connection with the operation of any Foreclosed
Property separate and apart from their own funds and general assets and shall
deposit all such funds collected and received in connection with the operation
of any Foreclosed Property in the Collection Account.
(c) The Servicer shall have full power and authority, subject only to the
specific requirements and prohibitions of this Indenture and Accepted Servicing
Practices, to do any and all things in connection with the Foreclosed Property
for the benefit of the Holders on such terms and for such period as the Servicer
deems to be in the best interests of the Holders and as consistent with Accepted
Servicing Practices. In connection therewith, the Servicer shall require the
Manager to deposit or cause to be deposited within one (1)
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Business Day after receipt in the Collection Account all revenues received with
respect to all Foreclosed Properties. To the extent such funds are available
therefor pursuant to Section 7.6(b)(iv) the Servicer shall withdraw from the
Collection Account funds necessary for the proper operation, management and
maintenance of the Foreclosed Property, including, but not limited to:
(i) all insurance premiums due and payable in respect of the
Foreclosed Properties;
(ii) all Impositions in respect of the Foreclosed Properties that
could result or have resulted in the imposition of a lien thereon;
(iii) all amounts that are due and payable under the Ground Leases,
any Leases or Operating Agreements affecting the Foreclosed Properties; and
(iv) all costs and expenses necessary to preserve the Foreclosed
Properties.
To the extent that funds on deposit in the Collection Account are insufficient
for the purposes set forth in clauses (i) through (iv) above, the Servicer shall
make a Carrying Cost Advance, subject to the limitations set forth in Section
7.17.
(d) The Servicer, in the name of the Trustee on behalf of the Holders,
shall contract with any Manager for the operation and management of the
Foreclosed Properties, provided that no such contract shall impose individual
liability on the Trustee, the Servicer or the Holders; and provided, further,
that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith (including those set forth in the definition of
Management Fee);
(ii) any such contract shall require, or shall be administered to
require, that the Manager (A) pay from revenues of all Foreclosed
Properties all costs and expenses incurred in connection with the operation
and management of the Foreclosed Properties, and (B) remit all related
revenues, net of such costs and expenses, to the Servicer for deposit to
the Collection Account as soon as practicable but in no event later than
the Business Day immediately following receipt; and
(iii) none of the provisions of this Section 7.9 relating to any such
contract or to actions taken by any such Manager shall be deemed to relieve
the Servicer of any of its duties and obligations to the Trustee on behalf
of the Holders with respect to the asset management of the Foreclosed
Properties.
The Servicer in the name of the Trustee on behalf of the Holders shall be
entitled to enter into any agreement with any Manager related to its duties and
obligations hereunder for indemnification of the Servicer by such Manager, and
nothing in this
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Indenture shall be deemed to limit or modify such indemnification. The Servicer
agrees to monitor the performance of the Manager and to enforce the obligations
of the Manager on behalf of the Trustee in accordance with Accepted Servicing
Practices. Expenses incurred by the Servicer in connection herewith shall
qualify as Carrying Cost Advances. The Servicer shall not serve as Manager, but
shall be obligated with respect to any management contract with the Manager to
the same extent as if the Servicer alone were performing all duties and
obligations in connection with the operation and management of the Foreclosed
Property.
SECTION VII.10 Sale of Foreclosed Property. (a) Promptly after the
acquisition of a Foreclosed Property by the Servicer in the name of and on
behalf of the Trustee, the Servicer shall on behalf of the Trustee obtain a full
narrative appraisal of such Foreclosed Property from an appraiser (unless there
exists and is available to the Servicer a full narrative appraisal of such
Mortgaged Property performed within the last twelve (12) months) in order to
determine the fair market value of such Foreclosed Property and shall provide
copies of such appraisal to the Trustee and the Issuers. The Servicer may offer
to sell to any Person one or more of the Foreclosed Properties, if and when the
Servicer determines, consistent with the Accepted Servicing Practices, that such
a sale would be in the best economic interests of the Holders. The Servicer
shall give the Trustee not less than five (5) days' prior written notice of its
intention to sell any Foreclosed Property and shall accept the highest cash
offer received from any Person (which Person shall certify in its offer as to
whether it is an Interested Person) for the Foreclosed Property that at least
equals the sum of (i) the Allocated Amount for such Foreclosed Property, plus
(ii) all unpaid interest accrued on Notes representing a principal amount equal
to the Allocated Amount (assuming a pro-rata selection of all Outstanding Notes,
based on principal amount) from time to time through the date of sale, plus
(iii) all amounts owed to the Servicer and the Trustee hereunder and the Manager
with respect to such Foreclosed Property, and all reasonably estimated
Liquidation Expenses. In the absence of any such offer, the Servicer shall
accept the highest cash offer received from any Person that is not less than the
fair market value of the Foreclosed Property as set forth in the most recent
full narrative appraisal (prepared by an appraiser) of such Foreclosed Property.
In the absence of any such offer, the Servicer shall offer the Foreclosed
Property for sale to any Person other than an Interested Person, in a
commercially reasonable manner for a period of not less than ten (10) or more
than 365 days, and shall accept the highest cash offer received therefor in
excess of the highest cash offer previously submitted. If no such offer is
received, any Interested Person may submit an offer for no less than the full
amount of principal of, and all other amounts due under, the Notes and all other
amounts due under the Security Documents, and the Servicer shall accept the
highest outstanding cash offer, regardless of from whom received and regardless
of its amount. No Interested Person shall be obligated to submit an offer to
purchase any Foreclosed Property, and notwithstanding anything to the contrary
herein, neither the Trustee in its individual capacity nor any of its Affiliates
may offer to purchase or purchase any Foreclosed Property pursuant hereto.
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(b) Subject to the provisions of Section 7.9, the Servicer shall act on
behalf of the Trustee for the benefit of the Holders in negotiating and taking
any other action necessary or appropriate in connection with the sale of the
Foreclosed Properties, including the collection of all amounts payable in
connection therewith. Any sale of a Foreclosed Property shall be without
warranty by, or recourse to, the Trustee, any Issuer, the Servicer, the Holders
or any other Person (except for such warranties of title and condition as may be
customary under the circumstances of any such sale) and, if consummated in
accordance with the provisions of this Section 7.10, neither the Trustee, any
Issuer nor the Servicer shall have any liability to any Holder with respect to
the purchase price thereof accepted by the Servicer or the Trustee.
(c) The proceeds of any sale effected pursuant to Section 7.10(a), after
deduction of the expenses incurred in connection therewith, shall be deposited
in the Collection Account in accordance with Section 7.6.
SECTION VII.11 Servicing Compensation. (a) Prior to the occurrence of any
Event of Default, the Issuers shall pay the Servicer as servicing compensation
the servicer fees and expenses provided for in the Servicer Fee Agreement. On
and after the occurrence of an Event of Default, the Servicer shall be entitled
to receive from the Collection Account as servicing compensation the servicer
fees and expenses provided for in the Servicer Fee Agreement, including
reimbursement for the actual out-of-pocket expenses incurred by it in the
performance of its duties hereunder, including reasonable amounts payable in
respect of the Servicer's counsel fees and expenses. In no event shall the
Servicer receive as servicing compensation (i) fees and expenses of any sub-
servicer; (ii) the cost of any fidelity bond or errors and omissions policy
required by Section 7.5; (iii) overhead expenses of the Servicer, including but
not limited to those that may properly be allocable under the Servicer's
accounting system or otherwise to the Servicer's activities under this Indenture
or the income derived by it hereunder (including the costs to the Servicer
associated with employees of the Servicer performing services in connection with
the obligations of the Servicer hereunder); and (iv) costs and expenses arising
from the negligence or willful misconduct of the Servicer.
(b) No transfer, sale, pledge or other disposition of the Servicer's right
to receive all or any portion of the fees payable to the Servicer hereunder or
under the Servicer Fee Agreement shall be made, and any such attempted transfer,
sale, pledge or other disposition shall be void, unless such transfer is made to
a successor servicer in connection with the assumption by such successor
servicer of the duties hereunder pursuant to Section 7.25 and all (and not a
portion) such fees are transferred to such successor servicer.
SECTION VII.12 Reports to the Trustee; Statements to the Issuers.
(a) After an Event of Default, the Servicer shall (i) furnish to the
Trustee or its designee the originals of all agreements entered into by the
Servicer in the name of the
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Trustee pursuant to this Indenture, (ii) advise the Trustee in writing of any
event or circumstance materially affecting the Mortgaged Properties or the
interests of the Holders therein coming to the attention of any Servicing
Officer in connection or as a result of the fulfillment by the Servicer of its
obligations under this Indenture, and (iii) furnish, and cause any Manager to
furnish, to the Trustee or its designee such other reports with respect to the
Mortgaged Properties, their condition, tenants, and the income resulting
therefrom as the Trustee or its designee may reasonably request in writing.
(b) On or before the fifth (5th) Business Day preceding each Interest
Payment Date the Servicer shall deliver to the Issuers and the Trustee a
statement setting forth the total amount of interest and any other expenses due
in respect of all of the Notes on such Interest Payment Date; provided, however,
that if the Servicer shall at any time fail to deliver such statement to the
Issuers, the Issuers shall not be relieved of their obligation to timely pay all
interest and other expenses due on any Interest Payment Date and the Servicer
shall have no liability to any Issuer for any such failure; and, provided
further, that if any such statement shall contain any mistaken information, the
Issuers shall not be relieved of their obligation to timely pay all amounts due
and owing on such Interest Payment Date and neither the Trustee nor the Servicer
shall have any liability to any Issuer arising from such mistaken information.
SECTION VII.13 Annual Statement as to Compliance. The Servicer shall
deliver to the Trustee and the Issuers on or before March 31 of each year,
beginning March 31, 1998, an Officer's Certificate stating, (a) that a review of
the activities of the Servicer during the preceding calendar year (or since the
Closing Date in the case of the first such Officer's Certificate) and of
performance under this Indenture has been made under such officer's supervision
and (b) that to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Indenture throughout
such period, or if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. Copies of such statements shall be provided by the Servicer
to the Rating Agency.
SECTION VII.14 Annual Independent Public Accountants' Servicing Report. On
or before March 31 of each year beginning March 31, 1998, the Servicer, at its
expense, shall cause a firm of independent public accountants that is a member
of the American Institute of Certified Public Accountants to furnish a statement
to the Trustee, the Issuers and the Rating Agency to the effect that such firm
has examined such documents and records as it deemed necessary and appropriate
relating to the Servicer's servicing of mortgage loans (which examination, if it
is conducted on the basis of any sampling of less than all mortgage loans
serviced by the Servicer in the relevant period, must include an examination of
documents and records relating to the Loan) for the preceding calendar year (or
since the Closing Date in the case of the first such statement) and that, on the
basis of such examination conducted substantially in compliance with generally
accepted auditing standards and the Uniform Single Attestation Program for
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Mortgage Bankers, such firm is of the opinion that the assertion of the
management of the Servicer that it maintained an effective internal control
system over servicing of mortgage loans is fairly stated in all material
respects except for such exceptions that, in the opinion of such firm, generally
accepted auditing standards and the Uniform Single Attestation Program for
Mortgage Bankers requires it to report, in which case such exceptions shall be
set forth in such statement. Copies of such statement provided to the Trustee by
the Servicer shall be provided by the Trustee to any Holder upon request.
SECTION VII.15 Access to Certain Documentation Regarding the Loan. Upon
reasonable advance notice, the Servicer shall provide reasonable access during
its normal business hours at its offices (i) to the Trustee to any information
in its possession relating to its servicing of the Loan and (ii) subject to the
confidentiality restrictions of Section 6.6 and delivery by it of a certificate
in the form of Exhibit D hereto to each Holder which is a savings and loan
association, bank or insurance company, to certain reports and to information
and documentation regarding the Loan sufficient to permit such Holder, the
Office of Thrift Supervision, the FDIC, the supervisory agents and the examiners
of any such entity to comply with applicable regulations of the Office of Thrift
Supervision or other regulatory authorities with respect to investment in the
Notes.
The Servicer shall provide any inquiring savings and loan association, bank
or insurance company desiring to purchase a Note, or a beneficial ownership
interest therein, at the reasonable request of such association, bank or
insurance company, to the extent reasonably available to the Servicer, specific
information as requested; provided that, the institution making such request
delivers a Certificate in the form of Exhibit D and agrees to pay the reasonable
fees and out-of-pocket expenses incurred by the Servicer in connection
therewith.
SECTION VII.16 Inspections. The Servicer shall, at its expense, inspect or
cause to be inspected each Mortgaged Property at least once each calendar year
and furnish to the Trustee a written report of the results of any inspection
required hereunder. If the Issuers fail to pay any sums due under any Note on or
before their due date and such failure is not remedied within five days, or if
an inspection is otherwise warranted in accordance with Accepted Servicing
Practices, the Servicer shall inspect the Mortgaged Properties (or such of them
as the Servicer deems appropriate) within 30 days of the relevant event (or as
soon thereafter as is practicable). The cost of inspecting the Mortgaged
Properties more than once per year shall be paid by the Issuers upon written
request by the Servicer therefor explaining in reasonable detail the basis for
such costs. If an Event of Default shall have occurred and be continuing, the
costs of inspecting the Mortgaged Properties more than once per year shall
constitute Carrying Cost Advances and shall be payable in accordance with
Section 7.6 or Section 5.6, as applicable.
SECTION VII.17 Advances. (a) On or before each Servicer Advance Date, the
Servicer shall make the Interest Advance by depositing in the Payment Account
the
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amount of interest on the Notes that is due from the Issuers with respect to the
next Interest Payment Date (at the regular interest rate set forth in Section
3.5) and was delinquent as of the close of business on the Business Day
immediately preceding such Servicer Advance Date to the extent required under
this Section 7.17. If the Servicer fails to make such Interest Advance on such
date in accordance with the terms of this Indenture, which failure shall
constitute an immediate Servicer Default, the Trustee, as successor Servicer
shall deposit into the Payment Account such Interest Advance amount on the
Interest Payment Date; provided that the Trustee shall be required to make an
Interest Advance only to the extent that the Trustee has determined that such
Interest Advance, together with interest thereon at the Advance Interest Rate,
would not constitute a Nonrecoverable Advance if made. Such determination by the
Trustee shall be made on the same basis that the Servicer would make such
determination in Section 7.17(d) hereof. All Carrying Cost Advances shall be
made by the Servicer in a timely manner as necessary and in accordance with
Accepted Servicing Practices to the extent required under this Section 7.17. If
the Servicer fails to fulfill its obligation to make a Carrying Cost Advance,
which failure shall constitute an immediate Servicer Default, the Trustee, as
successor Servicer, shall make the Carrying Cost Advance; provided that the
Trustee shall be required to make a Carrying Cost Advance only to the extent
that the Trustee has determined that such Carrying Cost Advance, together with
interest thereon at the Advance Interest Rate, would not constitute a
Nonrecoverable Advance if made. The Servicer will not be required to make
Advances of any principal payable on the Notes, of any Make-Whole Payments, of
any Additional Amounts or of any default interest in excess of the regular
interest payments owed by the Issuers on the Notes.
(b) It is understood that the obligation of the Servicer to make such
Advances is mandatory, subject to the limitations set forth in this Indenture,
and shall continue to apply after any modification of the Security Documents
pursuant to Section 7.3 hereof, beyond the Maturity Date for any Series if a
payment default shall have occurred on such date, notwithstanding any other
provision of this Indenture, other than the requirement of recoverability, and
beyond the insolvency of any Issuer (or any successor Issuer), and shall
continue, subject to the requirement of recoverability until the earliest of (i)
the payment in full of all amounts due under the Notes and the Security
Documents and (ii) the date on which all of the Mortgaged Properties become
Liquidated Mortgaged Properties; provided, however, that the obligations of the
Servicer to make Advances hereunder are limited to providing a liquidity
facility with respect to the Loan and making certain advances with respect to
the preservation of the Mortgaged Properties as expressly set forth in this
Indenture and do not constitute insurance or any similar credit enhancement with
respect to the Loan or the Notes and in no event shall the Servicer be required
to advance any Nonrecoverable Advance.
(c) Interest on each Advance made by the Servicer or the Trustee will
accrue for each day that such Advance is outstanding at a rate of interest equal
to the Prime Rate as reported in the Money Rates Section of the Wall Street
Journal (the "Advance Interest
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Rate") as most recently available for such day on the basis of a year of 360
days comprised of twelve (12) thirty (30) day months and the actual number of
days elapsed. The Servicer or the Trustee will be entitled to recover interest
payable on Advances as set forth in Section 7.6(b)(iii) or Section 5.6(ii), at
the Trustee's or the Servicer's option, as applicable.
(d) Notwithstanding anything herein to the contrary, the Servicer shall be
obligated to make an Advance only to the extent that the Servicer has determined
that such Advance, together with interest thereon at the Advance Interest Rate,
would not constitute a Nonrecoverable Advance if made. The Servicer is not
obligated to advance or pay (i) any principal due on the Notes, (ii) any amounts
required to cure a failure of any Mortgaged Property to comply with any law,
including any applicable Environmental Law, or to investigate (except in
connection with the foreclosure or acquisition of a Mortgaged Property as
contemplated by Section 7.7(c)), test, monitor, contain, cleanup or remedy an
environmental condition present at a Mortgaged Property, (iii) Uninsured Causes,
(iv) the cost of any capital improvements to any Mortgaged Property other than
those necessary to prevent an immediate or material loss to the Holder's
interest in the Mortgaged Properties or (v) any other payments not specified in
this Indenture.
(e) The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by a certificate of a Servicing Officer, delivered
on or before the related Servicer Advance Date in the case of an Interest
Advance or on or before the next Servicer Advance Date in the case of any other
Advance, to the Trustee and the Issuers, and detailing the reasons for such
determination, which in each case shall be accompanied by copies of any
engineers' reports, environmental surveys, other third party reports or other
information relevant thereto that were used by the Servicer to support its
determination that any Advance would be non-recoverable. The costs of any such
reports, surveys or other information used by the Servicer or the Trustee in
making the determination that an Advance is or would be a Nonrecoverable Advance
shall be an expense of the Holders or shall constitute a Carrying Cost Advance
if paid by the Servicer or the Trustee from its own funds.
All Advances shall be repaid in the order in which originally advanced, and
Advances owed to any prior Servicer shall be repaid in full, with interest,
prior to the repayment of Advances made by the successor Servicer; provided,
however, that if the Trustee has made an Advance as successor Servicer, it shall
be repaid in full, with interest, prior to the repayment of any Advance made by
any other Servicer.
SECTION VII.18 Rights of the Issuers with Respect to the Servicer.
The Servicer shall afford each Issuer, upon reasonable notice, during
normal business hours access to all records regarding payments made with respect
to the Loan and the Notes and with respect to any Advances made by the Servicer,
including those in
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electronic form, maintained by the Servicer as required hereunder and access to
Servicing Officers of the Servicer responsible for such records. Upon request,
the Servicer shall furnish the Issuers with the most recent publicly available
financial statements of Servicer. The Issuers shall not have any responsibility
or liability for any action or failure to act by the Servicer and are not
obligated to supervise the performance of the Servicer under this Indenture or
otherwise.
SECTION VII.19 Limitation on the Liability of the Servicer and Others.
(a) Neither the Servicer, nor any of its directors, officers, employees,
Affiliates or agents shall be under any liability to the Trustee or the Holders
for any action taken or for refraining from the taking of any action in good
faith pursuant to this Indenture, or for errors in judgment; provided, however,
that this provision shall not protect the Servicer or any such other Person
against any breach of warranties or representations made herein or any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Servicer and any of its directors,
officers, employees, Affiliates or agents may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Servicer, and any of its directors, officers,
employees or agents (each, a "Servicer Indemnified Party" and, collectively, the
"Servicer Indemnified Parties") shall be indemnified by the Issuers and held
harmless against any loss, liability, claim, demand or expense relating to this
Indenture, the Loan, the Mortgaged Properties, or the Security Documents, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder; provided, however, that
if it is found that any such claim or liability has resulted from the bad faith,
willful misconduct or negligence of any Servicer Indemnified Party in the
performance of its duties hereunder, such Servicer Indemnified Party shall repay
such portion of the reimbursed amounts that is attributable to expenses incurred
in relation to its act or omission which is the subject of such finding. If any
Servicer Indemnified Party is entitled to receive indemnification hereunder with
respect to any such action or proceeding brought by a third party, the Issuers
shall be entitled to assume the defense of any such action or proceeding with
counsel reasonably satisfactory to such Servicer Indemnified Party who shall
not, except with the consent of such Servicer Indemnified Party, be counsel to
any Issuer. Upon assumption by any Issuer of the defense of any such action or
proceeding, such Servicer Indemnified Party shall have the right to participate
in such action or proceeding and to retain its own counsel, but the Issuers
shall not be liable for any legal fees or expenses subsequently incurred by such
Servicer Indemnified Party in connection with the defense thereof unless (i) the
Issuers have agreed to pay such fees and expenses or (ii) counsel provided by
any Issuer pursuant to the foregoing is counsel to one or more of the Issuers
and such Servicer Indemnified Party shall have been advised by such counsel that
representation of such Servicer Indemnified Party by such counsel provided by
the Issuer
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pursuant to the foregoing would be inappropriate due to actual or potential
conflicting interests between the Issuers and such Servicer Indemnified Party,
including situations in which there are one or more legal defenses available to
such Servicer Indemnified Party that are different from or additional to those
available to any Issuer; provided, however, that the Issuers shall not, in
connection with any such action or proceeding, or separate but substantially
similar actions or proceedings arising out of the same general allegations, be
liable for the fees and expenses of more than one separate firm of attorneys at
any time, in addition to any local counsel, for all such Servicer Indemnified
Parties. No Issuer shall consent to the terms of any compromise or settlement of
any action defended by any Issuer in accordance with the foregoing without the
prior consent of the Servicer Indemnified Party. No Issuer shall be required to
indemnify any Servicer Indemnified Party for any amount paid or payable by such
Servicer Indemnified Party in settlement of any action, proceeding or
investigation without the prior written consent of the Issuers, which consent
shall not be unreasonably withheld. Promptly after receipt by any Servicer
Indemnified Party of notice of its involvement (or the involvement of any of its
affiliates or such affiliate's directors, officers, shareholders, agents or
employees) in any action, proceeding or investigation, such Servicer Indemnified
Party shall, if a claim for indemnification in respect thereof is to be made
against any Issuer hereunder, notify the Issuers in writing of such involvement,
but the failure of such Servicer Indemnified Party to provide such notice shall
neither cause the forfeiture of the right to receive indemnity hereunder nor
limit such right, except to the extent, if any, that any Issuer is prejudiced by
the failure of the Servicer Indemnified Party to promptly give such notice.
The Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties under this
Indenture and which in the Servicer's opinion may involve it in any expense or
liability; provided, however, that the Servicer may, in its discretion,
undertake any such action which it may deem necessary or desirable in respect of
this Indenture and the rights and duties of the parties hereto and the interests
of the Holders hereunder. In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Issuers. The indemnification provided herein is limited in
each case to direct damages and does not extend to consequential damages.
(b) The Servicer agrees, with respect to its actions and omissions and
those of its agents (but, not with respect to the actions or omissions of any
other Person), to indemnify the Trustee, and the Holders, and hold them harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, liabilities, fees and
expenses (including reasonable attorneys' fees) that the Trustee and/or the
Holders may sustain in connection with this Indenture related to the willful
misconduct, bad faith and/or negligence by the Servicer or its agents, in the
performance of duties by the Servicer or its agents hereunder or by reason of
reckless disregard of obligations and duties by the Servicer or its agents, as
the case may be, except that the Servicer shall not be liable for losses (i)
that arise from events occurring or conditions
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existing prior to the date of this Indenture; (ii) which were known to the
Trustee but not disclosed to the Servicer and as to which an employee or agent
of the Servicer performing the duties of the Servicer hereunder did not
otherwise have knowledge, unless such failure to have such knowledge resulted
from such Person's negligence, bad faith or misfeasance; (iii) which are caused
by Servicer's inability to perform because of the unavailability of funds in the
Collection Account or the Payment Account or because any Advance would be a
Nonrecoverable Advance; or (iv) which are caused by any action or inaction taken
by the Servicer in accordance with the express recommendation or at the
direction of Trustee; provided, that such indemnity is limited to direct damages
and shall not cover consequential damages. The Trustee shall immediately notify
the Servicer if a claim is made with respect to this Indenture or the Loan
entitling the Trustee or the Holders to indemnification hereunder, whereupon the
Servicer shall assume the defense of any such claim (with counsel reasonably
satisfactory to the Trustee) and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or them in respect of such claim. Any
failure to so notify the Servicer shall not affect any rights the Trustee or the
Holders may have to indemnification under this Indenture or otherwise except to
the extent the Servicer is prejudiced by such failure. Such indemnity obligation
shall survive the termination of the Trustee and the Servicer hereunder and the
termination of this Indenture. The Servicer shall not be required to indemnify
the Trustee and the Holders for any amount paid or payable by either of them in
settlement of any action, proceeding or investigation without the prior written
consent of the Servicer, which consent shall not be unreasonably withheld.
(c) The Issuers shall, consistent with the provisions set forth in Section
6.1(a)(1) and Section 7.19(a) hereof, defend, indemnify and hold harmless the
Servicer Indemnified Parties and the Trustee Indemnified Parties, against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs fees and expenses that the Servicer
Indemnified Parties or Trustee Indemnified Parties may sustain in connection
with lawsuits brought by third parties based upon actions taken by the Servicer
or Trustee pursuant to or in furtherance of this Indenture and the servicing of
the Loan, other than the making of Advances; provided, however, that in no event
shall the Servicer or Trustee be indemnified or held harmless under this Section
7.19(c) with respect to consequential damages or from its own negligent actions
or omissions or its willful misconduct. Any payment made by any Issuer under
this Section 7.19(c) shall not be part of the Collateral.
SECTION VII.20 Servicer Not to Resign; Termination of Servicer by Holders.
(a) Subject to the provisions of Section 7.21, the Servicer shall not
resign from its obligations and duties hereby imposed on it, except upon
determination that its duties hereunder are no longer permissible under
applicable law or are in material conflict with
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applicable law. Any such determination permitting the resignation of the
Servicer must be evidenced by an Opinion of Counsel to such effect obtained by
the Servicer (at the Servicer's expense) and delivered to the Trustee and the
Issuers. No resignation by the Servicer under this Indenture shall become
effective until the Trustee, in accordance with Section 6.20 hereof, or a
successor Servicer shall have assumed the Servicer's responsibilities and
obligations. The Servicer may assign its rights and delegate its duties
hereunder to a directly or indirectly wholly owned subsidiary of the Servicer
provided such assignment is consented to in writing by the Trustee (which
consent shall not be unreasonably withheld).
(b) Upon the occurrence and continuance of a Servicer Default, the Holders
of Notes evidencing, in the aggregate, no less than 66 2/3% of the Outstanding
aggregate principal amount of the Notes may terminate the Servicer under this
Indenture and replace the Servicer with a successor servicer having the
qualifications set forth in Section 7.25; provided, however, that such
replacement shall not terminate any rights (including rights to any amounts owed
to the Servicer under this Indenture or any other Security Documents) and
obligations accrued prior to such replacement and provided, further, that the
Holders shall not be entitled to terminate the Servicer under this Section
7.20(b) unless the successor servicer reimburses the Servicer for all
outstanding unreimbursed Advances made by the Servicer and interest thereon,
whereupon such successor servicer shall be entitled to reimbursement of such
Advances from the Collateral pursuant to this Indenture to the same extent as
the prior Servicer would have otherwise been entitled. In connection with any
termination and replacement of the Servicer, the Trustee shall make such
arrangements for the compensation of the successor servicer as it shall deem
reasonable and, if such compensation is in excess of the compensation being paid
the Servicer hereunder, such compensation shall be approved by the Holders of no
less than 66 2/3% of the Outstanding aggregate principal amount of the Notes
and, if no Event of Default has occurred and is continuing, each Issuer;
provided that if the Holders select a successor Servicer the Holders will also
be responsible for negotiating the compensation to be paid to such successor
Servicer in accordance with the foregoing.
SECTION VII.21 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence and rights as a
corporation or other entity, as the case may be, under the laws of the
jurisdiction of its organization, and shall be in compliance with the laws of
the State of New York and any other State in which any Mortgaged Property is
located to the extent necessary to perform its duties under this Indenture.
Any Person into which the Servicer may be merged or consolidated, or any
Person resulting from any merger or consolidation to which the Servicer shall be
a party, or any Person succeeding to substantially all business of the Servicer,
shall be a permitted successor of the Servicer hereunder and shall be deemed to
have assumed all of the
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liabilities and obligations of the Servicer hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto
(other than such Person), anything herein to the contrary notwithstanding; so
long as (i) the successor or surviving Person to the Servicer shall agree in
writing to service the Loan in accordance with this Indenture, (ii) such
successor has been affirmed by Rating Confirmation and (iii) such successor
shall not in the reasonable opinion of the Trustee be unable to perform the
duties of Servicer hereunder in at least the same manner as the Servicer.
SECTION VII.22 Servicer Default.
"Servicer Default," wherever used herein, means any one of the following
events (whatever the reason for such Servicer Default and whether it is
voluntary or involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) any failure by the Servicer to remit to the Trustee (including deposits
to the Payment Account) any Advance or any other payment required to be so made
or remitted by it under the terms of this Indenture; or
(ii) any failure by the Servicer to observe or perform in any material
respect any other of the Servicer's covenants or agreements contained in this
Indenture, which failure shall continue unremedied for a period of thirty (30)
days (except that such number of days shall be fifteen (15) in the case of a
failure to pay the premium for any insurance policy required to be maintained
under the Mortgage as required hereunder) after the date on which written notice
of such failure shall have been given to the Servicer by the Trustee; or
(iii) a representation or warranty of the Servicer set forth in this
Indenture shall prove to be incorrect as of the time made in any respect that
materially and adversely affects the interests of the Holders, and the
circumstances or condition in respect of which such representation or warranty
was incorrect shall not have been eliminated or cured within thirty (30) days
after the date on which written notice thereof shall have been given to the
Servicer by the Trustee; or
(iv) the entry of a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings against the
Servicer, or for the winding-up or liquidation of the Servicer's affairs, and
such decree or order remains unstayed and in effect for a period of sixty (60)
days; or
(v) the consent by the Servicer to the appointment of a conservator or
receiver or liquidator or liquidating committee in any insolvency, readjustment
of
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debt, marshalling of assets and liabilities, voluntary liquidation or
similar proceedings of or relating to the Servicer or of or relating to all
or substantially all of its property; or
(vi) any failure of the Servicer to make any Advance required to be
made from its own funds pursuant to Section 7.17; or
(vii) the reduction, qualification or withdrawal by the Rating Agency
of the outstanding rating of any Series of the Notes because the existing
or prospective financial condition or mortgage loan servicing capability of
the Servicer (taking into account the availability of the Trustee as a
"backup servicer" hereunder) is insufficient to maintain such outstanding
rating.
If (A) a Servicer Default due to any action or inaction of the
Servicer shall occur, (B) any of the representations or warranties of Servicer
are breached in any material respect and, as a result thereof, a Servicer
Default occurs, or (C) the Servicer fails to carry out any other of its
obligations under this Indenture and, as a result thereof, a Servicer Default
occurs or (D) a Servicer Default occurs under clause (vii) above, then, and in
each and every such case, so long as such Servicer Default, breach, or other
failure shall not have been remedied, the Trustee either (i) may, or (ii) shall,
upon the written direction of the Holders of Notes evidencing, in the aggregate,
not less than 66 2/3% of the Outstanding principal amount of the Notes,
terminate all of the rights and obligations of the Servicer hereunder other than
rights (including rights to any amounts owed to it under this Indenture) and
obligations accrued prior to such termination by notice in writing to the
Servicer (with a copy to the Rating Agency). Upon any termination of the
Servicer or appointment of a successor to the Servicer, the Trustee shall, as
soon as practicable, give written notice thereof to the Issuers, the Rating
Agency and the Holders. Any failure by the Servicer to make an Advance required
to be made by it pursuant to Section 7.17 shall constitute an immediate Servicer
Default which shall entitle the Trustee immediately to succeed to the rights of
the Servicer with respect to any such Advance.
If a Responsible Officer of the Trustee shall obtain knowledge of any
Servicer Default hereunder, the Trustee shall immediately notify the Servicer of
the occurrence of such Servicer Default. Upon the occurrence and continuation of
any Servicer Default hereunder known to a Responsible Officer of the Trustee for
more than ten (10) Business Days after notice thereof to the Servicer, the
Trustee shall give the Rating Agency and the Issuers written notice of the
occurrence thereof. Within sixty (60) days after a Responsible Officer of the
Trustee obtains actual knowledge of the occurrence of any Servicer Default, the
Trustee shall transmit by mail to all Holders notice of such Servicer Default,
unless such Servicer Default shall have been cured or waived.
On or after the receipt by the Servicer of written notice of
termination, all authority, power and obligations of the Servicer under this
Indenture (other than its
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capacity, if any, as a Holder) shall pass to and be vested in the Trustee in its
capacity as successor Servicer hereunder pursuant to and under this Section
including, without limitation, the obligation to make Advances hereunder
pursuant to Section 7.17. The Servicer agrees to provide to the Trustee promptly
(and in any event no later than five Business Days subsequent to such notice)
all documents and records, including those in electronic form, requested by it
to enable it to assume the Servicer's obligations hereunder, and to cooperate
with the Trustee in effecting the termination of the Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer within one
Business Day to the Trustee or its duly appointed agent or any successor
appointed by it for administration by it of all cash and other securities then
held in the Collection Account and any other cash received by the Servicer under
the Loan or the Security Documents and which shall at the time have been or
should have been credited by the Servicer to the Payment Account or thereafter
received with respect to the Loan (provided, however, that notwithstanding
anything to the contrary in this Section, the Servicer shall continue to be
entitled to receive all amounts accrued or owing to it under this Indenture on
or prior to the date of such termination, whether in respect of Advances or
otherwise in accordance with the terms hereof). All reasonable costs and
expenses (including attorneys' fees) incurred by the Trustee, any Issuer or the
Holders in connection with the appointment of a successor Servicer, including,
but not limited to, transferring originals of the Security Documents to the
successor Servicer and, if applicable, amending this Indenture to reflect such
succession as Servicer pursuant to this Section shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses to the Trustee. If not paid by the predecessor Servicer within sixty
(60) days after the request therefor, such costs and expenses shall be advanced
by the Issuers, who shall then be entitled to reimbursement therefor from the
predecessor Servicer.
SECTION VII.23 Remedies of Trustee. During the continuance of any Servicer
Default and so long as such Servicer Default shall not have been remedied, the
Trustee, in addition to the rights specified in Section 7.22 and elsewhere in
this Indenture, shall have the right, in its own name as trustee of an express
trust, to take all actions now or hereafter existing at law, in equity or by
statute to enforce its rights and remedies and to protect the interests, and
enforce the rights and remedies, of the Holders (including the institution and
prosecution of all judicial, administrative and other proceedings and the filing
of proofs of claim, debt and other papers in connection therewith). Except as
otherwise expressly provided in this Indenture, no remedy provided for by this
Indenture shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy and no delay or omission
to exercise any right or remedy shall impair any such right or remedy or shall
be deemed to be a waiver of any Servicer Default.
SECTION VII.24 Directions by Holders and Duties of Trustee During Servicer
Default. During the continuance of any Servicer Default, Holders of Notes
evidencing, in the aggregate, not less than a majority of the Outstanding
principal of the
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Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee under this Indenture; provided, however, that the Trustee shall be
under no obligation to pursue any such remedy, or to exercise any of the trusts
or powers vested in it by this Indenture (including, without limitation, (i) the
conducting or defending of any administrative action or litigation hereunder or
in relation hereto, and (ii) the terminating of the Servicer or any successor
Servicer from its rights and duties as Servicer hereunder) at the request, order
or direction of any of the Holders, unless such Holders shall have offered the
Trustee security or indemnification satisfactory to the Trustee against the
costs, expenses and liabilities which may be incurred therein or thereby and,
provided, further, that the Trustee shall have the right to decline to follow
any such direction if the Trustee determines that the action or proceeding so
directed may not lawfully be taken (such determination to be evidenced by an
Opinion of Counsel obtained by the Trustee and delivered to the Holders of the
Notes making such direction, with a copy to the Servicer and the Issuers; the
cost of such Opinion of Counsel to be payable by the Issuers in accordance with
Section 6.5) or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Holders.
SECTION VII.25 Trustee to Act as Servicer; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.22 or the Trustee receives the resignation of the Servicer
in accordance with Section 7.20(a), the Trustee shall be the successor in all
respects to the Servicer in its capacity as Servicer under this Indenture and
the transactions set forth or provided for herein and shall have all the rights
and powers and be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer accruing after such termination other
than those responsibilities, duties and liabilities of the Servicer arising
under Section 7.28; provided, however, that any failure to perform such duties
or responsibilities caused by the Servicer's failure to comply with Section 7.22
shall not be considered a default by the Trustee hereunder. In its capacity as
such successor, the Trustee shall have the same limitation of liability herein
granted to the Servicer. As compensation therefor, the Trustee shall be entitled
to such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination or resignation had been given, including, without
limitation, the fees payable under the Servicer Fee Agreement. Notwithstanding
anything contained herein, the Trustee may, if it shall be unwilling to so act,
or shall, if it is unable to so act, appoint, any established financial
institution or mortgage servicing institution which, (i) is then rated (A) by
the Rating Agency as having a long term debt rating at least equal to Aa3 (or
equivalent), (ii) shall be affirmed pursuant to a Rating Confirmation, (iii) has
a net worth of not less than $15,000,000 and (iv) has been consented to in
writing by each Issuer, such consent not to be unreasonably withheld, as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder; provided,
however, that until such appointment and assumption, the Trustee will continue
to perform the servicing
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obligations pursuant to this Indenture to the extent set forth above. In
connection with any such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor as it and such successor
shall agree; provided, however, that no such compensation shall be in excess of
that permitted the Servicer hereunder unless approved by each Issuer and the
Holders of no less than 66 2/3 of the Notes. In the event that no successor
Servicer has been appointed as provided above, the Trustee shall solicit, by
public announcement, bids from commercial finance institutions, banks and
mortgage servicing institutions meeting the qualifications set forth above.
Within sixty (60) days after any such public announcement, the Trustee shall
negotiate and effect the sale, transfer and assignment of the servicing rights
and responsibilities hereunder to the qualified party submitting the highest
satisfactory bid. The Trustee shall deduct all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing rights
and responsibilities hereunder from any sum received by the Trustee from the
successor to the Servicer in respect of such sale, transfer and assignment.
After such deductions, the remainder of such sum shall be paid by the Trustee to
the Servicer at the time of such sale, transfer and assignment to the Servicer's
successor, net of any amounts due from the Servicer hereunder, which shall be
deposited in the Payment Account. If no successor servicer shall have been so
appointed and have accepted appointment within sixty (60) days after the Trustee
receives the resignation of the Servicer in accordance with Section 7.20, the
Trustee may petition any court of competent jurisdiction for the appointment of
a successor servicer in accordance with the procedures and terms set forth
above. The Trustee, the Issuers, the Servicer and such successor shall take such
action, consistent with this Indenture, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any successor Servicer shall be deemed
to be in default of any of its obligations under this Section if and to the
extent that such default arises from failure of the Servicer to timely provide
all applicable books, records and other documents necessary to effectuate the
sale, transfer or assignment of servicing rights to the Trustee or a successor
Servicer in accordance with this Section.
(b) Any successor, including the Trustee, to the Servicer as servicer
hereunder shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as mortgage servicer hereunder, and (ii) a
fidelity bond in respect of its officers, employees and agents to the same
extent that the Servicer is required pursuant to Section 7.5(b).
(c) Notwithstanding any other provision of this Indenture, no Person (other
than the Trustee) shall be appointed as a successor Servicer if such
appointment, in and of itself, would result in a downgrading or withdrawal of
the then-current rating assigned to any Note by the Rating Agency.
SECTION VII.26 Notification to Holders.
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(a) Upon any termination of the Servicer or appointment of a successor to
the Servicer, in each case as provided herein, the Trustee shall as soon as
practicable give written notice thereof to the Rating Agency, to the Issuers and
to the Holders at their respective addresses appearing in the Register.
(b) Any notification to Holders required pursuant to Section 7.24(a) or
Section 7.22, shall advise the Holders of their rights hereunder, including, if
applicable, their rights pursuant to item (ii) of the second paragraph of
Section 7.22.
SECTION VII.27 Waiver of Past Events of Default. Either the Trustee or the
Holders of Notes evidencing, in the aggregate, not less than 66 2/3% of the
Outstanding Principal of the Notes may, on behalf of all Holders of Notes, waive
any Servicer Default hereunder and its consequences; provided, that in the
absence of written instructions from all Holders the Trustee shall not waive any
Servicer Default (i) consisting of the failure to remit or deposit any interest
on the Notes as required by it hereunder, or the failure of the Servicer to make
any Advance as required hereunder, or (ii) in respect of a covenant or provision
hereunder that under Article IX hereof cannot be modified or amended without the
consent of each Holder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Indenture. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
SECTION VII.28 Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the other parties hereto
that as of the Closing Date:
(i) the Servicer has been duly organized and is validly existing under
the laws of the state of its organization and is in compliance with the
laws of the State of New York and each other jurisdiction in which any
Mortgaged Property is located to the extent necessary to perform its
obligations in accordance with the terms of this Indenture;
(ii) the execution and delivery of this Indenture by the Servicer have
been duly authorized by all necessary action on the part of the Servicer
and its general partner; the Servicer is duly authorized under applicable
law, its certificate of limited partnership and its limited partnership
agreement to perform its obligations under this Indenture and all action
necessary or required therefore has been duly and effectively taken or
obtained; none of the execution, delivery and performance of this
Indenture, or the consummation of the transactions herein contemplated, nor
the compliance with the provisions hereof, in each case by the Servicer
will conflict with or result in a breach of or constitute a default under
(A) the terms of any material agreement or instrument to which the Servicer
is a party or by which it is bound; (B) the certificate
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of limited partnership or limited partnership agreement of the Servicer; or
(C) to the Servicer's knowledge, the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on the Servicer or its
properties, which conflict, breach or default in the case of clause (A) or
clause (C) materially and adversely affects or to the knowledge of the
Servicer may in the future materially and adversely affect (X) the ability
of the Servicer to perform its obligations under this Indenture or (Y) the
business, operations or financial condition of the Servicer; neither the
Servicer nor any of its Affiliates is a party to, bound by, or in breach of
or in violation of any material indenture or other agreement or instrument,
or subject to or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or to the
knowledge of the Servicer may in the future materially and adversely affect
(X) the ability of the Servicer to perform its obligations under this
Indenture or (Y) the business, operations or financial condition of the
Servicer;
(iii) the execution and delivery by the Servicer of this Indenture and
the consummation by the Servicer of the transactions contemplated hereby do
not require any consent, approval, authorization, order, registration or
qualification of or with any court or any regulatory authority or other
governmental agency or body required for the execution, delivery and
performance by Servicer of this Indenture, except such as has been obtained
and is in full force and effect;
(iv) this Indenture has been duly executed and delivered by the
Servicer and, assuming due authorization, execution and delivery by the
other parties hereto, constitutes a valid and legally binding obligation of
the Servicer, enforceable against it in accordance with its terms, subject
to (A) applicable bankruptcy, fraudulent conveyance or transfer,
insolvency, reorganization, moratorium or similar laws of general
applicability relating to or affecting the rights and remedies of creditors
generally and (B) the application of principles of equity (regardless of
whether considered and applied in a proceeding in equity or at law);
(v) there are no actions, suits or proceedings pending or, to the
Servicer's knowledge, threatened against the Servicer, before or by any
court, administrative agency, arbitrator or governmental body (A) with
respect to any of the transactions contemplated by this Indenture or (B)
with respect to any other matter which could, if determined adversely to
the Servicer, materially and adversely affect the Servicer's (x) business,
operations or financial condition or (y) ability to perform its obligations
under this Indenture; and
(vi) the Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the Servicer's
business, operations or financial condition or might
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have consequences that would materially and adversely affect the Servicer's
ability to perform its obligations hereunder.
Within thirty (30) days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation or
warranty of the Servicer set forth in this Section 7.28, the Servicer shall cure
such breach in all material respects.
ARTICLE VIII
THE ISSUERS
SECTION VIII.1 Reports by the Issuers.
(a) The Issuers shall, at the expense of the Issuers, promptly deliver to
the Trustee and the Servicer, for distribution to the Rating Agency and, where
applicable under Section 6.17, the Initial Purchasers, Holders and owners of
beneficial interests in the Notes, copies of all reports and statements to be
prepared hereunder and under the Mortgage including, without limitation, the
Rule 144A Information as required under Section 3.14.
(b) If any Notes are listed on the Luxembourg Stock Exchange, the Trustee
shall, promptly after receipt of any annual and quarterly financial statements
of the Issuers required to be provided by the Issuers under the terms of the
Mortgage, deliver the same to the Luxembourg Stock Exchange.
SECTION VIII.2 Representations and Warranties of the Issuers.
(a) The Issuers hereby collectively represent and warrant to the other
parties hereto that as of the Closing Date:
(i) each Issuer is a limited liability company, limited partnership or
other entity (as applicable), duly organized or formed (as applicable),
validly existing and in good standing under the laws of the jurisdiction in
which it was organized or formed, with full power and authority to own the
Mortgaged Property described on Exhibit A hereto as being owned by such
Issuer to carry on its business relating to such Mortgaged Property as
presently conducted and to enter into and perform its obligations under the
Notes, this Indenture and the other Security Documents to which it is a
party;
(ii) the execution and delivery of the Notes, this Indenture and the
other Security Documents to which it is a party by each Issuer have been
duly authorized by all necessary action on the part of each such Issuer;
neither the execution, delivery and performance of the Notes, this
Indenture and the other Security Documents, nor
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the consummation of the transactions herein or therein contemplated, nor
the compliance with the provisions hereof or thereof, will conflict with or
result in a breach of, or constitute a default under (A) the terms of any
material agreement or instrument to which any Issuer is a party or by which
it is bound; (B) the operating agreement, partnership agreement, charter
and by-laws or other comparable organizational documents (as applicable) of
any Issuer; or (C) to the knowledge of any Issuer, the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
any of the Issuers or any Mortgaged Property; none of the Issuers or any of
their respective Affiliates is a party to, bound by, or in breach of or in
violation of any indenture or other agreement or instrument, or subject to
or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which, in any such case, would reasonably be expected
to have a material adverse effect on any Issuer's ability to perform its
obligations under this Indenture or the other Security Documents to which
such Issuer is a party;
(iii) to each Issuer's knowledge, no consent, approval, authorization,
order, registration or qualification of or with any court or any regulatory
authority or other governmental agency or body required for the execution,
delivery and performance by the Issuers of their obligations under the
Notes, this Indenture or the other Security Documents, except such as has
been obtained and is in full force and effect;
(iv) each of the Notes, this Indenture and each of the other Security
Documents have been duly executed and delivered by each Issuer (to the
extent it is a party thereto) and, assuming due authorization, execution
and delivery by the other parties hereto or thereto, as applicable,
constitutes a valid and legally binding obligation of each Issuer
enforceable against it in accordance with its terms, except as such
enforcement may be limited by bankruptcy, fraudulent conveyance or
transfer, insolvency, reorganization, receivership, moratorium or other
similar laws relating to or affecting the rights of creditors generally,
and by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(v) there are no actions, suits or proceedings pending or, to the
knowledge of any of the Issuers, threatened against any Issuer, before or
by any court or other governmental body (A) with respect to any of the
transactions contemplated by this Indenture or any other Security Document
or (B) with respect to any other matter which could, if determined
adversely to any Issuer, materially and adversely affect its ability to
perform its obligations under the Notes, this Indenture and the other
Security Documents to which it is a party.
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Commencing upon the earlier of discovery by any Issuer or receipt of
notice by the Issuers of a breach of any representation or warranty set forth in
this Section 8.2, the Issuers shall diligently cure such breach in all material
respects.
ARTICLE IX
SUPPLEMENTAL INDENTURES; AMENDMENTS
SECTION IX.1 Supplemental Indentures or Amendments Without Consent of
Holders.
Without the consent of any Holders, the Issuers, when authorized by their
respective Boards of Directors, the Servicer (it being understood that the
Servicer's signature shall not be required for any such supplement or amendment
unless the supplement or amendment restricts or impairs the rights of the
Servicer hereunder in any material respect) and the Trustee, at any time and
from time to time, may enter into one or more indentures supplemental hereto, or
one or more amendments hereto or to the Notes, and the Issuers and the Trustee
may enter into any amendments to the Security Documents (other than the
Mortgage, the amendment of which is governed by Article 53 thereof), in form
satisfactory to the Trustee and the Servicer (it being understood that the
Servicer's signature or approval, as applicable, shall not be required for any
such amendment to any such Security Document unless the amendment restricts or
impairs the rights of the Servicer thereunder in any material respect), for any
of the following purposes:
(1) to evidence the succession of one or more Persons as the Issuers and
the assumption by (subject to Section 1.12 and Section 1.14) any such successors
of the covenants of the Issuers herein and in the Notes if such succession and
assumption are effected in accordance with Article XIV; or
(2) to add to the covenants of the Issuers for the benefit of the Holders
of the Notes or to surrender any right or power herein conferred upon any
Issuer, provided such surrender shall not adversely affect the interests of the
Holders of the Notes; or
(3) to add any additional Events of Default, provided such action shall
not adversely affect the interests of any Holder of the Notes; or
(4) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee; or
(5) to cure any ambiguity, or to cure, correct or supplement any defective
or inconsistent provision herein, in the Notes, or in any Security Document,
provided such action shall not adversely affect the interests of the Holders of
the Notes; or
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(6) to provide for the issuance of Additional Notes (or the increase in the
principal amount of any of the Global Notes) secured by the Collateral that are
either senior to, pari passu in right of payment with or subordinate to the
Notes of any other Class of Notes issued hereunder, and to add to, change or
eliminate any of the provisions of this Indenture solely in respect of or
otherwise necessary in connection with the issuance of such Additional Notes;
provided, however, that any such issuance of Additional Notes shall be subject
to the conditions precedent that:
(i) such Additional Notes may only be issued after the Issuers have
redeemed some portion of the 2004 Fixed Rate Notes being issued under this
Indenture on the date hereof (or simultaneous with such a redemption);
(ii) such Additional Notes shall mature on November 15, 2007;
(iii) at the time of issuance of such Additional Notes, no Event of
Default shall have occurred and be continuing;
(iv) immediately after the issuance of any such Additional Notes, the
Debt Service Coverage Ratio shall be at least equal to 1.4:1;
(v) the Additional Notes may rank (in right of payment as set forth in
Section 5.6) junior to, pari passu with or senior to the Notes of any Series,
provided that Additional Notes (a) shall not rank senior in right of payment
to the Notes of the highest rated Series that will be Outstanding immediately
after the issuance of such Additional Notes and (b) shall have been assigned
a minimum rating of Baa3 or higher by the Rating Agency;
(vi) the Trustee shall have received written confirmation from the
Rating Agency that the issuance of such Additional Notes, in and of itself,
will not cause the rating on any Series of Notes intended to be outstanding
after such issuance to be rated below the rating level assigned to such Notes
on the date of this Indenture (it being understood that the Issuers will pay
any fees the Rating Agency may charge in connection with their review and
approval of such confirmation);
(vii) the Issuer may not issue Additional Notes more than once in any
period of twelve consecutive months; and
(viii) the Issuers shall have provided evidence satisfactory to the
Servicer (which may include, among other things, opinions of counsel or
additional title insurance coverage) that the lien of the mortgage will
secure the Additional Notes and that either (i) such lien will have the
same priority over other encumbrances on each Mortgaged Property as the
mortgage lien that secures the then-outstanding Notes
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or (ii) such lien will not, at the time of the issuance of the Additional Notes,
be impaired by any intervening liens.
SECTION IX.2 Supplemental Indentures With Consent of Holders .
With the consent of the Holders of not less than 66 2/3% in aggregate
principal amount of the Outstanding Notes, each Issuer, when authorized by its
respective Board of Directors, the Servicer (it being understood that the
Servicer's signature shall not be required for any such supplement or amendment
unless the supplement or amendment restricts or impairs the rights of the
Servicer hereunder in any material respect) and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding to any
provisions of or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of the
Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
adversely affected thereby,
(1) change the Maturity Date of, the principal of, or the due date or
amount of any Interest Installment on, any Note, or reduce the principal
amount thereof or the rate of interest thereon or change any obligation of
any Issuer to pay Make-Whole Payments pursuant to Section 11.1, or change
any obligation of any Issuer to pay Additional Amounts pursuant to Section
10.4, or change the coin or currency in which any Note or interest or
Additional Amounts thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Maturity Date
thereof (or, in the case of redemption, on or after the Redemption Date),
or
(2) reduce the percentage in principal amount of the Outstanding
Notes, the consent of whose Holders is required for any supplemental
indenture, or the consent of whose Holders is required for any waiver of
compliance with certain provisions of this Indenture or for any other
reason under this Indenture or reduce the requirements of Section 13.4 for
quorum or voting, or
(3) change any obligation of any Issuer to maintain an office or
agency in the places and for the purposes specified in Section 10.2, or
(4) modify any of the provisions of this Section or Section 5.13,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby, or
(5) except as otherwise expressly provided in this Indenture or in
the Mortgage, deprive any Holder of the benefit of a first priority
security interest in the Mortgaged Properties.
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In connection with the execution of any such supplemental indenture, the
Issuers shall obtain and deliver to the Trustee an Opinion of Counsel from
counsel experienced in federal income tax matters that the execution of such
supplemental indenture will not result in the Notes being treated as having been
exchanged for new notes pursuant to Section 1001 of the Code, provided that no
such Opinion of Counsel shall be required if such Opinion of Counsel cannot be
obtained and that fact is disclosed to the Holder of each Outstanding Note whose
consent is required hereunder. It shall not be necessary for the consent of the
Holders under this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
SECTION IX.3 Delivery of Supplements.
Promptly after the execution by each Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of Section 9.2, the Issuers
shall mail, first class postage prepaid, a notice to each Holder at the address
for such Holder set forth in the Register setting forth in general terms the
substance of such supplemental indenture or amendment. Any failure of the
Issuers to mail such a notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture. The
Trustee also shall mail, first class postage prepaid, a conformed copy of such
supplement to the Rating Agency. Any failure of the Trustee to give such notice,
or any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture.
SECTION IX.4 Opinion of Counsel.
If the Trustee determines in the exercise of its good faith judgment that
it has doubt as to whether a proposed amendment or supplement to this Indenture
is permitted under the terms of Section 9.1 or 9.2 above, the Trustee may
require, as a condition to its executing any such amendment or supplement, that
the Issuers deliver, at no expense to the Trustee, an Opinion of Counsel
confirming that the amendment or supplement in question is permitted under the
relevant Section of this Article IX, it being understood that the Trustee does
not have any affirmative obligation to request such an opinion.
ARTICLE X
COVENANTS; WARRANTIES
SECTION X.1 Payment of Principal and Interest.
The Issuers collectively covenant and agree for the benefit of the Holders
of the Notes that they will duly and punctually pay the principal of, and
interest (including
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Additional Amounts, if any, and Make-Whole Payments, if any) on, the Notes and
any fees due and payable in accordance with the terms of the Notes and this
Indenture.
SECTION X.2 Maintenance of Office or Agency.
The Issuers will maintain or cause to be maintained an office or agency in
the continental United States where notices and demands to or upon any Issuer in
respect of the Notes and this Indenture may be served. The Issuers will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Issuers shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Issuers hereby appoint the
Trustee as its agent to receive such respective notices and demands.
The Issuers may also from time to time designate one or more other offices
or agencies outside the United States where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve any Issuer of its obligation to maintain an office or agency
in accordance with the requirements set forth in the preceding paragraph. The
Issuers will give prompt written notice to the Trustee and prompt notice to the
Holders, in accordance with the provisions of Section 1.6, of any such
designation or rescission and of any change in the location of such office or
agency.
SECTION X.3 Paying Agents; Transfer Agent; Money for Note Payments to be
Held in Trust.
The Trustee hereby appoints (on behalf of each Issuer) itself, at its
Corporate Trust Office, as Paying Agent, Transfer Agent and listing agent in
connection with the Notes. The foregoing appointments may be rescinded at any
time by the Issuers giving notice thereof to the Trustee. The Issuers may have
more than one Paying Agent and Transfer Agent for the Notes at any time, and the
Paying Agent and the Transfer Agent may be the same person. Prior to 11:00 a.m.
(New York time) on the date immediately preceding each due date of the principal
of or interest on any Notes, the Trustee shall transfer funds from the Payment
Account, to the extent funds are available therefor, to the Principal Paying
Agent in an amount sufficient to pay when due the principal of or interest (and
Make-Whole Payment, if any) on the Notes so becoming due, such funds to be held
in trust for the benefit of the Persons entitled to such principal, Make-Whole
Payment, if any, and interest. All payments made by the Trustee in its capacity
as a Paying Agent, will be made by wire transfer to such account as a Holder
shall designate by written instructions to be received by the Trustee no less
than five (5) Business Days prior to the applicable Regular Record Date or
Special Record Date).
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The Issuers will cause any Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of and
interest (and Make-Whole Payment, if any) on the Notes in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by any Issuer (or any
other obligor upon the Notes) in the making of any payment of principal of
or interest (and Make-Whole Payment, if any) on the Notes; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Issuers may, at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Issuer
Order direct the Paying Agent (if other than the Trustee or any Issuer) to pay,
to the Trustee all sums held in trust by the Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums were held by
the Paying Agent; and, upon such payment by the Paying Agent to the Trustee, the
Paying Agent shall be released from all further liability with respect to such
money.
SECTION X.4 Withholding; Payment of Additional Amounts.
(a) In respect of the Notes held by United States Aliens, at least ten
(10) days prior to the first date of payment of interest on such Notes and at
least ten (10) days prior to each date, if any, of payment of principal or
interest thereafter, the Issuers will furnish the Trustee and each other Paying
Agent with a certificate of an Authorized Person instructing the Trustee and
each other Paying Agent whether such payment of principal of or any interest on
such Notes shall be made without deduction or withholding for or on account of
any tax, assessment or other governmental charge. If any such deduction or
withholding shall be required, then such certificate shall specify, by country,
the amount, if any, required to be withheld on such payment to Holders of such
Notes, and the Issuers will pay or cause to be paid to the Trustee (or, if
applicable, directly to a Paying Agent or Agents) Additional Amounts (as defined
below), if any, as required by Section 10.4(b) to be paid. The Issuers agree,
consistent with the provisions set forth in Section 6.1(a)(1) hereof, to
indemnify the Trustee, the Servicer and each other Paying Agent for, and to hold
them harmless against, any loss, liability or expense reasonably incurred
without negligence, wilful misconduct or bad faith on their part arising out of
or in connection with actions taken or omitted by them in reliance on any
certificate furnished pursuant hereto.
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(b) The Issuers will pay to the Holder of any Note who is a United States
Alien such additional amounts ("Additional Amounts") as may be necessary in
order that every net payment of the principal of and interest on such Note,
after deduction or withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment by
the United States or any political subdivision or taxing authority thereof or
therein, will not be less than the amount provided for in such Note to be then
due and payable; provided, however, that the foregoing obligation to pay
Additional Amounts will not apply to any one or more of the following:
(1) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor,
beneficiary or member of such Holder, if such Holder is an estate, a trust
or a partnership) and the United States, including, without limitation,
such Holder (or such fiduciary, settlor, beneficiary or member) being or
having been a citizen or resident or treated as a resident thereof, or
being or having been engaged in trade or business or present therein, or
having or having had a permanent establishment therein, or (ii) such
Holder's present or former status as a passive foreign investment company,
a personal holding company, a foreign personal holding company, or a
controlled foreign corporation for United States tax purposes or a
corporation which accumulates earnings to avoid United States federal
income tax;
(2) any tax, assessment or other governmental charge imposed on
interest received by reason of such Holder's past or present status as the
actual or constructive owner (taking into account attribution rules of
ownership under Section 871(h)(3) of the Code) of 10% or more of the
capital or profits interest in the Issuers;
(3) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with any certification,
identification or other reporting requirements concerning the nationality,
residence, identity, affiliation or connection with the United States of
the Holder or beneficial owner of such Note or similar information
reporting requirements if compliance is required by statute or by
regulation of the United States Treasury Department as a precondition to
exemption from such tax, assessment or other governmental charge;
(4) any estate, inheritance, gift, sales, transfer, personal property
or any similar tax, assessment or other governmental charge;
(5) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of or
interest on such Note;
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(6) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the Holder of such Note
for payment on a date more than fifteen (15) days after the date on which
such payment became due and payable or the date on which payment thereof is
duly provided for, whichever occurs later; or
(7) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from a payment on a Note, if such payment can
be made without such withholding by any other Paying Agent;
nor will Additional Amounts be paid with respect to any payment of principal of
or interest (or Make-Whole Payment, if any) on any such Note to any United
States Alien who is a fiduciary or partnership or other than the sole beneficial
owner of any such payment to the extent that a beneficiary or settlor with
respect to such fiduciary, a member of such a partnership or the beneficial
owner would not have been entitled to the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the Holder of such Note.
(c) All references in this Indenture to principal and interest in respect
of Notes shall, unless the context otherwise requires, be deemed to mean and
include all Additional Amounts, if any, payable in respect thereof as set forth
in this Indenture.
SECTION X. Corporate Existence.
Each Issuer represents and agrees that it will do or cause to be done all
things necessary and within its control to preserve and keep in full force and
effect the existence, rights (contractual and statutory) and franchises of such
Issuer; provided, however, that no Issuer shall be required to preserve any such
right or franchise if it shall determine that the preservation thereof is no
longer desirable for the conduct of its business and that loss thereof is not
disadvantageous in any material respect to the Holders, and the Issuer shall
deliver to the Trustee an Officer's Certificate to that effect. The Issuers
collectively represent that they are not in default in the payment of any taxes
levied or assessed against any of the Mortgaged Properties under any applicable
statute, rule, order or regulation of any governmental authority, under the
Notes, this Indenture or any of the other Security Documents to which any Issuer
is a party or under any other agreement to which any Issuer is a party or by
which any Issuer or any of the Mortgaged Properties are bound.
SECTION X.6 Payment of Taxes and Other Claims.
Each Issuer agrees, in its independent capacity, that it will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Mortgaged Property described on Exhibit A as being owned by
such Issuer or upon the income or profits of such Issuer derived from such
Mortgaged Property, as shown to be due on the tax returns
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filed by the Issuer and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the Mortgaged Property, except
any such taxes, assessments, governmental charges or claims which the Issuer is
in good faith contesting in appropriate proceedings in accordance with Article
12 of the Mortgage.
SECTION X.7 Maintenance of Lien and Recording.
(a) Each Issuer will maintain and preserve the security interest created
by this Indenture (in Section 3.1(c)) and each other Security Document to which
it is a party (except in connection with a release thereof permitted hereby or
thereby) so long as any Note is Outstanding.
(b) The Issuers will, forthwith after the execution and delivery of this
Indenture and thereafter from time to time, cause the Mortgage and any
continuation statement or, upon the reasonable request of the Trustee or the
Servicer, any additional financing statement or similar instrument relating to
the Mortgage or to any property intended to be subject to the lien thereof to be
filed, registered and recorded in such manner and in such places as may be
required by law in order to publish notice of and fully to protect and perfect
the validity thereof or the lien thereof purported to be created upon the
property subject thereto and the Issuers will take such actions with respect to
the interest and rights of the Trustee in the Collateral as are necessary or
reasonably requested by the Trustee or the Servicer to preserve the interest and
rights of the Trustee therein. The Issuers will pay or cause to be paid all
document, recording, stamp and similar taxes and fees incident to such filing,
registration and recording, and all expenses incident to the preparation,
execution and acknowledgment of the Mortgage and of any instrument of further
assurance, and all taxes (except income taxes and franchise taxes of parties
other than any Issuer), duties and charges arising out of or incurred in
connection with the execution and delivery of such instruments; provided,
however, that no Issuer shall be required to pay or discharge or cause to be
paid or discharged any lien or encumbrance affecting the Collateral to the
extent such lien or encumbrance is being contested in good faith by appropriate
proceedings in accordance with and as permitted by the provisions of Section 12
of the Mortgage. The Issuers will at all times preserve, warrant and defend the
Trustee's title and right in and to the property included in the Collateral
against the claims of all Persons, subject to the Permitted Exceptions.
SECTION X.8 Performance and Enforcement.
(a) Each Issuer will faithfully observe and perform, or cause to be
observed and performed, all its covenants, agreements, conditions and
requirements contained in the Security Documents in accordance with the terms
thereof and will maintain the validity and effectiveness of such instruments and
the pledge thereof to the Trustee. No Issuer will take action, nor permit any
action to be taken, that will release any party to such instruments from any of
its obligations or liabilities thereunder, or will result in the termination,
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modification or amendment, or will impair the validity, of any such instruments,
except as expressly provided for herein and therein. The Issuers will give the
Trustee and the Servicer written notice of any default by any party to any of
such instruments promptly after it becomes known to any Issuer.
(b) Subject to the provisions of the Operating Agreements and the Leases in
the event of a casualty or condemnation resulting in the payment to the Trustee,
to be held in trust and applied in accordance with provisions of the Mortgage,
of any Proceeds, the Trustee shall hold such Proceeds as part of the Collateral
in an Eligible Account (the "Casualty Account"), shall invest the funds in the
Casualty Account in the manner described in Section 6.14 with respect to the
Payment Account and, acting in accordance with directions given by the Servicer,
shall disburse or apply such Proceeds in accordance with the provisions of
Article 15 of the Mortgage.
(c) Each Issuer agrees to undertake any reasonable action necessary to
maintain ratings of each Series of the Notes by the Rating Agency (including the
payment of any reasonable fees in connection with monitoring by the Rating
Agency).
SECTION X.9 Negative Covenants.
The Issuers collectively agree that they will not:
(a) incur, create or assume any indebtedness other than the Notes and as
otherwise expressly permitted by the provisions of this Indenture, the Mortgage
and the other Security Documents; or
(b) voluntarily file a petition for bankruptcy, insolvency, rehabilitation,
reorganization, assignment for the benefit of creditors or similar proceeding
under any Federal or state bankruptcy, insolvency, reorganization, or other
similar law.
SECTION X.10 Statement as to Compliance.
Each Issuer will deliver to the Servicer and the Trustee, within one
hundred and twenty (120) days after the end of each fiscal year, an Officer's
Certificate, stating that in the course of the performance by the signer of such
Officer's Certificate of his or her present duties as an officer or authorized
signatory of such Issuer such signer would normally obtain knowledge or have
made due inquiry as to the existence of any condition or event which constitutes
an Event of Default or would constitute an Event of Default after notice or
lapse of time or both and that to the best of the signer's knowledge, based on
such review, (a) the applicable Issuer has fulfilled all its obligations under
this Indenture in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such obligation in any material
respect, specifying each such default known to such signer and the nature and
status thereof, and (b) no event has occurred and is continuing which is, or
after notice or lapse of time or both would become, an Event of Default, or,
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if such an event has occurred and is continuing, specifying each such event
known to such signer and the nature and status thereof.
SECTION X.11 Notices to Rating Agency.
The Servicer shall provide written notice to the Rating Agency of (i) any
Event of Default, (ii) any merger, consolidation or sale of substantially all of
the assets of any Issuer, and (iii) any amendments to or modifications of this
Indenture, in each case to the extent the Servicer has actual knowledge thereof,
and the Trustee, upon receipt, shall provide copies to the Rating Agency of all
compliance reports delivered pursuant to Section 10.10 hereof and all
certificates, financial statements and reports delivered by the Issuers pursuant
to Article 18 of the Mortgage.
SECTION X.12 Resale of Certain Securities.
During the period beginning on the Closing Date and ending on the date that
is three years from the Closing Date, the Issuers will not, and will not permit
any of their "affiliates" (as defined under Rule 144 under the Securities Act or
any successor provision thereto) to, resell any Notes which constitute
"restricted securities" under Rule 144 that have been reacquired by any of them.
SECTION X.13 Completion of Capital/Environmental Items.
During the two years following the Closing Date, the Issuers will undertake
each of the deferred maintenance and capital improvement items identified on
Exhibit G hereto, which items shall have been completed on or prior to the
second anniversary of the Closing Date. In addition, the Issuers agree to
complete the environmental remediation at Westroads Mall as described on Exhibit
G on or before December 31, 1998. The Issuers will provide the Trustee and the
Servicer written confirmation of compliance with the requirements of this
Section 10.13 (including a schedule identifying actions to date with respect to
each item on Exhibit G) at least once per calendar year within thirty (30) days
of the end of each such calendar year beginning with 1998, and each such notice
shall be accompanied by such updated cost information with respect to the items
on Exhibit G as the Issuers (or their agents or contractors) shall have in their
possession at such time. In the event that any of the deferred maintenance or
capital improvement items set forth on Exhibit G have not been completed on or
before the second anniversary of the Closing Date, such failure shall not form
the basis for an Event of Default so long as the Issuers deliver to and maintain
with the Trustee Cash and Cash Equivalents, a Credit Facility and/or Eligible
Collateral, in any such case in an amount equal to the excess of $2,274,000 over
the amount actually expended on such items though the date of determination,
provided that the collateral so delivered shall be subject to reduction as and
when such excess amount is actually expended.
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ARTICLE XI
REDEMPTION OF NOTES
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SECTION XI.1 Applicability of Article.
(a) All principal, accrued and unpaid interest and other amounts, if any,
in respect of the Notes shall be paid in full upon Maturity of such Notes. Upon
receipt by the Trustee of amounts corresponding to all principal and accrued and
unpaid interest and other amounts owing on the Notes and any other Security
Documents upon Maturity, the Trustee shall deposit such monies into the Payment
Account and apply such monies as provided in Section 3.5.
(b) The Notes shall be subject to redemption as set forth in writing to the
Trustee on any Interest Payment Date or any other date fixed for redemption in
accordance with this Article XI (i) at the option of the Issuers, in whole or in
part, as provided in Section 11.1(c), (ii) in whole or in part as specified in
Sections 11.1(d) and 11.1(e), and (iii) at the option of the Issuers, in whole
but not in part, as specified in Section 11.1(f); provided, that in each such
case no Notes may be redeemed hereunder unless and until all other amounts then
due and payable to the Trustee and the Servicer under this Indenture and the
other Security Documents have been paid in full.
(c) In the event the Issuers (by notice to the Trustee in accordance with
Section 11.2) elect to redeem Notes pursuant to Section 11.1(b), the Trustee
shall give notice to the Holders of the Notes (with a copy given to the Rating
Agency), which notice shall be given not less than fifteen (15) days prior to
the date fixed for redemption, that Notes (in an aggregate principal amount
specified in the notice to the Trustee by the Issuers pursuant to Section 11.2)
shall be redeemed on such date. Such Notes shall be redeemed at a price equal to
100% of their outstanding principal amounts, together with interest and all
other amounts owing on the Notes accrued to the date fixed for redemption and,
in the case of a redemption of any Note being redeemed more than five Business
Days prior to the applicable Scheduled Maturity Date, the Make-Whole Payment
applicable thereto.
(d) In the event that (i) following the occurrence of a casualty or taking
affecting a Mortgaged Property, the Issuers are required or elect pursuant to
the terms of the Mortgage to redeem Notes, the Issuers shall redeem such Notes
as are required or permitted under Article 15 of the Mortgage at a redemption
price equal to 100% of their principal amounts together with interest and all
other amounts owing on the Notes accrued to the date of redemption (but without
Make-Whole Payment), in accordance with this Indenture, on the first Interest
Payment Date on which the Issuers are able to do so after complying with the
notice provisions of this Article XI or (ii) after the date hereof, any law of
any of the states in which the Mortgaged Properties are located is passed
changing in any way the laws for the taxation of mortgages or debts secured by
mortgages for state or
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local purposes or the manner of the collection of any such taxes, and imposing a
tax, either directly or indirectly, on the Mortgage or any of the Notes (other
than a tax that may arise in connection with the ownership or transfer of the
Notes) and resulting in an increase in the taxes or other charges imposed on or
incurred by the Holders by reason of such change in law, the Trustee may, at its
option, upon sixty (60) days' notice, declare the Notes to be due and payable
(without any premium or Make-Whole Payment); provided, however, that the Trustee
shall not make such declaration if, notwithstanding said law, (A)(x) the Issuers
may lawfully pay such taxes on behalf of the Holders or (y) the Issuers and the
Trustee may lawfully, and do, enter into an enforceable agreement obligating the
Issuers to pay the Trustee, for the benefit of the Holders, an amount equal to
any increase in taxation or charges imposed on or incurred by such Holders by
reason of such change in law (which agreement shall thereupon become part of
this Indenture), and (B) the Issuers do in fact pay such taxes or such increases
in taxation or charges, as applicable; provided, however, that this clause
(d)(ii) shall not apply to any taxes that may arise in connection with the
ownership or transfer of the Notes or that may be imposed upon the income of the
Holders.
(e) In the event that the rate of interest on the Notes of any Series is
determined to be usurious under applicable law the Issuers shall redeem the
Notes of such Series at a redemption price equal to 100% of their principal
amounts together with interest and all other amounts owing on the Notes accrued
to the date of redemption (but without Make-Whole Payment), in accordance with
this Indenture, on the first Interest Payment Date at which the Issuers are able
to do so after complying with the notice provisions of this Article XI.
(f) Notes held by United States Aliens may be redeemed, as a whole but not
in part, at the option of the Issuers, upon not more than one hundred and eighty
(180) or less than fifteen (15) days' prior notice as described under Section
1.6 (which notice shall be irrevocable), at a redemption price equal to 100% of
their principal amount, together with interest and all other amounts owing on
the Notes (but without Make-Whole Payment) accrued to the date fixed for
redemption, if, as a result of any amendment to, or change in, the laws (or any
regulations or rulings thereunder) of the United States or any political
subdivision or taxing authority thereof affecting taxation, or any amendment to
or change in an official interpretation or application of such laws or
regulations or rulings, which amendment or change is effective on or after the
Closing Date, the Issuers will become obligated to pay Additional Amounts
(pursuant to Section 10.4) on the next succeeding Interest Payment Date, and
such obligation cannot be avoided by the use of reasonable measures available to
the Issuers, not including assignment of the Notes; provided, however, that (1)
no such notice of redemption may be given earlier than sixty (60) days prior to
the earliest date on which the Issuers would be obligated to pay such Additional
Amounts were a payment in respect of the Notes then due, and (2) at the time
such notice of redemption is given, such amendment or change giving rise to the
obligation to pay such Additional Amounts shall not have been repealed or
otherwise voided. Immediately prior
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to the publication of any notice of redemption pursuant to Section 11.4, the
Issuers shall deliver to the Trustee (i) a certificate stating that the Issuers
are entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Issuers so to redeem
have occurred, and (ii) an opinion of independent legal counsel of recognized
standing to the effect that the Issuers have or will become obligated to pay
such Additional Amounts as a result of such change or amendment.
SECTION XI.2 Election to Redeem; Notice to Trustee.
Any redemption of Notes issued hereunder pursuant to Section 11.1(c), (d),
(e) or (f) shall be preceded by the delivery to the Trustee (with a copy to the
Servicer as required by Section 1.5) by the Issuers of an Officer's Certificate,
at least thirty (30) days prior to the Redemption Date fixed by the Issuers
(unless a shorter period shall be reasonably satisfactory to the Trustee) (i)
stating that the Issuers are entitled or required to effect such redemption,
(ii) setting forth in reasonable detail the circumstances giving rise to such
redemption, (iii) stating the aggregate principal amount of the Notes to be
redeemed, (iv) stating whether a Make-Whole Payment is payable in connection
with such redemption and, if so, setting forth the estimated amount thereof and
the calculations made to determine such estimated amount and stating that such
calculations were made in accordance with the applicable provisions of this
Indenture, (v) with respect to the redemption of Notes to be effected pursuant
to Section 11.1(c) attaching the written notice of the Issuers referred to in
Section 11.1(c) and (vi) specifying the Redemption Date applicable thereto.
SECTION XI.3 Selection by Trustee of Notes to be Redeemed.
(a) With the exception of redemptions described in clause (f) of Section
11.1, if less than all the Notes of any Class are to be redeemed, an equal
proportion in aggregate current principal amount of the Outstanding Notes of
such Class held by each Holder shall be redeemed.
(b) In all cases, Notes shall be redeemed only in integral multiples of
U.S. $100,000 and increments of $100,000 (or such smaller amount as remains
outstanding at such time) for amounts in excess thereof from funds available for
such redemption.
(c) Except as set forth below or elsewhere in this Article XI (including,
without limitation, the last clause of Section 11.1(b)), the Trustee will
allocate redemption proceeds in the following order of priority: first, to
redeem any Outstanding Class A Notes, then to redeem any Outstanding Class B
Notes, then to redeem any Outstanding Class C Notes, then to redeem any
Outstanding Class D Notes and then to redeem any Outstanding Class E Notes. In
each such instance, the Trustee shall promptly notify the Issuers in writing of
the Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed.
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In the event that the Issuers elect to redeem Notes as permitted hereunder
without seeking the release of any of the Mortgaged Properties from the lien of
the Mortgage in connection therewith (other than in connection with a Casualty
or Taking or as may be permitted to avoid paying Additional Amounts), the
Issuers may, in their sole discretion, select the Series and/or the Notes
thereof toward which the Trustee will apply the related redemption proceeds. In
the event that the Issuers elect to redeem Notes in connection with the release
of one or more Mortgaged Properties as permitted under Section 44.1 of the
Mortgage, the Trustee will apply (i) the redemption proceeds first toward the
redemption of any Outstanding Class A Notes, then toward the redemption of any
Outstanding Class B Notes, then toward the redemption of any Outstanding Class C
Notes, then toward the redemption of any Outstanding Class D Notes and then
toward the redemption of any Outstanding Class E Notes until Notes with a
principal amount equal to 100% of the Allocated Amount for each Mortgaged
Property to be released have been redeemed and (ii) (A) so long as the Issuers
remaining after such release can demonstrate a Debt Service Coverage Ratio
(adjusted to give effect to the release and related redemptions) of at least
1.4:1, the remaining proceeds (i.e. the portion of the redemption proceeds
representing the prepayment premium) to repay Notes from such Classes, or Series
thereof, as the Issuers may direct in their sole discretion and (B) in all other
cases, the remaining proceeds in the same manner as is described in clause (i)
above with respect to the initial portion of the redemption proceeds.
(d) For purposes of this Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Notes shall relate, in the case of
any Notes redeemed or to be redeemed only in part, to the portion of the
principal amount of such Notes which has been or is to be redeemed.
SECTION XI.4 Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section 1.6
to the Holders of the Notes to be redeemed, not later than fifteen (15) Business
Days prior to the Redemption Date.
All notices of redemption shall state:
(1) the Redemption Date (which date must be an Interest Payment Date),
(2) if less than all the Outstanding Notes are to be redeemed, which Notes
are to be redeemed and the aggregate principal amount of the Notes to be
redeemed,
(3) the Redemption Price,
(4) whether a Make-Whole Payment is payable,
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(5) that on the Redemption Date the Redemption Price will become due and
payable upon each Note to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date, and
(6) with respect to Notes other than those in global form, the place or
places where such Notes maturing after the Redemption Date are to be surrendered
for payment of the Redemption Price.
SECTION XI.5 Deposit of Redemption Price.
On or before the Business Day next preceding a Redemption Date, the Issuers
shall deposit with the Trustee an amount of Cash sufficient to pay the
Redemption Price of all the Notes which are to be redeemed on such Redemption
Date.
SECTION XI.6 Notes Payable on Redemption Date.
If notice of redemption shall have been given as aforesaid, the Notes
subject to redemption shall, on the Redemption Date, become due and payable at
the Redemption Price therein specified, and from and after such date (unless the
Issuers shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Issuers at the
Redemption Price; provided, however, that principal and Interest Installments on
Notes which have a Maturity Date on or prior to the Redemption Date shall be
payable to the Holders of such Notes, or one or more Predecessor Notes, as of
the close of business on the relevant Record Dates according to their terms and
the provisions of this Indenture.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and Make-Whole Payment, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Note.
SECTION XI.7 Notes Redeemed in Part.
Any Note which is to be redeemed only in part shall be surrendered at a
place of payment therefor (with, if any Issuer or the Trustee so requires, due
endorsement by, or written instrument of transfer in form satisfactory to the
Issuers or the Trustee duly executed by, the Holder thereof or an attorney for
the Holder duly authorized in writing), and each Issuer shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder, in an aggregate principal amount equal to and in exchange for
the unredeemed portion of the principal of the Notes so surrendered.
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In the event of a redemption of the Notes in part, no Issuer shall be
required (i) to register the transfer of or to exchange any Note during a period
beginning at the opening of business fifteen (15) days before, and continuing
until, the date notice is given identifying the Notes to be redeemed, or (ii) to
register the transfer or exchange of any Note, or portion thereof, called for
redemption, or (iii) to exchange any Note called for redemption, except for a
Note of like aggregate principal amount which is simultaneously surrendered for
redemption.
ARTICLE XII
LIQUIDATION OF COLLATERAL
-------------------------
Following an Event of Default and acceleration of the Notes, the Trustee,
or the Servicer on the Trustee's behalf, may take such action as is required
(and is permitted by law) in order to liquidate the Collateral or any portion
thereof until the sum of the funds so received or obtained by the Trustee are
sufficient to make timely payment of such principal and interest and such other
amounts as are due to Holders, the Trustee and the Servicer in accordance with
Article V and the other provisions of this Indenture and the other Security
Documents. This Article XII shall not be interpreted as limiting the rights of
the Trustee and the Servicer described in Article V and Section 1.13. Payment
made with funds obtained by the Trustee by liquidating any part of the
Collateral shall not constitute a cure of a failure by the Issuers to make a
payment for purposes of Section 5.1 hereof unless the Event of Default relating
thereto is waived in accordance with Section 5.13.
ARTICLE XIII
MEETINGS OF HOLDERS OF NOTES
----------------------------
SECTION XIII.1 Purposes for Which Meetings May Be Called.
A meeting of Holders of Notes may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Notes, or any Series of
the foregoing, as required by Section 1.3(e).
SECTION XIII.2 Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Notes for any
purpose specified in Section 13.1, to be held at such time and at such place in
the Borough of Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of Holders of Notes of any Series, setting forth the
time and place of such meeting
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and in general terms the action proposed to be taken at such meeting, shall be
given by the Trustee to each Holder of Notes of such Series and the Issuers, in
the manner provided in Section 1.6, not less than 10 nor more than 180 days
prior to the date fixed for the meeting.
(b) In case at any time any Issuer or the Holders of at least 10% in
principal amount of the Outstanding Notes shall have requested the Trustee to
call a meeting of the Holders of Notes for any purpose specified in Section
13.1, by written request setting forth in reasonable detail the action proposed
to be taken at the meeting, and the Trustee shall not have made the first
publication of the notice of such meeting within 10 days after receipt of such
request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then any Issuer or the Holders of Notes in the amount above
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York, for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in subsection (a)
of this Section.
SECTION XIII.3 Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders a Person shall (a) be a
Holder of one or more Notes or (b) be a Person appointed by an instrument in
writing as proxy by a Holder of one or more Notes. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders shall be the
Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of any
Issuer and its legal and financial advisers.
SECTION XIII.4 Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Notes (or, in the case of a Series-specific meeting, a majority of
the Notes of such Series) shall constitute a quorum for a meeting of Holders of
Notes; provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver that this Indenture expressly provides may be
given by Holders of not less than 66 2/3% in principal amount of the Outstanding
Notes, the Persons entitled to vote 66 2/3% in principal amount of the
Outstanding Notes shall constitute a quorum. In the absence of a quorum within
60 minutes of the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Notes, be dissolved. In any other case the
meeting may be adjourned for a period of not less than ten (10) days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than ten
(10) days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 13.2, except that such notice need be
given only once not less than five (5) days prior to the date on which the
meeting is scheduled to be reconvened. Notice of
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the reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Notes (or, if
applicable, the Outstanding Notes of a particular Series) that shall constitute
a quorum.
Except as limited by the proviso to the first paragraph of Section 9.2, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding Notes entitled to
vote thereon; provided, however, that, except as limited by the proviso to the
first paragraph of Section 9.2, any resolution with respect to any consent or
waiver that this Indenture expressly provides may be given by the Holders of not
less than 66 2/3% in principal amount of the Outstanding Notes may be adopted at
a meeting or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid only by the affirmative vote of the Holders of 66 2/3% in
principal amount of the Outstanding Notes; and provided, further, that, except
as limited by the proviso to the first paragraph of Section 9.2, any resolution
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Notes may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Notes.
Any resolution passed or decision taken at any meeting of Holders of Notes
duly held in accordance with this Section shall be binding on all the Holders of
such Notes, whether or nor present or represented at the meeting.
SECTION XIII.5 Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Notes in regard to proof of the holding of Notes and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the rights to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 1.3 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a chairman of
the meeting, unless the meeting shall have been called by any Issuer or by
Holders of Notes as provided in Section 13.2(b), in which case such Issuer or
the Holders of Notes calling the meeting, as the case may be, shall in like
manner appoint a chairman. A permanent
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chairman and a permanent secretary of the meeting shall be elected by vote of
the Persons entitled to vote a majority in principal amount of the Outstanding
Notes represented at the meeting.
(c) At any meeting each Holder of a Note or proxy shall be entitled to one
vote for each $1,000 principal amount of the Outstanding Notes held or
represented by such Holder; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Note challenged as not Outstanding and
ruled by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Note or of a proxy.
(d) Any meeting of Holders of Notes duly called pursuant to Section 13.2 at
which a quorum is present may be adjourned from time to time by Persons entitled
to vote a majority in principal amount of the Outstanding Notes represented at
the meeting; and the meeting may be held as so adjourned without further notice.
SECTION XIII.6 Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of Notes
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Notes or their representatives by proxy and the principal amounts and
serial numbers of the Outstanding Notes held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Notes shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was given as provided in Section 13.2 and, if applicable, Section 13.4.
Each copy shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one such copy shall be delivered to
the issuers, and another to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting. Any record so
signed and verified shall be conclusive evidence of the matters therein stated.
ARTICLE XIV
ASSUMPTION OF OBLIGATIONS UNDER THE NOTES
Each Issuer may at any time assign all of such Issuer's interest in the
Mortgaged Property or Mortgaged Properties identified in the Mortgage as being
owned by such Issuer to a permitted transferee in connection with a permitted
transfer of all (but not less
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than all) of such Mortgaged Property or interests in the ownership of such
Mortgaged Property, pursuant to Article 19 of the Mortgage; provided, however
that such transferee assumes the obligations of an Issuer under, and agrees to
comply with all of the provisions of, this Indenture and, in particular, Section
10.10 hereof. Upon any such assignment and the express assumption, subject to
the provisions of Sections 1.12 and 1.14, by the assignee of all of the
obligations of an Issuer under the Notes and this Indenture, the transferring
Issuer or Issuers shall be released from such obligations, and the assignee
shall assume and perform such obligations, and shall succeed to, and be
substituted for, and may exercise every right and power of, an Issuer under this
Indenture with the same effect as if such assignee had been named as an Issuer
herein, subject to Section 1.12 and Section 1.14.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed, all
as of the day and year first above written.
LASALLE NATIONAL BANK, as Trustee
By:
Name:
Title:
MIDLAND LOAN SERVICES, L.P., as Servicer
By: Midland Data Systems, Inc.,
its general partner
By:
Name:
Title:
[SIGNATURE BLOCKS FOR ISSUERS TO COME]
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EXHIBIT 4.3
[FORM OF NOTE]
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUERS OR
THEIR AGENTS FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO
HEREINAFTER. THIS GLOBAL NOTE MAY NOT BE EXCHANGED, IN WHOLE OR IN PART, FOR A
NOTE REGISTERED IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES SET FORTH IN THE INDENTURE. BENEFICIAL
INTERESTS IN THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH
THE INDENTURE.]/1/
[THE NOTES EVIDENCED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT, EXCEPT (A)(I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II)
PURSUANT TO AN EXEMPTION (IF AVAILABLE) FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER OR (III) IN A TRANSACTION OUTSIDE OF THE
UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND (B)
IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION OF THE
B-1
<PAGE>
UNITED STATES. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUERS
THAT THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A)
ABOVE.
THIS NOTE WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE
REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET
FORTH ABOVE HAVE BEEN COMPLIED WITH, ALL AS PROVIDED IN THE INDENTURE.]/2/
[THIS NOTE WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE UNLESS THE HOLDER OF THIS NOTE, SUBSEQUENT TO SUCH EXCHANGE, WILL
HOLD A MINIMUM AGGREGATE BENEFICIAL INTEREST IN THE GLOBAL NOTE OF AT LEAST ONE
HUNDRED THOUSAND DOLLARS ($100,000).]/3/
[THIS NOTE IS A REGULATION S TEMPORARY GLOBAL NOTE WITHIN THE MEANING OF
THE INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS REGULATION S TEMPORARY
GLOBAL NOTE MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE REGULATION S RESTRICTED
PERIOD (AS DEFINED IN THE INDENTURE), AND NO TRANSFER OR EXCHANGE OF AN INTEREST
IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY BE MADE FOR AN INTEREST IN THE
RESTRICTED GLOBAL NOTE OR IN THE UNRESTRICTED GLOBAL NOTE UNTIL AFTER THE LATER
OF THE DATE OF TERMINATION OF THE REGULATION S RESTRICTED PERIOD AND THE DATE ON
WHICH THE OWNER SECURITIES CERTIFICATION AND THE DEPOSITARY SECURITIES
CERTIFICATION RELATING TO SUCH INTEREST HAVE BEEN PROVIDED IN ACCORDANCE WITH
THE TERMS OF THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL OWNER OR OWNERS OF
SUCH INTEREST ARE NOT U.S. PERSONS.]/4/
[THIS IS ONE OF THE "NOTES" REFERRED TO AND DEFINED IN THAT CERTAIN
CONSOLIDATION AND SPLITTING AGREEMENT OF EVEN DATE HEREWITH BETWEEN LOCKPORT
L.L.C. AND PAYEE (THE "LOCKPORT CONSOLIDATION AGREEMENT") AND THAT CERTAIN
CONSOLIDATION AND SPLITTING AGREEMENT OF EVEN DATE HEREWITH BETWEEN SOONER
FASHION MALL L.L.C. AND PAYEE (THE "SOONER CONSOLIDATION AGREEMENT" AND TOGETHER
WITH THE LOCKPORT CONSOLIDATION AGREEMENT HEREINAFTER REFERRED TO AS THE
"CONSOLIDATION AND SPLITTING AGREEMENTS").]
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<PAGE>
Series [ ]/5/ Fixed Rate Note
No. R-____ [CUSIP No.________]
U.S.$__________________
The thirteen entities identified on Exhibit A hereto (herein called the
"Issuers"), for value received, hereby promise to pay in lawful currency of the
United States of America to _____________/6/, or registered assigns, the
principal sum of ______________ Million Dollars (U.S.$____,000,000) as provided
in the Indenture, and to pay interest thereon in arrears on the 15th day of each
month, commencing December 15, 1997 (each an "Interest Payment Date"), from the
date hereof until the principal hereof is paid or made available for payment,
provided, however, that if any Interest Payment Date is not a Business Day, the
Interest Payment Date shall be the next succeeding Business Day, without
additional interest. The interest payable on this Note for the period from the
date of issuance to, but not including, the Maturity Date shall be [ ]%/7/ per
annum. The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such Interest Payment Date,
which shall be the fifth (5th) Business Day next preceding such Interest Payment
Date. Interest shall be calculated on the basis of twelve 30-day Interest
Periods (as defined in the Indenture). If, for any reason, interest on any Note
is not paid on or prior to the Interest Payment Date on which such interest is
due, or the principal of any Note is not repaid on or prior the Maturity Date
applicable to such Note, the Issuers will be required to pay Default Interest as
set forth in Section 3.11(b) of the Indenture. Upon default by the Issuers, in
the payment of interest on principal on the Notes, such interest and Default
Interest payable in connection therewith shall forthwith cease to be payable to
the Holder on such Regular Record Date, and Default Interest will instead be
paid to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Default Interest to be fixed by the Trustee, notice whereof shall be given
to Holders not less than five (5) Business Days prior to such Special Record
Date, all as more fully provided in the Indenture. Payment of the principal of
this Note will be payable against surrender thereof at the office or agency of
the Issuers maintained for that purpose in the Borough of Manhattan, the City of
New York, by wire or by check mailed on or before the due date for such payment
to the Person entitled thereto at such Person's address appearing on the
Register or to such other address as the registered Holder shall provide in
writing at the time of such surrender. All capitalized terms used but not
defined herein shall have the meanings specified in the Indenture.
If an Event of Default specified in Section 5.1(4) or 5.1(5) of the
Indenture occurs and is continuing, the amounts specified in the next sentence
shall automatically become and be due and payable immediately without any action
B-3
<PAGE>
whatsoever on the part of the Trustee, the Servicer or the Holders. If an Event
of Default specified in Section 5.1(1), 5.1(2), 5.1(3) or 5.1(6) (other than an
Event of Default which arises thereunder solely by virtue of the occurrence of
an Event of Default arising under Section 5.1(4) or Section 5.5(5) of the
Indenture) of the Indenture occurs and is continuing, then in every such case
the Trustee may and at the direction of the Holders of not less than 66 2/3% in
aggregate principal amount of the Outstanding Notes shall, by a notice in
writing to the Issuers and the Servicer, declare the sum of (i) the principal
amount of this Note and (ii) any other amounts, including, but not limited to
accrued interest, Additional Amounts, if any, and Make-Whole Payments, if any,
payable to the Holder under this Note, to the extent such amounts are permitted
by law to be paid, to be due and payable immediately, and upon any such
declaration such amounts shall become immediately due and payable.
This Note is one of a duly authorized issue of securities of the Issuers
(herein called the "Notes") designated as specified in the title hereof, issued
and to be issued in accordance with the Indenture and Servicing Agreement, dated
as of November 25, 1997 (herein called the "Indenture"), among the Issuers,
LaSalle National Bank, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), and Midland Loan Services,
L.P., as Servicer, copies of which Indenture are on file and available for
inspection at the corporate trust office of the Trustee in Chicago, Illinois.
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuers, the Trustee, the Principal Paying
Agent and the Holders of the Notes.
The Holder of this Note may receive payment in respect of principal
and interest only as provided in the Indenture.
This Note is subject to mandatory redemption, in whole or in part, on any
Interest Payment Date (i) upon certain events of casualty or condemnation with
respect to the Mortgaged Properties, (ii) at the option of the Trustee upon a
change in laws governing taxation of any Mortgage, and (iii) upon the
determination that the rate of interest on this Note is usurious under
applicable law. The Redemption Price of this Note under such circumstances shall
be equal to 100% of the principal amount, together with accrued and unpaid
interest and Additional Amounts, if any, to the Redemption Date, but without any
Make-Whole Payment of penalty. This Note is also redeemable, at the option of
the Issuers, on any Interest Payment Date, (i) in whole or in part, at a
Redemption Price equal to 100% of the principal amount to be redeemed, together
with accrued and unpaid interest and Additional Amounts, if any, to the
Redemption Date and Make-Whole Payment, if any, and (ii) in whole if held by a
United States Alien upon an amendment to or change in the laws of the United
States or a political subdivision thereof resulting in the Issuers becoming
obligated, pursuant to the
B-4
<PAGE>
Indenture, to pay Additional Amounts at a Redemption Price equal to 100% of the
principal amount to be redeemed, together with accrued and unpaid interest and
Additional Amounts, if any, to the Redemption Date, but without any Make-Whole
Payment or penalty.
Notice of redemption of any Notes will be given no later than fifteen (15)
days prior to the proposed Redemption Date for such Notes. Such notice shall
specify, among other things, the Redemption Date, the Redemption Price and (if
less than all Notes are to be redeemed) the principal amount of the Notes to be
redeemed.
In the event that this Note is redeemed in part only, a New Note for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
As more fully described in the Indenture and the Mortgage, this Note is
secured by the Collateral. The Indenture constitutes a security agreement under
the Uniform Commercial Code as in effect in each state where property which is a
part of the Collateral is located and the Payment Account, the Holdover Account
and any other similar account established by the Trustee or the Servicer in
furtherance of its rights or responsibilities under this Indenture or any other
Security Document are located. Upon the occurrence of any Event of Default, the
Trustee shall have all rights and remedies in respect of the Collateral of a
secured party on default under the Uniform Commercial Code to enforce the
assignments and security interests contained in the Indenture and the Mortgage
and under applicable law.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof or the modification of the rights and obligations of the
Issuers and the rights of the Holders of the Notes under the Indenture at any
time by the Issuers and the Trustee with the consent of the Holders of not less
than 66 2/3% in aggregate principal amount of the Notes at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time Outstanding,
on behalf of the Holders of all the Notes, to waive compliance by the Issuers
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consents or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
As provided in the Indenture and subject to the limitations therein set
forth, the transfer of this Note is registrable in the Register, upon surrender
of this Note for registration of transfer at the office or agency of the Trustee
in the Borough of
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<PAGE>
Manhattan, the City of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuers and the Registrar
duly executed by, the Holder hereof or his or her attorney duly authorized in
writing, and thereupon one or more New Notes, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
This Note may not be exchanged for Notes in bearer form. The Notes issued
are issuable only in registered form without coupons in authorized denominations
of $100,000 and integral multiples of $1,000 in excess thereof.
Prior to due presentation of this Note for registration of transfer, the
Issuers, the Trustee and any agent of any Issuer or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof, for all
purposes, whether or not this Note be overdue, and neither any Issuer, the
Trustee nor any such agent shall be affected by notice to the contrary.
The agreements contained herein shall remain in full force and effect
notwithstanding any changes in the shareholders or other equity owners of, or
the officers and directors relating to, any Issuer, and the term "Issuers" as
used herein, shall include any alternate or successor Person, but any
predecessor Person shall not be relieved of any liability hereunder except as
provided in Article XIV of the Indenture.
The Issuers and all others who may become liable for the payment of all or
any part of the amounts due under this Note do hereby severally waive
presentment and demand for payment, notice of dishonor, protest, notice of
protest and non-payment and all other notices of any kind, except those
expressly required under the Indenture and the other Security Documents. No
notice to or demand on any Issuer or any other Person shall be deemed to be a
waiver of the obligation of any Issuer or the right of the Trustee, on behalf of
the Holders, to take further action without notice or demand as permitted in
this Note, the Indenture and the other Security Documents.
It is not intended that, and none of the terms and conditions of the
Indenture, the Mortgage or the other Security Documents shall ever be construed
to create a contract whereby, any Issuer or any guarantor, endorser or other
party now or hereafter becoming liable for payment of this Note shall be
required to pay interest on this Note at a rate in excess of the maximum
interest that may be lawfully charged under applicable law. If the Notes, the
Mortgage or any other Security Document would otherwise be usurious under
applicable law, the terms of Article 48 of the Mortgage shall govern.
B-6
<PAGE>
The representations, undertakings, covenants and agreements of the Issuers
contained in the Indenture are those of the Issuers only and not of the Trustee
and the Trustee will have no liability with respect thereto.
As provided in Section 1.14 of the Indenture, this Note is a non-recourse
obligation of the Issuers payable only from and secured only by the Collateral.
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
[The remainder of this page was intentionally left blank]
B-7
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly
executed.
Dated:
--------- ---, -----
SIGNATURE BLOCKS FOR ISSUERS TO
COME
By:
---------------------------
Name:
Title:
This Note is one of the Notes referred
to in the above-mentioned Indenture.
LaSalle National Bank, as Trustee
By:
---------------------------
Name:
Title:
<PAGE>
/1/ Insert if the Note is a Global Note.
/2/ Insert if the Note is a Restricted Note.
/3/ Intentionally deleted.
/4/ Insert if the Note is a Regulation S Temporary Global Note.
/5/ Insert the applicable letter and number designation for the Series of which
this note is a part.
/6/ Insert "Cede & Co." if the Note is a Global Note.
/7/ Insert the interest rate applicable to the Series of which this Note is a
part.
B-9
<PAGE>
Repayments of Principal, Make-Whole Payments, if any, and
Transfers Affecting the Note
(Initial Principal Balance on ________ __, ____: $_____)
<TABLE>
<CAPTION>
==============================================================================================================
Amount of Repayment or
Transfer To or From Amount of Make-Whole Date of Repayment or Balance After Repayment Notation Made
Another Note Payment, if any Transfer or Transfer By:
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<S> <C> <C> <C> <C>
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</TABLE>
<PAGE>
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Jill Ann Coleman, Esq.
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2100
Chicago, Illinois 60602
- --------------------------------------------------------------------------------
MORTGAGE, DEED OF TRUST,
SECURITY AGREEMENT, ASSIGNMENT OF LEASES
AND RENTS, FIXTURE FILING
AND FINANCING STATEMENT
Dated and effective as of November 25, 1997
among
THE BORROWERS NAMED HEREIN,
together, Mortgagor (Index as Grantor), and
FIRST AMERICAN TITLE INSURANCE COMPANY, as Deed Trustee,
solely with respect to Mortgaged Property located in the State of California,
and
ROBERT MECKFESSEL, as Deed Trustee, solely with respect to
Mortgaged Property located in the State of Missouri, and
FIRST AMERICAN TITLE INSURANCE COMPANY, as Deed Trustee, solely with respect to
Mortgaged Property located in the State of Nebraska and
LASALLE NATIONAL BANK, as Trustee, as Mortgagee
(also index as Grantee and as Beneficiary in California, Georgia, Missouri and
Nebraska)
- --------------------------------------------------------------------------------
THE SECURED PARTY DESIRES THAT THIS FINANCING
STATEMENT BE INDEXED AGAINST THE
RECORD OWNER OF THE REAL ESTATE
Name of Record Owner:
Tax ID Number of Record Owner: [TO BE COMPLETED DIFFERENTLY FOR EACH MORTGAGOR
FOR EACH FILING]
Property Identification Number of Mortgaged Property:
THIS DOCUMENT WAS PREPARED BY:
Benjamin R. Weber, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
<PAGE>
THIS MORTGAGE SECURES NOTES MADE OUTSIDE THE STATE OF FLORIDA AND IS SECURED BY
A MULTI-STATE MORTGAGE RECORDED IN FLORIDA WHICH DESCRIBES AND PLEDGES THE
FLORIDA PROPERTY DESCRIBED HEREIN TOGETHER WITH COLLATERAL OUTSIDE THE STATE OF
FLORIDA. FLORIDA DOCUMENTARY STAMP TAXES HAVE BEEN COMPUTED PURSUANT TO SECTION
12B-4.053(32)(b), F.A.C.AND FLORIDA INTANGIBLE TAXES HAVE BEEN COMPUTED PURSUANT
TO SECTION 199.133(2), FLORIDA STATUTES, ON A FLORIDA ALLOCATION OF INDEBTEDNESS
OF $76,440,000 COMPUTED BY DIVIDING $116,000,000 (THE VALUE OF ALL FLORIDA
COLLATERAL) BY $850,000,000 (THE VALUE OF ALL FLORIDA AND OUTSIDE OF FLORIDA
COLLATERAL), AND OBTAINING 13.65%, WHICH IS MULTIPLIED BY $560,000,000 (THE
TOTAL INITIAL PRINCIPAL INDEBTEDNESS SECURED BY ALL COLLATERAL). BASED UPON
THE FOREGOING DOCUMENTARY STAMP TAXES ARE BEING PAID IN THE AMOUNT OF
$267,540.00 AND INTANGIBLE TAXES ARE BEING PAID IN THE AMOUNTS OF $152,880.00
SIMULTANEOUSLY WITH THE RECORDING OF THIS MORTGAGE.
TO THE EXTENT PERMITTED BY LAW, A POWER OF SALE HAS BEEN GRANTED IN THIS
INSTRUMENT. A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE AND SELL ALL OR A
PORTION OF THE PROPERTY ENCUMBERED BY THIS INSTRUMENT WITHOUT GOING TO COURT IN
A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGORS UNDER THIS INSTRUMENT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PRELIMINARY STATEMENT.................................................................. 1
GRANTING CLAUSES....................................................................... 3
1. PRINCIPLES OF CONSTRUCTION; DEFINITIONS; PARTICULAR
PROVISIONS................................................................... 6
1.1. Principles of Construction............................................. 6
1.2. Definitions............................................................ 7
1.3. Provisions Concerning Particular States................................ 27
1.4. Mortgagor Representative............................................... 27
1.5. Mortgagee Consents and Approvals....................................... 27
2. PARTICULAR COVENANTS, REPRESENTATIONS AND
WARRANTIES................................................................... 28
2.1. Due Authorization; Validity of the Mortgage and the Other
Security Documents; Title to the Premises; Etc..................... 28
2.2. Maintenance of Validity, Recording and Other Covenants Relating
to the Mortgaged Properties........................................ 30
2.3. Negative Covenants..................................................... 32
2.4. Existence and Rights................................................... 34
2.5. Payment of Taxes and Other Claims...................................... 34
2.6. Payment of the Notes, All Other Amounts and the Trustee's Fees......... 34
3. THE GROUND LEASES................................................................. 35
3.1. Ground Leases Covenants................................................ 35
4. MAINTENANCE AND REPAIRS; SHORING.................................................. 36
5. UTILITY SERVICES.................................................................. 36
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
6. NO CLAIMS AGAINST THE MORTGAGEE................................................... 36
7. INDEMNIFICATION BY THE MORTGAGOR.................................................. 37
8. INSPECTION........................................................................ 38
9. PAYMENT OF IMPOSITIONS, ETC....................................................... 38
10. COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS..................... 39
11. LIENS............................................................................. 39
12. PERMITTED CONTESTS................................................................ 39
13. INSURANCE......................................................................... 40
13.1. Risks to be Insured................................................... 40
13.2. Ratings of Insurers................................................... 42
13.3. Policy Provisions..................................................... 43
13.4. Certificates.......................................................... 44
13.5. Replacement Policies.................................................. 44
13.6. Reports of Insurance Broker........................................... 44
13.7. Separate Insurance.................................................... 45
14. ALTERATIONS AND EXPANSIONS........................................................ 45
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
15. CASUALTY, TAKING AND APPLICATION OF INSURANCE PROCEEDS AND TAKING PROCEEDS........ 48
16. ENFORCEMENT....................................................................... 54
17. EVICTION BY PARAMOUNT TITLE....................................................... 55
18. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION............ 55
18.1. Books and Records..................................................... 55
18.2. Financial Statements.................................................. 56
18.3. Additional Information................................................ 56
19. TRANSFERS AND INDEBTEDNESS........................................................ 58
19.1. Sale of the Mortgaged Property........................................ 59
19.2. Indebtedness.......................................................... 61
19.3. Subordinate Liens..................................................... 62
19.4. Additional Permitted Transfers........................................ 62
19.5. Delivery of Documents to the Mortgagee................................ 64
19.6. Potential Mortgagor Obligations....................................... 65
20. PERFORMANCE OF LEASES; APPLICATION OF RENTS....................................... 65
21. NO ENDORSEMENT.................................................................... 68
22. NO CREDIT FOR PAYMENT OF TAXES OR IMPOSITIONS..................................... 68
23. EVENT OF DEFAULT.................................................................. 68
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
24. COMPROMISE OF ACTIONS BY THE MORTGAGEE............................................ 69
25. FORECLOSURE....................................................................... 69
25.1. Foreclosure........................................................... 69
25.2. The Mortgagors' Waivers............................................... 70
25.3. Recovery of Advances.................................................. 71
25.4. Sale.................................................................. 71
25.5. Several Parcels....................................................... 72
26. THE MORTGAGEE AUTHORIZED TO EXECUTE INSTRUMENTS................................... 72
27. PURCHASE OF PROPERTIES BY THE MORTGAGEE........................................... 73
28. RECEIPT A SUFFICIENT DISCHARGE TO PURCHASER....................................... 73
29. WAIVER OF MARSHALLING............................................................. 73
30. SALE SHALL BE A BAR AGAINST THE MORTGAGORS........................................ 73
31. APPLICATION OF PROCEEDS OF SALE................................................... 73
32. APPOINTMENT OF RECEIVER........................................................... 74
33. POSSESSION, MANAGEMENT AND INCOME................................................. 74
34. RIGHT OF THE MORTGAGEE TO PERFORM THE MORTGAGORS' COVENANTS........................ 75
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
35. REMEDIES CUMULATIVE............................................................... 76
36. APPLICABLE LAW.................................................................... 76
37. NO WAIVER......................................................................... 77
38. OBLIGATIONS ARE WITHOUT RECOURSE.................................................. 77
39. STAMP AND OTHER TAXES............................................................. 79
40. FURTHER ASSURANCES................................................................ 80
41. ESTOPPEL CERTIFICATES............................................................. 80
42. ADDITIONAL SECURITY............................................................... 80
43. FINANCING STATEMENT............................................................... 80
44. RELEASE; SUBSTITUTE PROPERTY...................................................... 81
44.1. Release of Mortgaged Properties....................................... 81
44.2. Substitute Property................................................... 82
45. CONFIDENTIALITY................................................................... 88
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
46. SECURITY AGREEMENT, ETC........................................................... 89
46.1. Grant of Security..................................................... 89
46.2. Financing Statements.................................................. 89
46.3. Multiple Remedies..................................................... 89
46.4. Waiver of Rights...................................................... 89
46.5. Expenses of Disposition of the Properties............................. 90
47. EXPENSES OF THE MORTGAGEE......................................................... 90
48. USURY............................................................................. 91
49. MISCELLANEOUS..................................................................... 92
50. NON-MERGER........................................................................ 92
51. ASSIGNMENT OF RENTS AND THE MORTGAGORS' INTEREST IN LEASES........................ 92
52. NOTICES........................................................................... 97
53. SUPPLEMENTS....................................................................... 98
53.1. Supplements Without Consent........................................... 98
53.2. Supplements With Consent.............................................. 99
53.3. Delivery of Supplements............................................... 99
54. WAIVER OF TRIAL BY JURY........................................................... 100
55. SEVERABILITY...................................................................... 100
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
56. SPECIAL STATE PROVISIONS.......................................................... 100
57. THE DEED TRUSTEE IN THE DEED OF TRUST STATES...................................... 114
58. FUTURE ADVANCES................................................................... 116
</TABLE>
-vii-
<PAGE>
Page
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EXHIBITS
EXHIBIT A Mortgagors/Shopping Centers
EXHIBIT B-1 Property Description for Colony Square Mall
EXHIBIT B-2 Property Description for Columbia Mall
EXHIBIT B-3 Property Description for Fallbrook Square Mall
EXHIBIT B-4 Property Description for Fox River Shopping Center
EXHIBIT B-5 Property Description for Lockport Mall
EXHIBIT B-6 Property Description for Market Place Shopping Center
EXHIBIT B-7 Property Description for Rio West Mall
EXHIBIT B-8 Property Description for River Hills Mall
EXHIBIT B-9 Property Description for Sooner Fashion Mall
EXHIBIT B-10 Property Description for Southlake Mall
EXHIBIT B-11 Property Description for The Oaks Mall
EXHIBIT B-12 Property Description for Westroads Mall
EXHIBIT B-13 Property Description for Westwood Mall
EXHIBIT C -- Permitted Exceptions
EXHIBIT D -- Assumption
EXHIBIT E -- [Intentionally Omitted]
EXHIBIT F -- Allocated Amounts
EXHIBIT G -- Charter Provisions for a Corporate Single Purpose/Insolvency-
Remote Entity
EXHIBIT H -- Environmental Reports
EXHIBIT I -- Potential Mortgagor Obligations
EXHIBIT J -- Subordination, Attornment And Non-Disturbance Agreement
-xi-
<PAGE>
THIS MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES
AND RENTS, FIXTURE FILING AND FINANCING STATEMENT, dated and effective as of
November 25, 1997 (this "Mortgage"), among the thirteen entities listed on
Exhibit A hereto, each of which shall have an address for all purposes hereunder
- ---------
c/o GGP Limited Partnership, 55 West Monroe Street, Suite 3100, Chicago,
Illinois 60603, Attention: Mr. Bernard Freibaum, Chief Financial Officer, First
American Title Insurance Company, a California corporation ("Deed Trustee"
solely with respect to Mortgaged Property located in the State of California),
whose address for all purposes hereunder is c/o First American Title Company of
Los Angeles, 520 North Central Avenue, Glendale, California 91203, Robert
Meckfessel ("Deed Trustee" solely with respect to Mortgaged Property in the
State of Missouri), whose address for all purposes hereunder is c/o First
American Title Company, 7600 Forsyth Blvd., Clayton, Missouri 63105, First
American Title Insurance Company ("Deed Trustee" solely with respect to
Mortgaged Property in the State of Nebraska), whose address for all purposes
hereunder is c/o First American Title Insurance Company, 13924 Gold Circle,
Omaha, Nebraska 68144, and LaSalle National Bank, a nationally chartered bank,
solely in its capacity as trustee on behalf of the Holders (as defined below),
mortgagee to the extent that this Mortgage operates as a mortgage, grantee, to
the extent this Mortgage operates as a deed to secure debt, beneficiary to the
extent that this Mortgage operates as a deed of trust and secured party
hereunder (together with its permitted successors and assigns, "Mortgagee"),
whose address for all purposes hereunder is 135 South LaSalle Street, Chicago,
Illinois 60603, Attention: Asset-Backed Securities Trust Services: General
Growth Properties.
W I T N E S S E T H :
-------------------
PRELIMINARY STATEMENT
WHEREAS, each of the Mortgagors (as defined herein) is the owner of the
fee and other interests in one of the thirteen (13) regional shopping centers
known as Colony Square Mall, located in Zanesville, Ohio, Columbia Mall, located
in Columbia, Missouri, Fallbrook Square Mall, located in Canoga Park,
California, Fox River Shopping Center, located in Appleton, Wisconsin, Lockport
Mall, located in Lockport, New York, Market Place Shopping Center, located in
Champaign, Illinois, Rio West Mall, located in Gallup, New Mexico, River Hills
Mall, located in Mankato, Minnesota, Sooner Fashion Mall, located in Norman,
Oklahoma, Southlake Mall, located in Morrow, Georgia, The Oaks Mall, located in
Gainesville, Florida, Westroads Mall, located in Omaha, Nebraska and Westwood
Mall, located in Jackson, Michigan (each a "Shopping Center" and together the
"Shopping Centers"), as identified on Exhibit A as being owned by it.
<PAGE>
WHEREAS, the Mortgagors are executing and delivering this Mortgage for
the purpose of granting, conveying, transferring and assigning to the Mortgagee
a first priority lien on the Mortgagors' respective interests in the Shopping
Centers.
WHEREAS, simultaneously with the execution of this Mortgage, the
Mortgagors intend to issue Collateralized Fixed Rate Notes Due November 15, 2004
and Collateralized Fixed Rate Notes Due November 15, 2007, in the aggregate
principal amount of up to $560,000,000, the latest scheduled maturity date of
which is November 15, 2007, pursuant to an Indenture and Servicing Agreement,
dated as of the date hereof, among the Mortgagors, the Servicer, as hereinafter
defined, and the Mortgagee, as trustee for the holders from time to time of the
Notes (as hereinafter defined), as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time (the "Indenture"); the
Notes issued under the Indenture on the date hereof will be in the following
series and principal amounts:
Series Principal Annual Interest Maturity
A-1 $151,350,000 6.537% November 15, 2004
B-1 29,500,000 6.635% November 15, 2004
C-1 29,500,000 6.762% November 15, 2004
D-1 29,500,000 6.917% November 15, 2004
E-1 10,150,000 7.052% November 15, 2004
A-2 187,700,000 6.602% November 15, 2007
B-2 36,500,000 6.728% November 15, 2007
C-2 36,500,000 6.806% November 15, 2007
D-2 36,500,000 6.992% November 15, 2007
E-2 12,800,000 7.224% November 15, 2007
The Mortgagors may issue securities evidencing additional indebtedness in excess
of $560,000,000 in one or more issuances after the date hereof, which securities
would also be secured hereby (provided that, for purposes of the Mortgaged
Property in the State of Minnesota, the principal amount of indebtedness secured
by such Mortgaged Property will never exceed Five Hundred Sixty Million Dollars
($560,000,000) and for purposes of the Mortgaged Property in the State of
Nebraska the principal amount of indebtedness secured by such Mortgaged Property
will never exceed One Billion Dollars ($1,000,000,000)), upon satisfaction of
certain conditions set forth in Section 9.1 of the Indenture;
WHEREAS, the Mortgagors are granting this Mortgage in order to secure the
payment by the Mortgagors of the principal of, interest and Make-Whole Payment,
if any, on, Additional Amounts, if any, in respect of and all other amounts
payable under, the Notes, this Mortgage and the other Security Documents (as
defined below), and to secure the performance by the Mortgagors of the covenants
and agreements contained in this Mortgage and the other Security Documents.
-2-
<PAGE>
WHEREAS, the Mortgagors are the fee owners of the real property described
on Exhibits B-1 through B-13 hereto, except parcels described in the next clause
------------ ----
(subject to such exception, the "Owned Land");
WHEREAS, certain of the Mortgagors are the lessees of the real property
(the "Leased Land") leased under the following ground leases (as the same have
been and may hereafter be amended, renewed, modified, replaced, assigned or
substituted from time to time and collectively referred to herein as the "Ground
Leases"): (i) Lease of Mall Stores R and S at Fallbrook Square Mall, dated
October 1, 1985, between Fairbanks, Equity Ltd. (assignee of Sears, Roebuck &
Co.) and Fallbrook Square Partners Limited Partnership (f/k/a Fallbrook Square
Partners), as amended by Lease Amendment No. 1, dated December 5, 1994, (ii)
Lease of Non-Mall Store 1 at Fallbrook Square Mall dated October 1, 1985,
between Fairbanks Equity, Ltd., (assignee of Sears Roebuck & Co.) and Fallbrook
Square Partners Limited Partnership (f/k/a Fallbrook Square Partners) and (iii)
Ground Lease Agreement for Rio West Mall, dated May 19, 1980, between Gamerco
Associates Current Investment Limited Partnership, No. 2 (assignee of Gamerco
Associates, Ltd.), and Rio West L.L.C. (f/k/a Rio West Partners), indirect
assignee of General Growth Development Corporation.
WHEREAS, the indebtedness evidenced by the Notes and secured by this
Mortgage and the other Security Documents is referred to herein as the "Loan".
WHEREAS, each of the Mortgagors has duly authorized the execution and
delivery of this Mortgage and has taken all actions required by law and all
other actions of such Mortgagor required therefor.
NOW, THEREFORE, in order to secure: (i) payment by the Mortgagors of the
principal of, interest (including Additional Amounts (as defined in the
Indenture), if any) on, Additional Amounts, if any, in respect of, Make-Whole
Payment, if any, on and all other amounts payable under, the Notes; (ii) the
payment of all amounts payable under this Mortgage and the other Security
Documents; (iii) the performance by the Mortgagors of their respective covenants
and agreements contained in this Mortgage and the other Security Documents; and
(iv) the payment and performance by the Mortgagors of their respective covenants
and agreements under the Leases (as defined below) and the Operating Agreements
(as defined below) (items (i) through (iv) being referred to herein as the
"Secured Obligations"); the Mortgagors and the Mortgagee by these presents do
hereby agree as follows:
GRANTING CLAUSES
----------------
Each Mortgagor does hereby grant, convey, bargain, sell, mortgage (in a
Mortgage State), warrant, pledge, assign and transfer to the Mortgagee, to the
extent that the Mortgaged Property is in a Mortgage State or the State of
Georgia, and to Deed Trustee for the benefit of the Mortgagee, as beneficiary in
trust, to the extent that the
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<PAGE>
Mortgaged Property is in a Deed of Trust State, the following property
(such property being referred to herein, with respect to any one of the Shopping
Centers, as a "Mortgaged Property", and, with respect to all of the Shopping
Centers, as the "Mortgaged Properties") with respect to the Shopping Center
identified on Exhibit A as being owned by it, subject to the Ground Leases and
---------
the other permitted encumbrances described on Exhibit C hereto (the "Permitted
---------
Exceptions"):
(i) all of such Mortgagor's estate, right, title and interest in
and to the Owned Land;
(ii) in the case of each of Rio West L.L.C. and Fallbrook Square
Partners Limited Partnership, all of such Mortgagor's estate, right, title and
interest in, to and under each Ground Lease to which such Mortgagor is a party
and the leasehold estate created thereby in the Leased Land, together with all
appurtenances including, but not limited to (a) extension, renewal, modification
and option rights, and all of the estate and right of such Mortgagor of, in, and
to the Leased Land under and by virtue of such Ground Lease, (b) all credits to
and deposits of such Mortgagor under such Ground Lease and all other options,
privileges and rights granted and demised to such Mortgagor under such Ground
Lease, and (c) all the right or privilege of such Mortgagor to terminate,
cancel, surrender or merge such Ground Lease;
(iii) all additional estates in real estate (including the Land), if
any, which, from time to time, by supplemental mortgage, deed to secure debt or
deed of trust or otherwise, may be expressly made subject to the lien hereof;
(iv) all of such Mortgagor's right, title and interest in and to
the Improvements (including, without limitation, any such right, title and
interest granted to such Mortgagor pursuant to any Ground Lease, if applicable)
and any alterations thereto or replacements thereof, now or hereafter erected
upon the Land;
(v) all of such Mortgagor's right, title and interest in and to
all Fixtures now or at any time hereafter affixed to, attached to, placed upon
or used in any way in connection with the complete and comfortable use,
enjoyment, occupancy or operation of the Land or the Improvements, together with
any and all replacements thereof and additions thereto;
(vi) all of such Mortgagor's right, title and interest in and to
all Equipment and Personal Property now or at any time hereafter located at or
used in connection with the Land or the Improvements, together with any and all
replacements thereof and additions thereto;
(vii) all of such Mortgagor's right, title and interest in, to and
under all Leases and all Specialty Leases of the Land and/or the Improvements,
or any part thereof, now or hereafter entered into, and in and to all cash or
securities deposited
-4-
<PAGE>
thereunder to secure performance by the lessees of their obligations thereunder,
to the extent legally assignable, and the right upon the occurrence and
continuation of an Event of Default hereunder, to receive and collect the rents
thereunder;
(viii) all of such Mortgagor's right, title and interest now owned or
hereafter acquired in and to the permits, licenses and rights in and to the use,
occupation and operation of the Land and the Improvements and any part thereof,
to the extent legally assignable;
(ix) all of such Mortgagor's right, title and interest in and to all
rights of way or use, air rights, water rights (whether riparian, appropriative,
or otherwise), utility rights, privileges, franchises, servitudes, easements,
tenements, hereditaments and appurtenances now or hereafter belonging or
appertaining to any of the foregoing or to the Land, and all of such Mortgagor's
right, title and interest in and to any streets, ways, alleys, roadbeds,
inclines, tunnels, culverts, strips or gores of land adjoining or serving the
Land or any part thereof, whether now owned or hereafter acquired by such
Mortgagor; and
(x) all of such Mortgagor's right, title and interest in and to all
rents, issues, profits, proceeds and products arising from any of the foregoing
and all of such Mortgagor's right, title and interest, if any, to 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, without limiting any of the other provisions of this Mortgage,
each Mortgagor expressly grants to the Mortgagee, as secured party, a security
interest in the portion of the Mortgaged Property identified on Exhibit A as
---------
being owned by it which is or may be subject to the provisions of the Uniform
Commercial Code as in effect from time to time in the state in which such
Mortgaged Property is located (the "Commercial Code") which are applicable to
secured transactions; it being understood and agreed that the Improvements and
Fixtures are part and parcel of the Land and appropriated to the use thereof
and, whether affixed or annexed to the Land or not, shall for the purposes of
this Mortgage be deemed conclusively to be real estate and conveyed hereby in a
Deed of Trust State and mortgaged hereby in a Mortgage State.
TO HAVE AND TO HOLD the above granted and described Mortgaged
Properties, subject in all respects only to the Permitted Exceptions and any
items that are being contested in accordance with Article 12 hereof, unto and to
the proper use and benefit of the Mortgagee (or the Deed Trustee in a Deed of
Trust State) and its successors, assigns and substitutes, and each Mortgagor
hereby binds itself and its successors, assigns and substitutes in each case
forever upon the terms and conditions set forth herein.
-5-
<PAGE>
PROVIDED ALWAYS, and this instrument is upon the express condition that,
if the Mortgagors pay to the Mortgagee the aggregate principal balance of all of
the Notes, the interest thereon and all other sums payable to the holders of the
Notes and to the Mortgagee and the Servicer in accordance with the provisions of
the Notes, this Mortgage, the Indenture and the other Security Documents, at the
times and in the manner specified, without offset, deduction, fraud or delay,
and the Mortgagors perform and comply with all the other agreements, conditions,
covenants, provisions and stipulations contained in the Notes, this Mortgage,
the Indenture and the other Security Documents, then this Mortgage and the
estate hereby granted (i) in a Mortgage State or Deed of Trust State shall cease
and become void and (ii) in the State of Georgia, shall be canceled and
surrendered; provided, further, this instrument is intended to operate and is to
be construed in the State of Georgia as a deed passing title to the Owned Land
to Mortgagee and is made under those provisions of the existing laws of the
State of Georgia relating to deeds to secure debt, and is given to secure the
payment of the Secured Obligations.
The following actions of the Mortgagee shall not affect the liability of
the Mortgagors for payment and performance of the Secured Obligations and shall
not affect the lien hereof upon any portion of any Mortgaged Property not
expressly released herefrom: if the Mortgagee shall, with or without notice (a)
retain or obtain a security interest in any property to secure all or any
portion of the Secured Obligations, (b) retain or obtain the primary or
secondary liability of any party or parties with respect to all or any portion
of the Secured Obligations, (c) alter, exchange, extend, renew, modify, release
or cancel for any period (whether or not longer than their original maturity)
any terms, conditions, provisions or covenants contained in any or all of the
Security Documents, (d) release or compromise any liability of any party or
parties primarily or secondarily liable on all or any portion of the Secured
Obligations, (e) release its security interest, if any, in all or any portion of
the Mortgaged Properties and/or permit any substitution or exchange for any such
portion of the Mortgaged Properties, (f) resort to any Mortgaged Property
conveyed by this Mortgage, or any portion thereof, for payment of the Secured
Obligations, or any portion thereof, whether or not the Mortgagee shall have
resorted to any other property otherwise securing the Secured Obligations, or
shall have proceeded against any other party primarily or secondarily liable on
the Secured Obligations, and (g) apply all or any portion of any of the
Mortgaged Properties or direct the order or manner of sale thereof as the
Mortgagee in its sole discretion chooses in accordance with the terms of this
Mortgage.
AND, TO PROTECT THE SECURITY OF THIS MORTGAGE, each Mortgagor represents,
warrants, covenants and agrees as follows:
1 PRINCIPLES OF CONSTRUCTION; DEFINITIONS; PARTICULAR PROVISIONS
--------------------------------------------------------------
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<PAGE>
1.1. Principles of Construction. (a) Capitalized terms, not otherwise
--------------------------
defined in this Mortgage, shall have the respective meanings assigned thereto in
the Indenture.
(b) For all purposes of this Mortgage, except as otherwise expressly
provided or unless the context otherwise requires:
(1) The terms defined in this Article shall have the meanings assigned
to them in this Article and shall include the plural as well as the
singular;
(2) All accounting terms not otherwise defined herein shall have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States of America, and, except as otherwise herein
expressly provided, the term "generally accepted accounting principles"
with respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted in the United States
of America as of the date of such computation;
(3) The word "including" shall be construed to be followed by the words
"without limitation";
(4) Section headings are for the convenience of the reader and shall not
be considered in interpreting this Mortgage or the intent of the parties
hereto; and
(5) The words "herein", "hereof" and "hereunder" and other words of
similar import shall refer to this Mortgage as a whole and not to any
particular Article, Section or other subdivision.
1.2. Definitions. As used in this Mortgage the following terms have the
-----------
following respective meanings:
Affiliate shall mean a Person or Persons directly or indirectly, through
---------
one or more intermediaries, controlling, controlled by or under common
control with the Person or Persons in question. The term "control", as
used in the immediately preceding sentence, shall mean, with respect to a
Person that is a corporation, the right to exercise, directly or
indirectly, more than 50% of the voting rights attributable to the shares
of the controlled corporation and, with respect to a Person that is not a
corporation, the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of the controlled
Person.
Allocated Amount shall mean, with respect to each Mortgaged Property, the
----------------
amount set forth on Exhibit F hereto; provided, however, that such amounts
---------
shall be reduced as set forth in Section 44.1 in the event of certain
prepayments of the Notes in accordance with the terms of this Mortgage and
the Indenture.
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<PAGE>
Alteration shall have the meaning stated in Article 14 hereof.
----------
Alteration Threshold Amount shall have the meaning stated in Section
---------------------------
14(d) hereof.
Appraiser shall mean any Person selected by the Mortgagors who is a
---------
member of the Appraisal Institute (formerly the American Institute of Real
Estate Appraisers of the National Association of Realtors) or any successor
organization thereto, has at least ten (10) years' experience in appraising
regional shopping center properties and is not an Affiliate of any
Mortgagor.
Approved Bank shall mean banks or other financial institutions which have
-------------
(i)(a) a minimum net worth of $500,000,000, or (b) total assets of
$5,000,000,000 and (ii) a minimum long-term unsecured debt rating at least
equivalent to the Required Rating.
Assignment of Contracts shall mean the blanket Assignment of Agreements,
-----------------------
Licenses, Permits and Contracts, dated as of the date hereof, from the
Mortgagors, as assignors, to the Mortgagee, as assignee, together with any
amendments thereto.
Assignment of Leases shall mean the blanket Assignment of Leases and
--------------------
Rents, dated as of the date hereof, from the Mortgagors, as assignors, to
the Mortgagee, as assignee, together with any amendments thereto pursuant
to the provisions thereof, assigning all the Leases, Specialty Leases and
rents therefrom relating to the Mortgaged Properties.
Business Day shall have the meaning stated in the Indenture.
------------
Calculation Date shall mean the date as of which Net Operating Income is
----------------
being calculated.
Cash and Cash Equivalents shall mean (i) cash, (ii) U.S. Government
-------------------------
Securities, (iii) interest bearing or discounted obligations of federal
agencies and government sponsored entities or pools of such instruments
offered by Approved Banks and dealers, including, without limitation,
Federal Home Loan Mortgage Corporation participation sale certificates,
Government National Mortgage Association modified pass-through
certificates, Federal National Mortgage Association bonds and notes,
Federal Farm Credit System securities (provided all of the obligations
described in this clause (iii) shall be rated "AAA" or backed by the full
faith and credit of the United States government for full and timely
payment), (iv) time deposits, domestic and Eurodollar certificates of
deposit, bankers acceptances or commercial paper rated at least P-1 (or its
equivalent) by the Rating Agency, and/or guaranteed by an entity having a
long-term rating at least equal to the Required Rating, floating rate
notes, other money market instruments and letters of
-8-
<PAGE>
credit each issued by Approved Banks (provided that if the scheduled
maturity of any such note, instrument or letter of credit is more than six
(6) months after the date of purchase of such obligation by a Mortgagor or
Mortgagee, the note, instrument or letter of credit must be issued by a
bank having a long-term unsecured debt rating at least equal to the
Required Rating), (v) obligations issued by state and local governments or
their agencies, carrying a rating at least equal to the Required Rating
and/or guaranteed by an irrevocable letter of credit of an Approved Bank
(provided that if the scheduled maturity of any such obligation is more
than six (6) months after the date of purchase by a Mortgagor or Mortgagee
and such obligation is guaranteed by a letter of credit, the letter of
credit guaranteeing such obligation must be issued by an Approved Bank
having a long-term unsecured debt rating at least equal to the Required
Rating), (vi) repurchase agreements with major banks and primary government
securities dealers fully secured by U.S. government or agency collateral
with a value equal to or exceeding the principal amount on a daily basis
and held in safekeeping (provided that at the time of purchase the
counterparty to such repurchase agreement must have a long-term unsecured
debt rating at least equal to the Required Rating), (vii) investments in
money market funds and money market mutual funds all the assets of which
are comprised of investments described in clauses (i) through (vi) above,
and (viii) any other investment which the Rating Agency confirms in writing
will not, in and of itself, result in a downgrading, qualification or
withdrawal of the rating then assigned to any of the Notes. Except as
otherwise provided in this definition, Cash and Cash Equivalents shall not
include any investments commonly known as "derivatives", any investments
requiring a payment above par for an obligation, and under no circumstances
shall Cash and Cash Equivalents include interest-only strips. Any
investment in Cash and Cash Equivalents shall have a maturity date not
later than one Business Day prior to the date that the proceeds therefrom
are required hereunder.
Casualty shall have the meaning stated in Article 15 hereof.
--------
Closing Date shall mean November 25, 1997 or such other date as the
------------
parties hereto shall mutually agree upon.
Code shall mean the Internal Revenue Code of 1986, as amended from time
----
to time.
Cost Sharing Agreement shall mean that certain Cost Sharing Agreement,
----------------------
dated as of the date hereof, among the Mortgagors named herein, which
describes how the Mortgagors will share the proceeds of the Loan and the
costs and expenses arising under the Notes and the other Security
Documents.
Credit Facility shall mean a clean irrevocable, unconditional
---------------
transferable letter of credit, payable on sight draft only, in respect of
which (a) any reimbursement obligation is not secured by any of the
Mortgaged Properties or any other property
-9-
<PAGE>
pledged to secure the Secured Obligations, and (b) Mortgagors shall be
permitted to have a contingent reimbursement obligation only in favor of
any lender with respect to any Credit Facility issued by such lender which
Credit Facility was issued for the benefit of Mortgagors, if and only if
(i) such lender's rights with respect to such reimbursement obligation are
fully subordinated to payment of the Secured Obligations, (ii) no payment
shall be made to such lender in respect of such reimbursement obligation
during the occurrence and continuation of an Event of Default and (iii)
such lender shall be prohibited from exercising any and all remedial action
against any Mortgagor in connection therewith until the Secured Obligations
have been paid in full, in favor of the Mortgagee and entitling Mortgagee
to draw thereon in New York, New York or in such other city as Mortgagee's
corporate trust office may be located at the time of the issuance of such
letter of credit, issued by a domestic bank or the U.S. agency or branch of
a foreign bank the long-term unsecured debt rating of which at the time
such letter of credit is delivered and throughout the term of such letter
of credit is not less than the then Required Rating, or, if there are no
domestic banks or U.S. agencies or branches of a foreign bank having such
long-term unsecured debt rating then issuing letters of credit, then such
letter of credit may be issued by a domestic bank the long-term unsecured
debt rating of which is not lower than "Aa3" by the Rating Agency. Anything
to the contrary herein notwithstanding, the parties hereto agree that, for
so long as U.S. Bank, National Association ("U.S. Bank"), Union Bank of
Switzerland, New York Branch ("UBS") or Bank of America National Trust and
Savings Association ("BofA"), as the case may be, has a long-term senior
unsecured credit rating not less than its rating as of the Closing Date,
U.S. Bank, UBS or BofA, as the case may be, may be the issuer of any Credit
Facility required or permitted hereunder. Such Credit Facility shall
provide that it will automatically renew unless the issuer of such Credit
Facility delivers written notice to Trustee, as beneficiary, and
Mortgagors, as account parties, at least 30 days prior to its expiration
that such Credit Facility will not be renewed, and, in such case, shall
provide that Mortgagee, as beneficiary, shall be entitled to draw upon the
full amount of such Credit Facility. Without in any way limiting the
generality of the foregoing, if any Credit Facility is not renewed or
replaced with another Credit Facility prior to the date that is 30 days
prior to its expiration, Mortgagee shall be entitled to draw upon the full
amount of such Credit Facility.
Debt Securities shall mean debt obligations, other than U.S. Government
---------------
Securities, of any Person, whether evidenced by bonds, notes, debentures,
certificates, book entry deposits, certificates of deposit, commercial
paper, bankers acceptances, reinvestment letters, funding agreements or
other instruments, which (x) are not subject to prepayment or redemption
prior to maturity and (y) are rated not less than the then Required Rating;
or any combination of the foregoing.
Debt Service shall mean, in respect of the Notes and any other
------------
indebtedness for borrowed money of any of the Mortgagors permitted
hereunder for any period, all payments of interest (assuming a constant
annual interest rate of 9.25% on all
-10-
<PAGE>
Notes) and principal amortization, if any, paid or payable by the
Mortgagors or any of them during such period, excluding (i) balloon
payments of principal or accrued interest, if any, due at maturity and (ii)
amounts payable with respect to Notes that have been defeased pursuant to
Article IV of the Indenture.
Debt Service Coverage Ratio shall mean the ratio of (i) Net Operating
---------------------------
Income to (ii) Debt Service on the Notes, for the four (4) most recent
preceding calendar quarters for which the Mortgagors have delivered
financial statements to the Mortgagee pursuant to Section 18.2 hereof.
Deed of Trust State shall have the meaning stated in Section 1.3 hereof.
-------------------
Deed Trustee shall mean, with respect to the Mortgaged Property located
------------
in the State of California, First American Title Company, with respect to
the Mortgaged Property located in the State of Missouri, Robert Meckfessel,
with respect to the Mortgaged Property located in the State of Nebraska,
First American Title Insurance Company, or their respective successors.
Default shall mean any condition or event which constitutes or which,
-------
after the giving of notice or lapse of time or both, would constitute an
Event of Default hereunder.
Eligible Account shall have the meaning stated in the Indenture.
----------------
Eligible Collateral shall mean U.S. Government Securities, Debt
-------------------
Securities or Cash and Cash Equivalents, or any combination thereof.
Employee Benefit Plan shall mean any employee benefit plan within the
---------------------
meaning of Section 3(3) of ERISA which is established, sponsored,
maintained, or contributed to by any one or more of the Mortgagors on
behalf of its employees, if any.
Environmental Indemnity shall mean that certain blanket Environmental
-----------------------
Indemnity Agreement, dated as of the date hereof, from the Mortgagors to
the Mortgagee and the Servicer, together with any amendments, supplement on
modifications thereto.
Environmental Laws shall mean, to the extent applicable to the Premises
------------------
of any Mortgaged Property, the following: the Resource Conservation and
Recovery Act (42 U.S.C. (S) 6901 et seq.), as amended by the Hazardous and
Solid Waste Amendments of 1984, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. (S) 9601 et seq.), as amended by
the Superfund Amendments and Reauthorization Act of 1986, the Hazardous
Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the Toxic
Substances Control Act (15
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<PAGE>
U.S.C. (S) 2601 et seq.), Clean Air Act (42 U.S.C. (S) 9402 et seq.), the
Clean Water Act (33 U.S.C. (S) 1251 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. (S) 136 et seq.), the Occupational
Safety and Health Act (29 U.S.C. (S) 651 et seq.) and all other federal,
state and local laws, including obligations under the common law,
ordinances, rules and regulations, as any of the foregoing may have been or
may be amended, supplemented or supplanted, relating to the regulation or
control of Hazardous Substances or wastes, or their handling, storage or
disposal, to the protection of human health or to the health, safety and
protection of the environment.
Equipment shall mean all machinery, apparatus, equipment, materials,
---------
fittings, fixtures, chattels, articles of personal property and all other
property (real, personal or mixed), and all appurtenances and additions
thereto and betterments, renewals, substitutions and replacements thereof,
now or hereafter owned by any of the Mortgagors or in which any of the
Mortgagors has or shall acquire an interest (to the extent of such
interest), and now or hereafter located on, attached to or contained in or
used in connection with the Land or the Improvements, or placed on any part
thereof though not attached thereto, including all indoor and outdoor
furniture, landscaping, indoor plants, tools, screens, awnings, shades,
blinds, curtains, draperies, partitions, carpets, rugs, furniture and
furnishings, heating, lighting, plumbing, water heating, cooking,
monitoring, ventilating, air conditioning, refrigerating, sanitation, waste
removal, incinerating or compacting plants, systems, fixtures and
equipment, elevators, escalators, stoves, ranges, vacuum systems, window
washing and other cleaning systems, call systems, sprinkler systems and
other fire prevention and extinguishing apparatus and materials, alarms,
telecommunications, entertainment, recreational or security systems and
equipment, motors, automobiles, trucks, machinery, pipes, ducts, conduits,
dynamos, engines, compressors, generators, boilers, stokers, furnaces,
pumps, tanks, and appliances.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
Event of Default shall have the meaning stated in Article 23 hereof.
----------------
Exculpated Persons shall have the meaning stated in Article 38 hereof.
------------------
Excusable Delay shall mean a delay due to any act of God, governmental
---------------
restriction, enemy action, civil commotion, fire, casualty, strike,
shortage of supplies or labor, work stoppage or other cause beyond the
reasonable control of the Mortgagors or any of them, but lack of funds
shall not be deemed a cause beyond the reasonable control of the Mortgagor.
Fiscal Year shall mean the period from January 1 through December 31,
-----------
inclusive, of any calendar year.
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<PAGE>
Fixed Rate Notes shall have the meaning stated in the Indenture.
----------------
Fixtures shall mean all Equipment now owned by any Mortgagor, leased to
--------
any Mortgagor pursuant to any of the Ground Leases or otherwise or
hereafter acquired by any Mortgagor, which is so related to the Land and
Improvements forming part of any of the Mortgaged Properties that it is
deemed fixtures or real property under the law of the particular state in
which the Equipment is located, including, without limitation, all building
or construction materials intended for construction, reconstruction,
alteration or repair of or installation on any of the Mortgaged Properties,
construction equipment, appliances, machinery, plant equipment, fittings,
apparatuses, fixtures and other items now or hereafter attached to,
installed in or used in connection with (temporarily or permanently) any of
the Improvements or the Land, including, but not limited to, Equipment,
engines, devices for the operation of pumps, pipes, plumbing, cleaning,
call and sprinkler systems, fire extinguishing apparatuses and equipment,
water tanks, heating, ventilating, plumbing, laundry, incinerating,
electrical, air conditioning and air cooling equipment and systems, gas and
electric machinery, appurtenances and equipment, pollution control
equipment, security systems, disposals, dishwashers, refrigerators and
ranges, recreational equipment and facilities of all kinds, and water, gas,
electrical, storm and sanitary sewer facilities, utility lines and
equipment (whether owned individually or jointly with others, and, if owned
jointly, to the extent of the applicable Mortgagor's interest therein) and
all other utilities whether or not situated in easements, all water tanks,
water supply systems, water power sites, fuel stations, fuel tanks, fuel
supply systems, and all other structures, together with all accessions,
appurtenances, additions, replacements, betterments and substitutions for
any of the foregoing and the proceeds thereof. Notwithstanding the
foregoing, "Fixtures" shall not include any property which tenants are
entitled to remove pursuant to Leases, except to the extent that the
applicable Mortgagor shall have any right or interest therein.
GAAP shall mean generally accepted accounting principles in the United
----
States of America as of the relevant date in question.
General Growth shall mean General Growth Properties, Inc., a Delaware
--------------
corporation, and its successors and assigns.
GGP shall mean GGP Limited Partnership, a Delaware limited partnership,
---
and its successors and assigns.
Guaranty shall have the meaning stated in Section 51(a).
--------
Ground Leases shall have the meaning stated in the Preliminary Statement
-------------
hereto.
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<PAGE>
Hazardous Substances shall mean (i) those substances in such amounts
--------------------
included within definitions of or identified as "hazardous substances",
"hazardous materials", or "toxic substances" in or pursuant to
Environmental Laws; (ii) those substances in such amounts listed in the
United States Department of Transportation Table (40 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); (iii) any material, waste or substance which is or contains (A)
petroleum, including crude oil or any fraction thereof, natural gas, or
synthetic gas usable for fuel or any mixture thereof, or any product
containing the foregoing substances, (B) asbestos or asbestos containing
material, (C) polychlorinated biphenyls, (D) any substance in such amount
designated as "hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. (S) 1251 et seq. (33 U.S.C. (S) 1321), or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. (S) 1317), (E)
flammable explosives and (F) radioactive materials; and (iv) such other
substances, materials and wastes in such amounts which are regulated as
hazardous, toxic or "special" or "industrial" wastes, or any other
substance which may result in liability, under Environmental Laws.
Hazardous Substances shall not include those types and amounts of
substances which are (1)(x) commonly used in maintenance, repair and
renovation activities (y) standard office supplies and (z) retail tenants'
inventory generally held for resale in typical shopping centers, provided
that they are used, stored and handled in a commercially acceptable fashion
and in compliance with all applicable laws and (2) gas, oil and other
ordinary automotive fluids contained in an ordinary manner in motor
vehicles visiting the applicable Mortgaged Property.
Hazardous Substance Activity shall mean any storage, holding, existence,
----------------------------
release, spill, leaking, pumping, pouring, injection, escaping, deposit,
disposal, dispersal, leaching, migration, use, treatment, emission,
discharge, generation, processing, abatement, removal, disposition,
handling or transportation of any Hazardous Substance from, under, into, or
on any Mortgaged Property, including, without limitation, the discharge of
any Hazardous Substance emanating from any Mortgaged Property through the
air, soil, surface water, groundwater or property and also including,
without limitation, the abandonment or disposal of any barrels, containers
and other closed receptacles containing any Hazardous Substance from or on
such Mortgaged Property, in each case whether sudden or non-sudden,
accidental or intentional; provided, however, that the usage and/or storage
of Hazardous Substances at any Mortgaged Property in compliance with
applicable Environmental Laws and consistent with the normal operation and
maintenance of such Mortgaged Property shall not constitute a Hazardous
Substance Activity.
Holder shall have the meaning stated in the Indenture.
------
Impositions shall have the meaning stated in Article 9 hereof.
-----------
-14-
<PAGE>
Improvements shall mean any and all buildings, structures, utility sheds,
------------
workrooms, air conditioning towers, open parking areas, and all other
structures and improvements of every kind whatsoever, and any and all
additions, alterations, betterments or appurtenances thereto, now or at any
time owned by any Mortgagor, leased to any Mortgagor pursuant to any of the
Ground Leases or hereafter acquired by any Mortgagor and situated, placed
or constructed on, over or under the Land or any part thereof, except the
term Improvements shall not include buildings, structures, or other
improvements situated on portions of the Land leased to tenants under
ground leases or other customary arrangements but owned by such tenants,
except at such time, if any, and only for such time, as the relevant
Mortgagor shall be entitled to possession thereof by reason of the
termination of such ground leases or other arrangements.
Indenture shall have the meaning stated in the Preliminary Statement
---------
hereof.
Independent Architect shall mean a Person selected by the relevant
---------------------
Mortgagor that is a member of a nationally recognized architecture or
construction management firm that is licensed or registered in the state
where the relevant Mortgaged Property is located, if required by the laws
of such state, and is not an Affiliate of the Mortgagor.
Insurance Proceeds shall have the meaning stated in Article 15 hereof.
------------------
Insurance Requirements shall mean all terms of any insurance policy
----------------------
required hereunder covering or applicable to any Mortgaged Property or any
part thereof, all requirements of the issuer of any such policy, and all
orders, rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions)
applicable to or affecting any Mortgaged Property or any part thereof or
the use of any Mortgaged Property or any part thereof.
Interest Payment Date shall have the meaning stated in the Indenture.
---------------------
Investment Grade shall mean having a long-term unsecured debt rating (or,
----------------
with respect to providers of insurance, claims-paying-ability rating) not
lower than Baa3 by the Rating Agency.
Ivanhoe Entities shall mean any one or more of the following: Ivanhoe
----------------
Equities V L.P., a Delaware limited partnership, Ivanhoe III Inc., a Quebec
corporation, or Caisse De Depot Et Placement Du Quebec.
Land shall mean the Owned Land and the Leased Land.
----
Lease shall mean, with respect to each Mortgaged Property, any lease,
-----
sublease, further sublease, license, occupancy agreement or other
agreement,
-15-
<PAGE>
including, without limitation, any Specialty Lease, existing on the date
hereof or hereafter entered into by the Mortgagor identified on Exhibit A
---------
as owning such Mortgaged Property permitting the use, occupancy or
enjoyment of any part of the Mortgaged Property, and every modification,
amendment, or extension relating thereto.
Leased Land has the meaning stated in the Preliminary Statement hereof.
-----------
Legal Requirements shall mean all laws, statutes, codes, acts,
------------------
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions having the force of law and
requirements of all governments, departments, commissions, boards, courts,
authorities, agencies, officials and officers, of governments, federal,
state, county and municipal, ordinary or extraordinary (including
Environmental Laws), and all covenants, restrictions and conditions now or
hereafter of record, which now or at any time hereafter may be applicable
to and enforceable against any Mortgagor or any Mortgaged Property as a
result of the ownership, use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction of the
Premises or any part thereof, including, without limitation, building and
zoning codes and ordinances.
Lien shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
----
assignment, security interest, or any other encumbrance of, on or affecting
any Mortgaged Property or any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing
statement, liens for delinquent real estate taxes and construction,
mechanic's, materialmen's and other similar liens and encumbrances.
Loan shall have the meaning stated in the Preliminary Statement hereto.
----
Make-Whole Payment shall have the meaning stated in the Indenture.
------------------
Mall Store Space shall mean the aggregate gross leasable area leased and
----------------
available for lease to tenants (but not including anchor Tenants) along the
enclosed corridors connecting the anchor stores at the Premises.
Mall Store Tenants shall mean Tenants that lease Mall Store Space.
------------------
Maturity shall have the meaning stated in the Indenture.
--------
Maximum Foreseeable Casualty Loss shall have the meaning set forth in
---------------------------------
Section 13.2 hereof.
Mortgage shall mean this Mortgage, Deed of Trust, Security Agreement,
--------
Assignment of Leases and Rents, Fixture Filing and Financing Statement, as
the
-16-
<PAGE>
same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, and shall also include the version of this
agreement recorded in the State of Michigan under the title "Mortgage and
Security Agreement".
Mortgage State shall have the meaning stated in Section 1.3 hereof.
--------------
Mortgaged Property and Mortgaged Properties shall have the meanings
------------------ --------------------
stated in the Granting Clause, but shall not include any property or
portion thereof that is hereafter released from the lien of this Mortgage.
Mortgagee shall have the meaning provided in the introductory paragraph
---------
hereto.
Mortgagor shall mean any one or more of the Mortgagors, as the context
---------
may require.
Mortgagors shall mean, collectively, the thirteen entities described on
----------
Exhibit A, and any successors and assigns thereto permitted hereunder,
---------
subject in all cases to the provisions of Section 38.
Multiemployer Plan shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA, if any, to which the Mortgagor is making or
has an obligation to make contributions.
Net Operating Income shall mean the excess of Operating Income over
--------------------
Operating Expense based upon the Mortgagors' most recent audited financial
statements (or, if such audited financial statements are as of a date more
than one hundred and thirty-five (135) days before the determination date,
the aggregate sum of net operating income as it appears on the Mortgagors'
unaudited financial statements for the four most recent quarters for which
such financial statements are available, provided, that those statements
are prepared on a basis substantially consistent with the most recent
audited financial statements).
Notes shall have the meaning stated in the Indenture.
-----
Officer's Certificate shall mean a certificate signed by any of the
---------------------
persons identified on Exhibit D to the Indenture or any other person or
---------
persons authorized to act on behalf of each of the Mortgagors, which shall
mean, with respect to each Mortgagor, a responsible officer of the
Mortgagor, if the Mortgagor is a corporation, a general partner of the
Mortgagor, if the Mortgagor is a partnership, or by an individual of
similar authority and responsibility authorized to sign such certificate on
behalf of the Mortgagor if the Mortgagor shall not be a corporation or a
partnership, which certificate shall, in each case, be subject to the non-
recourse provisions of Article 38 hereof.
-17-
<PAGE>
Operating Agreements shall mean the operating agreements, reciprocal
--------------------
easement agreements, ground leases or other agreements, as applicable, setting
out the respective rights and obligations between each Mortgagor and each of the
anchor store owners at or adjacent to each of the Mortgaged Properties.
Operating Expenses shall mean, for any period, all expenses payable by
------------------
the Mortgagors (or by the Property Manager for the account of any of the
Mortgagors) during such period in connection with the operation of the Mortgaged
Properties, determined on an accrual basis, in accordance with GAAP, which shall
include the following expenses:
(i) expenses in connection with cleaning, repair, maintenance,
management, leasing, decoration or painting thereof, or the provision of
services to any Tenant, net of any insurance proceeds or condemnation
proceeds in respect of any of the foregoing;
(ii) wages, benefits, payroll taxes, uniforms, insurance costs and
all other related expenses for on-site building personnel, up to and
including the level of the on-site building manager, engaged in cleaning,
repair, maintenance, management, leasing, decoration or painting thereof or
the provision of services to any Tenant;
(iii) the compensation being paid for bookkeeping, accounting
and building management services for the Mortgaged Properties, and all
other items of compensation and reimbursement payable by any of the
Mortgagors to the Property Manager (exclusive, however, of any investment
advisory fees) and, if applicable (but without duplication), allocations of
wages, benefits, payroll taxes, insurance costs and other related expenses
for bookkeeping, accounting and other building management functions and
home office expenses and computer usage relating to the Mortgaged
Properties;
(iv) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, telecommunications,
utility or similar items, including overtime usage, and the cost of
building and cleaning supplies;
(v) Impositions;
(vi) premiums for liability, casualty, fidelity, business
interruption, loss of "rental value" and other insurance (which, in the
case of any policy covering multiple properties, shall be allocated by the
Mortgagors to each Mortgaged Property in such manner as the Mortgagors
determine to be equitable, taking into account the relative replacement
values of each of the
-18-
<PAGE>
properties covered by such policy for casualty insurance, the respective
size and experience rating of each of the properties covered by such policy
for liability insurance, and the insured value of each of the properties
covered by such policy for the other coverages);
(vii) legal accounting, appraisal and other professional fees,
expenses and disbursements including annual fees and other amounts payable
annually to the Trustee in accordance with the Indenture and to the Rating
Agency in connection with the Notes;
(viii) amounts paid in consideration of any modification,
amendment, supplement, waiver, renewal, or termination of any Lease or
Specialty Lease;
(ix) all amounts paid or expenses incurred under any Lease of an
anchor department store or a peripheral site at any of the Mortgaged
Properties;
(x) fees and expenses of the Mortgagee (if any) paid by the
Mortgagors; and
(xi) all other amounts paid during such period in respect of items
which in accordance with generally accepted accounting principles would be
included in the Mortgagors' annual financial statements for such period or
any other period as operating expenses of the Mortgaged Properties and are
reasonably expected by the Mortgagors to be regularly recurring operating
expenses of the Mortgaged Properties and not separately deducted in the
definition of Operating Income.
Notwithstanding the foregoing clauses (i) through (xi), Operating Expenses shall
not include (1) depreciation or amortization or other noncash items (other than
expenses that are due and payable but not yet paid), (2) the principal of and
interest and Make-Whole Payment, if any, on the Notes or any other indebtedness
for borrowed money of any of the Mortgagors (except as otherwise provided in
clause (vii) above), (3) income taxes or other Impositions in the nature of
income taxes, (4) any expenses (including legal, accounting and other
professional fees, expenses and disbursements) incurred in connection with the
issuance of the Notes or the sale, exchange, transfer, financing or refinancing
of all or any portion of the Mortgaged Properties or in connection with the
recovery of insurance or condemnation proceeds which are applied to prepay any
of the Notes pursuant to Article 15 hereof, (5) the cost of leasehold
improvements and tenant improvements, leasing commissions, any other
expenditures on behalf of Tenants (except to the extent, and only to the extent,
that reimbursement from Tenants for such items is included in Operating Income),
any Equipment (except to the extent, and only to the extent, that the proceeds
from the sale of the Equipment being replaced thereby are included in Operating
Income) and
-19-
<PAGE>
any capital expenditures, (6) distributions to the partners or members in any
Mortgagor, or any asset management fees or similar compensation payable to any
Affiliate of any Mortgagors to the extent such compensation exceeds market
rates, (7) certain other non-operating, non-recurring expenses identified by the
Mortgagors and related to any of the Mortgaged Properties and (8) any item of
expense which otherwise would be considered within Operating Expenses pursuant
to the provisions above but is paid directly by any Tenant.
Operating Income shall mean, for any period, all income payable to any of
----------------
the Mortgagors (or to the Property Manager for the account of any of the
Mortgagors) from any Person on account of such period in connection with the
operation of any of the Mortgaged Properties, determined on an accrual basis
modified as set forth below, which shall include the following income:
(i) all amounts received as rent by the applicable Mortgagor (or
by a Property Manager for the account of the applicable Mortgagor)
(including percentage rent, franchise fees and fees from temporary
tenants), charges for electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, telecommunications,
telephone, utility or similar items, including overtime usage, HVAC
equipment charges, sprinkler charges, escalation charges, license fees,
maintenance fees, charges for improvements, Impositions and other amounts
received by any of the Mortgagors (or to the Property Manager for the
account of any of the Mortgagors) under any Lease or other agreement
relating to any of the Mortgaged Properties pursuant to which any portion
of the Premises or the Improvements thereon (including storage space
rentals and rentals for community hall usage), utilities, facilities,
equipment, parking facilities or other services are furnished by any of the
Mortgagors, and including late charges, default interest and temporary
investment income but excluding any security deposits received;
(ii) condemnation proceeds under a temporary taking to the extent
that such proceeds are compensation for lost rent;
(iii) business interruption and loss of "rental value"
insurance proceeds;
(iv) proceeds of any sale of Equipment pursuant to Section 19.1
hereof to the extent replaced with other Equipment purchased;
(v) all amounts received under any Lease of an anchor department
store or a peripheral site at any of the Mortgaged Properties reasonably
expected by the Mortgagors to recur in the ordinary course of business;
(vi) income from cash holdings and interest from notes in lieu of
rent; and
-20-
<PAGE>
(vii) all other amounts received by any of the Mortgagors
during such period in respect of items which in accordance with GAAP would
be included in the Mortgagors' annual financial statements for such period
or any other period as operating income of the Mortgaged Properties and
which are reasonably expected to recur during the next two (2) years
following the Calculation Date;
provided, however, that the items of income described in subparagraphs (i) and
(vi) shall be reduced by the greater of one percent (1%) or the then-current
allowance for doubtful accounts or, if no such allowance has been established,
the average bad debts expense for the first two (2) calendar years preceding the
year in which the Calculation Date falls, in each case established by the
relevant Mortgagor in accordance with its bad debts policy and generally
acceptable accounting principles.
Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (ii) and (iii) above), (B) any proceeds resulting from the
sale, exchange, transfer, financing or refinancing of all or any part of any
Mortgaged Property (other than of the types described in clauses (ii) and (iv)
above), (C) any rent accrued by any Mortgagor but not received because of any
free rent provisions or other rental concessions in any Lease, (D) any
repayments received from Tenants of principal loaned or advanced to Tenants by
any Mortgagor, (E) items of non-recurring income or (F) any type of income that
would otherwise be considered Operating Income pursuant to the provisions above
but is paid directly by any Tenant to a Person other than a Mortgagor.
Out-of-Pocket Costs shall mean with respect to the Mortgaged Properties,
-------------------
following an Event of Default, (a) any and all sums actually paid or required to
be paid by the Mortgagee or the Servicer for real estate taxes, taxes on rents
or rentals or insurance premiums as provided in this Mortgage, and any and all
other sums actually paid or required to be paid by the Mortgagee or the Servicer
pursuant to the terms of this Mortgage to protect and preserve any of the
Mortgaged Properties or the Mortgagee's interest therein, and (b) any and all
sums, including, without limitation, judgments, settlements or compromises (to
the extent such settlements or compromises have been consented to by the
Mortgagors if such consent is required under the Security Documents), reasonable
attorneys' fees and other costs and expenses, paid by the Mortgagee or the
Servicer in connection with any suit, action, legal proceeding or dispute of any
kind, in which the Mortgagee or the Servicer is a party or appears, arising from
or related to any of the Mortgaged Properties or the indebtedness secured by
this Mortgage.
Outstanding shall, with reference to the Notes, have the meaning set
-----------
forth in the Indenture.
-21-
<PAGE>
Owned Land shall have the meaning stated in the Preliminary Statement
----------
hereto.
Permitted Exceptions shall mean those matters identified in Exhibit C
-------------------- ---------
hereto.
Permitted Owner shall mean:
---------------
A. any Person that satisfies at least one of the criteria in each of the
following two categories: (a) any one of the following:
(i) a pension fund, pension trust or pension account,
(ii) an insurance company,
(iii) a national money-center bank, or
(iv) a Person with a long-term unsecured debt rating of at least
Investment Grade, and
(b) any one of the following (all of the figures in this clause (b) are
to be calculated exclusive of the Mortgaged Properties):
(i) a Person with a current net worth of $250 million or more and
owns real estate assets of $500 million or more or, if such
Person is a pension fund advisor, one which controls $1 billion
or more of real estate equity investments, or
(ii) a pension fund, pension trust or pension account that has total
assets of $500 million or more, managed by a Person that
controls at least $1 billion in real estate equity investments,
or
(iii) a Person that controls at least twelve (12) regional malls
containing (in the aggregate) at least six million square feet
of leasable space, or
B. any Person approved by the Mortgagee (such approval not to be
unreasonably withheld or delayed) and affirmed by Rating Confirmation, or
C. any Person controlled by General Growth, or
D. with respect to The Oaks Mall and Westroads Mall only, any Person
controlled by one or more Ivanhoe Entities.
For purposes of this definition and of Section 19, "control" or
"controlled" means primary responsibility to make or veto all material
decisions with respect to
-22-
<PAGE>
the operation, management, financing and disposition of the specified
interest, rather than a beneficial ownership requirement, and without being
compromised by the fact that responsibility for such day-to-day operating
and management functions or leasing activities as are ordinarily handled by
a property manager has been delegated by such controlling Person pursuant
to an agreement in writing.
Person shall mean any individual, sole proprietorship, corporation,
------
general partnership, limited partnership, limited liability company or
partnership, joint venture, association, joint stock company, bank, trust,
estate, unincorporated organization, any federal, state, county or
municipal government (or any agency or political subdivision thereof),
endowment fund or any other form of investment vehicle or other entity.
Personal Property shall have the meaning stated in Section 46.1
-----------------
hereof.
Pledged Assets means, collectively and as of the date of
--------------
determination, all of the Mortgaged Properties then subject to the lien of
this Mortgage (including, without limitation, any Substitute Mortgaged
Property then encumbered by a mortgage lien in favor of the Mortgagee), but
excluding all Loan proceeds distributed by any Mortgagor to its partners or
members.
Potential Mortgagor Obligations means the Mortgagor's contingent
-------------------------------
obligations to expand anchor stores (or contribute toward the cost thereof)
as identified on Exhibit I hereto.
---------
Premises shall mean the Land, Improvements and Equipment and all
--------
accessions and additions thereto and increases therein which at any future
time constitute a part of the Land, Improvements and/or Equipment.
Proceeds shall mean amounts, awards or payments payable to any of the
--------
Mortgagors or the Mortgagee in respect of all or any part of any of the
Mortgaged Properties in connection with the damage, destruction, taking or
condemnation thereof (after the deduction therefrom and payment to the
relevant Mortgagor and the Mortgagee, respectively, of any and all
reasonable expenses incurred by such Mortgagor and the Mortgagee in the
recovery thereof, including all attorneys' fees and expenses, the fees of
insurance experts and adjusters and the costs incurred in any litigation or
arbitration with respect to such damage, destruction, taking or
condemnation).
Property Manager has the meaning stated in Section 20(b).
----------------
Qualified Fire Protection Engineer shall mean with respect to any
----------------------------------
Mortgaged Property (a) an engineer duly licensed in the State where the
Mortgaged Property is located who shall either (x) have ten (10) years'
experience evaluating fire and life
-23-
<PAGE>
safety systems and making estimates comparable to the estimates described
in Section 13.2 hereof or (y) be certified as a qualified fire protection
engineer (or equivalent) by a professional, trade or other similar
association of recognized standing, (b) a reputable insurance broker having
an in-house engineering and loss control group capable of making estimates
comparable to the estimates described in Section 13.2 hereof, or (c) an
insurer meeting the criteria set forth in Section 13.2 hereof or a
qualified employee thereof, in each case selected by the Mortgagor
identified in Exhibit A as owning such Mortgaged Property (unless
---------
reasonably disapproved by the Mortgagee). Rating Agency shall mean Moody's
Investors Service, Inc., or any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "Rating Agency" shall be deemed to refer to any other nationally
recognized rating agency selected by the Mortgagors (and not reasonably
disapproved by the Mortgagee).
Rating Confirmation shall have the meaning stated in the Indenture.
-------------------
Release Premises shall have the meaning stated in Section 44.1(c)
----------------
hereof.
Renewal Lease shall have the meaning stated in Section 20(b) hereof.
-------------
Required Rating shall mean the higher of (i) the highest rating then
---------------
assigned by the Rating Agency to any of the outstanding Notes, and (ii)
"A2" (or its equivalent) by the Rating Agency.
Restoration shall mean, in case of damage to, destruction of, taking
-----------
or condemnation of the Premises of any Mortgaged Property or any part
thereof, the restoration, replacement or rebuilding of such Premises as
nearly as practicable (after taking into account the consequences of a
taking or condemnation, if any) to at least the value and utility (in light
of commercial materials and services then available) of such Premises
immediately prior to such damage, destruction, taking or condemnation,
together with such Alterations as may be made at the relevant Mortgagor's
election in accordance with the applicable provisions of this Mortgage.
Secured Obligations shall have the meaning stated in the Preliminary
-------------------
Statement hereof.
Security Documents shall mean this Mortgage, the Assignment of Leases,
------------------
the Environmental Indemnity, the Assignment of Contracts, the Subordination
of Management Agreement, the Notes, the Indenture, the Trustee Fee
Agreement, the
Service Fee Agreement, the financing statements now or hereafter executed
in connection herewith and any and all other agreements, certificates
(including, without limitation, Officer's Certificates), instruments or
documents executed by the
-24-
<PAGE>
Mortgagors or any of them evidencing, securing or delivered in connection
with the Loan and/or the transactions contemplated hereby.
Servicer shall mean the institution serving from time to time as
--------
Servicer for the benefit of the Holders of Notes under and pursuant to the
Indenture.
Shopping Centers shall have the meaning stated in the Preliminary
----------------
Statement hereof.
Single Purpose/Insolvency Remote Entity shall mean a Person, other
---------------------------------------
than an individual, which is formed or organized solely for the purpose of
holding, directly, an ownership interest in any of the Mortgaged
Properties, does not engage in any business unrelated to such Mortgaged
Property or Mortgaged Properties and the financing thereof, does not have
any assets other than those related to its interest in such Mortgaged
Property or Mortgaged Properties or the financing thereof or any
indebtedness other than as permitted by this Mortgage or the other Security
Documents, has its own separate books and records and its own accounts, in
each case which are separate and apart from the books and records and
accounts of any other Person, and holds itself out as being a Person,
separate and apart from any other Person. If the foregoing entity is a
partnership or limited liability company, (i) its partnership agreement or
operating agreement, as applicable, must provide that the partnership or
limited liability company will dissolve upon the withdrawal or dissolution
of the last remaining general partner or member, but the partnership or
limited liability company will not be dissolved if the remaining partners
or members, within ninety (90) days, by majority vote elect to continue the
partnership or limited liability company and, in the case of a limited
partnership, appoint a new general partner, (ii) one general partner or
managing member (as applicable) must at all times be a Single
Purpose/Insolvency Remote Entity formed solely for the purpose of acting as
such general partner or managing member, as applicable, and (iii) the
partnership agreement or operating agreement (as applicable) must provide
that the dissolution and winding up or insolvency filing of such
partnership or limited liability company requires the unanimous consent of
all general partners or members, respectively. If the foregoing entity is a
corporation, the entity's articles of incorporation must include provisions
substantially similar to those contained on Exhibit G hereto and that
---------
otherwise limit its business to a single purpose as described above in the
first sentence of this definition. Any other entity seeking to qualify as a
Single Purpose/Insolvency Remote Entity shall have adopted provisions in
its governing documents that are substantively similar to the provisions
contained in Exhibit G and described above for partnerships, limited
---------
liability companies and corporations.
Specialty Lease shall mean any lease, sublease, future sublease,
---------------
license, occupancy agreement or other agreement having an initial term of
less than one (1) year existing on the date hereof or hereafter, in either
case entered into by a
-25-
<PAGE>
Mortgagor and permitting the use, occupancy or enjoyment of any part of any
Mortgaged Property, and every modification, amendment or extension relating
thereto.
Square Footage shall have the meaning stated in Section 15(d).
--------------
Subordination of Management Agreement shall mean the Manager's Consent
-------------------------------------
and Subordination of Management Agreement, dated as of the date hereof, by
General Growth Management, Inc. to the Trustee, together with any
amendments thereto.
Substitute Assignment of Leases shall have the meaning stated in
-------------------------------
Section 44.2(d).
Substitute Mortgaged Property shall have the meaning stated in Section
-----------------------------
44.2.
Substitution Notice shall have the meaning stated in Section
-------------------
44.2(a)(i).
Taking shall have the meaning stated in Article 15 hereof.
------
Taking Proceeds shall have the meaning stated in Article 15 hereof.
---------------
Tax Opinion shall have the meaning stated in the first paragraph of
-----------
Section 19 hereof.
Tenant shall mean any Person (i) liable by contract or otherwise to
------
pay rent or a percentage of gross income, revenue or profits pursuant to a
Lease or (ii) party to an Operating Agreement affecting any of the
Mortgaged Properties.
Termination Percentage shall have the meaning stated in Section 15(d)
----------------------
hereof.
Threshold Amount shall mean, with respect to any Mortgaged Property,
----------------
five percent (5%) of the original Allocated Amount applicable to such
Mortgaged Property, rounded up to the nearest hundred thousand; provided,
that the Threshold Amount for any Mortgaged Property shall always be at
least Two Million Dollars ($2,000,000).
Title Company shall mean First American Title Insurance Company, or
-------------
any successor in interest thereto, or any other nationally recognized title
insurance company selected by the relevant Mortgagor.
Trade Payables, with respect to a Mortgagor, shall mean amounts
--------------
payable by or on behalf of such Mortgagor for or in respect of the
operation of the Mortgaged Property identified on Exhibit A hereto as being
---------
owned by such Mortgagor in the ordinary course and which would under GAAP
be regarded as ordinary expenses, as well as leasing commissions and tenant
improvements, including amounts payable
-26-
<PAGE>
to suppliers, vendors, contractors, mechanics, materialmen or other Persons
providing property or services to such Mortgaged Property or Mortgagor.
Transferee Mortgagor shall mean with respect to any Mortgaged Property
--------------------
any Mortgagor other than the entity identified on Exhibit A as owning such
---------
Mortgaged Property as of the date hereof.
Trustee shall mean the institution serving from time to time as
-------
Trustee for the benefit of the Holders of Notes under and pursuant to the
Indenture (and does not refer to the Deed Trustees).
U.S. Government Securities shall mean securities evidencing an
--------------------------
obligation to pay principal and interest in a full and timely manner that
are (y) direct obligations of the United States of America for the payment
of which its full faith and credit is pledged, or (z) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of and guaranteed as a full faith and credit obligation by
the United States of America, which in either case are not callable or
redeemable at the option of the issuer thereof (including a depository
receipt issued by a bank (as defined in Section 3(a)(2) of the Securities
Act) as custodian with respect to any such securities or a specific payment
of principal of or interest on any such securities held by such custodian
for the account of the holder of such depository receipt; provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the securities or
the specific payment of principal of or interest on the securities
evidenced by such depository receipt.
Withdrawal Notice shall have the meaning stated in Section 44.2(c).
-----------------
Work shall have the meaning stated in Section 15(d)(ii).
----
1.3. Provisions Concerning Particular States. Notwithstanding anything
---------------------------------------
to the contrary herein contained: (a) To the extent the Mortgaged Property is
located in Florida, Georgia, Illinois, Ohio, Oklahoma, Michigan, Minnesota, New
Mexico, New York or Wisconsin (each a "Mortgage State"), this instrument shall
--------------
be deemed to be and shall be enforceable as a mortgage and/or leasehold
mortgage, and as a security agreement, assignment of leases and rents and
fixture filing and financing statement.
(b) To the extent the Mortgaged Property is located in the State of
Georgia, this instrument shall be enforceable as a deed to secure debt and as a
security agreement, assignment of leases and rents and fixtures filing and
financing statement.
(c) To the extent the Mortgaged Property is located in California,
Nebraska or Missouri (each a "Deed of Trust State"), this instrument shall be
-------------------
deemed to be and shall be enforceable as a deed of trust and/or leasehold deed
of trust and as a security
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<PAGE>
agreement, assignment of leases and rents and fixture filing and financing
statement. This Section 1.3 is not intended to preclude the Mortgagee (or the
Servicer on its behalf) from treating this Mortgage as a "mortgage" in any Deed
of Trust State if such treatment is necessary or desirable to enable the
Mortgagee to realize the practical benefits intended to be provided by this
Mortgage.
Wherever herein contained, the word "Mortgagee" (i) shall be deemed to
refer to the Mortgagee (as the mortgagee) to the extent a Mortgaged Property is
situated in any Mortgage State and to the Mortgagee (as grantee) to the extent
the Mortgaged Property is situated in the State of Georgia, and neither Deed
Trustee shall have any rights, powers or obligations in those States, and (ii)
to the extent the Mortgaged Property is situated in any Deed of Trust State,
shall be deemed to refer to (1) the relevant Deed Trustee for the benefit of the
Mortgagee (as beneficiary) and (2) if the context so requires or permits and if
the Mortgagee so elects and if the law of the applicable Deed of Trust State
permits, the Mortgagee.
1.4. Mortgagor Representative. The Mortgagors hereby acknowledge the
------------------------
provisions of Section 1.15 of the Indenture (appointing Lockport L.L.C., a New
York limited liability company, to act as representative of the Mortgagors under
the Indenture, this Mortgage and the other Security Documents), which Section
hereby is incorporated by reference into this Mortgage.
1.5. Mortgagee Consents and Approvals. Whenever, in this Mortgage or
--------------------------------
in any other Security Document, any consent or approval or other action may or
shall be granted, withheld or otherwise taken by the Mortgagee, such consent,
approval or other action shall be granted or withheld and such other action may
be taken by the Servicer on behalf of the Mortgagee in accordance with Accepted
Servicing Practices (as defined in the Indenture). In deciding whether to grant
or withhold any such consent or approval or to take any such other action, the
Servicer shall be entitled (but not required) to consult with such counsel, real
estate professionals or other Persons as the Servicer may deem necessary or
appropriate and the Mortgagors shall reimburse the Servicer for all reasonable
fees and expenses incurred by the Servicer in connection with any such
consultation.
2. PARTICULAR COVENANTS, REPRESENTATIONS AND WARRANTIES.
----------------------------------------------------
2.1. Due Authorization; Validity of the Mortgage and the Other
---------------------------------------------------------
Security Documents; Title to the Premises; Etc. The Mortgagors collectively
- -----------------------------------------------
covenant and agree and represent and warrant as follows:
(a) this Mortgage and the other Security Documents have been duly
authorized, executed and delivered and constitute legal, valid and binding
obligations of the Mortgagors enforceable in accordance with their respective
terms, subject, as to
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<PAGE>
enforcement, to bankruptcy, insolvency, fraudulent transfer, fraudulent
conveyance, reorganization, moratorium, rehabilitation and other laws relating
to or affecting creditors' rights and to general equity principles;
(b) each Mortgagor is duly authorized to execute and deliver this
Mortgage and the other Security Documents and thereby to grant, convey, transfer
and assign the Mortgaged Property identified on Exhibit A as being owned by such
---------
Mortgagor to the Mortgagee in accordance with this Mortgage and the other
applicable Security Documents, and all limited liability company, partnership,
corporate and governmental action, consents, authorizations and approvals
necessary therefor have been duly and effectively taken or obtained;
(c) as of the date hereof, each Mortgagor has good and marketable fee
simple title to the portion of the Owned Land and the Improvements attributable
to the Mortgaged Property identified on Exhibit A as being owned by such
---------
Mortgagor and valid title to the portion of the Personal Property (including,
without limitation, Equipment, but excluding Personal Property that is leased to
the Mortgagor by third parties, as to which the Mortgagor holds a valid,
enforceable and unencumbered leasehold interest) relating thereto and has in
each case good right to convey the same aforesaid, subject to no liens, charges
or encumbrances other than the Permitted Exceptions (excluding, however,
Permitted Exceptions of the type set forth in clause (h) of Exhibit C hereto for
---------
purposes of this representation), and upon the execution by each Mortgagor of
this Mortgage, and the proper recording of the same (and any required Uniform
Commercial Code financing statements) in the appropriate public records, the
Mortgagee shall have a valid first lien and security title on the Premises and a
valid first priority security interest in the Personal Property (other than that
excluded above) in trust for the benefit of the Mortgagee subject to no liens,
charges or encumbrances other than the Permitted Exceptions (but excluding, for
purposes of this representation, liens, charges and encumbrances of the type
described in clause (h) of Exhibit C); there is no condemnation, appropriation
---------
or recapture proceeding pending or, to its knowledge, threatened with respect to
any Mortgaged Property and there are no unrecorded options to purchase all or
any part of any Mortgaged Property; and each Mortgagor warrants that the
Permitted Exceptions affecting title to the Mortgaged Property as of the date
hereof will not materially and adversely affect the ability of the Mortgagors to
timely pay principal and interest due under the Notes; no title insurance
company issuing a policy covering all or any part of any Mortgaged Property
shall be considered a beneficiary of, or entitled to rely on, the
representations and warranties contained herein;
(d) None of the Mortgagors has ever had any employees or made or been
required to make any contributions to any Employee Benefit Plans. None of the
Mortgagors has any knowledge of any material liability which has been incurred
by it or any other Mortgagor and remains unsatisfied for any taxes or penalties
with respect to any Employee Benefit Plan or any Multiemployer Plan, or of any
lien which has been
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<PAGE>
imposed on such Mortgagor's assets pursuant to Section 412 of the Code or
Sections 302 or 4068 of ERISA;
(e) at the time of execution of this Mortgage, there is no litigation
to which any Mortgagor is a party which, if determined adversely to such
Mortgagor, would have a material adverse effect on any of the Mortgaged
Properties or on the ability of the Mortgagors to perform their obligations
hereunder that would not be covered by insurance; and at the time of the
execution of this Mortgage none of the Mortgagors has knowledge of any
contingent liabilities of any of the Mortgagors which, if realized, would have a
material adverse effect on any of the Mortgaged Properties or on the ability of
the Mortgagors to perform their obligations hereunder, in each case that would
not be covered by insurance;
(f) at the time of execution of this Mortgage, no Mortgagor has any
past due financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Mortgagor is a party
which, if left unpaid could be expected to have any material adverse effect on
the Mortgaged Property owned by such Mortgagor or the ability of such Mortgagor
to satisfy its obligations under the Notes, this Mortgage or any other Security
Documents;
(g) (i) each Mortgagor is the sole owner of the entire lessor's
interest in the Leases and the Specialty Leases in effect at the Mortgaged
Property identified on Exhibit A as being owned or leased by such Mortgagor on
---------
the date hereof, subject to the Permitted Exceptions; (ii) to each Mortgagor's
knowledge (and except for such leases as have terminated in accordance with
their terms between November 6, 1997 and the date hereof), the Leases with the
Tenants identified on the rent rolls dated November 6, 1997 and previously
delivered to the Mortgagee are valid, enforceable and in full force and effect
in all material respects, subject in each case to bankruptcy, insolvency,
fraudulent transfer, fraudulent conveyance, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles; (iii) except as provided in the Assignment of
Leases, no Mortgagor's rights to receive rents under the Leases are assigned or
otherwise pledged or hypothecated; (iv) none of the rents payable under the
Leases (excluding, for purposes hereof, Specialty Leases) have been collected
for more than one (1) month in advance of their due date; and (v) no person or
entity other than the Mortgagor identified on Exhibit A as owning such Mortgaged
---------
Property has any possessory interest in or right to occupy any of the Mortgaged
Properties except under and pursuant to a Lease (and, with respect to the Leased
Land, the lessors under the respective Ground Leases);
(h) except as disclosed in the environmental reports identified in
Exhibit H hereto, (i) to the knowledge of the Mortgagors none of the Mortgagors
- ---------
has any liability, including, without limitation, any contingent liability, in
connection with any Hazardous Substance Activity on, at or relating to any of
the Mortgaged Properties under any Environmental Laws in effect as of the date
hereof that could reasonably be expected to
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<PAGE>
have a material adverse effect on the value of any of the Mortgaged Properties
(taken individually or together as a group) or the prospect of timely payment of
interest and principal on the Notes when due; and (ii) none of the Mortgagors is
aware of any condition in existence, or any Hazardous Substance Activity taking
place, in either case on, at or relating to any of the Mortgaged Properties that
could reasonably be expected to subject any Mortgagor, or any Tenant or occupant
of any of the Mortgaged Properties, to any liability under any Environmental Law
that would have a material adverse effect on the value of any of the Mortgaged
Properties (taken individually or together as a group) or the prospect of timely
payment of interest and principal on the Notes when due; and
(i) to the knowledge of the Mortgagors there are no current or
contingent liabilities arising from or relating to any real estate or other
assets, other than the Mortgaged Properties, which, individually or in the
aggregate, could be expected to have a material adverse effect on any of the
Mortgaged Properties or the Mortgagors' ability to make timely payments of
interest and principal on the Notes and any other amounts payable under the
Security Documents when due.
2.2. Maintenance of Validity, Recording and Other Covenants Relating
---------------------------------------------------------------
to the Mortgaged Properties. (a) Each Mortgagor covenants that it will forthwith
- ---------------------------
after the execution and delivery of this Mortgage and thereafter as necessary
from time to time cause this Mortgage and the other Security Documents and any
continuation statement or similar instrument relating to any property subject
thereto or to any property intended to be granted, conveyed, transferred and
assigned by this Mortgage to be filed, registered and recorded in such manner
and in such places as may be required by law in order to publish notice of and
fully to protect the validity thereof or the grant thereby of the property
subject thereto and the interest and rights of the Mortgagee therein. Each
Mortgagor covenants that it has paid or will pay or cause to be paid all taxes
and fees incident to such filing, registration and recording, and all expenses
incident to the preparation, execution and acknowledgment thereof, and of any
instrument of further assurance, and all federal or state stamp taxes or other
charges arising out of or in connection with the execution and delivery of such
instruments.
(b) Each Mortgagor covenants that at all times it will itself, or
will use its best efforts to cause third parties to, preserve, warrant and
defend the Mortgagee's title and right in and to each Mortgaged Property,
subject to the Permitted Exceptions and items being contested in accordance with
Article 12 hereof, against the claims of all Persons (other than those claiming
by or through the Mortgagee) and will maintain and preserve such title and right
so long as any of the Notes are outstanding.
(c) Notwithstanding any provision to the contrary contained herein,
the Mortgagee hereby (i) consents to the modification of existing easements,
rights of way, restrictive covenants, dedications or similar agreements included
in the Permitted Exceptions and to the creation by any Mortgagor of additional
easements, rights of way,
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<PAGE>
restrictive covenants, dedications or similar agreements affecting title to the
Premises owned or leased by such Mortgagor, including in connection with an
Alteration, and (ii) agrees that this Mortgage shall be subordinate to such
modifications, additional easements, rights of way, restrictive covenants,
dedications or similar agreements, in either case upon receipt by the Mortgagee
of an Officer's Certificate confirming that such action (A) will either benefit
the Mortgaged Property affected thereby or will not affect the utility,
operation or value of such Mortgaged Property in any material adverse respect
and (B) will not, to the knowledge of each certifying officer, cause the
Mortgaged Property affected thereby to be in violation of any Legal
Requirements, Leases or Insurance Requirements or result in the loss of any
certificate of occupancy.
(d) Each Mortgagor covenants and agrees (i) to punctually perform all
obligations and agreements to be performed by it as lessor under any Lease or as
a party to or a beneficiary of any of the Permitted Exceptions, and to take such
action as shall be commercially reasonable and diligent to compel performance by
each other party to each of such instruments of such other party's obligations
and agreements thereunder, (ii) to maintain the validity, perfection, priority
and effectiveness of this Mortgage and the other Security Documents, (iii) that,
unless otherwise permitted in this Mortgage and the other Security Documents,
such Mortgagor will not take any action, will not permit action to be taken by
others and will not omit to take any action, nor will the Mortgagor give any
notice, approval or consent or exercise, waive or modify any rights under or in
respect of the Permitted Exceptions, which action, omission, notice, approval,
consent or exercise, waiver or modification of rights would release the
Mortgagor from, or reduce any of the Mortgagor's obligations or liabilities
under, or would result in the termination, surrender or assignment of, or the
amendment or modification of, any of the Security Documents, or would impair the
validity of any of the Permitted Exceptions in a manner materially adverse to
any Mortgaged Property or the rights of the Mortgagee therein, this Mortgage or
any of the other Security Documents, or would otherwise affect any Mortgaged
Property in any material adverse respect, without the Mortgagee's consent, and
any attempt to do any of the foregoing without such consent shall be of no force
and effect, and (vi) that such Mortgagor will not take any action, will not
permit action to be taken by others and will not omit to take any action, nor,
except as permitted by Article 20 hereof, will the Mortgagor give any notice,
approval or consent or exercise any rights under or in respect of any Lease or
any of such other instruments, which action, omission, notice, approval, consent
or exercise of rights would release any Tenant or other party from, or reduce
any Tenant's or any other party's obligations or liabilities under, or would
result in the termination, surrender or assignment of, or the amendment or
modification of in any material adverse respect, or would impair the validity
of, any Lease, any such other instruments, this Mortgage or any of the other
Security Documents (other than as expressly permitted by Article 20 hereof), if
any of the foregoing would affect any Mortgaged Property in any material adverse
respect, without the prior written consent of the Mortgagee, and any attempt to
do any of the foregoing without such consent shall be of no force and effect.
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<PAGE>
(e) Each Mortgagor represents that, to such Mortgagor's knowledge, no
Mortgaged Property or portion thereof is, on the date hereof, in violation of
any Legal Requirement or any Insurance Requirement or of any Lease, Operating
Agreement or other agreement binding upon any Mortgagor in a manner that could
have a material adverse effect on such Mortgaged Property, any of the other
Mortgaged Properties or the ability of any Mortgagor to operate the Mortgaged
Property identified on Exhibit A as being owned or leased by it or the ability
---------
of any of the Mortgagors to otherwise satisfy its obligations under this
Mortgage or the other Security Documents.
(f) The Mortgagors covenant that they will deliver to the Mortgagee a
mortgagee's title insurance policy for each Mortgaged Property in an amount not
less than the original Allocated Amount applicable to such Mortgaged Property
and in form and substance and with such endorsements as shall have been
previously agreed between the Mortgagors and the Initial Purchasers (as defined
in the Indenture), which title insurance policy shall be dated the Closing Date
and redated the date of recording of this Mortgage and shall insure that this
Mortgage is a valid first priority grant of, and lien on, the Premises, subject
only to the Permitted Exceptions. The issuer of such title insurance shall be
the Title Company or one or more other nationally recognized title insurance
companies and there shall be reinsurance and direct access agreements to the
extent previously agreed upon between the Mortgagor and the Placement Agents.
2.3. Negative Covenants. Each Mortgagor covenants that until the
------------------
Secured Obligations are paid in full it will not:
(a) engage, directly or indirectly, in any business other than that
arising out of entering into this Mortgage and the other Security Documents to
which the Mortgagor is a party and ownership, operation, management, leasing and
financing of the Mortgaged Property identified on Exhibit A as being owned or
---------
leased by it;
(b) partition the Mortgaged Property owned or leased by it or any
portion thereof (except as permitted by Section 2.2(c) or Section 19.4 or to a
tenancy-in-common permitted in accordance with Section 19.1(a)(i)(x));
(c) commingle its assets with the assets of any of its Affiliates;
(d) transfer or lease any Mortgaged Property or any interest therein,
except in each case as permitted by this Article 2 and by Article 19 or Article
20 hereof;
(e) to its knowledge, engage in a nonexempt prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code that would cause
any obligation or action taken or to be taken hereunder (or the exercise by the
Mortgagee of any of its rights under the Notes, this Mortgage or the other
Security Documents) to be a non-exempt prohibited transaction under ERISA;
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<PAGE>
(f) incur, create or assume any indebtedness for borrowed sums
(whether secured by any Mortgaged Property or any interest therein or otherwise)
except for the Notes and such other indebtedness as is expressly permitted by
the provisions of this Mortgage and the Indenture; each Mortgagor represents and
warrants that as of the date hereof such Mortgagor does not have any
indebtedness or obligations that would cause it to be in violation of the
foregoing covenant;
(g) permit title to any material real estate asset other than the
Mortgaged Properties to be acquired by any of the Mortgagors, unless (i) such
additional real estate asset is a Substitute Mortgaged Property and the
conditions set forth in Section 44.2 are satisfied, or a property determined by
the Mortgagor, in the exercise of its reasonable judgment, to be complementary
to any Mortgaged Property, (ii) the relevant Mortgagor's interest in such real
property becomes subject to the lien of this Mortgage concurrently with the
acquisition thereof by such Mortgagor and (iii) in the case of any real estate
complementary to a Mortgaged Property, the relevant Mortgagor has provided the
Trustee and the Servicer with the items that would be required under clauses
(1), (2), (4), (6) and (7) of Section 44.2(a)(i) if such real estate were to be
a Substitute Mortgaged Property at least fifteen (15) days prior to the closing
of the acquisition, so as to permit the Servicer to confirm the Mortgagor's
determination described in clause (i) above;
(h) it will not guarantee any obligation of any Person or make loans
or advances to any of its Affiliates except in accordance with the Cost Sharing
Agreement and as is otherwise expressly permitted by this Mortgage;
(i) it will not voluntarily file, or consent to the filing of, a
petition for bankruptcy, reorganization, assignment for the benefit of creditors
or similar proceeding, without the unanimous consent of its general partners,
members or other similar governing body or entity, as applicable;
(j) (A) it will not own or acquire any assets other than the
Mortgaged Property identified on Exhibit A as being owned or leased by such
---------
Mortgagor and additional property incidental to the ownership of such Mortgaged
Property and (B) it will not own any subsidiaries or make investments in any
Person, other than investments in Eligible Investments permitted under this
Mortgage or under any other Security Documents; and
(k) in the case of a general (other than a limited liability
partnership) or limited partnership, each of its general partners, or in the
case of a limited liability partnership or limited liability company at least
one (1) of its general partners or members, as applicable, will be a Single
Purpose/Insolvency-Remote Entity that complies with the requirements of this
Section 2.3, as and to the extent applicable.
2.4. Existence and Rights. Each Mortgagor covenants that it will do or
--------------------
cause to be done all things necessary to preserve and keep in full force and
effect its existence and will maintain adequate capitalization (taking into
account, among other
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<PAGE>
things, the market value of its assets) for its business purposes; that it will
not modify its partnership agreement, certificate of formation, operating
agreement, certificate of incorporation or other organizational document in any
manner that would have a material adverse effect on the interests of the
Mortgagee hereunder; that it will pay all expenses of the Mortgaged Property
identified on Exhibit A as being owned or leased by it from property of such
---------
Mortgagor; that it will maintain books and records and bank accounts separate
from those of its Affiliates and will maintain a separate business office (which
may be a management office at the Premises); that it will at all times hold
itself out to the public as a legal entity separate and distinct from any of its
Affiliates (including in its leasing activities, in entering into any contract,
in preparing its financial statements, and to the extent practicable in its
stationery), and will cause its Affiliates to conduct business with it on an
arm's-length basis (or, as to management and leasing, on a basis comparable to
the management and leasing arrangements at properties similar to the Premises
owned by any Affiliate of the Mortgagor and managed by the Property Manager or a
similar property manager); that it will file its own tax returns or, if part of
a consolidated group, will join in the consolidated tax return of such group as
a separate member thereof; and will cause its management to meet regularly to
carry on its business;
2.5. Payment of Taxes and Other Claims. Subject to the provisions of
---------------------------------
Article 12 hereof, each Mortgagor represents that there is no default in the
payment of, and covenants that it will pay or discharge or cause to be paid or
discharged before any fine, penalty, interest or other cost may be imposed for
nonpayment thereof, all taxes, assessments and governmental charges (or
installments thereof) levied or imposed upon the Mortgaged Property identified
on Exhibit A as being owned or leased by it.
---------
2.6. Payment of the Notes, All Other Amounts and the Trustee's Fees.
--------------------------------------------------------------
Subject to the provisions of Article 38 hereof, the Mortgagors, jointly and
severally, will cause to be duly paid the principal of, interest on and Make-
Whole Payment, if any, on the Notes and all other amounts due under the Notes at
the places, at the respective times and in the manner provided in the Notes.
The Mortgagors will also cause to be duly paid all other charges, fees and other
amounts that become due by any of them under this Mortgage and the other
Security Documents and the fees, expenses and proper disbursements payable to
the Trustee and the Servicer under the terms of the Indenture.
3. THE GROUND LEASES. Each of Rio West L.L.C. and Fallbrook Square
-----------------
Partners Limited Partnership agrees, and any successor in interest to either
such Mortgagor shall be deemed to agree, with respect to the leasehold interests
identified on Exhibit A as being owned by such Mortgagor, as follows:
---------
3.1. Ground Leases Covenants. (a) Upon the occurrence and during the
-----------------------
continuation of an Event of Default, such Mortgagors shall not modify, waive,
extend or in any way alter, or grant any consents in respect of any material
terms of, any of the Ground Leases or in any way cancel, release, terminate or
surrender any of the Ground
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<PAGE>
Leases without the Mortgagee's prior written consent which consent shall be
granted or withheld in the Mortgagee's sole discretion.
(b) Each such Mortgagor shall use all reasonable efforts to keep and
perform, or cause to be kept and performed, all of the material covenants and
conditions contained in the Ground Lease to which it is a party by the lessee
therein to be kept, provided, that in any case and to the extent where
performance of any such covenant or condition is also the obligation of a third
party in possession, the Mortgagor shall not be obligated to undertake such
performance itself, but the Mortgagor shall use commercially reasonable efforts
to cause performance of such covenant or condition by such third party.
(c) If any Mortgagor exercises any option to purchase any portion of
the Leased Land under any Ground Lease, thereafter such Leased Land shall for
all purposes hereunder be treated as if the subject Leased Land had been Owned
Land and shall be subject to this Mortgage as such.
(d) Each Mortgagor shall give the Mortgagee prompt notice in writing
of the receipt by such Mortgagor of any notice of default from the lessor under
any of the Ground Leases, together with a copy of the same.
(e) If any Mortgagor shall fail to comply with Section 3.1(b) hereof,
the Mortgagee may (but shall not be obligated to), after notice to the
Mortgagors and the failure of the Mortgagors to cure the same as provided in
Article 34 hereof and subject to applicable Legal Requirements, exercise the
rights provided to it in Article 34 hereof as provided therein.
(f) So long as this Mortgage is in effect, there shall be no merger
of the Ground Leases or any interest therein, or of the leasehold estate created
thereby, with the fee estate in the Leased Land or any portion thereof by reason
of the fact that the Ground Leases or such interest therein or such leasehold
estate may be held directly or indirectly by or for the account of any person
who shall hold the fee estate in the Leased Land or any portion thereof or any
interest of the lessor under the Ground Leases. In case any Mortgagor acquires
the fee title to the Land leased under any of the Ground Leases, this Mortgage
shall attach to and cover and be a lien upon the fee title or such other estate
so acquired, and such fee title or other estate shall, without further
assignment, mortgage or conveyance, become and be subject to the lien of and
covered by this Mortgage.
4. MAINTENANCE AND REPAIRS; SHORING. The Mortgagors will keep, or
--------------------------------
use all reasonable efforts (consistent with standards that would generally be
employed by institutional owners of comparable properties) to cause Tenants to
keep, the Premises and the parking areas, sidewalks, curbs and streets and ways
located on the Land and all other means of access to the Premises in good and
clean order and condition such that the utility and operation of the Premises
will not be affected in any material adverse respect, subject to ordinary wear
and tear, and, subject to Excusable Delays, the
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<PAGE>
temporary results of any Alteration permitted hereunder and the provisions set
forth in this Mortgage with respect to damage or destruction caused by fire or
other Casualty or by a Taking or condemnation, the Mortgagors will promptly make
or use all reasonable efforts to cause to be made all necessary or appropriate
repairs, replacements and renewals thereof (which if not made would affect the
utility or operation of the Premises in any material adverse respect), whether
interior or exterior, structural or nonstructural, ordinary or extraordinary.
All repairs and replacements shall consist of materials which are compatible
with the existing Improvements and installed in a good and workmanlike manner.
The Mortgagors will do or use all reasonable efforts to cause others to do, to
the extent permitted by applicable law, all shoring of foundations and walls (i)
of any Improvements or (ii) of the ground adjacent thereto, and every other act
necessary or appropriate for the preservation and safety of the Premises by
reason of or in connection with any excavation or other building operation upon
the Land or any adjoining property, whether or not the Mortgagor or any other
Person shall, by any Legal Requirement, be required to take such action or be
liable for failure to do so. Subject (to the extent applicable) to the
provisions of Article 12 relating to permitted contests, the Mortgagors each
agree that they will not do or permit any act or thing which might affect the
utility or operation of any Mortgaged Property or any part thereof in any
material adverse respect, or commit or permit any waste of any Mortgaged
Property or any part thereof.
5. UTILITY SERVICES. Subject to the provisions of Article 12 hereof,
----------------
the Mortgagors will pay or cause to be paid when due all charges for all public
or private utility services, all public or private highway services, all public
or private communication services and all sprinkler systems and protective
services at any time rendered to or in connection with each Mortgaged Property
or any part thereof and which are incurred by or on behalf of the Mortgagors.
6. NO CLAIMS AGAINST THE MORTGAGEE. Nothing contained in this
-------------------------------
Mortgage shall constitute any consent or request by the Mortgagee, express or
implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof, nor as giving any of the Mortgagors any right, power or authority to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against the Mortgagee in respect thereof or any claim
that any Lien based on the performance of such labor or services or the
furnishing of any such materials or other property is prior to the interest of
the Mortgagee under this Mortgage.
7. INDEMNIFICATION BY THE MORTGAGOR. Subject to the provisions of
---------------------------------
Article 38 hereof and Section 6.1 of the Indenture, each Mortgagor agrees that
it will protect, indemnify and save harmless the Mortgagee, the Servicer and the
Holders and, in the case of clause (h) hereof, the Deed Trustees (collectively,
the "Indemnified Parties") from and against: all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including all
reasonable attorneys' fees
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and expenses) imposed upon or incurred by or asserted against such Indemnified
Party (without the negligence or wilful misconduct of any of them) by reason of
the occurrence or existence of any of the following (to the extent the
insurance proceeds payable on account of the following and received by the
Indemnified Party shall be inadequate) prior to the payment in full of the
Notes and the satisfaction of all conditions for the satisfaction and release
or defeasance of this Mortgage: (a) ownership or possession of any Mortgagor's
interest in any of the Mortgaged Properties, or any interest therein, or
receipt of any rent or other sum therefrom, (b) any accident, injury to or
death of any Persons or loss of or damage to property occurring on or about the
Premises or any part thereof or the adjoining parking areas, sidewalks, curbs,
vaults and vault space, if any, streets or ways, (c) any use, non-use or
condition of the Premises or any part thereof or the adjoining parking areas,
sidewalks, curbs, streets or ways, including claims or penalties arising from
violation of any Legal Requirement or Insurance Requirement, as well as any
claim based on any patent or latent defect, whether or not discoverable by the
Indemnified Party, any claim the insurance as to which is inadequate, and any
claim in respect of any adverse environmental impact or effect, (d) any failure
on the part of any Mortgagor to perform or comply with any of the terms of any
Lease, any Ground Lease, this Mortgage or any other Security Document to which
it is a party and any breach of any representation made by any Mortgagor
herein, (e) any performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Properties or any part
thereof, (f) any negligence or tortious act or omission on the part of any
Mortgagor or any of its agents, contractors, servants, employees, subleasees,
licensees or invitees, (g) any contest referred to in Article 12, or (h) the
presence at, on, or under the Premises or the migration from or release at, on,
or from the Premises of any Hazardous Substance. Any Indemnified Party shall
give notice to the Mortgagor of any claims, liabilities, obligations, damages,
penalties, costs or causes of action for which the Indemnified Party believes
it is entitled to indemnification hereunder promptly upon its discovery of the
action or event giving rise to such claim, but the failure of such Indemnified
Party to provide such notice shall neither cause the forfeiture of the right to
receive indemnity hereunder nor limit such right, except to the extent, if any,
that the Mortgagor is prejudiced by the failure of the Indemnified Party to
promptly give such notice. Any amounts payable under this Section to the
Indemnified Parties that are not paid within ten (10) Business Days after
written demand therefor by the Indemnified Parties, setting forth in reasonable
detail the amount of such demand and the basis therefor, shall bear interest
from the date of demand until paid at the rate applicable to the lowest rated
series of Notes on the date hereof, and shall be secured by this Mortgage. In
case any action, suit or proceeding is brought against any Indemnified Parties
by reason of any such occurrence, the Mortgagor, upon the request of the
Indemnified Parties, will (or at the option of the Mortgagors, the Mortgagors
may) at the Mortgagors' expense resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel for the
insurer of the liability or by counsel selected by the Mortgagors (unless
reasonably disapproved by the Indemnified Parties); provided that Mortgagor
shall be entitled to recover from such Indemnified Parties any costs or
expenses incurred by the Mortgagor on behalf of any such Indemnified Parties in
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satisfaction of its obligation under this sentence (or otherwise under this
Section) if it is determined by final judgment that the action, suit or
proceeding in question was not properly the subject of a claim for
indemnification under this Section. So long as the Mortgagors are resisting and
defending such action, suit or proceeding as provided above in a prudent and
commercially reasonable manner, none of the Indemnified Parties shall be
entitled to settle such action, suit or proceeding or claim the benefit of this
Article 7 with respect to such action, suit or proceeding (including the right
to reimbursement of such Indemnified Parties' counsel fees and expenses) and the
Indemnified Parties are deemed to agree in advance that they will not settle any
such action, suit or proceeding without the written consent of the Mortgagors;
provided that if the Mortgagors are not diligently defending such action, suit
or proceeding in a prudent and commercially reasonable manner as provided above,
any Indemnified Party may settle such action, suit or proceeding as it relates
to such Indemnified Party, subject only to the written consent of the
Mortgagors, which consent then may not be unreasonably withheld or delayed, and
claim the benefit of this Article 7 with respect to settlement of such action,
suit or proceeding.
8. INSPECTION. The Mortgagee, the Servicer and their authorized
----------
representatives may upon reasonable notice and accompanied by an agent of the
Mortgagors (but no more than once per month unless an Event of Default has
occurred and is continuing) enter and examine any Mortgaged Property (including
any labor performed and materials furnished in and about the Premises in
connection with any Alteration or Restoration), subject to the rights of
Tenants; provided that at all times during such visits, the Mortgagee's or
Servicer's representatives and agents, as applicable, use all reasonable efforts
not to interfere with operation of the Mortgaged Property or the business of the
Tenants. Neither the Mortgagee nor the Servicer shall inspect the Premises on
any day other than a Business Day, except in the case of an emergency or at any
time following the occurrence and during the continuance of an Event of Default.
Neither the Mortgagee nor the Servicer shall have any duty under this Mortgage
to make any such inspection and neither of them shall have any liability or
obligation for making or not making any such inspection (except that the
foregoing shall not relieve the Mortgagee or the Servicer from their obligations
arising under any other Security Document or from any liability resulting from
its negligence or wilful misconduct in connection with the conduct of an
inspection permitted hereby).
9. PAYMENT OF IMPOSITIONS, ETC. Subject to the provisions of Article
---------------------------
12 relating to permitted contests, the Mortgagors agree to pay, or cause to be
paid, before any fine, penalty, interest or cost may be added for such
nonpayment, all real estate taxes, assessments, fees, taxes on rents or rentals,
and other governmental charges that may be levied or assessed against any of the
Mortgaged Properties or any of the Mortgagors with respect to any of the
Mortgaged Properties or rents therefrom or which might, if due and unpaid,
become Liens upon any of the Mortgaged Properties (collectively, "Impositions").
Except as set forth in Section 10.4 of the Indenture, the Mortgagors shall not
be required to pay any income, excess profits or revenue tax, excise tax or
inheritance tax, gift tax, franchise tax, corporation tax, capital levy, estate
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succession or other similar tax or charge that may be payable by or chargeable
to the Mortgagee, any interest, fines, costs, additions to tax or penalties in
respect thereof, unless such tax is imposed, levied or assessed in substitution
for any Impositions that the Mortgagors are required to pay pursuant to this
Article 9.
10. COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS.
-------------------------------------------------------------
(a) Subject to the provisions of Article 12 relating to permitted contests, each
Mortgagor agrees promptly, subject to Excusable Delays, to comply in all
material respects with, or use all reasonable efforts (consistent with the
standards that would generally be employed by institutional owners of comparable
properties) to cause Tenants or other third parties whose obligation it is to so
comply by contract or pursuant to law to comply in all material respects with,
all Legal Requirements and all Insurance Requirements.
(b) Each Mortgagor covenants and agrees (i) to perform punctually all
material obligations and agreements to be performed by it as lessor under any
Lease, as lessee under any Ground Lease, or as subject obligor under any other
instrument or agreement constituting a Permitted Exception or any management
agreement, such that there will be no material and adverse impairment of the
value of any Mortgaged Property or the Mortgagee's interest under this Mortgage,
and (ii) to do all things necessary or appropriate in the ordinary course of its
business to compel performance by each other party to each of such instruments
of such other party's obligations and agreements thereunder.
11. LIENS. Subject to the provisions of Article 12 relating to
-----
permitted contests, Section 19.2 relating to permitted indebtedness, the
Mortgagor will not directly or indirectly create or permit or suffer to be
created or to remain, and will discharge or promptly cause to be bonded or
discharged by bonding, payment, final order of a court of competent jurisdiction
or otherwise, within forty-five (45) Business Days after receiving written
notice of the filing thereof, any Lien against any Mortgaged Property or any
part thereof, other than the Permitted Exceptions.
12. PERMITTED CONTESTS. Anything to the contrary contained herein
------------------
notwithstanding, any Mortgagor at its expense may contest, by appropriate legal,
administrative or other proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
Imposition or lien therefor or any Legal Requirement or Insurance Requirement or
any taxes, assessments, charges or other amounts required to be paid pursuant to
the provisions of Section 2.5 or Articles 4, 5, 9, 10, 11, 14, 39 or any other
similar provision hereof, or the application of any instrument of record
affecting any Mortgaged Property or any part thereof (other than the Security
Documents) or any claims or judgments of mechanics, materialmen,
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suppliers, vendors or other Persons or any lien therefor, and may withhold
payment of the same pending such proceedings if permitted by law; provided that
(a) in the case of any Impositions or lien therefor or any claims or judgments
of mechanics, materialmen, suppliers, vendors or other Persons or any lien
therefor, such proceedings shall suspend the collection thereof from the
Mortgagor, the Mortgagee and the Mortgaged Property, (b) neither the Mortgaged
Property nor any part thereof or interest therein would be in danger of being
sold, forfeited or lost if the Mortgagor were to pay the amount or satisfy the
condition being contested, and the Mortgagor will have the opportunity to so pay
or satisfy, and commits that it will do so, if required to avoid such a sale,
forfeiture or loss, in the event of the Mortgagor's failure to prevail in the
contest, (c) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not impair the validity of any insurance
required to be maintained by the Mortgagor under Article 13 or the right to full
payment in respect of any claims thereunder, (d) in the case of taxes, if an
amount can be contested without being paid, the Mortgagor shall establish
reserves in the amount being contested together with interest and penalties
reasonably expected to accrue for so long as such amount is due and payable and
unpaid, provided that if the aggregate amount of all reserves established by the
Mortgagors under this clause (d) with respect to a particular Mortgaged Property
shall exceed the Threshold Amount for such Mortgaged Property, the Mortgagors
shall escrow the excess reserve amount with the Mortgagee (to be held and
invested by the Mortgagee in an Eligible Account and invested in the same manner
as is described in Section 6.14 of the Indenture with respect to the Payment
Account), (e) in the case of any utility service described in Article 5, any
contest or failure to pay will not result in a discontinuance of any such
service, (f) in the case of any instrument of record affecting the Mortgaged
Property or any part thereof, the contest or failure to perform under any such
instrument shall not result in the placing of any Lien on the Mortgaged Property
or any part thereof unless such Lien is bonded or otherwise discharged in
accordance with Article 11 and (g) except to the extent the Mortgagor has
provided sufficient Eligible Collateral or Credit Facility therefor, neither the
failure to pay or perform any obligation which the Mortgagor is permitted to
contest under this Article 12 nor an adverse determination of any such contest
shall result in a material adverse effect on the utility, value or operation of
the Mortgaged Property.
13. INSURANCE.
---------
13.1. Risks to be Insured. During the term of this Mortgage the
-------------------
Mortgagors will, at their sole cost and expense, maintain or cause to be
maintained with respect to each Mortgaged Property, insurance coverage, cost and
expense, of the following types (and minimum limits) and shall pay in a timely
manner all premiums due in connection therewith:
(a) insurance with respect to the Improvements and the Equipment
against any peril included within the classification "All Risks of Physical
Loss" with extended coverage in amounts at all times sufficient to prevent any
Mortgagor from becoming co-insurer within the terms of the applicable policies,
but in any event such insurance shall be maintained in an amount equal to the
full insurable value of the Improvements and the Equipment, the term "full
insurable value" to mean the actual replacement cost
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of the Improvements and the Equipment (without taking into account any
depreciation, and exclusive of excavations, footings and foundations,
landscaping and paving) as reasonably determined annually in accordance with the
Mortgagors' customary practices by an insurer, a recognized independent
insurance broker or an appraiser selected and paid by the Mortgagors (unless
reasonably disapproved by the Mortgagee) and in no event less than the coverage
required pursuant to the terms of any Ground Lease, Lease or Operating
Agreement;
(b) comprehensive general liability insurance, including bodily injury,
death and property damage liability, and umbrella liability insurance against
any and all claims, including all legal liability to the extent insurable
imposed upon the Mortgagee and all court costs and attorneys' fees and expenses,
arising out of or connected with the possession, use, leasing, operation,
maintenance or condition of such Mortgaged Property in such amounts as are
generally available at reasonable premiums and are generally required by
institutional lenders for properties comparable to such Mortgaged Property;
(c) statutory workers' compensation insurance (to the extent the risks
to be covered thereby are not already covered by other policies of insurance
maintained by the Mortgagors or their agents), with respect to any work on or
about such Mortgaged Property;
(d) business interruption and/or loss of "rental value" insurance in an
amount sufficient to avoid any co-insurance penalty and, if the duration of such
coverage is limited by reference to the passage of time, to provide Proceeds for
a period not less than one and one half years of loss, the term "rental value"
to mean the sum of (A) the total payable under the Leases and (B) the total
amount of all other amounts to be received by the applicable Mortgagor or third
parties that are the legal obligation of the Tenants pursuant to the terms of
the Leases or Guarantees, reduced to the extent such amounts would not be
received because of expenses not incurred during a period of non-occupancy of
that portion of such Mortgaged Property then not being occupied;
(e) broad form boiler and machinery insurance (without exclusion for
explosion) covering all boilers or other pressure vessels, machinery and
equipment located in, on or about such Mortgaged Property and insurance against
loss of occupancy or use arising from any breakdown in such amounts as are
generally available at reasonable premiums and are generally required by
institutional lenders for properties comparable to such Mortgaged Property;
(f) if any portion of the Improvements is located within an area
federally designated a "100 year flood plain", flood insurance (x) if generally
available at reasonable premiums and in such amount as generally required by
institutional lenders for similar properties or (y) if not so available from a
private carrier, from the federal government to the extent available; and
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(g) such other insurance with respect to such Mortgaged Property against
loss or damage of the kinds from time to time customarily insured against and in
such amounts as are generally available at reasonable premiums and are generally
required by institutional lenders for properties comparable to such Mortgaged
Property.
13.2. Ratings of Insurers. The Mortgagors will maintain a portion of
-------------------
the insurance coverage described in Section 13.1(a) above for each Mortgaged
Property (in an amount at least equal to the Maximum Foreseeable Casualty Loss
for such Mortgaged Property) and the insurance coverage described in Section
13.1(d) above, in each case with either the insurers who insure the Mortgaged
Properties on the date of this Mortgage or one or more other primary insurers
having (or a syndicate (i.e., either a consortium or a co-insurance group) of
- -
insurers through which at least seventy-five percent (75%) of the coverage (if
there are four or fewer members of the syndicate) or at least sixty percent
(60%) of the coverage (if there are five or more members of the syndicate) is
with carriers having) a claims paying ability of not less than "A2" by the
Rating Agency (or its equivalent); the coverage described in clauses (b) and (e)
of Section 13.1 above shall be maintained with either the insurers who insure
the Mortgaged Properties on the date of this Mortgage or one or more other
primary insurers having (or a syndicate (as defined above) of insurers through
which at least seventy-five percent (75%) of the coverage (if there are four or
fewer members of the syndicate) or at least sixty percent (60%) of the coverage
(if there are five or more members of the syndicate) is with carriers having) a
claims paying ability of not less than "A2". The coverage described in clause
(c) of Section 13.1 above shall be maintained with either an insurer having a
claims paying ability of not less than "A" or the applicable state workers'
compensation fund. In each case, however, if no providers of such insurance are
so rated, the requirement for such rating shall be the highest rating then given
to insurers by the Rating Agency; provided that in the case of a syndicate (as
defined above) failing to satisfy the foregoing test, supplementary qualifying
coverage shall be required within ninety (90) days of the date any of the
Mortgagors learn of such failure only to the extent the syndicate (as defined
above) fails to satisfy the test. If, during the term of the Notes, any insurer
providing insurance coverage required under this Mortgage becomes insolvent, the
Mortgagors agree to use commercially reasonable efforts to replace the insurance
provided by any such insurer within thirty (30) days after any of the Mortgagors
first receives notice of such insolvency.
All insurance coverage shall be provided by one or more primary insurers
having an Alfred M. Best Company, Inc. rating of "A" or better, except to the
extent that insurance in force on the date of this Mortgage does not satisfy
such criteria or that any of the providers of such insurance on the date hereof
may hereafter be downgraded or if otherwise approved by the Mortgagee. All
insurers providing insurance required by this Section 13 shall be authorized to
issue insurance in the state or states where each Mortgaged Property covered by
such insurer is located.
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The insurance coverage required under this Article 13 may be effected
under a blanket policy or policies covering the Mortgaged Properties and other
properties and assets not constituting Mortgaged Properties; provided that any
such blanket policy shall specify, except in the case of public liability
insurance, the portion of the total coverage of such policy that is allocated to
the Mortgaged Properties, and any sublimits in such blanket policy applicable to
the Mortgaged Properties, which amounts shall not be less than the amounts
required pursuant to Section 13.1 and which shall in any case comply in all
other respects with the requirements of this Article 13.
The "Maximum Foreseeable Casualty Loss" with respect to the Premises at
any particular Mortgaged Property shall be the estimate of the Qualified Fire
Protection Engineer then being used in connection with its existing insurance
package (unless reasonably disapproved by the Mortgagee) of the maximum probable
casualty loss that would be incurred in respect of the Premises of such
Mortgaged Property as a result of damage caused by the perils covered by the
insurance described in clause (a) of Section 13.1 above.
13.3. Policy Provisions. Each policy of insurance maintained in respect
-----------------
of any Mortgagor and/or any Mortgaged Property pursuant to Section 13.1 and
Section 13.2 shall (a) except in the case of workers' compensation insurance and
public liability insurance, name the Mortgagor or Mortgagors, as applicable, as
insured(s) and name the Mortgagee and Servicer as additional insureds or as loss
payees and in the case of public liability insurance, name the Mortgagee and
Servicer as additional insureds (and not loss payees); (b) except in the case of
public liability insurance and workers' compensation insurance, provide that all
Proceeds thereunder shall be payable to the Mortgagee pursuant to a standard
first mortgagee endorsement, without contribution, and that adjustment and
settlement of any material loss shall be subject to the reasonable approval of
the Mortgagee; (c) include effective waivers by the insurer of all claims for
insurance premiums against all loss payees, additional insureds and named
insureds (other than the Mortgagors) and, to the extent available at
commercially reasonable rates, all rights of subrogation against any loss payee,
additional insured or named insured; (d) permit the Mortgagee to pay the
premiums and continue any insurance upon failure of any Mortgagor to pay
premiums when due, upon the insolvency of any Mortgagor or through foreclosure
or other transfer of title to any Mortgaged Property (it being understood that
the Mortgagors' rights to coverage under such policies may not be assignable
without the consent of the provider); (e) except in the case of public liability
and workers' compensation insurance, provide that any Proceeds shall be payable
to the Mortgagee and that the insurance shall not be impaired or invalidated by
virtue of (i) any act, failure to act, negligence of, or violation of
declarations, warranties or conditions contained in such policy by any
Mortgagor, the Mortgagee or any other named insured, additional insured or loss
payee, except for the willful misconduct of the Mortgagee knowingly in violation
of the conditions of such policy, (ii) the occupation or use of the insured
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insured properties or
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(iv) any change in the possession of the insured properties without a change in
the identity of the holder of actual title to such properties (provided that
with respect to items (iii) and (iv), any notice requirements of the applicable
policies are satisfied); (f) be subject to a deductible, if any, not greater in
any material respect, in proportion to the coverage maintained, than the
deductible applicable under such coverage on the date of this Mortgage, provided
that such coverage is available at commercially reasonable rates; and (g) except
to the extent the Mortgagors have provided sufficient Eligible Collateral or
Credit Facility therefor, provide that if all or any part of such policy shall
be cancelled or terminated, or shall expire, the insurer will forthwith give
notice thereof to each named insured, additional insured and loss payee and that
no cancellation, termination, reduction in amount of, or material change (other
than an increase) in, coverage thereof shall be effective until at least thirty
(30) days after receipt by each named insured, additional insured and loss payee
of written notice thereof.
13.4. Certificates. The Mortgagors will deliver to the Mortgagee and to
------------
the Servicer on or prior to the Closing Date certificates setting forth in
reasonable detail the material terms (including any applicable notice
requirements) of all insurance policies that the Mortgagors are required to
maintain hereunder, from the respective insurance companies that issued such
policies. The Mortgagors will deliver to the Mortgagee and to the Servicer,
concurrently with each material change in or renewal of any insurance policy
covering any part of the Premises required to be maintained by the Mortgagors
hereunder, a certificate with respect to such changed or renewed insurance
policy certified by the insurance company issuing such policy, in substantially
the same form and containing substantially the same information as the
certificates required to be delivered by the Mortgagor pursuant to the first
sentence of this Section 13.4 and stating that all premiums then due thereon
have been paid to the applicable insurers and that the same are in full force
and effect (or if such certificate and report shall not be obtainable by the
Mortgagors with respect to any coverage obtained by them in satisfaction hereof,
the Mortgagor may deliver an Officer's Certificate to such effect in lieu
thereof).
13.5. Replacement Policies. Not less than ten (10) Business Days prior
--------------------
to the expiration, termination or cancellation of any insurance policy which the
Mortgagors are required to maintain hereunder, the Mortgagors shall obtain a
replacement policy or policies (or a binding commitment for such replacement
policy or policies), which shall be effective no later than the date of the
expiration, termination or cancellation of the previous policy, and shall
deliver to the Mortgagee a certificate in respect of such policy or policies in
the same form and (i) containing the same information as the certificates
required to be delivered by the Mortgagors pursuant to the first sentence of
Section 13.4, or a copy of the binding commitment for such policy or policies
and (ii) confirming that such policy complies with all the requirements of
Section 13.1 and Section 13.2.
13.6. Reports of Insurance Broker. Within ninety (90) days following
---------------------------
the end of each calendar year during the term of this Mortgage commencing with
the end of the calendar year in which the Closing Date occurs, and concurrently
with the delivery
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of each replacement policy or a binding commitment for the same pursuant to
Section 13.5, the Mortgagors shall deliver to the Mortgagee and to the Servicer
a report from a reputable and experienced insurance broker or from the insurer
setting forth the particulars as to all insurance obtained by the Mortgagors
pursuant to this Article 13 and then in effect and stating that all premiums
then due thereon have been paid to the applicable insurers, that the same are in
full force and effect and that, in the opinion of such insurance broker or
insurer, such insurance otherwise complies in all material respects with the
requirements of this Article 13 (or if such report shall not be available after
the Mortgagors shall have used reasonable efforts to provide the same, the
Mortgagors will deliver to the Mortgagee an Officer's Certificate containing the
information to be provided in such report).
13.7. Separate Insurance. None of the Mortgagors may take out separate
------------------
insurance concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to this Article 13 unless such insurance
complies with Section 13.3.
14. ALTERATIONS AND EXPANSIONS. (a) Except as expressly provided in
--------------------------
Article 15 hereof, and subject to Section 14(d), the Mortgagors, Tenants and
other occupants of the Mortgaged Properties shall have the right to make
modernizations, alterations, renovations, improvements and additions
(collectively, "Alterations") to any Mortgaged Property or Mortgaged Properties
-----------
without the prior consent of the Mortgagee so long as the Alterations will not
materially and adversely affect the value of the subject Mortgaged Property or
Mortgaged Properties; provided that except as otherwise provided herein no such
Alterations shall be made without the prior written consent of the Mortgagee,
which consent shall not be unreasonably withheld or delayed, if, as a result of
the performance of such Alterations, (i)(x) Tenants leasing fifteen percent
(15%) or more (in the aggregate) of space at the relevant Mortgaged Property
then leased to Mall Store Tenants (excluding, for purposes hereof, Tenants
pursuant to Specialty Leases) cancel, or have the right to cancel, their Leases
or abate, or have the right to abate, rent thereunder and such cancellation or
abatement is not covered by rent abatement or interruption insurance, or (y) one
(1) or more anchors at such Mortgaged Property cancel or have the right to
cancel their Lease or Operating Agreement and such cancellation (assuming the
exercise of such cancellation rights) would result in there being fewer than
three (3) anchors at the Mortgaged Property in question (any Alteration
described in clause (i)(x) or (i)(y) above, a "Significant Alteration") and (ii)
----------------------
after giving effect to the cancellations and abatements and assuming the
cancellations and abatements referred to in clause (i) above, the Debt Service
Coverage Ratio will be less than 1.40:1. In addition, the Mortgagors shall not
be permitted to commence or continue more than three Significant Alterations at
any given time unless, prior to commencing each such additional Significant
Alteration the Mortgagors shall have obtained Rating Confirmation.
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(b) All Alterations shall be constructed in compliance with all
applicable Legal Requirements, whether or not the Mortgagee's consent is
required in connection therewith.
(c) The Mortgagee's consent shall not be required in connection with any
Alterations contemplated by any Operating Agreement or Lease now or hereinafter
in effect and as amended from time to time in accordance with the Security
Documents.
(d) If the cost of any Alteration will exceed the lesser of (a) five
percent (5%) of the aggregate Allocated Amounts of all the Mortgaged Properties
and (b) fifteen percent (15%) of the Allocated Amount of the Mortgaged Property
to which such Alteration relates, the Mortgagor identified on Exhibit A as
---------
owning or leasing such Mortgaged Property shall not commence construction of
such Alteration unless it (i) obtains a construction bond covering the cost of
the Alteration (as reasonably determined by such Mortgagor, in consultation with
a licensed or registered architect or engineer, and not disapproved by the
Mortgagee, acting reasonably) from an entity having a long-term unsecured debt
rating of at least Aa2 or its equivalent by the Rating Agency, (ii) obtains a
completion guaranty from an entity having a long-term unsecured debt rating of
at least Aa2 or its equivalent by the Rating Agency or (iii) delivers to the
Mortgagee to be held in escrow a Credit Facility or Cash and Cash Equivalents
(which amounts shall be held in an Eligible Account and invested in the same
manner as is described in Section 6.14 of the Indenture with respect to the
Payment Account), or any combination thereof, in an amount equal to the lesser
of (a) the cost to complete the Alteration, as reasonably determined by such
Mortgagor, in consultation with a licensed or registered architect or engineer,
and not disapproved by the Mortgagee, acting reasonably, and (b) the cost (as
reasonably determined by the Mortgagor, in consultation with a licensed or
registered architect or engineer, and not disapproved by the Mortgagee, acting
reasonably), if work on the Alteration were to be terminated on such date, to
restore the Mortgaged Property to the extent necessary so that, as restored,
there would be no material adverse effect on the value of the Mortgaged Property
taken as a whole, as reasonably determined by such Mortgagor. Each Mortgagor
agrees to provide the Servicer with commercially reasonable access to such
information as it has relied upon (including without limitation, any
architectural or engineering plans, specifications or other items) in
determining the costs to complete and/or restore for purposes of clause (iii)
above, so that the Servicer will be able to assess the reasonableness of the
Mortgagor's determination thereof.
(e) Any Alteration of the type described in Section 14(d) shall be
undertaken in accordance with the following requirements:
(1) no phase of construction of such Alteration shall be undertaken
until the Mortgagor shall have procured and paid for, so far as the same
may be required from time to time, all permits and consents of all
governmental authorities having jurisdiction that would be procured and
paid for, as of such time, in accordance with sound construction practices;
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<PAGE>
(2) any work done in connection with the Alteration shall be
conducted under the supervision of a licensed architect and/or engineer
selected by the applicable Mortgagor, and no such work shall be done except
in accordance with plans and specifications and cost estimates (x) prepared
and approved in writing by the Mortgagor's architect and/or engineer (such
approval not to be unreasonably withheld or delayed) and (y) if the cost of
such work exceeds the lesser of fifty percent (50%) of the applicable
Allocated Amount for the subject Mortgaged Property and $15,000,000, also
approved by the Mortgagee (provided that the Mortgagee shall not
unreasonably withhold or delay such approval); in connection with the
foregoing each Mortgagor agrees that it will deliver to the Mortgagee
copies of all plans and specifications and cost estimates relating to any
such work regardless of the cost to be incurred in connection therewith;
(3) any work shall be completed free and clear of all liens,
encumbrances, chattel mortgages, conditional bills of sale and other
charges, and in accordance with the plans and specifications therefor;
(4) during the performance of any such work, the applicable
Mortgagor shall procure and maintain the insurance coverages required under
the applicable provisions of Article 13 hereof; and
(5) the Mortgagors shall reimburse the Mortgagee for all reasonable
fees and expenses incurred by the Mortgagee in connection with review of
such Alteration, including, but not limited to, the reasonable fees and
expenses of any architect or other real estate professional selected by the
Mortgagee to review the plans and specifications and to inspect the work on
behalf of the Mortgagee.
In addition, provided no Event of Default has occurred and is continuing, any
Cash and Cash Equivalents delivered to the Mortgagee pursuant to clause (d)
above shall be applied by the Mortgagee either to pay, or to reimburse the
Mortgagor for, the costs and expenses incurred for the Alteration (including
payments to contractors, subcontractors, materialmen, suppliers, attorneys,
engineers, architects or other Persons who have rendered services or furnished
materials for such Alteration), in the manner set forth below:
(x) each request for payment shall be made by (or on behalf of) the
applicable Mortgagor on 10 days' prior notice to the Mortgagee and shall be
accompanied by a certificate to be made by the supervising architect or
engineer or by an officer of the Mortgagors stating that the sum requested
is justly required to reimburse the Mortgagors for payments by the
Mortgagor to, or is justly due to, the contractor, subcontractors,
materialmen, laborers,
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<PAGE>
engineers, architects or other Persons rendering services or materials for
the Alteration (giving a brief description of such services and materials);
and
(y) each request shall be accompanied by written waivers of liens
reasonably satisfactory to the Mortgagee, covering that part of the
Alteration for which payment or reimbursement is being requested, or by
other evidence satisfactory to the Mortgagee that there has not been filed
with respect to such Mortgaged Property any mechanics' or other lien or
instrument for the retention of title in respect of any part of the
Alteration not discharged of record or bonded to the reasonable
satisfaction of the Mortgagee, subject, in each case, to the applicable
Mortgagor's right to contest such liens in accordance with Article 12
hereof.
Except upon the occurrence and continuance of an Event of Default, the
Mortgagee will pay to the applicable Mortgagor any amounts held by it after the
application of proceeds in the above-mentioned escrow account to the Alteration
and the completion thereof.
Any Credit Facility delivered to the Mortgagee pursuant to clause (d)
above may be reduced at the applicable Mortgagor's request in the same manner as
Cash and Cash Equivalents are to be reduced in accordance with the above terms
of this Section 14(e).
(f) Any Cash and Cash Equivalents and/or Credit Facility delivered to
the Mortgagee pursuant to Section 14(d) shall be held by the Mortgagee in an
Eligible Account (if it be cash) as additional security for the repayment of the
Secured Obligations, subject to the terms of Section 14(e), and any such cash
shall be invested at the Mortgagors' direction in the same manner as is
permitted under Section 6.14 of the Indenture with respect to the Payment
Account. So long as no Event of Default has occurred and is continuing, the
Mortgagors shall be entitled, upon ten (10) days' written notice to the
Mortgagee but no more frequently than once per month, to receive any interest or
other income earned in respect of such investments from the Mortgagee free of
the lien of this Mortgage.
(g) Each Mortgagor agrees to give the Mortgagee prior written notice of
its intention to make any Alteration or series of related Alterations to any
Mortgaged Property costing in excess of the Threshold Amount for such Mortgaged
Property, whether or not the Mortgagee's consent is required in accordance with
this Article 14.
CASUALTY, TAKING AND APPLICATION OF INSURANCE PROCEEDS AND TAKING
-----------------------------------------------------------------
PROCEEDS. (a) The Mortgagors agree to give the Mortgagee prompt written notice
- --------
of (A) any damage to or destruction of all or any portion of any Mortgaged
Property, the insurance proceeds payable to the Mortgagors (or any of them) in
respect of which exceed $2,000,000 (any such damage or destruction to the extent
that any insurance proceeds payable to the Mortgagors (or any of them) in
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connection therewith exceed the lesser of $5,000,000 and 15% of the applicable
Allocated Amount for the related Mortgaged Property being hereinafter referred
to as a "Casualty" and such proceeds being hereinafter referred to as "Insurance
Proceeds"), and (B) any actual or, to the knowledge of the Mortgagor, proposed,
contemplated or threatened taking of all or any portion of any Mortgaged
Property by reason of any public improvements or condemnation or similar
proceeding, the condemnation proceeds payable to the Mortgagors (or any of them)
in respect of which exceed $2,000,000 (such taking, condemnation or other
similar proceeding, the condemnation award proceeds or other compensation
payable to the Mortgagors (or any of them) in respect of which exceed the lesser
of $5,000,000 and 15% of the applicable Allocated Amount for the related
Mortgaged Property being hereinafter referred to as a "Taking" and any such
award proceeds or other compensation being hereinafter referred to as "Taking
Proceeds").
(b) Subject to the immediately succeeding sentence, all Insurance
Proceeds and all Taking Proceeds shall be applied and disbursed in accordance
with the provisions of this Article 15. So long as no Event of Default has
occurred and is continuing, all proceeds of insurance which do not constitute
Insurance Proceeds and all awards or other compensation from condemnation or
taking proceedings which do not constitute Taking Proceeds shall be the property
of and payable to the Mortgagor identified on Exhibit A as owning the Mortgaged
---------
Property in respect of which such proceeds were paid (subject to such
Mortgagor's compliance with Section 20(a)) or such other Tenant, occupant or
other person who is, pursuant to any Lease or Operating Agreement, otherwise
entitled to such proceeds or taking compensation. Notwithstanding any provision
of this Mortgage or the other Security Documents to the contrary, in the event
of any conflict between the provisions of this Mortgage relating to Insurance
Proceeds and Taking Proceeds and/or the payment and application thereof and the
provisions of any anchor Lease, Operating Agreement or Ground Lease (existing on
the date hereof), the provisions of such anchor Lease, Operating Agreement or
Ground Lease shall control to the extent necessary to avoid such conflict.
(c) Subject to Section 15(b), in the event of any Casualty at or Taking
of any Mortgaged Property or any part thereof and if an Event of Default shall
have occurred and be continuing, all Insurance Proceeds or Taking Proceeds, as
the case may be, shall be payable to the Mortgagee for the benefit of the
Holders (the Mortgagors hereby authorizing and directing any affected insurance
company to make payment of such Insurance Proceeds directly to the Mortgagee)
and the Mortgagee shall have the right to apply such proceeds to the payment of
the Secured Obligations on the next Interest Payment Date, in accordance with
the priorities established in Section 5.6 of the Indenture.
(d) Subject to Section 15(b), in the event of any Casualty at or Taking
of any Mortgaged Property or any part thereof, and if an Event of Default shall
not have occurred and be continuing, the following provisions shall apply:
- ---
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<PAGE>
(i) In the event (any such event, a "Major Casualty/Taking") that, in
connection with any Casualty or Taking, occupants of thirty percent (30%)
or more (in the aggregate) of the total square footage (the "Square
Footage") of such Mortgaged Property devoted to retail and appurtenant uses
(exclusive of common areas and leasable square footage which is not then
subject to a Lease) exercise their rights to cancel their Leases (not
including Specialty Leases) or Operating Agreements or, in the case of
Leases (not including Specialty Leases), are exercising their rights to
abate their rent (which abatement is expected to continue for more than 12
months, as reasonably determined by the applicable Mortgagor and not
disapproved by the Servicer, acting reasonably) and such abatement is not
covered by rent interruption/ abatement insurance (the percentage of the
Square Footage in which the occupants exercising any such rights have
interests is hereinafter referred to as the "Termination Percentage"), the
applicable Mortgagor shall be obligated to apply the Insurance Proceeds or
the Taking Proceeds to the prepayment of Notes (without penalty or Make-
Whole Payment) in accordance with the Indenture in an amount up to, but not
exceeding, 125% of the Allocated Amount for the affected Mortgaged Property
plus accrued but unpaid interest thereon on the next Interest Payment Date
after a final determination of the amount of the Insurance Proceeds or
Taking Proceeds has been made, provided, however, that the amount of such
Insurance Proceeds or Taking Proceeds so applied shall be determined after
deducting from the total Proceeds the applicable Mortgagor's reasonable
estimate of the cost to restore any portion of the affected Mortgaged
Property that was occupied by an anchor store prior to the Major
Casualty/Taking if, but only if, the Mortgagor has provided evidence,
reasonably satisfactory to the Mortgagee, that one or more retailers
reasonably acceptable to the Mortgagee are of a comparable value to the
anchor store being replaced (based upon a report provided by the Mortgagor
and prepared by an Appraiser to the Mortgaged Property) and have delivered
commitments to operate a replacement anchor store in the portion of the
Mortgaged Property adversely affected by the Major Casualty/Taking, if the
amount of Insurance Proceeds or Taking Proceeds applied by the applicable
Mortgagor in accordance with the foregoing clause equals or exceeds the
Allocated Amount applicable to the affected Mortgaged Property, plus
accrued and unpaid interest on Notes with a principal amount equal to such
Allocated Amount, and no Event of Default has occurred and is continuing,
the affected Mortgaged Property shall be released from the Lien of this
Mortgage, and the Mortgagee agrees that it will execute any documents that
may be reasonably requested by the Mortgagors (or any of them) to evidence
such release. For purposes of the foregoing, the Termination Percentage
shall be determined on the day that is sixty (60) days after the date on
which a substantially final determination of the amount of the Insurance
Proceeds or the Taking Proceeds is made. In the
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event that Insurance Proceeds or Taking Proceeds are insufficient to prepay
Notes with a principal amount at least equal to the Allocated Amount
applicable to the affected Mortgaged Property at a price of par plus
accrued and unpaid interest (without penalty or Make-Whole Payment), the
Mortgagor may pay the amount of such insufficiency up to such Allocated
Amount plus any accrued but unpaid interest to the Mortgagee for the
benefit of the Holders, and upon the payment of such Allocated Amount plus
accrued and unpaid interest thereon (both without penalty or Make-Whole
Payment), provided no Event of Default has occurred and is continuing and
provided further that the terms of the PROVISO set forth in the first
sentence of this Section 15.1(d)(i) are complied with, such Mortgaged
Property shall be released from the Lien of this Mortgage and the Mortgagee
agrees that it will execute any documents that may be reasonably requested
by the Mortgagors (or any of them) to evidence such release.
Notwithstanding the foregoing, no Mortgagor shall be entitled to obtain the
release of an affected Mortgaged Property hereunder in exchange for the
repayment of Notes in an amount less than 125% of the Allocated Amount
therefor, plus accrued and unpaid interest thereon, if such Mortgagor shall
have elected to apply any portion of the Insurance Proceeds or Taking
Proceeds, as applicable, paid in respect of such Mortgaged Property to the
Restoration of the affected Mortgaged Property.
(ii) In the event of any Casualty or Taking other than a Major
Casualty/ Taking (i.e., a Casualty or Taking not described in clause (i)
above), the Mortgagor identified on Exhibit A as owning or leasing the
---------
affected Mortgaged Property shall have the option to:
(1) apply the Insurance Proceeds or the Taking Proceeds to
prepayment of Notes (without penalty or Make-Whole Payment) on the first
Interest Payment Date occurring after the expiration of sixty (60) days
from the final determination of the amount of such Insurance Proceeds or
Taking Proceeds, in an amount up to, but not exceeding, 125% of the
Allocated Amount for the affected Mortgaged Property plus accrued and
unpaid interest thereon, and if the amount of Insurance Proceeds or Taking
Proceeds applied by such Mortgagor in accordance with the foregoing clause
equals or exceeds the Allocated Amount applicable to the affected Mortgaged
Property, and no Event of Default has occurred and is continuing, the
affected Mortgaged Property shall be released from the Lien of this
Mortgage (provided that the terms of the PROVISO set forth in the first
sentence of Section 15.1(d)(i) are complied with), and the Mortgagee shall
execute any documents that may be reasonably requested by the Mortgagors
(or any of them) to evidence such release; provided, that, if the resulting
--------
Insurance Proceeds or Taking Proceeds exceed eighty percent (80%) of the
Allocated Amount for the affected Mortgaged Property but are insufficient
to prepay Notes with a principal
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<PAGE>
amount at least equal to the Allocated Amount applicable thereto at a
price of par plus accrued but unpaid interest (without penalty or
Make-Whole Payment), such Mortgagor may pay the amount of such
insufficiency to the Mortgagee for the benefit of the Holders and upon
the payment of such Allocated Amount plus accrued and unpaid interest
thereon (both without penalty or Make-Whole Payment), provided no
--------
Event of Default has occurred and is continuing (and the terms of the
PROVISO set forth in the first sentence of Section 15.1(d)(i) are
complied with), such Mortgaged Property shall be released from the
Lien of this Mortgage); or
(2) upon written notice to the Mortgagee no later than sixty (60)
days after a substantially final determination of the amount of the
Insurance Proceeds or the Taking Proceeds, to elect irrevocably to
apply such proceeds to the Restoration of the Mortgaged Property, in
which event the Mortgagor shall comply with the following conditions
in connection with the performance of all of such Restoration
(hereinafter "Work"):
(A) no Work shall be undertaken until the Mortgagor shall have
procured and paid for, so far as the same may be required from time
to time, all permits and consents of all governmental authorities
having jurisdiction that would be procured and paid for, as of such
time, in accordance with sound construction practices;
(B) any Work done pursuant to this Section 15(d)(ii) shall be
conducted under the supervision of a licensed architect and/or
engineer selected by the Mortgagor, and no such Work shall be done
except in accordance with plans and specifications and cost
estimates prepared by the Mortgagor and (x) approved in writing by
the Mortgagor's architect and/or engineer (such approval not to be
unreasonably withheld or delayed) and (y) if the cost of such Work
exceeds the lesser of fifty percent (50%) of the applicable
Allocated Amount for such Mortgaged Property and $15,000,000, also
approved by the Mortgagee (provided that the Mortgagee shall not
unreasonably withhold or delay such approval). The Mortgagor shall
deliver to the Mortgagee copies of all plans and specifications and
cost estimates relating to any such Work regardless of the cost to
be incurred in connection therewith;
(C) any Work shall be commenced promptly and in any event
within one hundred eighty days (180) after a final determination of
the amount of the Insurance Proceeds or the Taking Proceeds and,
once commenced, shall be prosecuted diligently to completion in a
good and workmanlike manner and in compliance with all applicable
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permits and authorizations and with all other applicable
Legal Requirements;
(D) the Work shall be performed with the objective of
restoring the Mortgaged Property to at least its value and
general utility prior to the relevant Casualty or Taking (as
determined by an Appraiser);
(E) any Work shall be completed free and clear of all
liens, encumbrances, chattel mortgages, conditional bills of
sale and other charges, and in accordance with the plans and
specifications therefor;
(F) during the performance of any such Work, such
Mortgagor shall procure and maintain the insurance coverages
required under the applicable provisions of Article 13
hereof; and
(G) the Mortgagors shall reimburse the Mortgagee for all
reasonable fees and expenses incurred by the Mortgagee in
connection with review of such Work, including, but not
limited to, the reasonable fees and expenses of any architect
or other real estate professional selected by the Mortgagee
to review the plans and specifications and to inspect the
Work on behalf of the Mortgagee.
In the event that such Mortgagor fails to elect to restore within the
time period specified above for the making of such election, it shall
be deemed to have elected to prepay Notes in accordance with clause
(ii)(1) above.
(iii) Subject to Section 15(b), if a Mortgagor has elected pursuant
to the terms of Section 15(d)(ii)(2) to restore the Mortgaged Property
identified on Exhibit A as being owned or leased by it, such Mortgagor
---------
shall, at the Mortgagee's request, deposit all such Insurance Proceeds
or Taking Proceeds with the Mortgagee. The Mortgagee shall disburse
such Insurance Proceeds or Taking Proceeds to or for the account of
such Mortgagor, upon request, in installments, to pay the costs and
expenses associated with the Restoration of the Mortgaged Property, as
set forth below:
(x) each request for payment shall be made on 10 days'
prior notice to the Mortgagee and shall be accompanied by a
certificate to be made by the supervising architect or
engineer or by an officer of the Mortgagor stating that the
sum requested is justly required to reimburse the Mortgagor
for payments by the Mortgagor to, or is justly due to, the
contractor, subcontractors, materialmen, laborers, engineers,
architects or other Persons rendering services or materials
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<PAGE>
for the Work (giving a brief description of such services and
materials);and
(y) each request shall be accompanied by waivers of
liens reasonably satisfactory to the Mortgagee, covering that
part of the Work for which payment or reimbursement is being
requested, or by other evidence satisfactory to the Mortgagee
that there has not been filed with respect to such Mortgaged
Property any mechanics' or other lien or instrument for the
retention of title in respect of any part of the Work not
discharged of record or bonded to the reasonable satisfaction
of the Mortgagee, subject, in each case, to the Mortgagor's
right to contest such liens in accordance with Article 12
hereof.
Upon the payment of such costs and expenses, the balance of such
Insurance Proceeds or Taking Proceeds, if any, shall be delivered to
the Mortgagor.
(e) Subject to Section 15(b), if Section 15(c) shall be applicable,
the Mortgagee and not the Mortgagors shall have the right to settle, adjust or
compromise any claim under any policy of insurance relating to any Casualty or
Taking. In all other cases, (A) the applicable Mortgagor may settle, adjust or
compromise any claim which is equal to or less than $5,000,000; and (B) with
respect to any claim in excess of $5,000,000, the Mortgagee and the applicable
Mortgagor shall consult and cooperate with each other and each shall be entitled
to participate in all meetings and negotiations with respect to the settlement
of such claim. Any adjustment or settlement by the Mortgagor of any claim which
is in excess of $5,000,000 shall be subject to the prior approval of the
Mortgagee, which approval shall not be unreasonably withheld or delayed.
(f) All Insurance Proceeds and Taking Proceeds received or held by or
deposited with the Mortgagee shall be invested in Eligible Collateral (as
directed by the Mortgagor) and all interest accruing thereon shall be deemed
part of such Insurance Proceeds or Taking Proceeds.
(g) Subject to Section 15(b), if Section 15(c) (Event of Default) or
Section 15(d)(i) (Major Casualty/Condemnation and no Event of Default) shall
govern and the amount then due to the Mortgagee by the applicable Mortgagor
exceeds the Taking Proceeds by an amount in excess of 25% of the Allocated
Amount for the related Mortgaged Property (i.e., the Proceeds are significantly
lower than the amount payable by the Mortgagor to the Mortgagee in respect of
such taking), the Mortgagor alone shall have the right to settle, adjust or
compromise any claim in connection with such a Taking. In all other cases, (A)
the Mortgagor may settle, adjust or compromise any claim which is less than or
equal to $5,000,000; and (B) with respect to any claim which is in
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excess of $5,000,000, the Mortgagee and the Mortgagor shall consult and
cooperate with each other and each shall be entitled to participate in all
meetings and negotiations with respect to the settlement of such claim. Any
adjustment or settlement by the Mortgagor of any claim which is in excess of
$5,000,000 shall be subject to the approval of the Mortgagee.
(h) Nothing in this Article 15 shall prevent the Mortgagee from applying
at any time all or any part of the Insurance Proceeds or Taking Proceeds then
held by the Mortgagee to the prepayment of the Secured Obligations following (A)
the occurrence and continuance of an Event of Default or (B) the acceleration of
the Secured Obligations in accordance with Section 5.2 of the Indenture.
16. ENFORCEMENT. The Mortgagors acknowledge that the Secured
-----------
Obligations are secured by this Mortgage, the Assignment of Leases and various
other documents or instruments securing or evidencing the Loan. Upon the
occurrence of an Event of Default, the Mortgagee shall have the right to
institute a proceeding or proceedings for the total or partial foreclosure of
this Mortgage and any or all of the other Security Documents, whether by court
action, power of sale or otherwise, under any applicable provisions of law, for
all of the indebtedness secured by the Security Documents or the portion of such
indebtedness allocated to any particular Mortgaged Property, and the liens and
the security interests created by the Security Documents shall continue in full
force and effect as to the Mortgaged Property not foreclosed without loss of
priority securing that portion of the indebtedness then due and payable and
still outstanding. The Mortgagors acknowledge that the Mortgaged Properties are
located in thirteen (13) different states and agree that, subject to Article 38
of this Mortgage, upon the occurrence of an Event of Default hereunder the
Mortgagee shall be entitled to enforce payment of the indebtedness secured by
the Security Documents and the performance of any term, covenant or condition of
the Security Documents and exercise any and all rights and remedies under the
Security Documents or as provided by law or at equity, by one or more
proceedings, whether contemporaneous, consecutive or both, to be determined by
the Mortgagee in its sole discretion, in any one or more states in which the
Mortgaged Properties are located. Neither the acceptance of this Mortgage or the
other Security Documents nor the enforcement thereof in any one state, whether
by court action, foreclosure, power of sale or otherwise, shall prejudice or in
any way limit or preclude enforcement by court action, foreclosure, power of
sale or otherwise, of the Notes, this Mortgage or the other Security Documents
through one or more additional proceedings in that state or in any other state.
Any and all sums received by the Mortgagee under the Notes, this Mortgage or the
other Security Documents shall be applied toward the repayment of the Secured
Obligations in such order and priority as the Mortgagee shall determine,
consistent with the requirements of the Security Documents (including, without
limitation, the rights of Mortgagors set forth in Section 44 of this Mortgage),
but otherwise without regard to the Allocated Amount applicable to each
Mortgaged Property or the appraised value of any of the Mortgaged Properties.
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17. EVICTION BY PARAMOUNT TITLE. The Mortgagors, within three (3)
---------------------------
Business Days of obtaining knowledge of the pendency of any proceedings for the
eviction of any Mortgagor from the Premises or any part thereof by paramount
title or otherwise questioning any Mortgagor's title to the Premises as
warranted in this Mortgage, or of any condition which might reasonably be
expected to give rise to any such proceedings, shall notify the Mortgagee
thereof. The Mortgagee may participate in such proceedings, and the Mortgagors
will deliver or cause to be delivered to the Mortgagee all instruments
reasonably requested by the Mortgagee to permit such participation. In any such
proceeding the Mortgagee may be represented by counsel reasonably satisfactory
to it and the Mortgagors will pay all costs, fees and expenses reasonably
incurred by the Mortgagee and the Servicer on its behalf (including all
reasonable attorneys' fees and expenses, the fees of insurance experts and
adjusters and the reasonable costs incurred in any litigation or arbitration),
in connection with any such proceeding and seeking and obtaining any award or
payment on account thereof.
18. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER
----------------------------------------------------------
INFORMATION.
- -----------
18.1. Books and Records. Each Mortgagor will keep proper books of
-----------------
record and account, in which accurate and complete entries shall be made of all
dealings or transactions of or in relation to the Mortgaged Property identified
on Exhibit A as being owned or leased by such Mortgagor and the business and
---------
affairs of the Mortgagor relating to the Premises. The Mortgagee, the Servicer
and their authorized representatives may from time to time, designate an agent
to examine, at reasonable times and upon reasonable notice, the books and
records of each Mortgagor relating to the operation of the Premises; provided
that the confidentiality provisions of Section 6.6 of the Indenture shall apply
to any information gathered in such examinations.
18.2. Financial Statements. (a) Not later than one hundred twenty
--------------------
(120) days after each December 31 and for the year then ended, the Mortgagors
will prepare and deliver to the Mortgagee an audited balance sheet as of the
last day of such year and an audited statement of income and expenses for such
year for the Mortgaged Properties as a group, in each case in reasonable detail
as to the sources and character thereof and stating in comparative form the
figures for the previous year. Such annual financial statements for each year
shall be certified by the certified public accounting firm that prepared such
statements and that is reasonably acceptable to the Mortgagee and shall be
accompanied by an Officer's Certificate certifying that such statements fairly
and accurately present the information set forth therein as of the date thereof,
and that the officer signing such certificate has obtained no knowledge of any
Default or Event of Default or, if so, specifying each such Default or Event of
Default and the nature and status thereof and what action the Mortgagors are
taking and propose to take with respect
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thereto. Without limitation, any of the six largest national accounting firms
shall be acceptable to the Mortgagee.
(b) Not later than ninety (90) days after the end of each fiscal quarter
(other than the fourth quarter) of the Mortgagors, the Mortgagors will deliver
to the Mortgagee an unaudited balance sheet as of the last day of such quarter
and an unaudited statement of income and expenses for the year-to-date for the
Mortgaged Properties as a group, in each case in reasonable detail as to the
sources and character thereof. Such unaudited financial statements shall be
accompanied by an Officer's Certificate certifying that such statements fairly
and accurately present the information set forth therein as of the date thereof,
and that the officer signing such certificate has obtained no knowledge of a
Default or Event of Default or, if so, specifying each such Default or Event of
Default and the nature and status thereof and what action the Mortgagors are
taking and propose to take with respect thereto.
18.3. Additional Information. Subject to Section 6.6 of the Indenture,
----------------------
the Mortgagors will deliver to the Mortgagee (for each Mortgaged Property) as
soon as reasonably available but in no event later than sixty (60) days after
such items become available to the Mortgagors in final form:
(a) [Intentionally Omitted];
(b) an annual rent roll dated not later than the anniversary of the date
of the last rent roll relating to such Mortgaged Property so delivered;
(c) copies of any final engineering or environmental reports prepared
for any Mortgagor with respect to the Premises;
(d) notice in the event of any (i) material change in an insurance
policy or coverage required by the terms of this Mortgage, (ii) material tort
action against any Mortgagor relating to the Premises and not covered by
insurance, (iii) Event of Default under this Mortgage or the Indenture, (iv)
material casualty to any Mortgaged Property, (v) change in the Property Manager
for any Mortgaged Property, (vi) release of the Lien of this Mortgage in whole
or in part, (vii) Taking or threatened Taking or (viii) amendment to any
Security Document;
(e) a copy of any notice received by any Mortgagor from any
environmental authority having jurisdiction over the Mortgaged Property with
respect to a condition existing or alleged to exist or emanate from or at the
Mortgaged Property;
(f) an annual report containing total revenues, total expenses, Mall
Store occupancy as of December 31, reported Mall Store sales per square foot and
capital expenditures (including separate line items for (1) maintenance (i.e.,
roofs, parking lots,
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equipment and HVAC), (2) tenant improvements and leasing commissions, and (3)
renovations, expansions and enhancements), in each case for the most recently
completed fiscal year;
(g) in addition to the foregoing, if at any time while any Notes are
outstanding any of the following has occurred:
(i) an Event of Default, or
(ii) the Debt Service Coverage Ratio of the Mortgaged Properties for
1998 or any subsequent calendar year is less than 1.4:1, or
(iii) Mortgaged Properties having an aggregate initial Allocated Amount
of $187 million or more have been (1) released from the Lien of this Mortgage,
(2) replaced through substitution of collateral or (3) transferred directly or
indirectly such that they are no longer owned and controlled (as such term is
defined in the definition of Permitted Owner) by General Growth and are no
longer being managed by the Property Manager or another affiliate of General
Growth, then, in any such case, the Mortgagors shall provide each of the
following items for each of the Mortgaged Properties;
(x) for each calendar year and not later than one hundred twenty
(120) days after December 31 of such year, an audited balance sheet as
of the last day of such year and an audited statement of income and
expenses for such year;
(y) for each quarter and not later than ninety (90) days after the
end of such quarter, an unaudited balance sheet as of the last day of
such quarter and an unaudited statement of income and expenses for such
quarter; and
(z) for each quarter and not later than ninety (90) days after the
end of such quarter, a report containing Operating Income, Operating
Expenses and total Mall store occupancy for such quarter.
(h) The Mortgagors hereby agree that, within one hundred twenty (120)
days after the end of any calendar year during which any Release Premises was
released from the Lien of this Mortgage, they will provide to the Mortgagee, and
the Mortgagee will make available to Holders of the Notes upon written request
(but subject to the confidentiality requirements of the Indenture), the
Operating Income and Operating Expenses for the Mortgaged Properties that are
not Release Premises for (i) the year then ended and (ii) the immediately
preceding calendar year.
19. TRANSFERS AND INDEBTEDNESS. Unless such action is permitted by the
--------------------------
provisions of Section 2.2(c) or the provisions of Article 19 or Article 20
hereof,
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no Mortgagor will (i) sell, assign, convey, transfer or otherwise dispose of or
encumber legal or equitable interests in all or any part of any Mortgaged
Property, (ii) permit or suffer any owner, directly or indirectly, of a
beneficial interest in any of the Mortgaged Properties, to transfer such
interest, whether by transfer of stock or other beneficial interest in any
entity or otherwise, (iii) mortgage, hypothecate or otherwise encumber or grant
a security interest in all or any part of the Mortgaged Properties or (iv) file
a declaration of condominium with respect to any of the Mortgaged Properties. In
addition to satisfying the requirements of this Mortgage, any transaction
described in clauses (i)-(iv) above must also be made in accordance with Article
XIV of the Indenture. Notwithstanding the foregoing or any other provision of
this Article 19, a sale, assignment, conveyance, transfer, or other disposition
or hypothecation or other encumbrance of a direct or indirect beneficial
interest:
(A) in any Mortgagor shall be permitted if (x) after giving effect to
the proposed transaction either General Growth or GGP, or the two Persons
acting together, will own at least 51% of the equity interests in and
control such Mortgagor, or (y) upon completion of such transfer one or more
Permitted Owners, acting individually or in concert, shall own at least 51%
of the equity interests in and control the Mortgagor and such transfer is
affirmed by Rating Confirmation, or
(B) in the case of a transaction or series of related transactions that
will result in one or more Persons other than GGP and General Growth,
directly or indirectly, owning 50% or more of the equity interests in each
of the Mortgagors, shall be permitted if (x) upon completion of such
transfers any one Permitted Owner individually, or any two or more
Permitted Owners jointly, directly or indirectly, will own at least 51% of
the equity interests in and control each of the Mortgagors and (y) if, upon
completion of such transfer or transfers, the same Permitted Owner does
not, or Permitted Owners do not, own and control each of the Mortgagors
then each such transfer shall have been affirmed by Rating Confirmation, or
(C) in the Mortgagor that owns The Oaks Mall or Westroads Mall shall be
permitted if after giving effect to the proposed transaction one or more of
the Ivanhoe Entities shall own at least 51% of the equity interests in and
control such Mortgagor;
provided, however, that in each such case (a) if the above-described transfer
constitutes a transfer of a block of 25% or more of the membership interests,
stock or other direct equity ownership interests in any Mortgagor or a transfer
of a general partnership interest in any Mortgagor organized as a partnership or
managing member's interest (if any) in any Mortgagor organized as a limited
liability company, such transfer will require an Officer's Certificate of the
type described in clause 19.1(c)(i) below and an Opinion of Counsel of the type
described in clause 19.1(c)(ii) below, (b) if the above-described transfer
involves the transfer of any interest in a general partner or managing member of
any Mortgagor where such general partner or managing member is the requisite
Single
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Purpose/Insolvency-Remote Entity, such transfer will require an Officer's
Certificate of the type described in clause 19.1(c)(i) below and an Opinion of
Counsel relating to such Single Purpose/Insolvency-Remote Entity and such
transferee of the type described in clause 19.1(c)(ii) below and (c) if the
above-described transfer is of a type that requires Rating Confirmation, the
Mortgagors shall also have obtained and delivered to the Mortgagee an Opinion of
Counsel (as defined in the Indenture) from counsel experienced in federal income
tax matters that such transfer will not result in a deemed exchange of any Note
for a newly issued obligation pursuant to Section 1001 of the Code, or adversely
affect the status of the Notes as debt for federal income tax purposes or result
in the creation of a "taxable mortgage pool" within the meaning of Section 7701
of the Code (such opinions, collectively, a "Tax Opinion").
-----------
Nothing in this Section 19 and no other provision of this Mortgage or any
other Security Document shall prohibit or be construed as prohibiting any
shareholder in General Growth or any partner in GGP from selling, assigning,
pledging, conveying, transferring or otherwise disposing of or encumbering such
Person's shares in General Growth or partnership interests in GGP, respectively,
to any other Person.
19.1. Sale of the Mortgaged Property. (a) Except as set forth in the
------------------------------
penultimate sentence of this Section 19.1(a) or elsewhere in this Article 19,
the Mortgagors (or any of them) may only sell, assign, convey, transfer or
otherwise dispose of legal or equitable title to the Mortgaged Properties or any
one or more of them if, after giving effect to the proposed transaction, (i)
each of the Mortgaged Properties will be either (x) directly owned by a Single
Purpose/Insolvency-Remote Entity (including a tenancy-in-common among Single
Purpose Entities under a tenancy-in-common agreement in substance the same in
all material respects as a partnership agreement of a Single Purpose/Insolvency-
Remote Entity organized as a partnership) which at the time of such transfer
will be in compliance with the applicable covenants contained in Sections 2.3
and 2.4 hereof and which has assumed in writing (subject to the terms of Article
38 hereof) and agreed to comply with all the terms, covenants and conditions set
forth in this Mortgage, expressly including the applicable covenants contained
in Sections 2.3 and 2.4 hereof, and each of the other Security Documents, or (y)
beneficially owned and controlled by an entity with a rating from the Rating
Agency no less than one (1) rating category below the highest rating then
assigned by the Rating Agency (but in no event less than Investment Grade) to
any series of the Notes, (ii) one or more Permitted Owners, directly or
indirectly, will own at least 51% of the equity interests in and control each
Mortgagor and, in the case of a transfer of less than all of the Mortgaged
Properties, the transferring Mortgagor(s) shall have obtained a Rating
Confirmation (provided, however, that Rating Confirmation shall not be required
in connection with a transfer of The Oaks Mall and/or Westroads Mall to any
Person directly or indirectly owned and controlled by one or more of the Ivanhoe
Entities), (iii) if the entity specifically named in the definition of "Property
Manager" or a person controlled by General Growth does not act as Property
Manager of the Mortgaged Properties and
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General Growth does not own or control each transferee, then (A) the Property
Manager of each Mortgaged Property retained by the Mortgagors or any of them
must be a reputable and experienced professional management company having under
management, at the time of the proposed transfer, at least twelve (12) regional
shopping centers (at least six (6) of which must be "super-regional" shopping
centers, as defined by The Urban Land Institute or any successor thereto)
comprising an aggregate of at least twelve (12) million gross leasable square
feet (excluding the Mortgaged Properties) and (B) the Permitted Owner, with
respect to such transferee (other than one or more of the Ivanhoe Entities in
the case of a transfer of The Oaks Mall and/or Westroads Mall to it or any
Person owned and controlled by it), together with its Affiliates, must own or
control at least twelve (12) super-regional shopping centers (as defined by The
Urban Land Institute or any successor thereto) totalling at least six (6)
million gross leasable square feet (excluding the Mortgaged Properties), (iv)
if, pursuant to any of the foregoing clauses, the transfer is of a type that
requires Rating Confirmation, the Mortgagors shall also have obtained and
delivered to the Mortgagee a Tax Opinion, and (v) no Event of Default shall have
occurred and be continuing. The permitted transferee of the Mortgaged Property
or Mortgaged Properties transferred shall execute an assumption in the form of
Exhibit D hereto, subject to the provisions of Article 38 hereof, of the
- ---------
obligations of a Mortgagor under this Mortgage with respect to each Mortgaged
Property transferred to such Person. Notwithstanding the foregoing, each
Mortgagor will be entitled to sell the Mortgaged Property owned or leased by it
or any portion thereof if such Mortgagor first obtains a release of such
Mortgaged Property from the Lien of this Mortgage in accordance with Article 44.
As used in this Article 19 the terms "control" and "controlled" shall have the
meanings assigned to them in the definition of Permitted Owner.
(b) Notwithstanding the provisions of Section 19.1(a), any Mortgagor may
transfer or dispose of Equipment that is either being replaced or that is no
longer necessary in connection with the operation of the Premises of any
Mortgaged Property, free from the interest of the Mortgagee under this Mortgage;
provided that such transfer or disposal will not adversely affect the value of
the Mortgaged Property, will not materially impair the utility of the Premises
relating thereto, and will not result in a reduction or abatement of, or right
of offset against, the rentals payable under any Lease, in either case as a
result thereof, and provided that any new Equipment acquired by any Mortgagor
(and not so disposed of) shall be subject to the interest of the Mortgagee under
this Mortgage unless leased to such Mortgagor. The Mortgagee shall, from time
to time, upon receipt of an Officer's Certificate requesting the same and
confirming satisfaction of the conditions set forth above, execute a written
instrument in form reasonably satisfactory to it confirming that such Equipment
which is to be, or has been, sold or disposed of is free from the interest of
the Mortgagee under this Mortgage.
(c) (i) Not less than fifteen (15) Business Days prior to the closing of
any transaction subject to the provisions of this Section 19.1, the Mortgagors
shall give the
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Mortgagee written notice of the transaction and the expected date of the closing
thereof, and on or prior to the closing of any such transaction the Mortgagors
shall deliver to the Mortgagee an Officer's Certificate describing the proposed
transaction and stating that such transaction is permitted by this Article 19,
together with any documents upon which such Officer's Certificate is based; and
(ii) on or prior to the closing of any transaction subject to the provisions of
this Section 19.1, the Mortgagors shall deliver to the Mortgagee and to the
Rating Agency an Opinion of Counsel to the Mortgagors or the transferee selected
by either of them (unless reasonably disapproved by the Mortgagee), confirming,
among other things, that after giving effect to the proposed transfer the assets
and liabilities of the relevant Mortgagor(s), and of its (their) managing
general partner(s) or special purpose member(s) (as applicable) will not be
substantively consolidated with the assets of certain owners or controlling
persons of such Mortgagor(s) in a bankruptcy or similar proceeding, such opinion
to be in form and substance consistent with similar opinions then being required
by the Rating Agency.
19.2. Indebtedness. No Mortgagor shall incur, create or assume any
------------
indebtedness or incur any liabilities whether or not secured by any Mortgaged
Property without the consent of the Mortgagee (other than the Notes and the
other obligations, indebtedness and liabilities secured by this Mortgage);
provided, however, that if no (x) monetary Default or (y) Event of Default shall
have occurred and be continuing, each Mortgagor may, without the consent of the
Mortgagee, incur, create or assume the following indebtedness:
(i) unsecured Trade Payables incurred in the ordinary course of such
Mortgagor's business, customarily paid by such Mortgagor within sixty
(60) days outstanding, or such longer period as such Mortgagor is, in
good faith and in accordance with customary and prudent practices,
contesting the payment of same, and capitalized personal property leasing
expenses, or in connection with the ownership, management, operation,
leasing, cleaning, maintenance, repair, replacement, financing,
improvement, alteration or restoration thereof incurred in the ordinary
course of operating such Mortgagor's business (provided, however, that
notwithstanding the foregoing, in no event shall any Mortgagor be
permitted under this provision to enter into a note for borrowed money);
(ii) amounts, not secured by any Mortgaged Property, payable or
reimbursable to any Tenant of any portion of the applicable Mortgaged
Property on account of work performed at the Mortgaged Property by such
Tenant or for costs incurred by such Tenant in connection with its
occupancy of space in the Premises of such Mortgaged Property, in each
case incurred in the ordinary course of such Mortgagor's business
(provided, however, that notwithstanding the foregoing, in no event shall
any Mortgagor be permitted under this provision to enter into a note for
borrowed money);
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(iii) indebtedness not secured by any of the Mortgaged Properties,
relating solely to financing of capital improvements, tenant
improvements, Equipment or leasing costs relating to any Mortgaged
Property or Mortgaged Properties, and costs associated with such
indebtedness, in an amount of up to 5% of the aggregate Allocated Amounts
of all Mortgaged Properties (initially, $28,000,000) (it being understood
that the maximum amount of indebtedness described in this clause (iii)
that may be outstanding at any time when any Notes are outstanding under
the Indenture shall be 5% of the aggregate of the original Allocated
Amounts of all of the Mortgaged Properties); the Mortgagor will initially
be deemed to have incurred $2,500,000 of unsecured debt in accordance
with the foregoing clause (which $2,500,000 will be reduced
proportionately as the then-Potential Mortgagor Obligations are
undertaken and/or the Mortgagor's responsibility in respect thereof is
satisfied or waived or the amounts payable in connection therewith are
secured by one or a combination of the items described in Section
14(d)(i)-(iii)); and
(iv) indebtedness in the form of Additional Notes as permitted under
Section 9.1(6) of the Indenture.
19.3. Subordinate Liens. [Intentionally omitted]
-----------------
19.4. Additional Permitted Transfers. Notwithstanding the foregoing
------------------------------
provisions of this Article 19, each Mortgagor without the consent of the
Mortgagee may (i) make transfers of portions of the Premises relating to any
Mortgaged Property (by sale, ground lease, subordination of fee interest to a
leasehold mortgage, sublease or other conveyance of any interest) to any
federal, state or local government or any political subdivision thereof in
connection with takings or condemnations of any portion of such Premises for
dedication or public use (subject to the provisions of Article 15 hereof, if
applicable) or portions of such Premises to third parties, including, without
limitation, owners of out parcels, department store pads, pads for office
buildings, hotels or other properties for the purpose of erecting and operating
additional structures whose use is integrated and consistent with the use of
such Mortgaged Property, (ii) dedicate portions of the Premises relating to any
Mortgaged Property or grant easements, restrictions, covenants, reservations and
rights of way in the ordinary course of business for traffic circulation,
ingress, egress, parking, access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes or amend
any Operating Agreement and (iii) transfer to a retail or an office user (by
conveyance, ground lease or otherwise) one or more anchor sites (together with
parking ancillary thereto), as well as reasonable and/or customary easements in
connection therewith, provided, in each such case, that the transfer, conveyance
or other encumbrance set forth
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in the foregoing clauses (i), (ii) and (iii) will not materially impair the
utility and operation of the related Mortgaged Property or materially adversely
affect the value of the related Mortgaged Property, in each case taken as a
whole. Subject to the provisions of Article 15 hereof, if any Mortgagor receives
any consideration in connection with any such transfer or other conveyance, the
Mortgagor shall have the right to use any such proceeds in connection with any
Alterations being performed in connection with, or required as a result of, such
transfer or conveyance. Any net proceeds received by such Mortgagor in excess of
the cost of such Alterations (including, without limitation, amounts received in
excess of the threshold described below in respect of non-revenue generating
land) shall, at the Mortgagor's option, (i) be paid to the Mortgagee for the
benefit of the Holders in repayment of the Notes on the next occurring Interest
Payment Date (as defined in the Indenture), together with the applicable Make-
Whole Payment (as defined in the Indenture), if any, and any amounts then
payable under the Security Documents or (ii) be deposited in escrow with the
Mortgagee to be held by the Mortgagee for the benefit of the Holders for
application toward payments of Secured Obligations if such payments are not made
by the Mortgagors when due, such amounts to be held by the Mortgagee in an
Eligible Account and to be invested by the Mortgagee in the same manner as is
permitted in Section 6.14 of the Indenture with respect to amounts held in the
Payment Account; provided, however, that if and to the extent that such proceeds
were received by any of the Mortgagors in payment for non-revenue generating
land as described below, and no Default or Event of Default has occurred and is
continuing, the Mortgagee shall disburse such proceeds to the Mortgagors upon
their written request (such request to be accompanied by an Officer's
Certificate confirming the absence of any Default under the Loan and
identifying, in reasonable detail, the expenses to which such request relates)
to reimburse the Mortgagors for any capital expenditures incurred by them at any
of the Mortgaged Properties, it being understood that for purposes hereof
"capital expenditures" shall mean leasing commissions, tenant improvement costs
and the costs of capital improvements that, in each case, are borne by a
Mortgagor and are not reimbursable by tenants. The Mortgagee shall invest any
amounts held in such account in the same manner as is permitted in Section 6.14
of the Indenture with respect to amounts held in the Payment Account. Such
escrow shall be released to the Mortgagors by the Mortgagee upon repayment in
full of the Notes. Notwithstanding the foregoing, if any such transfer or other
conveyance shall be of any currently unimproved and non-revenue-generating
portion of the Land that is not necessary for the operation of the relevant
Mortgaged Property, as certified to the Mortgagee by the applicable Mortgagor,
and no Event of Default shall have occurred and be continuing, the Mortgagor may
retain the first One Million Dollars ($1,000,000) of net proceeds received in
the aggregate from such transfers or other conveyances (subject, however, to the
same being used to pay the costs of any related Alterations). In addition, and
notwithstanding the foregoing, the Mortgagors shall be entitled to retain 100%
of the proceeds of the sale by it of (x) the former J.C. Penney site at Sooner
Fashion Mall and (y) a vacant anchor pad and surrounding parking area at Market
Place Shopping Center, in each case provided that such sale is consummated on or
prior to the second
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anniversary of the date hereof. In connection with any transfer, conveyance or
subordination or other encumbrance permitted pursuant to this Section 19.4, the
Mortgagee agrees to execute and deliver any instrument reasonably necessary or
appropriate to facilitate said action and, in the case of any transfers of fee
interests referred to in clauses (i), (ii) and (iii) of the first sentence of
this Section 19.4, to release the portion of the Land affected by such taking or
condemnation or such transfer from the Lien of this Mortgage or, in the case of
other transfers, conveyances or grants described in clauses (i), (ii) or (iii)
of the first sentence of this Section 19.4, to subordinate the Lien of this
Mortgage to such leasehold interests, subordination agreements, easements,
restrictions, covenants, reservations and rights of way or other similar grants
and, if appropriate, amend the relevant Operating Agreement or Operating
Agreements, in either case, upon receipt by the Mortgagee of: (1) a copy of the
instrument of transfer; (2) a plot plan identifying the location of the portion
of the Mortgaged Property to be released from the Lien of this Mortgage; (3) a
metes and bounds description of the portion of such Mortgaged Property to be
released; (4) an amendment to the relevant Exhibit B to this Mortgage
---------
implementing the proposed release, including a metes and bounds description of
the portion of the Land at the relevant Mortgaged Property that will continue to
be encumbered by the Lien of this Mortgage after the proposed release; (5) and
an Officer's Certificate stating (x) with respect to any taking or condemnation
or deed in lieu thereof, the consideration, if any, being paid for the transfer,
(y) that such transfer does not materially impair the utility and operation of
the Land, materially reduce its value or cause the Mortgaged Property to be in
violation of any applicable Legal Requirements, including laws relating to the
number of parking spaces at the Premises and (z) that the lien of this Mortgage
will continue unimpaired, subject to Permitted Exceptions, with respect to the
real estate described in item (4) above.
All Taking Proceeds shall be applied in accordance with the provisions of
Article 15 hereof.
19.5. Delivery of Documents to the Mortgagee. No more than twenty (20)
--------------------------------------
Business Days after the completion of any transaction subject to this Article
19, the Mortgagors shall provide the Mortgagee with copies of executed deeds,
mortgages and such other similar closing documents as may be reasonably
requested by the Mortgagee.
19.6. Potential Mortgagor Obligations. If the Mortgagors elect to
-------------------------------
transfer all of the Mortgaged Properties to a transferee permitted by Section
19.1, but not otherwise affirmed by Rating Confirmation, then, on or before such
transfer, the Mortgagors (or such Transferee Mortgagor) will be required to
deliver to the Mortgagee a Credit Facility or Eligible Collateral in the amount
of the sum of (i) $2,500,000 to secure Potential Mortgagor Obligations,
provided, that such amount shall be reduced from time to time (in such amounts
as are proposed by the Mortgagors based upon the amount of work then performed
or waived in respect of Potential Mortgagor Obligations and the amount of
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any such Potential Mortgagor Obligations that has then lapsed by the terms of
the documents giving rise thereto, and approved or disapproved by the Mortgagee,
in its reasonable discretion based upon the recommendation of the Servicer),
plus (ii) if such transfer will be completed before January 1, 1999 and, as of
the completion of such transfer, Westroads Mall still will be a Mortgaged
Property and the Mortgagors will not have completed the environmental
remediation required under Section 10.13 of the Indenture, an amount equal to
the cost to complete such remediation as estimated by the environmental
consultant then supervising such remediation, plus (iii) if such transfer will
be completed before the second anniversary of the date of this Mortgage,
$2,296,061 to secure the cost of completing the deferred maintenance and other
capital items required under Section 10.13 of the Indenture, provided, that such
amount shall be reduced to reflect amounts actually expended by the Mortgagors
on such required deferred maintenance and other capital items through the date
of such transfer. Any Credit Facility or Eligible Collateral delivered to the
Mortgagee in satisfaction of this Section 19.6 shall (a) be held by the
Mortgagee in escrow, if cash, in an Eligible Account (in which case the
Mortgagee shall invest such cash in the same manner as is described in Section
6.14 of the Indenture with respect to the Payment Account), (b) serve as
additional security for the Secured Obligations and (c) be reduced and released
or disbursed to the Mortgagors from time to time upon receipt by the Mortgagee
of at least five (5) Business Days' prior notice of such request accompanied by
an Officer's Certificate confirming that (x) no Event of Default has occurred
and is continuing and (y) the sum requested is justly required to reimburse the
Mortgagors for payments made by them in furtherance of completing the Potential
Mortgagor Obligations, environmental remediation or deferred maintenance and
other capital items, as applicable, for which such Credit Facility or Eligible
Collateral was originally provided.
20. PERFORMANCE OF LEASES; APPLICATION OF RENTS. (a) Each Mortgagor
-------------------------------------------
shall use reasonable efforts to timely perform and observe or cause to be
performed or observed all the material terms, covenants and conditions required
to be performed and observed by such Mortgagor under the Leases relating to the
Mortgaged Property identified on Exhibit A as being owned or leased by such
---------
Mortgagor, such that there will be no material and adverse impairment of the
value of any Mortgaged Property or the Mortgagee's interest therein under this
Mortgage. Each Mortgagor will promptly deliver to the Mortgagee and the Servicer
a copy of any notice from any Tenant under any Lease covering 15,000 square feet
or more of the gross leasable area of the Premises of any Mortgaged Property
claiming that the Mortgagor is in default in any material respect in the
performance or observance of any of the terms, covenants or conditions thereof
to be performed or observed by the Mortgagor.
(b) Each Mortgagor shall engage, and shall maintain during the term
hereof, its engagement of General Growth Management, Inc., any other entity
controlled by (as defined in the definition of Permitted Owner) General Growth
or another prominent
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professional management company that manages at least twelve (12) other regional
shopping centers in the United States (at least six (6) of which must be
"super-regional" shopping centers, as defined by The Urban Land Institute or any
successor thereto) comprising an aggregate of at least twelve (12) million
square feet (exclusive of the Mortgaged Properties), as the property manager of
each Mortgaged Property identified on Exhibit A as being owned or leased by such
---------
Mortgagor (any such property manager, the "Property Manager"). The Mortgagors
shall, or shall cause the Property Manager to, manage and operate each Mortgaged
Property in a reasonably prudent manner and shall not enter into any Lease with
respect to any Mortgaged Property after the date hereof that would, evaluated
alone or in conjunction with any then existing Leases of the Mortgaged Property,
result in any material impairment of the fair market value, as of the date such
Lease is executed by the Mortgagor, of the Mortgaged Property. Each Mortgagor
may enter into any Lease which is not inconsistent with the provisions of this
Article 20 and the other applicable provisions of this Mortgage, if any. If
Mortgagee delivers to Mortgagors written notice of any Default under this
Mortgage, Mortgagors agree that from and after the date Mortgagors receive said
notice, Mortgagors will deliver to the Mortgagee promptly after execution and
delivery thereof by all parties thereto either a duplicate original executed
counterpart or a certified copy of each Lease thereafter executed. Each Lease
entered into after the date hereof (including the renewal or extension on or
after the date hereof of any Lease entered into prior to the date hereof if the
rent payable during such renewal or extension, or a formula to compute such
rent, is not provided for in such Lease; each such a renewal or extension a
"Renewal Lease") shall (A) provide for rent and all other material items
-------------
thereunder to be payable in amounts at least equal to the fair market rental
value (taking into account the type and quality of the Tenant), as of the date
such Lease is executed by the Mortgagor, of the space covered by such Lease or
Renewal Lease for the term thereof, including any renewal options, (B) not have
a material adverse effect on the value of the related Mortgaged Property, taken
as a whole, or the ability of the applicable Mortgagor to pay its obligations in
respect of the Notes and this Mortgage or (C) be consented to by the Mortgagee.
(c) In addition to the foregoing, each Mortgagor may, without the
consent of the Mortgagee, amend, modify or waive the provisions of any Lease or
Operating Agreement, provided that such action does not have a material adverse
effect upon the value of the related Mortgaged Property, and provided further
that such Lease or Operating Agreement, as amended, modified or waived, is
otherwise in compliance with the requirements of this Mortgage and a certified
copy of the amendment, modification or waiver is delivered to the Mortgagee.
(d) Each Mortgagor may terminate or permit the termination of any Lease
of space or accept surrender of all or any portion of the space demised under
the Lease or acquire any Lease or reduce the rentals reserved under or shorten
the term of any Lease so long as such action (taking into account the planned
alternative uses of the
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space) does not materially adversely affect the value of the Mortgaged Property
to which such Lease relates (it being agreed that termination of the Lease of a
Tenant that is in default, after any applicable notice and cure periods, shall
be considered to be for the benefit of the Mortgaged Property) or the ability of
the applicable Mortgagor to pay its obligations in respect of the Notes and this
Mortgage.
(e) The Mortgagors shall not enter into any Lease with an Affiliate of
any Mortgagor at any Mortgaged Property, unless (i) the space is for the use and
occupancy of one or more of such Affiliates, and (ii) the material terms of such
Lease comply with the requirements set forth in Section 20(b) hereof; provided,
however, that a reasonable amount of office space not in excess of 10,000 net
leasable square feet can be provided to the Property Manager for the purpose of
management of each Mortgaged Property at less than fair market rental or at no
rental, at the discretion of the Mortgagors. Each Mortgagor shall have the
right, subject to the provisions of this Mortgage, to acquire Leases by way of
assignment, surrender, acquisition or further sublease. No Mortgagor shall
modify the terms governing the management of any Mortgaged Property in any
respect that would have a materially adverse effect on the operation of, or the
Net Operating Income generated by, or the value of, the Mortgaged Property in
question without the prior approval of the Mortgagee. Each Mortgagor shall
provide prompt written notice to the Mortgagee if it engages a new Property
Manager at any Mortgaged Property.
(f) No Mortgagor shall receive or collect, or permit the receipt or
collection of, any rental or other payments under any Lease (excluding, for
purposes hereof, Specialty Leases) more than one (1) month in advance of the
respective period in respect of which they are to accrue, except that (i) in
connection with the execution and delivery of any Lease or of any amendment to
any Lease, rental payments thereunder may be collected and received in advance
in an amount not in excess of one (1) month's rent and a security deposit
(including advance rents as or in lieu of a security deposit) may be required
thereunder (provided that such deposits are maintained in accordance with
applicable law and in accordance with Article 51 hereof), (ii) the Mortgagors
may receive and collect escalation, percentage rent and other charges in
accordance with the terms of each Lease and (iii) the Mortgagors may receive and
collect more than one month's rent in connection with a Tenant terminating its
Lease if the termination of the Lease is permitted under this Mortgage.
(g) Upon receipt by the Mortgagee of a written request from any
Mortgagor therefor, the Mortgagee shall execute and deliver to the Tenant under
any Lease (other than a Lease to an Affiliate of such Mortgagor) existing on the
date hereof or made in accordance with the provisions of this Article 20 a
subordination, non-disturbance and attornment agreement in the form attached
hereto as Exhibit J or such other form as may be proposed by the applicable
---------
Mortgagor and reasonably acceptable to the Mortgagee.
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21. NO ENDORSEMENT. The Mortgagee shall not become or be considered
--------------
to be an endorser, co-maker or co-obligor on the Notes or on any obligation of
the Mortgagors secured by this Mortgage.
22. NO CREDIT FOR PAYMENT OF TAXES OR IMPOSITIONS. None of the
---------------------------------------------
Mortgagors shall be entitled to any credit against the principal of or interest
or Make-Whole Payment, if any, payable on the Notes, and none of the Mortgagors
shall be entitled to any credit against any other amounts which may become
payable under the terms thereof or hereof, by reason of the payment of any tax
on any Mortgaged Property or any part thereof or by reason of the payment of any
other Imposition or other amount required to be paid hereunder. No deduction
shall be made or claimed from the taxable value of any Mortgaged Property or any
part thereof by reason of this Mortgage.
23. EVENT OF DEFAULT. If one or more of the following events (each an
----------------
"Event of Default") shall occur:
----------------
(a) default in the payment of any amounts due and payable hereunder
(other than interest, principal, Additional Amounts or Make-Whole Payment on the
Notes), which continues for a period of thirty (30) Business Days after written
demand by the Mortgagee for payment thereof; or
(b) an "Event of Default" as defined in the Indenture or any other
Security Document; or
(c) any Mortgagor shall, directly or indirectly, make or permit to
occur a violation of the covenants contained in Sections 2.3 or 2.4 hereof, or a
violation of the covenants contained in Article 11 hereof (subject to the
provisions of Article 12 hereof), or any sale, assignment, conveyance, transfer,
mortgage, pledge, encumbrance or other disposition in violation of Article 19
hereof, or incur any indebtedness in violation of Article 19 hereof; or
(d) any Mortgagor shall fail to perform or comply with any of the
material covenants of this Mortgage, or any Mortgagor shall breach any material
representation or warranty made by it in this Mortgage or in any other Security
Document, and in any such case, such failure or breach shall continue for more
than thirty (30) Business Days after written notice thereof by the Mortgagee to
such Mortgagor; provided that in the case of any such failure or breach that is
susceptible of cure but that cannot with diligence be cured within such thirty
Business Day period, if the Mortgagor shall promptly have commenced to cure the
same and shall thereafter prosecute the curing thereof with diligence, subject
to Excusable Delays, the period within which such failure may be cured shall be
extended for such further period as shall be reasonably necessary for the curing
thereof with diligence, subject to Excusable Delays, provided that such extended
period shall not exceed one hundred eighty (180) days unless, only in the case
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of cures which require construction or remedial work, such cure cannot with
diligence reasonably be achieved within such one hundred eighty (180) days and
the Mortgagor has delivered an Officer's Certificate to the Mortgagee to such
effect, in which event such period shall be extended for an additional one
hundred eighty (180) days, subject to Excusable Delays (and provided that cure
of any breach of representation or warranty, and that cure of any failure to
make a delivery, subsequent to the date as of which the representation or
warranty was made or applies, or such delivery was required, shall constitute
cure of such breach, or cure of such failure to make the delivery, provided such
breach or failure has not had an irreparable material adverse effect on the
interest of the Mortgagee hereunder); or
(e) any Mortgagor shall fail to redeem the Notes as required by the
last paragraph of Article 48 hereof;
then, in any such event, the Mortgagee, at its option, may, in accordance with
the provisions of Section 5.2 of the Indenture, declare the Notes and the entire
indebtedness secured by this Mortgage and the other Security Documents due and
payable and, to the extent permitted by applicable law, the Mortgagee may
exercise the other remedies provided for herein for an Event of Default.
Notwithstanding anything to the contrary contained herein or in the
Security Documents, the Mortgagors shall not be in default with respect to any
monetary obligation under the Notes or hereunder or become obligated for the
payment of any additional interest so long as all amounts due and payable on the
Notes and all other amounts due hereunder and under any other Security Document
are paid to the Mortgagee in collectable funds on the Business Day preceding the
date the same are due and payable and are received by the Mortgagee before 12:00
noon New York, New York time on such Business Day.
24. COMPROMISE OF ACTIONS BY THE MORTGAGEE. Any action, suit or
--------------------------------------
proceeding brought by the Mortgagee pursuant to this Mortgage or otherwise and
any claim made by the Mortgagee under this Mortgage or otherwise may be
compromised, withdrawn or otherwise dealt with by the Mortgagee without notice
to or the approval of the Mortgagors or any of them.
25. FORECLOSURE.
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25.1. Foreclosure. Subject to Article 38 hereof, if any Event of
-----------
Default shall have occurred, the Mortgagee, for the benefit of the Holders, may
(but shall be under no obligation to) at any time proceed, at law or in equity
or otherwise, to enforce the payment of the Notes in accordance with the terms
thereof and, if the Notes have been declared due and payable: (a) in any
Mortgage State or the State of Georgia, to institute an action to foreclose, and
in any Deed of Trust State, cause the Deed Trustee to foreclose, its interest
under and the lien of this Mortgage against the Mortgaged Property
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or Mortgaged Properties located in each such state by judicial foreclosure sale
or strict foreclosure in one proceeding in each such state or against portions
of the Mortgaged Properties in a series of separate proceedings, and to have the
same sold under the judgment or decree of a court of competent jurisdiction or
proceed to take any of such actions, all to the extent permitted by applicable
law, it being understood that, subject to the provisions of Section 7.10 of the
Indenture, the Mortgagors and the Mortgagee shall each be entitled to bid in any
such sale;
(b) to take such other action at law or in equity or otherwise for
the enforcement of this Mortgage and the realization on the security or any
other security herein or elsewhere provided for, as the law may allow, and may
proceed therein to final judgment and execution for the entire unpaid balance of
the principal debt, together with all other sums payable by the Mortgagors in
accordance with the provisions of the Notes, this Mortgage and the other
Security Documents, and all sums which may have been advanced by the Mortgagee
for taxes, water or sewer rents, charges or claims, payment on prior liens,
insurance or repairs to the Mortgaged Properties, all costs of suit, together
with interest thereon at such interest rate as may be awarded in any judgment
obtained by the Mortgagee, as the case may be, from and after the date of any
foreclosure sale until actual payment is made to the Mortgagee of the full
amount due the Mortgagee, and attorneys' fees through and including all
appellate levels; and/or
(c) to sell, assign, transfer and deliver the whole or, from time to
time, any Mortgaged Property, or any interest in any part thereof, at any
private sale or at public auction permitted by law, with such demand,
advertisement or notice as required by law, and on such other terms as required
or permitted by law, and the aforesaid power of sale and agency hereby granted
are coupled with an interest and are irrevocable.
Before taking title to or possession of all or any portion of the Mortgaged
Properties, the Mortgagee, at the expense of the Mortgagors, may determine
whether any environmental hazards exist at any Mortgaged Property in respect of
which the Mortgagee may become liable by taking title, which determination shall
include the performance of an environmental audit of the Mortgaged Properties
(or any of them) by a qualified professional.
25.2. The Mortgagors' Waivers. It shall not be necessary for the
-----------------------
Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State,
to have actual or constructive possession of any part of any Mortgaged Property
in order to pass the title to and the right of possession of the Mortgaged
Property, and the title to and the right of possession of the Mortgaged
Properties, or any of them, shall pass to the purchaser or purchasers thereof at
any sale hereunder as fully as if the same actually had been present and
delivered. To the fullest extent allowed by applicable law, upon foreclosure of
this Mortgage, whether by power of sale or any other nonjudicial or judicial
foreclosure process, the Mortgagors or any person claiming any part of any
Mortgaged Property by,
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through or under any Mortgagor shall not be entitled to direct the order of sale
or to a marshalling of assets or a sale in inverse order of alienation. The
recitals and statements of fact contained in any notice or in any conveyance to
the purchaser or purchasers at any sale hereunder shall be prima facie evidence
of the truth of such facts, and all prerequisites and requirements necessary to
the validity of any such sale shall be presumed to have been performed. In the
event of a foreclosure sale, to the extent that any Mortgagor is in possession
of any of the Premises, such Mortgagor shall be deemed a tenant at will of the
purchaser at such judicial foreclosure sale and shall be liable for a reasonable
rental for the use of such Premises; and if such Mortgagor refuses to surrender
possession of the Premises upon demand, the purchaser shall be entitled to
institute and maintain the statutory action of forcible entry and detainer and
procure a writ of possession thereunder, and such Mortgagor expressly waives all
damages sustained by reason thereof and such Mortgagor agrees to pay to the
purchaser the reasonable costs and expenses (including all reasonable attorneys'
fees and expenses) of such action and writ, subject to the provisions of Article
38.
25.3. Recovery of Advances. Subject to the provisions of Article 35
--------------------
and subject to the provisions of Article 38, the Mortgagee shall have the right,
from time to time, to bring an appropriate action to recover any sums required
to be paid by any Mortgagor under the terms of this Mortgage and/or the Notes as
they become due, without regard to whether the principal indebtedness evidenced
by the Notes or any other sums secured by this Mortgage shall be due, and
without prejudice to the right of the Mortgagee thereafter to bring an action of
foreclosure, or any other action, for any default by any Mortgagor existing at
the time the earlier action was commenced.
25.4. Sale. Upon the completion of any sale or sales of all or any
----
portion of the Mortgaged Properties by virtue of this Article 25, the Mortgagee,
in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of
Trust State, or any officer of any court empowered to do so, shall execute and
deliver to the accepted purchaser or purchasers, good and sufficient instrument
or instruments (subject to the provisions of Article 38 hereof), conveying,
assigning and transferring all estate, right, title and interest in and to the
property and rights sold. In such event, the Mortgagee, in a Mortgage State or
the State of Georgia, or the Deed Trustee, in a Deed of Trust State, is hereby
irrevocably appointed the true and lawful attorney of the Mortgagors, in their
name and stead, to make all the necessary conveyances, assignments, transfers
and deliveries of the Mortgaged Property, or any portions thereof, and rights so
sold, and for that purpose the Mortgagee, in a Mortgage State or the State of
Georgia, or the Deed Trustee, in a Deed of Trust State, may execute all
necessary instruments of conveyance, assignment and transfer and may substitute
one or more persons with like power, the Mortgagors hereby ratifying and
confirming all that the Mortgagors' said attorney or such substitute or
substitutes shall lawfully do by virtue hereof. Nevertheless, any Mortgagor
shall, if so requested by the Mortgagee, in a Mortgage State or the State of
Georgia, or the Deed Trustee, in a Deed of Trust State, ratify and confirm
(subject to the provisions of Article
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38 hereof) any such sale or sales by executing and delivering to the Mortgagee,
in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of
Trust State, or to such purchaser or purchasers all such instruments (which in
each case shall be without recourse to or representation or warranty by such
Mortgagor) as may be advisable, in the judgment of the Mortgagee, in a Mortgage
State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State,
for the purpose and as may be designated in such request. Any such sale or sales
shall operate to divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of the applicable Mortgagor in and to
the properties, interests and rights so sold, and shall be a perpetual bar both
at law and in equity against such Mortgagor and against any and all persons
claiming or who may claim the same, or any part thereof from, through or under
such Mortgagor.
25.5. Several Parcels. If any Event of Default shall have occurred and
---------------
the Notes shall have been declared due and payable, the Mortgagee, in a Mortgage
State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State,
shall have the right to sell all or any portion of the Mortgaged Properties in
such order as it may determine, and the right of sale hereunder shall not be
exhausted by one or more sales, but successive sales may be had until all of the
Secured Obligations shall have been paid in full. In the event any sale
hereunder is not completed or is defective in the opinion of the Mortgagee, in a
Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust
State, such sale shall not exhaust the power of sale hereunder, and until all of
the Secured Obligations shall have been paid in full, the Mortgagee, in a
Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust
State, shall have the right to cause a subsequent sale or sales.
26. THE MORTGAGEE AUTHORIZED TO EXECUTE INSTRUMENTS. Each Mortgagor
-----------------------------------------------
hereby appoints (which appointment is irrevocable and is coupled with an
interest) the Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of
Trust State, the true and lawful attorney-in-fact of the Mortgagors, in its name
and stead and on its behalf, for the purpose of effectuating any sale,
assignment, transfer or delivery for the enforcement of this Mortgage after the
occurrence and during the continuance of an Event of Default hereunder, to
execute and deliver all such deeds, assignments, bills of sale and other
instruments (without recourse, warranty or representation of any kind) as the
Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State,
may consider necessary or appropriate, with full power of substitution, the
Mortgagors hereby ratifying and confirming (subject to the provisions of Article
38 hereof) all that such attorney or any substitutes shall lawfully do by virtue
hereof. Nevertheless, if so requested by the Mortgagee, in a Mortgage State, or
the Deed Trustee, in a Deed of Trust State, or any purchaser, the Mortgagors
shall ratify and confirm (subject to the provisions of Article 38 hereof) any
such sale, assignment, transfer or delivery by executing and delivering to the
Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State,
or such purchaser all deeds, assignments, bills of sale, releases and other
proper instruments (which in each case shall be without recourse to or
representation or
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warranty by the Mortgagor) to effect such ratification and confirmation as
may be designated in any such request.
27. PURCHASE OF PROPERTIES BY THE MORTGAGEE. The Mortgagee, any
---------------------------------------
Holder individually, or any nominee of any of them may be a purchaser of the
Mortgaged Properties or of any interest therein at any sale thereof, and may
apply to the purchase price all or any part of the indebtedness secured hereby
then held by it in lieu of payment in cash of the amount of such indebtedness
applied. Any such purchaser shall, upon any such purchase, acquire good title to
the property so purchased, free of the lien of this Mortgage and, except to the
extent expressly prohibited by law, free of all rights of redemption in the
Mortgagors (or any of them).
28. RECEIPT A SUFFICIENT DISCHARGE TO PURCHASER. Upon any sale of any
-------------------------------------------
Mortgaged Property after the Notes become due and payable, whether at maturity,
by declaration of acceleration or by automatic acceleration if applicable after
an Event of Default or otherwise, the receipt of the Mortgagee, in a Mortgage
State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, or
the receipt of the officer making the sale under judicial proceedings shall, to
the full extent legally permitted, be sufficient discharge to the purchaser for
the purchase money, and such purchaser shall not be obligated to see to the
application thereof.
29. WAIVER OF MARSHALLING. Each Mortgagor hereby waives all rights,
---------------------
legal and equitable, it may now or hereafter have to require marshalling of
assets or to require upon foreclosure sales of assets in a particular order.
Each successor and assign of any of the Mortgagors, including a holder of a Lien
subordinate to the Lien created hereby (without implying that any Mortgagor has,
except as expressly provided herein, a right to grant an interest in, or a
subordinate lien on, any of the Mortgaged Properties), by acceptance of its
interest or Lien agrees that it shall be bound by the above waiver, as if it
gave the waiver itself.
30. SALE SHALL BE A BAR AGAINST THE MORTGAGORS. The sale of all or
------------------------------------------
any portion of the Mortgaged Properties in connection with the exercise of
remedies under this Mortgage after the Notes become due and payable, whether at
maturity, by declaration of acceleration or by automatic acceleration if
applicable after an Event of Default or otherwise, shall, to the full extent
legally permitted, forever be a perpetual bar against any Mortgagor's asserting
any claim to title to such portion of the Mortgaged Properties so sold.
31. APPLICATION OF PROCEEDS OF SALE. To the extent permitted by
-------------------------------
applicable Legal Requirements and except as otherwise required by law, the
proceeds of any sale of any Mortgaged Property or any part thereof or any
interest therein, after the Notes become due and payable, whether at maturity,
by declaration of acceleration or by automatic acceleration if applicable after
an Event of Default or otherwise, together with
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any other moneys and the proceeds of any Credit Facility or Eligible Collateral
at the time held by the Mortgagee, shall be applied as set forth in Section 5.6
of the Indenture.
32. APPOINTMENT OF RECEIVER. If an Event of Default shall have
-----------------------
occurred and be continuing, the Mortgagee shall, to the fullest extent permitted
by law, as a matter of right, be entitled to the appointment of a receiver for
all or any part of the Mortgaged Properties and the rents and profits therefrom,
whether such receivership be incidental to a proposed sale of the Mortgaged
Properties or otherwise, and without consideration of the value of the Mortgaged
Properties as security for the amounts due or the solvency of any Person liable
for the payment of such amounts, and each Mortgagor hereby consents to the
appointment of such a receiver and agrees that it will not oppose any such
appointment.
33. POSSESSION, MANAGEMENT AND INCOME. If an Event of Default shall
---------------------------------
have occurred and be continuing, the Mortgagee, with such notice, if any, to the
Mortgagors as may be required by law or as the Mortgagee considers appropriate
in the circumstances, and subject to the rights of Tenants and the provisions of
applicable law, may (but shall be under no obligation to) immediately enter upon
and take possession of the Premises by self-help, summary proceedings, ejectment
or otherwise, and may remove each Mortgagor and all other Persons and any and
all property therefrom, and may hold, operate and manage the same and receive
all earnings, income, rents, issues and proceeds accruing with respect thereto;
provided, however, that upon the cure of such Event of Default within the
permitted time, if any, and if no other Event of Default shall have occurred and
be continuing, the Mortgagee will surrender possession of such Premises back to
the Mortgagors. The Mortgagee shall be under no liability for or by reason of
any such taking of possession, entry, removal or holding, operation or
management, except (i) for its negligence or willful misconduct or (ii) to the
extent required by applicable law, and except that any amounts so received by
the Mortgagee shall be applied as set forth in Section 5.6 of the Indenture.
At the request of the Mortgagee, the Mortgagors shall promptly execute
and deliver (subject to the provisions of Article 38 hereof and without
representation or warranty) to the Mortgagee such deeds, instruments of
assignment and other documents as the Mortgagee may deem necessary or advisable
to enable the Mortgagee or any agent or representative designated by the
Mortgagee, at such time or times and place or places as the Mortgagee may
reasonably specify, to obtain possession of all or any portion or portions of
any of the Mortgaged Properties to which the Mortgagee shall at the time be
entitled hereunder, subject to the rights of Tenants.
If any Mortgagor shall fail for any reason to execute and deliver such
instrument or document after such request by the Mortgagee, the Mortgagee, to
the fullest extent permitted by law, may (i) obtain a judgment conferring on the
Mortgagee the right to immediate possession and requiring such Mortgagor to
execute and deliver
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such instruments and documents to the Mortgagee, which entry of judgment such
Mortgagor, to the extent it may lawfully do so, hereby specifically consents and
(ii) pursue the Mortgaged Properties wherever they may be found and to the
extent lawfully permitted, take possession of and remove the same, subject to
the rights of Tenants.
Upon every such taking of possession, the Mortgagee may (but shall
have no obligation to), from time to time, at the expense of the Mortgagors and
such expenses to constitute additional indebtedness secured by the Mortgaged
Properties, make all such expenditures for maintenance, insurance, repairs,
replacements and, to the extent commercially reasonable under the circumstances
in existence at the time, alterations, additions and improvements, to and of the
Premises, in each case as it may deem proper. In such case, the Mortgagee, to
the fullest extent permitted by law, shall have the right to manage, control,
use, operate, store, lease or otherwise deal with the Mortgaged Properties, or
any portion thereof, and to carry on the business and exercise all the rights
and powers of the Mortgagors relating to the Mortgaged Properties, as the
Mortgagee shall deem appropriate or advisable, including the right to enter into
any and all such agreements with respect to the management, cleaning, control,
use, operation, storage, leasing of or otherwise dealing with the Mortgaged
Properties, or any part thereof, as the Mortgagee may determine; and, to the
fullest extent permitted by law, the Mortgagee shall be entitled to collect and
receive all tolls, rents, revenues, issues, income, products and profits of each
of the Mortgaged Properties and every part thereof. Such tolls, rents, revenues,
issues, income, products and profits may be applied to pay the expenses of the
management, control, use, operation, storage, leasing of or otherwise dealing
with the Premises and of conducting the business thereof, and of all
maintenance, repairs, replacements and, to the extent commercially reasonable
under the circumstances in existence at the time, alterations, additions and
improvements, and to make all payments which the Mortgagee may be required or
may elect to make, if any, for Impositions, or other taxes, assessments,
insurance or other proper charges upon the Premises or any part thereof
(including the employment of engineers and accountants to examine, inspect and
make reports), and all other payments which the Mortgagee may be required or
authorized to make under any provision of this Mortgage or the Indenture.
77. RIGHT OF THE MORTGAGEE TO PERFORM THE MORTGAGORS' COVENANTS. If
-----------------------------------------------------------
the Mortgagors (or any of them) shall fail to make any payment or perform any
act required to be made or performed hereunder, the Mortgagee, upon notice to
the Mortgagors and upon the expiration of any applicable grace or cure period
provided in Article 23 (except in cases of emergency that threatens bodily
injury or material damage to property, in which case the Mortgagee will allow
such notice and grace or cure period, if any, as is reasonable under the
circumstances) and subject to each Mortgagor's right of contest under Article 12
hereof, but without waiving or releasing any obligation, Default or Event of
Default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of the
Mortgagors, and, to the extent permitted by applicable law, may enter
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upon the Premises for such purpose and take all such action thereon as, in the
judgment of the Mortgagee, may be reasonably necessary or appropriate therefor,
subject to the rights of Tenants. All sums so paid by the Mortgagee and all
reasonable costs and expenses (including all attorneys' fees and expenses) so
incurred, together with interest thereon at the highest rate of interest
applicable to the Notes on the date hereof from the date of payment by the
Mortgagee until paid, shall constitute additional indebtedness secured by this
Mortgage and, subject to the provisions of Article 38 hereof, shall be paid by
the Mortgagors to the Mortgagee upon demand therefor.
35. REMEDIES CUMULATIVE. Subject to the provisions of Article 38
-------------------
hereof, to the extent permitted under applicable law each right, power and
remedy of the Mortgagee provided for in this Mortgage or now or hereafter
existing at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Mortgage or now or hereafter existing at law or in equity
or by statute (including the Uniform Commercial Code as enacted in the State
where any Mortgaged Property is located) or otherwise, and the exercise or
beginning of the exercise by the Mortgagee of any one or more of the rights,
powers or remedies provided for in this Mortgage or now or hereafter existing at
law or in equity or by statute or otherwise shall not preclude the simultaneous
or later exercise by the Mortgagee, to the extent permitted by law, of any or
all of such other rights, powers or remedies.
36. APPLICABLE LAW. (a) All rights, powers and remedies provided
--------------
herein may be exercised only to the extent that the exercise thereof, including
those which do not require the giving of notice, do not violate any applicable
law, and are intended to be limited to the extent necessary so that they will
not render this Mortgage invalid, unenforceable or not entitled to be recorded,
registered or filed under any applicable law. All waivers, consents, confessions
and releases provided for in this Mortgage are effective only to the extent
permitted by applicable law.
(B) THIS MORTGAGE WAS NEGOTIATED AND MADE BY EACH MORTGAGOR IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN SECURED HEREBY WERE DISBURSED
FROM NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO
THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. IN ALL RESPECTS,
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY OF AND ENFORCEABILITY
OF THIS MORTGAGE, THE NOTES AND THE INDENTURE, AND THE INDEBTEDNESS OR
OBLIGATIONS ARISING THEREUNDER, BUT THE CREATION, VALIDITY, PERFECTION, PRIORITY
AND ENFORCEABILITY OF THE LIEN, SECURITY TITLE AND SECURITY INTEREST IN A
PARTICULAR MORTGAGED PROPERTY CREATED BY THIS MORTGAGE, ALL WARRANTIES OF TITLE
CONTAINED HEREIN WITH RESPECT TO SUCH MORTGAGED PROPERTY AND ALL PROVISIONS
HEREOF RELATING TO THE REALIZATION OF THE SECURITY COVERED BY THIS MORTGAGE AND
RELATING TO SUCH MORTGAGED PROPERTY SHALL BE GOVERNED BY THE LAWS OF THE STATE
IN WHICH SUCH MORTGAGED PROPERTY IS LOCATED
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AND THE MORTGAGORS AND THE MORTGAGEE WILL SUBMIT TO JURISDICTION AND THE LAYING
OF VENUE FOR ANY SUIT ON THIS MORTGAGE IN EACH SUCH STATE.
37. NO WAIVER. No failure by the Mortgagee to insist upon the strict
---------
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof shall constitute a waiver of any such term or
of any such breach. No waiver of any breach shall affect or alter this Mortgage,
which shall continue in full force and effect, or shall affect or alter the
rights of the Mortgagee with respect to any other then-existing or subsequent
breach. None of the Mortgagors nor any other person now or hereafter obligated
for payment of all or any part of the sums now or hereafter secured by this
Mortgage shall be relieved of such obligation by reason of the failure of the
Mortgagee to comply with any request of any of the Mortgagors or of any other
person so obligated, to take action to foreclose on this Mortgage or otherwise
to enforce any provisions of this Mortgage or the Notes or by reason of the
release, regardless of consideration, of all or any part of the security held
for the indebtedness secured by this Mortgage, or by reason of any agreement or
stipulation between any subsequent owner of any of the Mortgaged Properties and
the Mortgagee extending the time of payment or modifying the terms of this
Mortgage or the Notes without first having obtained the consent of the
Mortgagors or such other persons; and in the latter event each Mortgagor and all
such other persons shall continue to be liable, subject to Article 38, to make
payments according to the terms of any such extension or modification agreement,
unless expressly released and discharged in writing by the Mortgagee.
38. OBLIGATIONS ARE WITHOUT RECOURSE. (a) The obligations of the
--------------------------------
Mortgagors under this Mortgage and the other Security Documents are joint and
several. Anything contained in this Mortgage or the other Security Documents to
the contrary notwithstanding (except as provided below in this Section 38), the
recourse of the Mortgagee, the Servicer, any Holder of a Note or any other
Person, their respective successors and assigns, and all persons and/or entities
whose rights under this document arise by, through or under any of the foregoing
Persons, for the satisfaction of the indebtedness due under the Notes and for
the payment and performance of all of the obligations and liabilities of the
Mortgagors under this Mortgage or the other Security Documents shall be limited:
(x) solely to each Mortgagor's interest in the Pledged Assets, and
none of the Mortgagors, General Growth, GGP, any of the Ivanhoe
Entities or any of their respective successors or assigns, or any
partner (general or limited, or a subpartner at any level), member,
tenant in common, officer, director, trustee, beneficiary, shareholder,
controlling person, employee, agent, contractholder or policyholder, or
any Affiliate of any of the foregoing (collectively, "Exculpated
----------
Persons"), shall be liable in any other respect for (i) the payment of
-------
the principal of or interest, Make-Whole Payment, if any, or Additional
Amounts, if any, on the Notes, or (ii) the payment of any other
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amount due under the Notes, this Mortgage or the other Security
Documents, or (iii) damages for the breach of, or any costs or expenses
associated with the performance of or failure to perform, any of the
covenants, obligations, representations, warranties or indemnifications
contained herein or in the Notes or the other Security Documents, and
(y) with respect to each Mortgagor, such that the total liability of
that Mortgagor under the Notes, this Mortgage, the Indenture and each
other Security Document shall not
(i) at any time during the period from the date hereof to a date
one year and a day after the date hereof exceed the sum of (A) the
Allocated Amount for the Mortgaged Property identified on Exhibit A
---------
as being owned by such Mortgagor plus (B) such Mortgagor's Net Worth
on the date hereof, less (C) $1,000, and
(ii) at any time after the period referred to in clause (i) above
exceed the sum of (A) the Allocated Amount for the Mortgaged
Property identified on Exhibit A as being owned by such Mortgagor
---------
plus (B) the greater of such Mortgagor's Net Worth on the date
hereof and such Mortgagor's Net Worth on the date such determination
is being made (it being understood that for purposes of determining
such Mortgagor's Net Worth on any date subsequent to the date that
is one year and a day after the date hereof, such Mortgagor's
liabilities shall only include liabilities that are permitted under
the terms of the Security Documents), less (C) $1,000.
For purposes of the foregoing, "Net Worth" of a Mortgagor shall mean
the positive net worth of such Mortgagor, based on the sum of (x) the
fair saleable value of its assets (determined after giving effect to
distributions, if any, by such Mortgagor to such Mortgagor's partners,
members or other equity investors, as applicable, of the proceeds of
the Loan received by such Mortgagor on account of the issuance of the
Notes and determined in accordance with applicable laws governing
determinations of the insolvency of debtors), less (y) its liabilities
(determined as in clause (x) above), including a portion of the Loan
equal to the Allocated Amount for the Mortgaged Property identified on
Exhibit A as being owned by such Mortgagor, but excluding amounts
---------
payable under the Notes, this Mortgage, the Indenture and any other
Security Documents in excess of such Allocated Amount.
Each document that is executed by any Mortgagor and/or any other Exculpated
Persons pursuant to or in connection with this Mortgage and/or any other
Security Documents
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shall either expressly incorporate, or shall be deemed to incorporate, the
provisions contained in this Article 38.
(b) In furtherance of the foregoing, it is expressly understood and
agreed that nothing herein nor any act of any Mortgagor nor any document or
instrument executed by the Mortgagors (or any of them) in connection herewith
shall create or impose on any Mortgagor or any other Exculpated Persons any
personal liability, and this Mortgage is executed by each Mortgagor with the
express understanding and agreement that nothing herein contained or under any
of the Security Documents (including the Indenture and the Notes) shall be
construed as creating any liability on the part of the Mortgagors or any other
Exculpated Persons personally, to pay the principal obligation or any interest
that may accrue thereon or any indebtedness that may accrue hereunder or under
any of the other Security Documents (including the Indenture and the Notes) or
to perform any covenant, either express or implied, herein contained, and that
every Person now or hereafter claiming any right or security hereunder shall
look solely to the Pledged Assets for the payment thereof and the enforcement of
any lien hereby created or the enforcement of any covenant, condition or
agreement contained herein or under any of the other Security Documents
(including the Indenture and the Notes).
(c) The provisions of Section 38(a) and (b) hereof shall not (i)
constitute a waiver, release or impairment of any obligation of any Mortgagor
(without recourse to its partners, members or other equity investors) to the
extent that it would impair the Mortgagee's right or ability to declare an Event
of Default, accelerate the maturity of the indebtedness evidenced or secured by
the Notes, this Mortgage or any other Security Document, (ii) constitute a
waiver of the Mortgagee's right under Section 1111(b) of the United States
Bankruptcy Code to claim against any Mortgagor (without recourse to its
partners, members or other equity investors) which is a debtor in a bankruptcy
proceeding the full amount of the indebtedness evidenced by the Notes or
incurred pursuant to any of the other Security Documents or (iii) impair the
right of the Mortgagee to obtain a deficiency judgment (without recourse to any
partner, member or other equity investor in any Mortgagor) in any action or
proceeding in order to preserve its rights and remedies against Collateral as to
which a lien is granted hereunder, including, without limitation, foreclosure,
nonjudicial foreclosure or the exercise of a power of sale, under this Mortgage.
39. STAMP AND OTHER TAXES. Subject to the provisions of Article 12
---------------------
relating to permitted contests and Section 3.8(g) of the Indenture relating to
stamp and other taxes due upon transfers of Notes, each Mortgagor will pay any
United States documentary stamp taxes, with interest and fines and penalties, if
any, and any city, county or state mortgage recording taxes, with interest and
fines and penalties, if any, that may hereafter be levied, imposed or assessed
under or upon or by reason of this Mortgage or any instrument or transaction
(including a transfer of any Mortgaged Property and an assumption by the
transferee of the indebtedness evidenced by the
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Notes) affecting or relating thereto. In the event of any Mortgagor's failure to
pay any such amounts, the Mortgagee may advance the same and the amount so
advanced, together with interest thereon at the highest interest rate applicable
to any series of the Notes on the date hereof, shall be due and payable by the
Mortgagors to the Mortgagee within ten (10) days after demand therefor and shall
be considered Secured Obligations and shall be secured by the Lien of this
Mortgage. Except as set forth in Section 10.4 of the Indenture, none of the
Mortgagors shall be obligated to pay any taxes which may be imposed upon the
income of the Mortgagee.
40. FURTHER ASSURANCES. Subject to the provisions of Article 38 hereof,
------------------
the Mortgagors, at their own expense, will execute, acknowledge and deliver all
such instruments and take all such actions as the Mortgagee from time to time
reasonably may request or as may be reasonably necessary or proper for the
better assuring to the Mortgagee of the properties and rights now or hereafter
subject to the Lien hereof or intended so to be.
41. ESTOPPEL CERTIFICATES. The Mortgagors and the Mortgagee each will,
---------------------
from time to time, upon fourteen (14) days' prior written request by the other
party, execute, acknowledge and deliver to the requesting party, in the case of
a request directed to the Mortgagee, a certificate signed by an authorized
officer or officers and in the case of a request directed to the Mortgagors, an
Officer's Certificate from the Mortgagors, stating that this Mortgage is
unmodified and in full force and effect (or, if there have been modifications,
that this Mortgage is in full force and effect as modified and setting forth
such modifications) and stating the interest accrued to date on the aggregate
principal amount of the Notes then outstanding. The estoppel certificate from
the Mortgagee shall also state either that, to the best knowledge of the signer
of such certificate but with no independent investigation, no Default or Event
of Default exists hereunder or, if any Default or Event of Default shall exist
hereunder, specify each Default or Event of Default of which the Mortgagee has
actual knowledge.
42. ADDITIONAL SECURITY. Without notice to or consent of the Mortgagors
-------------------
(or any of them) and without impairment of the Lien and rights created by this
Mortgage, the Mortgagee may accept (but the Mortgagors shall not be obligated to
furnish) from the Mortgagors (or any of them) or from any other Person or
Persons, additional security for the Notes.
43. FINANCING STATEMENT. This Mortgage shall be deemed to be and may be
-------------------
enforced from time to time as a mortgage, chattel mortgage, assignment,
contract, security agreement, financing statement, or lien on machinery or other
Equipment situated on the Premises, and from time to time as any one or more
thereof, and shall constitute, with respect to each Mortgaged Property, a
"fixture filing" for the purposes of Article 9 of the Uniform Commercial Code as
enacted in the State where the Mortgaged Property is located.
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44. RELEASE; SUBSTITUTE PROPERTY.
----------------------------
44.1. Release of Mortgaged Properties. (a) If the Mortgagors shall pay
-------------------------------
or cause to be paid to the Mortgagee on behalf of the Holders of Notes the
principal of and interest (and Make-Whole Payment, if any) on the Notes in full
at maturity or earlier as permitted in accordance with the terms of the
Indenture and all other sums payable by the Mortgagors (or any of them) to the
Mortgagee hereunder and under the other Security Documents or secured hereby or
by the other Security Documents, then this Mortgage and all the other Security
Documents shall be discharged and satisfied or, if requested by the Mortgagors
and to the extent not prohibited by law, assigned (to the Mortgagors or to any
other Person at the Mortgagors' direction), at the Mortgagors' option and its
expense, without representation, recourse or warranty, other than for the acts
of the Mortgagee. Concurrently with such release and satisfaction or assignment
of this Mortgage and all the other Security Documents, the Mortgagee will return
to the Mortgagors (or deliver to any Person designated by the Mortgagors) the
Notes, executed originals of the other Security Documents and all title and
other insurance policies relating to the Mortgaged Properties and, on the
written request and at the expense of the Mortgagors, will execute and deliver
such proper instruments of release or assignment, as applicable (including
appropriate UCC-3 termination statements and/or assignment statements) as may
reasonably be requested by the Mortgagors to evidence such release and
satisfaction or assignment, and any such instrument, when duly executed by the
Mortgagee and duly recorded in the places where this Mortgage and each other
Security Document is recorded, shall conclusively evidence the release and
satisfaction or assignment of this Mortgage and the other Security Documents. In
furtherance of the foregoing, the provisions of Section 4.6 of the Indenture are
hereby incorporated into this Mortgage by reference. Any release of this
Mortgage with respect to the Mortgaged Property pursuant to Section 44.1(c) or
(d) shall be also effected in accordance with the procedures specified in the
immediately preceding two sentences to the extent applicable to such release.
(b) Any Mortgagor may elect at any time and from time to time during the
term of the Notes to be released from part or all of such Mortgagor's
obligations under the Notes and in connection therewith to have all or a portion
of the Mortgaged Property identified on Exhibit A as being owned or leased by
---------
such Mortgagor released from the Lien of this Mortgage, provided that such
Mortgagor complies with Section 44.1(c) hereof and the applicable provisions of
Article IV and XI of the Indenture. Any Eligible Collateral given by the
Mortgagors (or any of them) to the Mortgagee pursuant to this Section 44.1(b),
Section 44.1(c) hereof and Article IV of the Indenture, and any interest
accruing thereon, shall be irrevocably and unconditionally conveyed to the
Mortgagee free and clear of any claim of the Mortgagors (or any of them), and
not as security for repayment of obligations under the Notes. In the event of a
release in part of the obligations of the Mortgagors under the Notes, this
Mortgage may be enforced against
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the remaining Mortgaged Properties only to the extent of the amount of the
principal balance remaining outstanding on the Notes at the time of enforcement
(after giving effect to any partial releases as a result of the delivery of
Eligible Collateral, together with all income and other predetermined and
certain income from the investment thereof) and the amount of the other
obligations of the Mortgagors under the Indenture, this Mortgage and the other
Security Documents secured hereby and thereby.
(c) Except as otherwise provided in Article 15 or in Section 19.4, in
the event that the Mortgagors desire to obtain a release from the lien of this
Mortgage of one or more of the Mortgaged Properties, the Mortgagee shall consent
to the release of such property (the "Release Premises") from the lien of this
----------------
Mortgage, provided that (i) in connection with the release Notes are prepaid or
defeased in accordance with Article IV or Article XI of the Indenture in an
aggregate principal amount at least equal to 125% of the Allocated Amount
applicable to each such Mortgaged Property, but in no event more than the entire
aggregate amount payable with respect to all then-outstanding Notes and (ii) no
Event of Default has occurred and is continuing, unless the proposed release, by
itself, will eliminate the basis for all outstanding Events of Default, in which
case the requirement of this clause (ii) will be deemed to be satisfied. In
determining the principal amount of the Notes to be redeemed in connection with
the release of a Mortgaged Property under the foregoing sentence, the Allocated
Amount for such Mortgaged Property shall not be adjusted by reason of any prior
voluntary prepayment, except in the case of a partial prepayment resulting from
a Casualty or Condemnation as permitted or required under Article 15 of this
Mortgage, in which case the Allocated Amount for such Mortgaged Property shall
be reduced by the amount of any such prepayment.
44.2. Substitute Property. (a) Substitution. Except as expressly
------------------- ------------
provided in this Section 44.2 or otherwise in this Mortgage in connection with
the replacement of deteriorated or obsolete portions of any portion of any
Mortgaged Property or the release of portions of any of the Mortgaged Properties
generally, the Mortgagors may not substitute any property or properties for any
Mortgaged Properties without the prior written consent of the Mortgagee, which
consent may be given or withheld by the Mortgagee in its sole and absolute
discretion. At any time that a Default or Event of Default (other than a
monetary default) has occurred which is the result of an event, condition or
state of facts resulting from or relating to a particular Mortgaged Property or
a breach by any Mortgagor of any obligation of such Mortgagor with respect to a
particular Mortgaged Property contained in this Mortgage, the Assignment of
Leases or any other Security Document, the Mortgagors may (but shall not be
obligated to) substitute a new property (a "Substitute Mortgaged Property") in
lieu of such Mortgaged Property and on any five (5) other occasions selected by
the Mortgagors in their sole discretion (and without the requirement that a
Default or Event of Default has occurred), the Mortgagors may (but shall not be
obligated to) substitute a new property in lieu of
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any one of the Mortgaged Properties, provided that each of the following
conditions is satisfied in connection with any such substitution:
(i) The Mortgagors shall deliver written notice (a "Substitution
Notice") to the Mortgagee (x) describing the circumstances giving rise
to the Default or Event of Default, if any, and (y) stating their
intention to replace the relevant Mortgaged Property with the
Substitute Mortgaged Property (such notice to be delivered not less
than 20 days, nor more than 45 days, prior to the date upon which the
Mortgagors intend to effect such substitution), which Substitution
Notice shall, if given prior to the date a Notice of Redemption (as
defined in the Indenture) is issued in accordance with Article XI of
the Indenture as a result of the acceleration of the Loan hereunder
after an Event of Default, operate to stay the declaration of any
Default or Event of Default relating to such Mortgaged Property and the
exercise by the Mortgagee of any remedies in connection with such
Default or Event of Default, and which Substitution Notice shall
contain or shall be accompanied by all of the following information:
(1) a current title commitment, issued by the Title Company or
another reputable title insurer reasonably acceptable to the Mortgagee,
for the Substitute Mortgaged Property, together with copies of (or
reasonable access to copies of) (A) all instruments appearing on
Schedule B to such title commitment (other than Leases and instruments
relating to Leases if such Leases and related instruments are already
in the Mortgagee's possession), and (B) all anchor Leases, Operating
Agreements, ground leases and reciprocal easement agreements relating
to the Substitute Mortgaged Property;
(2) a current survey of the Substitute Mortgaged Property, in form
and detail (including certifications) substantially similar to the
surveys delivered by the Mortgagors to the Mortgagee on or prior to the
date of this Mortgage;
(3) evidence of the casualty and property insurance then in effect
for the Substitute Mortgaged Property, including the identity of the
carriers thereof;
(4) a current rent roll for the Substitute Mortgaged Property, in
form and detail substantially similar to the rent rolls delivered by
the Mortgagors to the Mortgagee on or prior to the date of this
Mortgage with respect to the Mortgaged Properties;
(5) [intentionally omitted];
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(6) a current phase I environmental report for the Substitute
Mortgaged Property (the "Substitute Property Phase I Report") and, if
recommended pursuant to such phase I environmental report, a current
phase II environmental report for the Substitute Mortgaged Property;
(7) a current statement of cash flow for the Substitute Mortgaged
Property; and
(8) calculation of the Debt Service Coverage Ratio, which shall be
not less than 1.4:1, after giving effect to the proposed substitution,
indicating the satisfaction of such ratio, or, if such ratio will not
be satisfied after giving effect to such substitution, indicating the
principal balance of the Notes that the Mortgagors intend to prepay in
order to satisfy such ratio (and if such a prepayment is required,
evidence of satisfaction of all conditions contained in Article XI of
the Indenture relating thereto);
(ii) all payments of principal of, interest on and Make-Whole Payment,
if any, in respect of the Notes required to be paid on or before the
date of such substitution shall have been paid and all other amounts
theretofore or at such time required to be paid under the Security
Documents shall have been received by the Mortgagee;
(iii) the Mortgagors shall have delivered an Officer's Certificate
to the Mortgagee at least 30 days prior to the date upon which the
Mortgagors desire to effect such substitution, and updated on the date
of such substitution, certifying in each case that (x) the conditions
in this Section have been satisfied (or will be on or prior to the date
of such substitution) and (y) the representations and warranties
contained in Section 2.1, Section 2.2 and Section 2.5, as applied to
(A) the Substitute Mortgaged Property and (B) the actions to be taken,
the consents and approvals to be obtained, the Legal Requirements
applicable to and the documents to be delivered by the Mortgagors at or
in connection with the closing for the Substitute Mortgaged Property,
are or will be true and correct;
(iv) immediately prior to and after giving effect to the proposed
substitution, no Event of Default shall have occurred and be continuing
(other than the Event of Default, if any, relating to the Mortgaged
Property being substituted, which Event of Default shall terminate upon
such substitution);
(v) the proposed Substitute Mortgaged Property shall be devoted
principally to use as an enclosed regional Shopping Center of at least
the same general character and quality as the Mortgaged Property being
replaced;
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(vi) concurrently with the closing of such substitution, the
Mortgagor that owns the Mortgaged Property to be replaced shall divest
itself of all ownership interests in the Mortgaged Property to be
replaced and shall acquire and own the fee and/or leasehold interests
in the Substitute Mortgaged Property free and clear of all Liens other
than such Liens as would constitute Permitted Exceptions hereunder;
(vii) the Mortgagors shall have obtained Rating Confirmation;
(viii) concurrently with such substitution the Mortgagor and the
Issuers will amend the Mortgage and the Assignment of Leases as
necessary to cause such instruments to encumber the Mortgagor's
interests in the Substitute Mortgaged Property; and
(ix) the Mortgagors shall have obtained and delivered to the
Mortgagee a Tax Opinion.
(b) The Mortgagee's Review. Upon its receipt of the Substitution
----------------------
Notice and other information required pursuant to Section 44.2(a)(i), the
Mortgagee shall (and, at the expense of the Mortgagors, shall cause its counsel
and the Mortgagee's or the Servicer's environmental consultant, without
duplication to) review and evaluate the same, and shall, within 15 days, notify
the Mortgagors of:
(i) any matters shown in the title report relating to such
Substitute Mortgaged Property to which the Mortgagee objects and which
(A) indicate the existence of Liens materially greater in scope or
amount than those generally accepted by the Mortgagee as Permitted
Exceptions for the original Mortgaged Properties, or (B) render title
uninsurable pursuant to a title insurance policy similar in form and
coverage to those issued in respect of the Mortgaged Properties on the
Closing Date, taking account of specific guidelines applicable to
title insurance in the jurisdiction in which the Substitute Mortgaged
Property is located;
(ii) any matters shown on the survey relating to such Substitute
Mortgaged Property to which the Mortgagee objects and which (A)
indicate the existence of Liens materially greater in scope or amount
than those generally accepted by the Mortgagee as Permitted Exceptions
for the original Mortgaged Properties, or (B) render title uninsurable
pursuant to a title insurance policy similar in form and coverage to
those issued in respect of the Mortgaged Properties on the Closing
Date, taking account of specific guidelines applicable to title
insurance in the jurisdiction in which the Substitute Mortgaged
Property is located;
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(iii) any matters regarding compliance with Environmental Laws or
Hazardous Substance Activity at or relating to such Substitute Mortgaged
Property to which the Mortgagee objects upon advice from any
environmental consultant retained by the Mortgagee in connection with its
review of the Substitute Mortgaged Property and which (x) are set forth
in the Substitute Property Phase I Report relating to such Substitute
Mortgaged Property, and (y) are recommended to be remedied or otherwise
reserved against by the Mortgagee's environmental consultant; and
(iv) any matters which, in the Mortgagee's reasonable opinion, indicate
that the Mortgagors have inaccurately determined the Debt Service
Coverage Ratio pursuant to Section 44.2(a)(i)(8).
(c) The Mortgagee's Objections. Upon receipt of any notice from the
--------------------------
Mortgagee pursuant to clause (i) or (ii) of Section 44.2(b), Mortgagors may, at
their election, (x) undertake to remedy any such title or survey defect, in
which circumstance the Mortgagors shall be afforded any extension of the
projected date for effecting the substitution as is necessary to complete such
remediation, and which remediation may be effected by providing to the title
insurer documents and instruments sufficient to allow the title insurer to
"insure over" such title or survey defect to the reasonable satisfaction of the
Mortgagee, or (y) withdraw their proposal to make the substitution by written
notice to the Mortgagee (a "Withdrawal Notice"), which Withdrawal Notice shall
either (A) state that the Mortgagors no longer intend to replace the proposed
Mortgaged Property (and upon its receipt of such notice the Mortgagee shall have
the right to declare a Default or Event of Default, if the same has occurred as
of such date, and exercise remedies in respect thereof in accordance with the
Security Documents), or (B) state that the Mortgagors intend to replace the
Mortgaged Property with another Substitute Mortgaged Property, in which event
such Withdrawal Notice shall constitute the Substitution Notice required
pursuant to Section 44.2(a)(i) in respect of such Substitute Mortgaged Property
and shall include or be accompanied by all information required by such Section,
provided that, in any event, such substitution shall be consummated no later
than 180 days from the date of the Substitution Notice for the withdrawn
Substitute Mortgaged Property.
Upon receipt of any notice from the Mortgagee pursuant to clause (iii) of
Section 44.2(b), the Mortgagors may, at their election, (x) undertake to remedy
any such environmental condition, in which circumstance the Mortgagors shall be
afforded, subject to Section 44.2(g), a reasonable extension of the projected
date for effecting the substitution necessary to complete such remediation, (y)
establish an escrow account with the Mortgagee for the purpose of securing the
performance of the remediation work, which escrow account shall be established
upon terms reasonably satisfactory to the Mortgagee, or (z) deliver a Withdrawal
Notice to the Mortgagee.
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Upon receipt of any notice from the Mortgagee pursuant to clause (iv) of
Section 44.2(b), the Mortgagors may, at their election, (x) agree to prepay
Notes in accordance with Article XI of the Indenture in an amount sufficient to
satisfy the Mortgagee's objections, (y) provide further information to the
Mortgagee in an effort to cause the Mortgagee to withdraw its objections, or (z)
deliver a Withdrawal Notice to the Mortgagee.
(d) The Mortgagors' Deliveries. On or before the date of the
--------------------------
consummation of such substitution, the Mortgagors shall deliver or cause to be
delivered to the Mortgagee (i) a mortgage or deed of trust (the "Substitute
Mortgage") encumbering the Substitute Mortgaged Property as security for the
Secured Obligations, substantially in the form of this Mortgage (but modified to
account for laws of the jurisdiction in which the Substitute Mortgaged Property
is located); (ii) an assignment of leases and rents (the "Substitute Assignment
of Leases") encumbering the leases of portions of the Substitute Mortgaged
Property as security for the Secured Obligations, substantially in the form of
the Assignment of Leases (but modified to account for laws of the jurisdiction
in which the Substitute Mortgaged Property is located); (iii) an environmental
indemnity agreement (the "Substitute Environmental Indemnity") signed by the
Substitute Mortgagor and relating to the Substitute Mortgaged Property,
substantially in the form of the Environmental Indemnity (but modified as may be
appropriate in the reasonable discretion of the Mortgagee to account for the
laws of the jurisdiction in which the Substitute Mortgaged Property is located);
(iv) an Assignment of Contracts (the "Substitute Assignment of Contracts"); (v)
a Subordination of Management Agreement (the "Substitute Subordination of
Management Agreement"); (vi) a written instrument signed by the Substitute
Mortgagor and in form and substance satisfactory to the Mortgagee, acting
reasonably, in which such Substitute Mortgagor assumes all of the obligations of
an "Issuer" under the Indenture, a maker under each of the Notes and a Mortgagor
under this Mortgage; (vii) UCC-1 Financing Statements relating to the Substitute
Mortgage for filing with the appropriate Secretary of State and City or County
Clerk or otherwise as required by local law; (viii) a mortgagee title insurance
policy for the Substitute Mortgaged Property, based upon the title commitment
described in Section 44.2(a)(i), incorporating remedies of the reasonable title
objections made by the Mortgagee, issued by the Title Company or such other
title insurer as is reasonably acceptable to the Mortgagee and substantially in
the form of the title insurance policies delivered on the Closing Date in
respect of the Mortgaged Properties (including, without limitation, as to
endorsements thereto, to the extent the same are available at reasonable rates
in the jurisdiction where the Substitute Mortgaged Property is located); (ix) a
current survey of the Substitute Mortgaged Property, certified by a licensed
surveyor in a form substantially similar to the survey certifications delivered
in connection with the Mortgaged Properties on the Closing Date; (x)
certificates of insurance from the carriers of the property and casualty
insurance relating to the Substitute Mortgaged Property fulfilling the
requirements therefor set forth in Article 13 hereof; and (xi) an opinion or
opinions of counsel as to the due authorization, execution and delivery by the
Mortgagors
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of the Substitute Mortgage and the Substitute Assignment of Leases, and the
validity and enforceability of such documents under the laws of the jurisdiction
in which the Substitute Mortgaged Property is located, addressing such matters
in respect of the Substitute Mortgage and Substitute Assignment of Leases as
were addressed in the opinions of counsel delivered on the Closing Date in
respect of this Mortgage and the Assignment of Leases. Additionally, the
Mortgagors shall use reasonable efforts to obtain, either prior to or within a
reasonable period of time following such substitution, estoppel certificates and
subordination agreements from tenants under anchor Leases and parties to
Operating Agreements, as applicable, at the Substitute Mortgaged Property, which
estoppel certificates and subordination agreements shall provide at least the
minimum protection required to be afforded to a mortgagee pursuant to the
provisions of such tenant's anchor Lease or such party's Operating Agreement, as
the case may be.
On or before the date of the consummation of such substitution and
provided that all conditions contained in this Section 44.2 have been satisfied
to the Mortgagee's reasonable satisfaction, the Mortgagee shall deliver to the
Mortgagors all documentation necessary to effect the release of the Lien of this
Mortgage upon the Mortgaged Property being substituted, as more particularly
described in Section 44.1 hereof.
(e) Costs; Cooperation. Each Mortgagor and the Mortgagee agree to
------------------
cooperate with one another in order to effect any such substitution in a timely
and cost-effective manner. All costs and expenses incurred by any Mortgagor and
the Mortgagee in connection with any such substitution shall be for the account
of the Mortgagors, including, without limitation, reasonable attorneys' fees,
recording and filing fees, costs of title searches, surveys and title insurance
premiums.
(f) Mortgaged Property. Upon consummation of any substitution under
------------------
this Section 44.2, (i) the Mortgaged Property released in connection therewith
shall cease to be a "Mortgaged Property" hereunder and under the other Security
Documents, (ii) the Substitute Mortgaged Property shall constitute a "Mortgaged
Property" for all purposes (including, without limitation, in connection with
any determination of the Pledged Assets and any calculation relating thereto),
and (iii) the Substitute Mortgage and Substitute Assignment of Leases shall
constitute additional Security Documents for all purposes hereunder and under
the other Security Documents.
(g) Failure to Effect Substitution. If for any reason other than the
------------------------------
negligence, wilful misconduct or breach of an obligation contained in the
Security Documents by the Mortgagee, such substitution is not consummated on or
before the latest date for substitution which is set forth in the Substitution
Notice or, in the event any extensions of time have been granted pursuant to the
above provisions, 180 days after the relevant original Substitution Notice, the
Mortgagee may, at its option, elect either to (i) grant the Mortgagors an
extension of time to effect the consummation of such substitution, or (ii) by
written notice to the Mortgagors, declare a Default or Event
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of Default (if the same has occurred on such date), and commence pursuit of
remedies under the Security Documents in respect thereof.
45. CONFIDENTIALITY. The Mortgagee agrees to keep confidential all
---------------
financial statements and other information obtained by it from any Mortgagor
pursuant to this Mortgage as and to the extent provided in Section 6.6 of the
Indenture and to not disclose such information to any other Person except (i) to
the Holders pursuant to the terms of this Mortgage and the Indenture (subject to
the confidentiality restrictions set forth in the Indenture applicable to the
Mortgagee and the Holders), to the Initial Purchasers (as defined in the
Indenture) and to the Rating Agency, (ii) to the extent required by any law, or
(iii) to the extent that such information is public when received by the
Mortgagee or becomes public thereafter due to the action or omission of any
party other than the Mortgagee and the Holders.
46. SECURITY AGREEMENT, ETC.
------------------------
46.1. Grant of Security. In addition to functioning, with respect to
-----------------
those portions of the Mortgaged Properties that are classified as real estate,
as a mortgage in each Mortgage State and a deed of trust in each Deed of Trust
State, this Mortgage is also a security agreement within the meaning of the
Uniform Commercial Code of the state where each Mortgaged Property is located
with respect to all personal property now or hereafter located at such Mortgaged
Property and owned by the applicable Mortgagor as to which the creation and
perfection of a security interest are subject to such Uniform Commercial Code
(the "Personal Property"). Each Mortgagor hereby grants to the Mortgagee a
-----------------
security interest in and to the Personal Property constituting a part of the
Mortgaged Property identified in Exhibit A as being owned or leased by such
---------
Mortgagor to secure the payment of the Notes. Any completely executed
counterpart of this instrument may be filed as a mortgage or deed of trust on
real property or fixtures, as a security agreement or financing statement on
Personal Property or as both. The address of the Mortgagors, as debtor, and the
address of the Mortgagee, as secured party, are shown on page 1 of this
Mortgage.
46.2. Financing Statements. The Mortgagors shall cause all financing
--------------------
and continuation statements and other instruments with respect to the Personal
Property at all times to be kept recorded, filed or registered in such manner
and in such places as may be required by law to fully evidence, perfect and
secure the interests of the Mortgagee in the Personal Property, and shall pay
all filing fees in connection therewith. The Mortgagors hereby appoint the
Mortgagee as their attorney-in-fact to perform the obligations of the Mortgagors
under this Section 46.2, at the expense of the Mortgagors, in the event they
fail to do so.
46.3. Multiple Remedies. If an Event of Default shall have occurred and
-----------------
be continuing, the Mortgagee shall have the option of proceeding, to the extent
permitted under applicable law, as to both real and personal property in
accordance with its rights
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and remedies in respect of the real property as an alternative to proceeding in
accordance with the provisions of the Uniform Commercial Code; and the Mortgagee
may exercise any and all of the other rights of a secured party under such
Uniform Commercial Code.
46.4. Waiver of Rights. To the extent permitted under applicable law,
----------------
each Mortgagor waives all rights of redemption after foreclosure and all other
rights and remedies of a debtor thereunder and all formalities prescribed by law
relative to the sale or disposition of the Personal Property after the
occurrence and during the continuance of an Event of Default hereunder and all
other rights and remedies of the Mortgagors with respect thereto. In exercising
its right to take possession of the Personal Property upon the occurrence and
during the continuance of an Event of Default hereunder, the Mortgagee,
personally or by its agents or attorneys, and subject to the rights of any
Tenant, may enter upon any part of the Premises without being guilty of trespass
or any wrongdoing, and without liability for damages thereby occasioned, except
damages arising from the Mortgagee's negligence or willful misconduct. To the
extent any notice of sale or other disposition of the Personal Property is
required and cannot be waived, in the event the Mortgagee elects to proceed with
respect to the Personal Property separately from the real property, the
Mortgagee shall give at least ten (10) Business Days' notice of the sale of the
Personal Property, which shall for all purposes be deemed to be commercially
reasonable. All recitals in any instrument of assignment or any other
instrument executed by the Mortgagee incident to any sale, transfer, assignment,
lease or other disposition or utilization of the Personal Property or any part
thereof shall be full proof of the matter stated therein and no other proof
shall be required to establish full legal propriety of the sale or other action
taken by the Mortgagee or of any fact or condition incident thereto, all of
which shall, absent gross error or fraud, be deemed conclusively to have been
performed or to have occurred.
46.5. Expenses of Disposition of the Properties. The Mortgagors shall
-----------------------------------------
reimburse the Mortgagee, within thirty (30) Business Days after demand, for all
reasonable expenses of retaking, holding, preparing for sale, lease or other use
or disposition, selling, leasing or otherwise using or disposing of the Personal
Property which are incurred, including all reasonable attorneys' fees and
expenses, and all such expenses shall be added to the obligations of the
Mortgagors to the Mortgagee and shall be secured hereby.
47. EXPENSES OF THE MORTGAGEE. (a) Subject to Article 38, if any
-------------------------
action, suit or other proceeding affecting the Mortgaged Properties or any part
thereof shall be commenced in which action, suit or proceeding the Mortgagee is
made a party or participates or in which the right to use the Mortgaged
Properties or any part thereof is threatened, or in which it becomes necessary
in the reasonable judgment of the Mortgagee to defend or uphold the interest of
the Mortgagee under this Mortgage (including any action, suit or proceeding to
establish or uphold the compliance of the Improvements with any Legal
Requirement), then all amounts reasonably paid or
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incurred by the Mortgagee for the expense of any such action, suit or other
proceeding or to protect its rights therein (whether or not the Mortgagee is
made or becomes a party thereto) or otherwise to enforce or defend the rights
and Lien created by this Mortgage (including all reasonable attorneys' fees and
expenses), shall be paid by the Mortgagors upon demand and, if not paid within
thirty (30) days of the giving of such demand, shall bear interest at the
highest interest rate applicable to any series of the Notes on the date hereof
from the date of the payment or incurring thereof, and any such amount and the
interest thereon shall be a Lien on the Mortgaged Properties, prior to any
right, or right to, interest in, or claim upon the Mortgaged Properties
attaching or accruing subsequent to or otherwise subordinate to the Lien of this
Mortgage, and the same shall be deemed to be indebtedness secured hereby,
provided such right of payment in the case of any enforcement of the rights of
the Mortgagee under this Mortgage shall only arise in the case where an Event of
Default shall have occurred and be continuing. All other reasonable amounts
paid, advanced or incurred by the Mortgagee after the occurrence and during the
continuance of an Event of Default in order to secure and protect the interest
of the Mortgagee under this Mortgage or the other Security Documents shall be a
like Lien on the Mortgaged Properties and be deemed to be part of the
indebtedness secured hereby.
(b) Subject to the provisions of Article 38, in the event this Mortgage
or the Notes are placed in the hands of counsel for collection of any amount
payable hereunder or thereunder or for the enforcement of any of the provisions
hereof or thereof and if an Event of Default shall have occurred and shall then
be continuing, the Mortgagors agree to pay all reasonable costs associated
therewith incurred by the Mortgagee, either with or without the institution of
an action, suit or other proceeding, in addition to all reasonable costs,
disbursements and allowances provided by law, all such costs to be paid upon
demand, together with interest thereon at the highest interest rate applicable
to any series of the Notes on the date hereof from the date of notice or
incurring thereof, and the same shall be deemed to be part of the indebtedness
secured hereby.
48. USURY. The Mortgagors and the Mortgagee intend to conform strictly
-----
to applicable laws regarding usury. The Mortgagors and the Mortgagee hereby
stipulate and agree that none of the terms and provisions contained in the Notes
or this Mortgage shall ever be construed to create a contract to pay for the
use, forbearance, or detention of money in an amount in excess of the maximum
nonusurious amount allowed by applicable law. If the Notes or this Mortgage or
the transactions contemplated by any of them would be otherwise usurious under
applicable law, then notwithstanding anything to the contrary in the Notes or
this Mortgage, the Mortgagors and the Mortgagee hereby agree as follows: (i) for
any applicable period of time specified by any applicable law, interest under
the Security Documents shall never exceed the maximum nonusurious amount allowed
by such law; and (ii) if the Notes shall be accelerated in whole or in part for
any reason, or if any required or permitted prepayment occurs hereunder, then
for any applicable period of time specified by any applicable law,
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interest shall never include more than the maximum nonusurious amount allowed by
each such law, and in either such case any excess interest (if any) otherwise
provided for under any or all of the Security Documents shall automatically be
applied by the Mortgagee in the following order: (1) to interest properly
charged under the Notes and this Mortgage; (2) to principal properly charged
under the Notes and this Mortgage (without Make-Whole Payment); (3) if all sums
due under (1) and (2) have been or would thereby be paid in full, all other
interest on the Notes shall be cancelled automatically as of and through the
date of such acceleration or prepayment; and (4) if any such excess interest has
been received by the Mortgagee, it shall be refunded by the Mortgagee to the
Mortgagors. No Mortgagor shall be required to pay unearned interest under the
Notes and this Mortgage or to pay interest under any or all of the Security
Documents in an amount in excess of the maximum nonusurious amount allowed by
applicable law, and the provisions of this Article 48 shall control over all
other provisions of any Security Document which may be in apparent conflict
herewith.
Notwithstanding anything to the contrary contained in this Article 48, in
the event that any payments required to be made under the Notes are determined
to be usurious under applicable law, the Mortgagor shall be required to redeem
the Notes immediately in accordance with the terms of the Indenture, and failure
to do so shall be an Event of Default under this Mortgage.
49. MISCELLANEOUS. This Mortgage may be discharged or terminated only by
-------------
an instrument in writing signed by the party against which enforcement of such
discharge or termination is sought. In the event any time period or any date
provided in this Mortgage ends or falls on a day other than a Business Day, then
such time period shall be deemed to end and such date shall be deemed to fall on
the next succeeding Business Day, and performance herein may be made on such
Business Day, with the same force and effect as if made on such preceding day.
Subject to Article 38 hereof, this Mortgage shall be binding upon each of the
Mortgagors and the Mortgagee and their respective successors and permitted
assigns and all Persons claiming under or through any Mortgagor and the
Mortgagee or any such successors or permitted assigns, and shall inure to the
benefit of and be enforceable by the Mortgagors and the Mortgagee and their
respective successors and permitted assigns. This Mortgage may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
50. NON-MERGER. It is the intention and agreement of each Mortgagor and
----------
the Mortgagee that there shall be no merger of any leasehold estate in the
Premises with the fee interest in the Premises or any other estate or interest
in the Premises, and there shall be no merger of this Mortgage and any estate in
the Premises, by reason of the fact that the same Person may own or hold (a) any
leasehold estate in the Premises, and/or (b) this Mortgage, and/or (c) the fee
interest in the Premises or any other estate or interest in the Premises.
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51. ASSIGNMENT OF RENTS AND THE MORTGAGORS' INTEREST IN LEASES. (a)
----------------------------------------------------------
During the term hereof, each Mortgagor hereby pledges, grants, sells, assigns,
conveys, delivers, transfers and sets over to the Mortgagee, subject to the
terms and conditions hereof, all of its respective right, title and interest,
now or hereafter acquired, in and to any and all existing Leases and Operating
Agreements and any Leases and Operating Agreements that may hereafter be entered
into by such Mortgagor, and any modifications, renewals, extensions or
replacements thereof, and any guaranties of the Tenant's obligations under any
Lease (each such guaranty, a "Guaranty") and all right, title and interest of
such Mortgagor thereunder, including, but not limited to, all claim, right and
demand to receive, collect and retain all rents and all other amounts due
thereunder and under any modifications, renewals or extensions thereof,
including, but not limited to:
(i) the immediate and continuing right to receive and collect all
amounts payable to such Mortgagor by all Tenants, subtenants or other
parties pursuant to the Leases, Operating Agreements and Guarantees,
including, without limitation, (A) all rents (including, without
limitation, all amounts payable to such Mortgagor on account of
maintenance, repairs, taxes, insurance and common area charges or similar
charges), income, revenues, issues, profits, insurance proceeds,
condemnation awards and other payments, tenders and security payable to
or receivable by such Mortgagor under the Leases and the Operating
Agreements, (B) all damages or other amounts payable in the event of any
disposition, expiration or termination of any Lease or Operating
Agreement pursuant to the terms thereof, by operation of law or
otherwise, (C) any indemnification against, or reimbursement for, sums
paid and costs and expenses incurred by such Mortgagor under any Lease or
Operating Agreement or otherwise, (D) any award in the event of the
bankruptcy of any Tenant or guarantor of a Lease and (E) any security
deposits, other security instruments, other deposits or prepayments with
respect to any such Lease or Operating Agreement;
(ii) all claims, rights, powers, privileges and remedies of such
Mortgagor, whether provided for in any Lease, Operating Agreement or
Guaranty or arising by statute or at law or in equity or otherwise,
consequent on any failure on the part of any Tenant to perform or comply
with any term of any Lease or any counterparty to comply with the
Operating Agreement;
(iii) all right to take all action upon the happening of a default under
any Lease, Operating Agreement or Guaranty as shall be permitted by any
Lease or by law, including, without limitation, the commencement, conduct
and consummation of proceedings at law or in equity; and
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(iv) the full power and authority, in the name of such Mortgagor or
otherwise, to enforce, collect, receive and make receipt for any and all
of the foregoing and to do any and all other acts and things whatsoever
that such Mortgagor is or may be entitled to do under any Lease,
Operating Agreement or Guaranty;
subject, however, to the right of such Mortgagor to mortgage and/or assign the
Leases, Operating Agreements and Guarantees and/or pledge excess rents from the
Premises in accordance with Section 19.2 hereof.
(b) Except as otherwise required by applicable law, any funds received
by the Mortgagee under this Article 51, after payment of all expenses of
managing and securing the Premises, including, without limitation, the salaries,
fees and wages of a managing agent and such other employees or agents as the
Mortgagee may deem necessary or desirable and all expenses of operating and
maintaining the Premises, including, without limitation, all taxes, charges,
claims, assessments, water charges, sewer rents and any other liens, and
premiums for all insurance that the Mortgagee may deem necessary or desirable,
and the cost of all alterations, renovations, repairs and replacements and, to
the extent commercially reasonable under the circumstances, alterations and
renovations, and all expenses incident to taking and retaining possession of the
Premises, shall be applied first to payment of all amounts then due and payable
under this Mortgage and the other Security Documents (other than the Notes), and
second to payment of all amounts then due and payable under the Notes. The
Mortgagee shall be accountable to the Mortgagors only for monies actually
received by the Mortgagee pursuant to this Article 51. Neither the collection
of said funds and the application thereof as aforesaid, nor any act done or
omitted pursuant to the power and rights granted to the Mortgagee hereunder,
shall cure or waive any Event of Default or waive, modify or affect any notice
of Event of Default or invalidate any act done pursuant to such notice, nor
shall the same be a waiver of any of the Mortgagee's rights and remedies under
the Notes, the Mortgages or the other Security Documents.
(c) (i) So long as no Event of Default shall have occurred and be
continuing, each Mortgagor shall have a license, which may be performed by the
Property Manager, to collect, receive and retain from the Tenants and the
parties to the Operating Agreements, rent and all other sums payable under the
Leases and the Operating Agreements, to enforce the obligations of Tenants under
the Leases and of such other parties under the Operating Agreements, and to
exercise all the rights and remedies of the landlord under the Leases and the
Operating Agreements, subject, however, to compliance with the provisions of
this Mortgage. The portion of all sums received by any Mortgagor or the Property
Manager under the license granted hereby equal to the Secured Obligations then
due and owing shall be held in trust for the benefit of the Mortgagee and used
to pay the Secured Obligations then due and owing.
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(ii) If any Event of Default shall have occurred and be continuing, the
license granted in Section 51(c)(i) hereof shall immediately cease and
terminate, without waiver of such Event of Default, with or without
notice, any action or proceeding or the intervention of a receiver
appointed by a court, and the Mortgagee or an agent or receiver appointed
by the Mortgagee may, to the fullest extent permitted by the Leases and
the Operating Agreements and applicable law, do any or all of the
following:
(A) exercise any of the Mortgagors' rights under the Leases,
Operating Agreements and Guarantees, including notifying Tenants to pay
rent to an account or location selected by the Mortgagee;
(B) enforce the Leases, Operating Agreements and Guarantees;
(C) demand, collect, sue for, attach, levy, recover, receive,
compromise and adjust, and make, execute and deliver receipts and
releases for all rents or other payments that may then be or may
thereafter become due, owing or payable with respect to the Leases,
Operating Agreements and Guarantees;
(D) demand that any sums held by any Mortgagor with respect to any
Lease, Operating Agreement or Guarantees (including, but not limited to,
any security deposits, other deposits or prepayments) be immediately
remitted to the Mortgagee; and
(E) generally, do, execute and perform any other act, deed, matter
or thing whatsoever that ought to be done, executed and performed in and
about or with respect to the Leases, Operating Agreements and Guarantees
as fully as allowed or authorized by this Article 51.
(d) Each Mortgagor hereby irrevocably authorizes and directs each Tenant
under a Lease and each other party under an Operating Agreement or Guaranty,
upon receipt of notice from the Mortgagee that an Event of Default has occurred
and is continuing, to pay directly to, or as directed by, the Mortgagee all
rents, issues and profits accruing or due under such Tenant's Lease or such
other party's Operating Agreement or Guaranty from and after the receipt of such
notice. Each Mortgagor agrees that any Tenant and any other party under an
Operating Agreement or Guaranty shall have the right to rely upon the notice
from the Mortgagee, and shall pay such rents, issues and profits to or as
directed by the Mortgagee without any obligation to inquire into the actual
existence of any Event of Default claimed by the Mortgagee, and notwithstanding
any notice from or contrary claim by any Mortgagor, and no Mortgagor shall have
any right or claim against any such Tenant, party under an Operating Agreement
or guarantor under a Guaranty for any rents, issues or profits so paid to the
Mortgagee. Such rents, issues and profits shall continue to be paid to the
Mortgagee
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unless and until the Event of Default which gave rise to the termination of the
Mortgagors' license under Section 51(c)(i) is, and any intervening Events of
Default have been, cured to the satisfaction of the Mortgagee (and so long as no
amount shall then be due and payable under the Notes, whether at maturity, by
declaration of acceleration or otherwise, and such acceleration has not been
rescinded). In the event each such Event of Default has been cured as aforesaid
(or, if the provisions set forth in the parenthetical in the immediately
preceding sentence are applicable, upon completion of foreclosure or comparable
remedies resulting in a disposition of the Premises), the Mortgagee shall direct
each Tenant and each other party under an Operating Agreement or Guaranty by
written notice to resume the payment of all rents, issues or profits accruing or
due under its respective Lease, Operating Agreement or Guaranty in accordance
with the provisions of Section 51(c) hereof (or, if the immediately preceding
parenthetical is applicable, to the then-owner of the Premises) from and after
receipt of such notice from the Mortgagee.
(e) Except for any termination of any Lease, Operating Agreement or
Guaranty or any amendment, modification or waiver of the provisions of any
Lease, Operating Agreement or Guaranty expressly permitted by the provisions
thereof and by Article 20 hereof, the Mortgagors at their expense will prudently
enforce in all material respects each of the Leases, Operating Agreements and
Guarantees in accordance with their terms. Neither the execution and delivery
of the Mortgage or any other Security Document nor any action or inaction on the
part of the Mortgagee or the Servicer shall release (i) any Tenant from its
Lease, (ii) any guarantor from any Guaranty or (iii) any Mortgagor from any of
its obligations under the Leases or constitute an assumption of any such
obligation under the Leases or constitute an assumption of any such obligation
on the part of the Mortgagee. No action or failure to act on the part of any
Mortgagor shall adversely affect or limit the rights of the Mortgagee under this
Mortgage or the Assignment of Leases or, through this Mortgage or the Assignment
of Leases, under the Leases.
(f) During the term hereof, all rights, powers and privileges of the
Mortgagee herein set forth are coupled with an interest and are irrevocable,
subject to the terms and conditions hereof, and no Mortgagor will take any
action under the Leases or otherwise which is inconsistent with the Assignment
of Leases or this Mortgage or any of the terms hereof or thereof, and any such
action inconsistent herewith or therewith shall, to the fullest extent permitted
by law, be void. Any further assignment of any rents, issues, or profits from
the Premises shall to the fullest extent permitted by law be void except as
permitted by Section 19.2 hereof. To the fullest extent permitted by applicable
law, each Mortgagor hereby waives any requirement that the Mortgagee or the
Servicer commence any foreclosure proceeding with respect to any or all of the
Mortgaged Properties prior to enforcement of any remedies pursuant to this
Article 51, including the right to commence and prosecute an action to appoint a
receiver for rents and all other amounts due under any Leases. The Mortgagors
will, from time to time, upon request of the
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Mortgagee, at the sole cost and expense of the Mortgagors, execute on a non-
recourse basis all instruments and further assurances and all supplemental
instruments and take all such action as the Mortgagee from time to time may
reasonably request in order to perfect, preserve and protect the interests
intended to be assigned to the Mortgagee hereby.
(g) Each Mortgagor hereby agrees that it will not, unilaterally or by
agreement, subordinate, amend, modify, extend, discharge, terminate, surrender,
waive or otherwise change any term of any of the Leases, Operating Agreements or
Guarantees in any manner that would violate this Mortgage. If any of the Leases
shall be amended as permitted thereby, they shall continue to be subject to the
provisions hereof without the necessity of any further act by any of the parties
hereto, subject to the provisions of any non-disturbance agreement that the
Mortgagee may have granted in accordance with the provisions of this Mortgage.
(h) Upon the payment, or the provision, in accordance with the
applicable provisions of the Indenture, for payment in full, of the principal of
and interest on the Notes at maturity or as permitted under the Notes in
accordance with the terms thereof and of all other sums payable under this
Mortgage and each other Security Document by the Mortgagors, the assignment made
in this Article 51 and all rights hereunder assigned to the Mortgagee shall
cease and terminate and shall revert to the Mortgagors. Further, upon the
partial payment of the Notes and all other sums in an amount sufficient to cause
the release of the Premises from the lien of this Mortgage pursuant to the terms
of this Mortgage, the assignment made in this Article 51 with respect to the
Premises and all rights hereunder assigned to the Mortgagee in respect thereof
shall cease and terminate and revert to the Mortgagors.
52. NOTICES. Any notice, direction, certificate, request, consent,
-------
election, waiver or demand which by any provision of this Mortgage is required
or permitted to be given may be served by an overnight national courier service
or may be given or served by facsimile only during business hours (9 a.m. - 5
p.m.) on a Business Day (with a confirmation copy sent by certified or
registered mail, return receipt requested, or by overnight courier) or by
certified or registered mail, in each case return receipt requested, postage
prepaid;
(a) If to the Mortgagee, to:
LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Asset-Backed Securities Trust
Services: General Growth Properties
and to the Servicer at:
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Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
Attention: Legal Counsel
If to the Deed Trustees, to:
First American Title Company of Los Angeles
520 North Central Avenue
Glendale, California 91203
and
First American Title Company
7600 Forsyth Blvd.
Clayton, Missouri 63105
Attention: Robert Meckfessel
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and
First American Title Company
13924 Gold Circle
Omaha, Nebraska 68144
(b) If to any Mortgagor, to such Mortgagor c/o GGP Limited Partnership,
55 West Monroe Street, Suite 3100, Chicago, Illinois 60603, Attention: Bernard
Freibaum,
with copies to:
Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
and
Ivanhoe Equities V L.P.
World Trade Centre Montreal
413 St. Jacques Street
Montreal, Quebec H2Y 3Z4
CANADA
Attention: Legal Affairs
or at such other address in the continental United States as any such Person may
designate in accordance with the provisions hereof. Any notices, requests,
approvals, demand or other communications shall be deemed given on the date
first received or, if earlier, on the date on which the initial attempted
delivery is refused or cannot be made because of a change of address of which
the sending party has not been notified.
53. SUPPLEMENTS.
-----------
53.1. Supplements Without Consent. Without the consent of any Holders,
---------------------------
the Mortgagors and the Mortgagee, upon their mutual agreement, may enter into
supplements to or may otherwise amend or modify this Mortgage for any one or
more of the following purposes:
(a) to correct or amplify the description of any property subject to the
Lien hereof; or
(b) to pledge to the Mortgagee any additional property; or
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(c) to evidence the succession of another Person as a Mortgagor as
permitted herein and the assumption (subject to Article 38) by such successor of
the covenants of the Mortgagors herein; or
(d) to evidence the succession of another Person as the Mortgagee
hereunder and the assumption by any successor of the Mortgagee's covenants
herein; or
(e) to add to the covenants and agreements thereafter to be observed by
the Mortgagors or to surrender any right or power herein reserved to or
conferred upon the Mortgagors, provided such surrender does not adversely affect
the interests of the Holders; or
(f) to add any additional Events of Default, provided such action shall
not adversely affect the interest of any Holder; or
(g) to cure any ambiguity, or to cure, correct or supplement any
defective or inconsistent provision contained herein or in any other Security
Document, provided that such action shall not adversely affect the interests of
the Holders of the Notes, or to evidence any succession and the assumption by
any such successor of the respective covenants herein; or
(h) to qualify this Mortgage under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect, except that nothing
herein contained shall permit or authorize the inclusion in any supplement
hereto of the provisions referred to in Section 316(a)(2) of said Act or any
corresponding provisions of any such similar federal statute; or
(i) in connection with any amendment or supplement to the Indenture
permitted thereunder.
53.2. Supplements With Consent. With the written consent of the Holders
------------------------
of more than 66% in aggregate principal amount of the outstanding Notes, the
Mortgagors and the Mortgagee may enter into supplements to or may otherwise
amend or modify this Mortgage to change in any manner or eliminate any of the
provisions of this Mortgage, as amended and supplemented; provided, that without
the consent of the Holder of each outstanding Note no such supplement shall,
except as otherwise expressly provided in this Mortgage, deprive the Holder of
any Notes of the benefit of a first priority security interest in any Mortgaged
Property as provided herein. The Mortgagee shall join with each Mortgagor in
the execution of such supplement unless such supplement affects the Mortgagee's
rights, duties or immunities hereunder, in which case the Mortgagee may, but
shall not be obligated to, enter into such supplement.
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53.3. Delivery of Supplements. Promptly after the execution by the
-----------------------
Mortgagors and the Mortgagee of any supplemental mortgage pursuant to the
provisions of Section 53.2, the Mortgagors shall mail, first class postage
prepaid, a notice to each Holder at the address for such Holder set forth in the
Register (as defined in the Indenture) setting forth in general terms the
substance of such supplemental mortgage or amendment. Any failure of the
Mortgagors to mail such a notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental mortgage. The
Mortgagee also shall mail, first class postage prepaid, a conformed copy of such
supplement to the Rating Agency. Any failure of the Mortgagee to give such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental mortgage.
54. WAIVER OF TRIAL BY JURY. To the extent permitted under applicable
-----------------------
law, each Mortgagor and Mortgagee hereby waive trial by jury in any action or
proceeding brought by, or any counterclaim asserted by any Mortgagor which,
action, proceeding or counterclaim in any way arises out of or is connected with
this Mortgage.
55. SEVERABILITY. In case any one or more of the provisions contained
------------
in this Mortgage shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. Without in any way
limiting or qualifying the foregoing, the invalidity or unenforceability of any
provision in this Mortgage with respect to a Mortgaged Property situated in one
state shall not in any way affect or impair the validity or enforceability of
such provision with respect to any Mortgaged Property situated in another state
where such provision is otherwise valid and enforceable.
56. SPECIAL STATE PROVISIONS.
------------------------
(a) Ohio. (i) Priority of Mortgage Lien. Mortgagee is authorized to do
---- -------------------------
all things permitted or sanctioned by Ohio Revised Code Section 1311.4, as
now existing or as hereafter amended.
(ii) Open-End Mortgage. This Mortgage is an open-end mortgage. The
-----------------
Mortgagors and the Mortgagee intend that this Mortgage may secure
indebtedness in addition to the initial disbursement made hereunder. The
maximum amount of the unpaid balance of the principal indebtedness, in
the aggregate and exclusive of advancements and accrued interest, which
may be outstanding and secured by the Mortgaged Property located in Ohio
at any time, is One Billion Dollars ($1,000,000,000).
(b) Missouri. Notwithstanding anything to the contrary set forth in
--------
this Mortgage, the Notes or the other Security Documents, if an Event of
Default shall have occurred and is continuing, the Trustee named herein may
proceed to sell the
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Mortgaged Property located in Missouri, or any part thereof, at public
vendue, at the customary place, in the County of Boone and State of
Missouri to the highest bidder for cash, first giving at least twenty (20)
days notice as required by the laws of the State of Missouri with respect
to the exercise of the power of sale under Deeds of Trust, or any such
other notice requirement then in effect, and upon such sale shall execute a
deed in fee simple of the Mortgaged Property sold, to purchaser or
purchasers thereof, and shall receive the proceeds of such sale, out of
which the Trustee shall pay such amounts in accordance with the provisions
of the Indenture.
Upon any sale made under or by virtue of this Mortgage of Mortgaged
Property located in Missouri (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 so sold or any part thereof and in lieu of paying cash
therefor may make settlement for the purchase price by crediting upon the
indebtedness secured hereby the net sales price after deducting therefrom
(to the extent allowed by applicable law) the expenses of the sale and
costs of the action and any other sums which Mortgagee is authorized to
deduct under this Mortgage.
No recovery of any judgment by Mortgagee and no levy of an execution
under any judgment upon the Mortgaged Property or any portion thereof or
upon any other property of Mortgagors shall affect in any manner or to any
extent the lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any liens, rights, powers or remedies of Mortgagee hereunder,
but such liens, rights, powers and remedies of Mortgagee shall continue
unimpaired as before.
The Trustee hereby lets the Mortgaged Property located in Missouri to
Mortgagors until a sale be had under the foregoing provisions therefor or
until an Event of Default, upon the following terms and conditions, to-wit:
Mortgagors and every and all persons claiming or possessing the Mortgaged
Property located in Missouri or any part thereof by, through or under
Mortgagors shall pay rent therefor during said term at the rate of one cent
(1c) per month, payable monthly upon demand, and shall surrender immediate
peaceable possession of the Mortgaged Property located in Missouri and any
and every part thereof sold under said provisions to the purchaser thereof
under such sale, without notice or demand thereof, and shall and will at
once, without notice, surrender up possession of such Mortgaged Property
and every part thereof in the event Mortgagee shall take charge and enter
such Mortgaged Property as provided in this Mortgage.
(i) THIS MORTGAGE SECURES FUTURE ADVANCES AND OTHER FUTURE
OBLIGATIONS INCLUDING, WITHOUT LIMITATION, THE STATED PRINCIPAL
INDEBTEDNESS OF $560,000,000.00. THIS MORTGAGE IS TO BE GOVERNED BY MO.
REV. STAT. (S)443.055.
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<PAGE>
(ii) ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND
OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU (MORTGAGORS) AND US
(MORTGAGEE) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE
REACH COVERING SUCH MATTERS ARE CONTAINED IN THE INDENTURE, THE NOTES, THIS
MORTGAGE OR THE OTHER SECURITY DOCUMENTS, WHICH ARE THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.
(c) California. (i) Notice to Mortgagors. Mortgagor hereby
---------- --------------------
requests that a copy of any notice of default and every notice of sale hereunder
be mailed to it as provided by law at Mortgagor's address set forth in Section
52.
(ii) Prepayment and Yield Maintenance.
--------------------------------
EACH MORTGAGOR HEREBY EXPRESSLY (i) WAIVES ANY RIGHTS IT MAY HAVE
UNDER CALIFORNIA LAW TO REPAY THE NOTES, IN WHOLE OR IN PART, WITHOUT
-------
PENALTY, UPON ACCELERATION OF THE NOTES, AND (ii) AGREES THAT IF, FOR
-------
ANY REASON, A PREPAYMENT OF ALL OR ANY PORTION OF THE PRINCIPAL AMOUNT
OF THE NOTES IS MADE INCLUDING WITHOUT LIMITATION UPON OR FOLLOWING
ANY ACCELERATION OF THE NOTES BY MORTGAGEE ON ACCOUNT OF ANY EVENT OF
DEFAULT BY ANY MORTGAGOR INCLUDING, WITHOUT LIMITATION, ANY TRANSFER,
DISPOSITION, OR FURTHER ENCUMBRANCE PROHIBITED OR RESTRICTED BY THIS
INDENTURE, THEN MORTGAGORS SHALL BE OBLIGATED TO PAY CONCURRENTLY WITH
SUCH PREPAYMENT THE YIELD MAINTENANCE PAYMENT SPECIFIED ABOVE. BY
INITIALING THIS PROVISION IN THE SPACE PROVIDED BELOW, EACH MORTGAGOR
HEREBY DECLARES THAT (1) EACH OF THE FACTUAL MATTERS SET FORTH IN THIS
PARAGRAPH IS TRUE AND CORRECT, (2) MORTGAGEE'S AGREEMENT TO MAKE THE
LOAN EVIDENCED BY THE NOTES CONSTITUTES ADEQUATE CONSIDERATION FOR
THIS WAVIER AND AGREEMENT, AND HAS BEEN GIVEN INDIVIDUAL WEIGHT BY
EACH MORTGAGOR AND MORTGAGEE, (3) EACH MORTGAGOR IS A SOPHISTICATED
AND KNOWLEDGEABLE REAL ESTATE INVESTOR WITH COMPETENT AND INDEPENDENT
LEGAL COUNSEL AND (4) EACH
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<PAGE>
MORTGAGOR FULLY UNDERSTANDS THE EFFECT OF THIS WAIVER AND AGREEMENT.
____________________________
MORTGAGOR INITIALS
(iii) Default Provisions. If an Event of Default shall have
------------------
occurred and be continuing, in addition to the remedies set forth in
this Mortgage, Mortgagee may, at its option, by or through Deed Trustee
or otherwise, exercise one or more or all of the following remedies:
a. Judicial Proceedings. Institute proceedings for the
--------------------
complete or partial foreclosure of this Mortgage or 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 Notes or in this
Mortgage (without being required to foreclose this Mortgage), or
in aid of the execution of any power herein granted, or for any
foreclosure hereunder, or for the enforcement of any other
appropriate legal or equitable remedy or otherwise as Mortgagee
shall elect.
b. Sale of Mortgaged Property. Cause the Mortgaged
--------------------------
Property and all estate, title and interest, claim and demand
therein, or any part thereof to be sold as follows:
(1) Mortgagee may proceed as if all of the Mortgaged
Property were real property, in accordance with
subparagraph (4) below, or Mortgagee may elect to treat
any of the Mortgaged Property which consists of a right in
action or which is property that can be severed from the
premises without causing structural damage thereto as if
the same were personal property, and dispose of the same
in accordance with subparagraph (3) below, separate and
apart from the sale of real property, with the remainder
of the Mortgaged Property being treated as real property.
(2) Mortgagee may cause any such sale or other
disposition to be conducted immediately following the
expiration of any grace period, if any, herein provided
(or required by law) or Mortgagee may delay any such sale
or other disposition for such period of time as Mortgagee
deems to be in its best interest. Should Mortgagee desire
that more than one such sale or other disposition be
conducted, Mortgagee may, at its option, cause the same to
be conducted simultaneously, or successively on the same
day, or at
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<PAGE>
such different days or times and in such order as
Mortgagee may deem to be in its best interest.
(3) Should Mortgagee elect to cause any of the
Mortgaged Property to be disposed of as personal property
as permitted by subparagraph (1) above, it may dispose of
any part thereof in any manner now or hereafter permitted
by Division 9 of the California Commercial Code (the
"UCC") or in accordance with any other remedy provided by
law. Both Mortgagors and Mortgagee shall be eligible to
purchase any part or all of such property at any such
disposition. Any such disposition may be either public or
private as Mortgagee may so elect, subject to the
provisions of the UCC. Mortgagee shall give Mortgagors at
least ten (10) days prior written notice of the time and
place of any public sale or other disposition of such
property or of the time at or after which any private sale
or any other intended disposition is to be made, and if
such notice is sent to Mortgagors it shall constitute
reasonable notice to Mortgagors.
(4) Should Mortgagee elect to sell the Mortgaged
Property which is real property or which Mortgagee has
elected to treat as real property, upon such election
Mortgagee or Deed Trustee shall give such Notice of
Default and Election to sell as may then be required by
law. Thereafter, upon the expiration of such time and the
giving of such Notice of Sale as may then be required by
law, Deed Trustee, at the time and place specified in the
Notice of Sale, shall sell such Mortgaged Property, or any
portion thereof specified by Mortgagee at public auction
to the highest bidder for cash in lawful money of the
United States, subject, however, to the provisions of
subparagraph (5) below. Mortgagee may, from time to time,
postpone the sale by public announcement thereof at the
time and placed noticed therefor. If the Mortgaged
Property consists of several lots or parcels, Mortgagee
may designate the order in which such lots or parcels may
be offered for sale or sold, and may direct that such
property be sold in one parcel, as an entirety, or in such
parcels as Mortgagee, in its sole discretion, may elect.
Each Mortgagor expressly waives any right which it may
have to direct the order in which any of the Mortgaged
Property shall be sold, and its rights, if any, to require
that the Mortgaged Property be sold as separate tracts,
lots, units or parcels. Any person, including Mortgagors,
Deed Trustee or Mortgagee, may purchase at the sale. Upon
any sale, Deed Trustee shall execute and deliver to the
purchaser or purchasers a deed or
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<PAGE>
deeds conveying the property so sold, but without any
covenant or warranty whatsoever, express or implied,
whereupon such purchaser or purchasers shall be let into
immediate possession.
(5) Upon any sale of the Mortgaged Property, whether
made under a power of sale herein granted or pursuant to
judicial proceedings, if the holder of the Notes is a
purchaser at such sale, it shall be entitled to use and
apply all or any portion of the indebtedness then secured
hereby for or in settlement or payment of all or any
portion of the purchase price of the property purchased.
(6) In the event of a sale or other disposition of
any such Mortgaged Property or any part thereof, and the
execution of a deed or other conveyance pursuant thereto,
the recitals in the deed or deeds of facts (such as of a
default, the giving of notice of default and notice of
sale, demand that such sale should be made, postponement
of sale, terms of sale, sale, purchaser, payment of
purchase money, and any other fact affecting the
regularity or validity of such sale or disposition) shall
be conclusive proof (absent fraud) of the truth of such
facts; and any such deed or conveyance shall be conclusive
against all persons as to such facts recited therein.
c. Receiver. Mortgagee shall be entitled, as a matter of
--------
strict right, without notice and upon ex parte application, and
without regard to the value or occupancy of the security, or the
solvency of Mortgagors, or the adequacy or the Mortgaged Property or
other collateral as security for the Notes, to have a receiver
appointed to enter upon and take possession of the Mortgaged
Property, collect the rents and all other sums payable under the
Leases and apply the same as the court may direct, such receiver to
have all the rights and powers permitted under the laws of the
jurisdiction in which the Mortgaged Property is located. Each
Mortgagor hereby waives any requirements on the receiver or
Mortgagee to post any surety or other bond. Mortgagee or the
receiver may also take possession of, and for these purposes use,
any and all personalty which is a part of the Mortgaged Property and
used by Mortgagors in the rental or leasing thereof or any part
thereof. The expense (including the receiver's fees, counsel fees,
costs and agent's compensation) incurred pursuant to the powers
herein contained shall be secured by this Deed of Trust. To the
extent not prohibited by applicable law, Mortgagee shall (after
payment of all costs and expenses incurred) apply such rents and
other sums payable
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<PAGE>
under the Leases received by it in the order set forth in Section
51. The right to enter and take possession of the Mortgaged
Property, to manage and operate the same, and to collect the rents
and other sums payable under the leases whether by receiver or
otherwise, shall be cumulative to any other right or remedy
hereunder or afforded by law, and may be exercised concurrently
therewith or independently thereof. Mortgagee shall be liable to
account only for such rents and other sums payable under the Leases
actually received by Mortgagee.
(iv) Fixture Filing. The personal property in which Mortgagee has
--------------
a security interest includes goods that are or shall become fixtures on the
Land or Improvements. This Mortgage is intended to serve as a fixture
filing pursuant to the terms of Sections 9313 and 9402 of the UCC. This
filing shall remain in effect as a fixture filing until this Mortgage is
released or satisfied of record or its effectiveness otherwise terminates
as to the Mortgaged Property. In that regard, the following information is
provided:
Name of Debtors: Each of the entities identified on
Exhibit A hereto
---------
Address of Debtors: c/o GGP Limited Partnership
55 West Monroe Street, Suite 3100
Chicago, Illinois 60603
Attention: Mr. Bernard Freibaum
Name of Secured Party: LaSalle National Bank, as trustee
Address of Secured Party: 135 South LaSalle Street
Chicago, Illinois 60603
Attention: Asset Backed Securities
Trust Services: General
Growth Properties
(d) Wisconsin. None.
---------
(e) New Mexico.
----------
(i) The grant by the Mortgagors of the mortgage and security
interest herein are made with mortgage covenants and upon the statutory
mortgage condition, for the breach of which this Mortgage is subject to
foreclosure as provided by law.
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<PAGE>
(ii) Copies of the Fixed Rate Notes and the other Security Documents
may be obtained from the Mortgagee at the address specified for it in
Section 52 herein.
(iii) To the extent, if at all, N.M. Stat. Ann. (S) 56-7-1 is
applicable to this Mortgage, any agreement to indemnify given by Mortgagors
to the Mortgagee or any other indemnitee will not extend to liability,
claims, damages, losses or expenses, including fees of lawyers, arising out
of (i) the preparation or approval of maps, drawings, opinions, reports,
surveys, change orders, designs or specifications by the Mortgagee or any
other indemnitee, or the agents or employees of the Mortgagee or any other
indemnitee, or (ii) the giving of or the failure to give directions or
instructions by the Mortgagee or indemnitee, or the agents or employees of
the Mortgagee or indemnitee, where such giving or failure to give
directions or instructions is the primary cause of bodily injury to persons
or damage to property.
(iv) Notwithstanding anything to the contrary in the Mortgage, the
filing with the court having jurisdiction over any action to foreclose the
lien of the Mortgage of the report of the Special Master appointed by the
court to conduct the foreclosure sale and of the Order approving such
Special Master's report shall discharge the purchaser of the Mortgaged
Property for the purchase money, and such purchaser shall not be obligated
to see to the application thereof.
(v) Maximum Amount Secured. The maximum amount secured by the lien
----------------------
of this Mortgage against property located in New Mexico shall not exceed at
any one time the maximum principal sum of One Billion Dollars
($1,000,000,000), plus interest thereon. The maximum amount shall not in
any way imply that the Mortgagee is obligated to make any future advances
to the Mortgagors at any time. The maximum amount secured by this Mortgage
may be advanced and repaid, and again made or advanced from time to time,
in the sole and absolute discretion of the Mortgagee, and the aforesaid
maximum amount shall limit only the total amount of principal that may be,
at any one time, outstanding and secured upon the terms set forth in this
Mortgage.
(vi) No Power of Sale. This Mortgage is granted by the Mortgagor
----------------
related to the Mortgaged Property located in New Mexico to the Mortgagee.
Any power of sale granted herein, and any designation of the Mortgagee as
such Mortgagor's attorney-in-fact for purposes of effecting transfers of
property sold pursuant to such power of sale and/or such other non-judicial
foreclosure proceeding, shall have no effect in the State of New Mexico.
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(vii) Shortening of Redemption Period. Notwithstanding anything to
-------------------------------
the contrary in the Mortgage, the parties recognize Mortgagor's statutory
right of redemption following a foreclosure sale, but agree that IF THIS
MORTGAGE IS FORECLOSED, THE REDEMPTION PERIOD FOR THE REAL PROPERTY
FOLLOWING ANY FORECLOSURE SALE SHALL BE ONE MONTH INSTEAD OF NINE MONTHS,
AS PERMITTED UNDER N.M. STAT. ANN. (S) 35-5-19.
(viii) Oral Agreements. Each Mortgagor confirms that it is aware of
---------------
the provisions of N.M. Stat. Ann. (S) 58-6-5, providing that no contract,
promise or commitment to loan money or to grant, extend or renew credit or
any modification thereof, in any amount greater than $25,000, not primarily
for personal, family or household purposes, made by a financial
institution, including Mortgagee, is enforceable unless in writing and
signed by the party to be charged, or by that party's authorized
representative.
(ix) Simple Description. A simple description of the Mortgaged
------------------
Property located in New Mexico is all property and improvements commonly
known as Rio West Mall located in Gallup, New Mexico just north of the
intersection of U.S. Highway 666 and Interstate 40.
(x) Address. An address of the secured party from which
-------
information concerning the security interest granted hereby may be obtained
is the address for the Mortgagee as set forth in Section 52 hereof. A
carbon, photographic or other reproduction of this Mortgage or any related
financing statement is sufficient as a financing statement when filed in
the real estate records of the county in which the Land is located.
(xi) Financing Statement. When filed in the real property records
-------------------
of McKinley County, New Mexico, this Mortgage shall be effective as a
financing statement filed as a fixture filing pursuant to New Mexico
Uniform Commercial Code (S) 9-402(6) and (S) 9-313 (N.M.S.A. 1978), as
amended. Any copy of this Mortgage or any carbon, photographic or other
reproduction of this Mortgage may also serve as the financing statement.
(xii) Use of Proceeds. The Mortgagor identified on Exhibit A as
--------------- ---------
owning the Mortgaged Property situate in New Mexico will not use the
proceeds of the Loan to finance construction at said Mortgaged Property.
(f) New York. (i) New York Trust Fund. Pursuant to Section 14 of the
-------- -------------------
Lien Law of New York, the Mortgagors shall receive the advances secured hereby
and shall hold the right to receive the advances secured hereby as a trust fund
to be applied first for the purpose of paying the cost of any improvement and
shall apply such
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<PAGE>
advances first to the payment of the cost of any such improvement on the
Mortgaged Property before using any part of the total of the same for any other
purpose.
(ii) Non-Residential Property. This Mortgage does not cover real
------------------------
property principally improved by one or more structures containing in the
aggregate six or less residential units having their own separate cooking
facilities.
(iii) Section 256 of the Tax Law. Reference is made to Section 256
--------------------------
of the Tax Law of the State of New York. Notwithstanding anything to the
contrary contained herein, the maximum amount of principal indebtedness
secured by this Mortgage at the time of execution or which under any
contingency may hereafter become secured hereby at any time is Twelve
Million Two Hundred Thousand ($12,200,000) dollars; provided that such
--------
limitation shall not limit the security of this mortgage with respect to
(i) interest on the aforesaid maximum amount of principal indebtedness at
the rates set forth in the Note, (ii) sums to pay impositions, (iii) sums
to pay premiums on insurance policies covering the premises, (iv) expenses
incurred after an Event of Default in upholding or enforcing the lien of
this Mortgage, including, but not limited to, the expenses of any
litigation to prosecute or defend the rights and lien created by this
Mortgage, (v) costs of removal of or otherwise related to Hazardous
Substances incurred after an Event of Default, (vi) any amount, costs or
charge to which Mortgagee becomes subrogated, upon payment, whether under
recognized principles of law or equity, or under express statutory
authority and (vii) any other amount secured by this Mortgage which, if not
limited by such limitation, would not increase the amount of mortgage
recording taxes, if any, payable with respect to this Mortgage.
(iii) This Mortgage amends and restates the terms and conditions of
that certain Consolidation and Splitting Agreement (the "Agreement"), dated
as of the date hereof and recorded in the Clerk's Office in the County of
Niagara ("Clerk's Office"). The Agreement consolidated, amended and
restated the following prior mortgages:
1. Combination Mortgage, Security Agreement and Fixture Financing
Statement between Lockport Partners Limited Partnership (now
known as Lockport L.L.C.) ("LPLP") and The Prudential Insurance
Company of America ("Prudential"), dated as of October 15, 1986
and recorded in the Clerk's Office on November 5, 1986 at Liber
1801, Page 232, which secures an original principle amount of
$11,750,000.00, as amended by that certain First Amendment of
Documents, dated September 26,
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<PAGE>
1988, by and between LPLP and Prudential, as recorded in the
Clerk's office.
2. Combination Mortgage, Security Agreement and Fixture Financing
Statement by and between LPLP and Prudential, dated as of
September 26, 1988 and recorded in the Clerk's Office on November
17, 1988 at Liber 2011, Page 141, which secures an original
principal amount of $750,000.00.
(a) Mortgages 1 and 2 above were consolidated pursuant to the
terms of that certain Mortgage Consolidation Agreement made by
LPLP and Prudential, dated September 26, 1988 and recorded in
the Clerk's Office on November 17, 1988 at Liber 577, Page
290, which mortgage consolidated the liens of the above
mortgages to forma single lien of $12,500,000.00
(b) The mortgages as consolidated were assigned to Goldman Sachs
Mortgage Company ("GSMC") by an Assignment, dated October 15,
1996 and recorded in the Clerk's Office on October 21, 1996 at
Liber 969, Page 317.
(c) The mortgages were also modified by that ceratin Modification
of Mortgage and of Assignment of Leases, dated October 15,
1996 and recorded in the Clerk's Office on October 21, 1996 at
Liber 969, Page 317.
(d) The above mortgages secure an existing indebtedness of
$7,000,000.00.
3. Mortgage, dated as of the date hereof and intended to be recorded
in the Clerk's Office immediately prior hereto securing an
indebtedness of $5,200,000.00.
4. Mortgages 1, 2 and 3 were consolidated pursuant to that certain
Consolidation and Splitting Agreement, dated as of the date hereof
and intended to be recorded in the Clerk's Office immediately
after Mortgage 3 above but prior hereto, which secures a
consolidated lien of $12,200,000.00.
The above mortgages as so consolidated, amended and restated as set forth
above are amended and restated herein to form a single lien serving a
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<PAGE>
maximum indebtedness of $12,200,000.00 with respect to the property
Situate in NY Mortgage.
(g) Minnesota. None.
---------
(h) Illinois.
--------
(i) With respect to the Mortgaged Property situated in the State
of Illinois and without limiting the generality of any other provisions of this
Mortgage, the Mortgagor hereby and in accordance with the provisions of Section
15-1701 of the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1701, expressly
authorizes and consents to the placing of the mortgagee in possession and the
appointment of a receiver as herein provided and hereby expressly waives the
statutory right of redemption provided in Section 15-1601 of the Illinois
Mortgage Foreclosure Law, 735 ILCS 5/15-1601.
(ii) This Mortgage is granted to secure future advances and loans
from the Holders to or for the benefit of the Mortgagors as provided in the
Indenture, and costs and expenses of enforcing the Mortgagors' obligations under
this Mortgage and the other Security Documents. All advances, disbursements or
other payments required by this Mortgage or the Indenture are obligatory
advances up to the credit limits established therein and shall, to the fullest
extent permitted by law, have priority over any and all mechanics' liens and
other liens and encumbrances arising after this Mortgage is recorded. All
obligations secured by this Mortgage, including, without limitation, all future
advances, shall have the same priority, to the same extent as if such
obligations secured by this Mortgage, including, without limitation, future
advances, were made on the date of this Mortgage.
(h) Oklahoma. This Mortgage is given in confirmation, ratification,
--------
modification, restatement and incorporation, and not in extinguishment of that
certain Mortgage, Assignment of Rents and Security Agreement executed by
Oklahoma Mall L.L.C., a Delaware limited liability company, in favor of Goldman
Sachs Mortgage Company, a New York limited partnership, filed November 18, 1997
recorded in Book RB 2896, Page 951 (the "Prior Oklahoma Mortgage") and secures
the Westwood and Sooner Notes (as defined in the first page of the Prior
Oklahoma Mortgage. The liens and security interests contained in the Prior
Oklahoma Mortgage hereby are incorporated, renewed, extended, modified,
ratified, confirmed and brought forward to secure payment of the Notes until all
indebtedness of the Mortgagors has been fully paid and satisfied. Mortgagors
hereby agree that, except pursuant to the terms hereby, this Mortgage shall in
no manner affect, impair or extinguish the liens and security interests
contained in the Prior Oklahoma Mortgage.
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<PAGE>
(i) Georgia. In the event of any sale conducted pursuant to Section 25.4
-------
of this Mortgage, Mortgagee, at its option, may sell the Mortgaged Properties or
any part of the Mortgaged Properties at public sale or sales before the door of
the courthouse of the county in which the Mortgaged Properties or any part of
the Mortgaged Properties are situated, to the highest bidder for cash, in order
to pay the Secured Obligations and all expenses of the sale and of all
proceedings in connection therewith, including attorneys' fees actually
incurred, after advertising the time, place and terms of sale once a week for
four (4) weeks immediately preceding such sale (but without regard to the number
of days) in a newspaper in which Sheriff's sales are advertised in said county.
At any such public sale, Mortgagee may execute and deliver to the purchaser a
conveyance of the Mortgaged Properties or any part of the Mortgaged Properties
in fee simple, with full warranties of title, and to this end, Grantor hereby
constitutes and appoints Mortgagee the agent and attorney-in-fact of Grantor to
make such sale and conveyance, and thereby to divest Mortgagors of all right,
title or equity that Mortgagors may have in and to the Mortgaged Properties and
to vest the same in the purchaser or purchasers at such sale or sales, and all
the acts and doings of said agent and attorney-in-fact are hereby ratified and
confirmed and any recitals in said conveyance or conveyances as to facts
essential to a valid sale shall be binding (absent fraud) upon Mortgagors. The
aforesaid power of sale and agency hereby granted are coupled with an interest
and are irrevocable, by bankruptcy or otherwise, and are granted as cumulative
of the other remedies provided hereby or by law for collection of the Secured
Obligations and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all of the Secured Obligations. In the event of
any sale under this Mortgage by virtue of the exercise of the powers herein
granted, or pursuant to any order in any judicial proceeding or otherwise, the
Mortgaged Properties may be sold as an entirety or in separate parcels and in
such manner or order as Mortgagee in its sole discretion may elect, and if
Mortgagee so elects, Mortgagee may sell the personal property covered by this
Mortgage at one or more separate sales in any manner permitted by the Uniform
Commercial Code of the State of Georgia, and one or more exercises of the powers
herein granted shall not extinguish nor exhaust such powers, until the entire
Mortgaged Properties are sold or the Secured Obligations is paid in full. If
the Secured Obligations are now or hereafter further secured by any chattel
mortgages, pledges, contracts of guaranty, assignments of lease or other
security instruments, Mortgagee may at its option exhaust the remedies granted
under any of said security instruments either concurrently or independently, and
in such order as Mortgagee may determine.
(j) Florida. None.
-------
(k) Nebraska. (i) Acceleration of Maturity. If an Event of Default
-------- ------------------------
shall have occurred, the entire unpaid principal of the Note, together with all
other sums payable under this Mortgage shall, at the option of Beneficiary,
immediately become due and payable by delivery to Deed Trustee of written
declaration of default. The Deed Trustee shall have the power of sale of the
Property, and if Beneficiary desires the
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<PAGE>
Mortgaged Property to be sold, it shall deposit with Deed Trustee this Mortgage,
the Note and all other documents evidencing expenditures secured hereby, and
shall deliver to Deed Trustee a written notice of default and election to cause
the Mortgaged Property to be sold, and the Deed Trustee, in turn, shall prepare
a similar notice in the form required by law, and shall record said notice in
each county in which any part of the Mortgaged Property is located and shall
mail copies of such notice in the manner required by law to Mortgagor and to any
other persons prescribed by law.
After the time required by applicable law, Deed Trustee shall give
public notice of sale to the persons and in the manner prescribed by
applicable law. Deed Trustee, without demand on Mortgagor, shall sell
the Mortgaged Property at public auction to the highest bidder at the
time and place and under the terms designated in the notice of sale in
one or more parcels and in any order Deed Trustee determines. Deed
Trustee may postpone sale of all or any parcel of the Mortgaged Property
by public announcement at the time and place of any previously scheduled
sale. Beneficiary or its designee may purchase the Mortgaged Property at
any sale.
Upon receipt of payment of the bid price, Deed Trustee shall
deliver to the purchaser Deed Trustee's deed conveying the Mortgaged
Property. The recitals in the Deed Trustee's deed shall be (absent
fraud) prima facie evidence of the truth of the statements made therein.
Deed Trustee shall apply the proceeds of the sale in the following
order: (a) to the actual expenses of the sale, including, but not
limited to, Trustee's and Servicer's fees and reasonable attorneys'
fees, but not to exceed five percent (5%) of the principal balance at
the time of recording the Notice of Default,; (b) to all sums secured by
this Mortgage; and (c) any excess to the person or persons legally
entitled to it.
(ii) Mortgagor's Right to Reinstate. If, within one (1) month
------------------------------
after the recording of a Notice of Default under this Mortgage, if the
Power of Sale is to be exercised, Mortgagor meets certain conditions,
Mortgagor shall have the right to have enforcement of this Mortgage
discontinued. Those conditions are that Mortgagor: (a) pays Beneficiary
all sums which then would be due under this Mortgage and the Notes had
no acceleration occurred; (b) cures any default of any other covenants
or agreement; (c) pays all expenses incurred in enforcing this Mortgage,
including, but not limited to, reasonable attorneys' fees; and (d) takes
such action as Beneficiary may reasonably require to assure that the
lien of this Mortgage, Beneficiary's rights in the Mortgaged Property
and Mortgagor's obligation to pay the sums secured by this Mortgage
shall continue unchanged. Upon reinstatement by Mortgagor, this Mortgage
and the obligations secured hereby shall remain fully effective as if no
acceleration had occurred.
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<PAGE>
(l) Michigan.
--------
(i) With respect to the real property located in Michigan,
Mortgagors grant power to the Mortgagee to sell the Mortgaged Property
or to cause the same to be sold at public sale, and to convey the same
to the purchaser, in accordance with applicable statutes.
WARNING: This Mortgage contains a power of sale and upon default, may be
foreclosed by advertisement. In foreclosure by advertisement and the
related sale of the Mortgaged Property, no hearing is required and the
only notice required is to publish notice in a local newspaper and to
post a copy of the notice on the Mortgaged Property. The Mortgagors
waive all rights under the constitution and laws of the United States
and under the constitution and laws of the State of Michigan to a
hearing prior to sale in connection with foreclosure by advertisement
and all notice requirements except as set forth in the Michigan statute
providing for foreclosure by advertisement.
(ii) Failure to pay any taxes and/or assessments assessed against
the Mortgaged Property located in the State of Michigan, or any
installment thereof, or any insurance premium upon policies covering any
of the Mortgaged Property located in the State of Michigan, shall
constitute waste and Mortgagors agree to and hereby do consent to the
appointment of a receiver, in the case of such waste should Mortgagee so
elect.
(iii) The assignment of leases set forth in Section 51 hereof
shall include, without limitation an assignment by Mortgagors to
Mortgagee of the right to receive and apply the rents, issues, profits,
license fees, revenues, charges, accounts and general intangibles
arising from the Mortgaged Property located in the State of Michigan, or
relating to any business conducted by the Mortgagors thereon, under
present or future Leases, which are hereby specifically assigned and
transferred to the Mortgagors including, without limit, all rights
conferred by Article No. 210 of the Michigan Public Acts of 1953, as
amended.
57. THE DEED TRUSTEE IN THE DEED OF TRUST STATES. (a) No Required
-------------------------------------------- -----------
Action. The Deed Trustee shall not be required to take any action toward the
- ------
execution and enforcement of the trust hereby created or to institute, appear in
or defend any action, suit or other proceeding in connection therewith where in
its opinion such action will be likely to involve it in expense or liability,
unless requested so to do by a written instrument signed by the Mortgagee and,
if the Deed Trustee so requests, unless the Deed Trustee is tendered security
and indemnity satisfactory to it against any and all
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<PAGE>
costs, expense and liabilities arising therefrom. The Deed Trustee shall not be
responsible for the execution, acknowledgement or validity of the Security
Documents, or for the proper authorization thereof, or for the sufficiency of
the lien or security interest purported to be created hereby, and makes no
representation in respect thereof or in respect of the rights, remedies and
recourses of the Mortgagee.
(b) Certain Rights. The Deed Trustee shall have the right to take any
--------------
and all of the following actions: (i) to select, employ and consult with
counsel (who may be, but need not be, counsel for the Mortgagee) upon any
matters arising hereunder, including the preparation, execution and
interpretation of the Security Documents, and shall be fully protected in
relying as to legal matters on the advice of counsel; (ii) to execute any of the
trusts and powers hereof and to perform any duty hereunder either directly or
through its agents or attorneys; (iii) to select and employ, in and about the
execution of its duties hereunder, suitable accountants, engineers and other
experts, agents and attorneys-in-fact, either corporate or individual, not
regularly in the employ of the Deed Trustee, and the Deed Trustee shall not be
answerable for any act, default or misconduct of any such accountant, engineer
or other expert, agent or attorney-in-fact, if selected with reasonable care, or
be otherwise responsible or accountable under any circumstances whatsoever,
except for the Deed Trustee's gross negligence, wilful misconduct or bad faith;
and (iv) to take any and all other lawful action as the Mortgagee may instruct
the Deed Trustee to take to protect or enforce the Mortgagee's rights hereunder.
The Deed Trustee shall not be personally liable, except for its gross
negligence, willful misconduct or bad faith, in case of entry by it, or anyone
entering by virtue of the powers herein granted to it, upon the Mortgaged
Property located in the Deed of Trust State to which the Deed Trustee's
appointment relates for debts contracted or liability or damages incurred in the
management or operation of such Mortgaged Property. The Deed Trustee shall have
the right to rely on any instrument, document or signature authorizing or
supporting any action taken or proposed to be taken by it hereunder, believed by
it in good faith to be genuine. The Deed Trustee shall be entitled to
reimbursement for reasonable expenses incurred by it in the performance of its
duties hereunder and to reasonable compensation for such of its services
hereunder as shall be rendered. The Mortgagors will, from time to time, pay the
reasonable compensation due to the Deed Trustee hereunder and reimburse the Deed
Trustee for, and save it harmless against, any and all liability and expenses
(other than liabilities and expenses arising out of the Deed Trustee's gross
negligence or misconduct) which may be incurred by it in the performance of its
duties.
(c) Retention of Moneys. All moneys received by the Deed Trustee shall,
-------------------
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law) and the Deed Trustee shall
be under no liability for interest on any moneys received by it hereunder.
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<PAGE>
(d) Successor Deed Trustees. The Deed Trustee may resign by giving
-----------------------
written notice of such resignation in recordable form to the Mortgagee. If the
Deed Trustee shall die, resign or become disqualified from acting in the
execution of this deed of trust, or shall fail or refuse to execute the same
when requested by the Mortgagee so to do, or if, for any reason, the Mortgagee
shall determine that it is prudent to appoint a substitute trustee or trustees
to act instead of the aforenamed Deed Trustee, the Mortgagee shall (after
reasonable notice to the Mortgagors) have full power to appoint a substitute
trustee or trustees and, if preferred, several substitute trustees in succession
who shall succeed to all the estates, properties, rights, powers and duties of
the aforenamed Deed Trustee. Such appointment may be executed by any authorized
agent or officer of the Mortgagee, and if the Mortgagee be a corporation and
such appointment be executed on its behalf by any officer of such corporation,
such appointment shall be conclusively presumed to be executed with authority
and shall be valid and sufficient without proof of any action by the Board of
Directors or any superior officer of the corporation. Such appointment shall be
duly recorded in the appropriate real estate records at any time before or, if
permitted by applicable law, upon sale of any Mortgaged Property by the
successor appointed thereby. Each Mortgagor hereby ratifies and confirms any
and all acts which the aforementioned Deed Trustee, or its successor or
successors in this trust, lawfully may do by virtue hereof. The Mortgagors
shall reimburse the Mortgagee and/or Deed Trustee for any reasonable expenses
incurred pursuant to the provisions of this Article 53.
(e) Perfection of Appointment. Should any deed, conveyance or
-------------------------
instrument of any nature be required from the Mortgagors by any successor Deed
Trustee to more fully and certainly vest in and confirm to such new Deed Trustee
such estates, rights,
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<PAGE>
powers and duties, then, upon request by such Deed Trustee, any and all such
deeds, conveyances and instruments shall be made, executed, acknowledged and
delivered subject to the provisions of Article 38 hereof and shall be caused to
be recorded and/or filed by the Mortgagors and the Mortgagors shall pay for any
expenses incurred by the Deed Trustee pursuant to this Article 53.
(f) Succession Instruments. Any new Deed Trustee appointed pursuant to
----------------------
any of the provisions hereof shall, without any further act, deed or conveyance,
become vested with all the estates, properties, rights, powers and trusts of its
or its predecessor in the rights hereunder with like effect as if originally
named as a Deed Trustee herein; but nevertheless, upon the written request of
the Mortgagee or of the successor Deed Trustee, the Deed Trustee ceasing to act
shall execute and deliver an instrument in recordable form transferring to such
successor Deed Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers and trusts of the Deed Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and moneys held by
such Deed Trustee to the successor Deed Trustee so appointed in its place.
(g) No Representation by Deed Trustee. By accepting or approving
---------------------------------
anything required to be observed, performed or fulfilled or to be given to the
Deed Trustee or beneficiary pursuant to the Security Documents, including but
not limited to, any officer's certificate, balance sheet, statement of profit
and loss or other financial statement, survey, appraisal or insurance policy,
Deed Trustee shall not be deemed to have warranted, consented to, or affirmed
the sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty, consent or affirmation with respect
thereto by the Deed Trustee.
58. Future Advances. Mortgagee may, in Mortgagee's sole discretion,
---------------
from time to time, within 20 years from the date of this Mortgage, or within
such lesser time as may be provided by law, as a prerequisite for the
sufficiency of the actual or record notice of optional future or additional
advances (including in connection with the issuance of Additional Notes under
the Indenture) as against the rights of creditors or subsequent purchasers for
valuable considerations, make further advances to Mortgagors or Mortgagors'
permitted successors in title, which shall be secured by the lien of this
Mortgage, provided that at no time shall the outstanding principal indebtedness
secured by this Mortgage, including advances, exceed the sum of $1,000,000,000,
plus interest and any disbursements made for the payment of taxes, levies,
insurance or other matters on each of the Mortgaged Properties, with interest on
those disbursements (provided, that the maximum principal indebtedness of the
Notes and the Additional Notes secured by the Mortgaged Property in the State of
Minnesota will never exceed, with respect to such Mortgaged Property,
$560,000,000 and the maximum principal indebtedness of the Notes and Additional
Notes secured by the Mortgaged Property in the State of Nebraska will never
exceed, with respect to such Mortgaged Property $1,000,000,000) and will
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<PAGE>
otherwise be subject to any other limitations set forth in this Mortgage or any
other Security Document.
-121-
<PAGE>
Each Mortgagor hereby acknowledges receipt, without charge, of a true
copy of this Mortgage.
WITNESS THE EXECUTION OF THIS MORTGAGE as of the date first above
written.
Signed, sealed and delivered in the LASALLE NATIONAL BANK, not in its
presence of: individual capacity but solely as
Trustee
________________________________ By:___________________________
Print Name:___________ Name:
Title
Address: 135 South LaSalle Street
Chicago, Illinois 60603
________________________________
Print Name:___________
[CORPORATE SEAL]
<PAGE>
General Growth Properties, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands-Unaudited)
<TABLE>
<CAPTION>
Quarter ended
March 31, 1998 1997 1996 1995 1994 1993
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Available Earnings:
Net income (loss) 8,455 89,551 $ 59,742 $ 43,054 $14,165 $12,610
Adjustments:
Minority interest 4,427 49,997 34,580 25,856 9,518 9,823
Equity in net (income) loss
of unconsolidated affiliates 5,193 (19,344) (17,589) (9,274) (6,096) -
Distribution from
unconsolidated affiliate(s) 9,379 20,352 35,322 23,462 14,600 -
Interest expense/(1)/ 21,379 79,343 71,266 49,099 45,847 42,136
------- -------- -------- -------- ------- -------
Available Earnings $48,833 $219,899 $183,321 $132,197 $78,034 $64,569
======= ======== ======== ======== ======= =======
Fixed Charges/(2)/:
Interest expense/(1)/ $21,379 $ 79,343 $ 71,266 $ 49,099 $45,847 $42,136
Capitalized interest 2,734 4,753 5,947 5,409 913 107
------- -------- -------- -------- ------- -------
Fixed Charges $24,113 $ 84,096 $ 77,213 $ 54,508 $46,760 $42,243
======= ======== ======== ======== ======= =======
Ratio of Earnings to Fixed Charges 2.03 2.61 2.37 2.43 1.67 1.53
======= ======== ======== ======== ======= =======
</TABLE>
/(1)/ Interest expense includes amortization of debt expense.
/(2)/ Rental expense is not calculated because annual rental expense of the
company is insignificant.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
Independent Auditors' Consent
We consent to the incorporation by reference in the Registration Statements of
General Growth Properties, Inc. on Forms S-3 (File Nos. 333-11067, 333-15907,
333-17021, 333-23035, 333-37247, 333-37383 and 333-41603) and the Registration
Statements on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449)
of our report dated May 14, 1998, relating to our audit of the combined
statement of revenues and certain expenses of the Landmark Mall, Mayfair
Complex, The Meadows, Northgate Mall, Oglethorpe Mall and Park City Center ("the
Malls") for the year ended December 31, 1997, included in this Form 8-K/A dated
June 2, 1998, and to the references to us as experts in such registration
statements.
Deloitte and Touche LLP
Atlanta, Georgia
June 2, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
General Growth Properties, Inc.
We consent to the incorporation by reference in the Registration Statement of
General Growth Properties, Inc. on Forms S-3 (File Nos. 333-11067, 333-15907,
333-17021, 333-23035, 333-37247, 333-37383 and 333-41603) and the Registration
Statement on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449)
of our report dated May 8, 1998, with respect to the combined statement of
revenues and certain expenses of certain retail properties of MEPC American
Holdings, Inc., U.K.-American Properties, Inc. and Caledonian Holding Company,
Inc. (wholly owned subsidiaries of MEPC plc, a United Kingdom company) for the
year ended September 30, 1997, which report appears in the Form 8-K/A Amendment
No. 1 dated June 2, 1998, of General Growth Properties, Inc., and to the
reference to our firm under the heading "Experts" in the prospectus supplement.
KPMG Peat Marwick LLP
Dallas, Texas
June 2, 1998
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
General Growth Properties, Inc. on Forms S-3 (File Nos. 333-11067, 333-15907,
333-17021, 333-23035, 333-37247, 333-37383 and 333-41603) and the Registration
Statements on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449)
of our report dated February 6, 1998, except as to Note 1 for which the date is
May 28, 1998, on our audit of the statement of revenues and certain expenses of
Northbrook Court for the year ended December 31, 1997, and which is also
included in this Form 8-K/A dated June 2, 1998. We also consent to the reference
to our firm under the caption "Experts" in the above Registration Statements.
Coopers & Lybrand L.L.P.
Chicago, Illinois
June 2, 1998
