SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 19, 1997
FAC REALTY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-11998 56-1819372
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
11000 REGENCY PARKWAY
THIRD FLOOR, EAST TOWER
CARY, NORTH CAROLINA 27511
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (919) 462-8787
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ITEM 5. OTHER EVENTS.
On February 20, 1997, J. Dixon Fleming, Jr., Chairman of the
Board of Directors, resigned from the Board of Directors of Registrant,
effective immediately.
On February 19, 1997, Registrant entered into a $150 million
line of credit agreement with Nomura Asset Capital Corporation. The Nomura line
of credit facility replaces Registrant's previous $75 million line of credit.
The description of this transaction is qualified in its entirety by reference to
the Line of Credit Agreement attached hereto as Exhibit 2.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
2.1 Line of Credit Agreement between FAC Realty, Inc.
and Nomura Asset Capital Corporation, dated as of
February 19, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FAC REALTY, INC.
Dated: March 10, 1997 By: /s/ C. Cammack Morton
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EXHIBIT LIST
<TABLE>
<CAPTION>
Exhibit No. Description Sequentially Numbered
Page
<S> <C> <C>
2.1 Line of Credit Agreement between FAC Realty, Inc. and Nomura 5
Asset Capital Corporation, dated as of February 19, 1997
</TABLE>
EXHIBIT 2.1
LINE OF CREDIT AGREEMENT BETWEEN FAC REALTY, INC. AND NOMURA ASSET CAPITAL
CORPORATION, DATED AS OF FEBRUARY 19, 1997
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LOAN AGREEMENT
Dated as of February 19, 1997
between
FAC REALTY, INC.,
as Borrower
and
NOMURA ASSET CAPITAL CORPORATION,
as Lender
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TABLE OF CONTENTS
Page
Section 1. Definitions and Accounting Matters.................................1
1.01 Certain Defined Terms...........................................1
1.02 Accounting Terms and Determinations............................15
Section 2. Facility..........................................................15
2.01 Loans..........................................................15
2.02 Borrowings.....................................................15
2.03 Changes of Commitment..........................................16
2.04 Fees...........................................................16
2.05 Note...........................................................16
2.06 Optional Prepayments of Loans..................................16
2.07 Acquisition Loans..............................................17
2.08 Releases Upon Prepayment.......................................17
2.09 Refinancing Fees...............................................19
2.10 Loss Event.....................................................19
2.11 Appraisals.....................................................19
2.12 Additional Loans...............................................19
Section 3. Payments of Principal and Interest................................20
3.01 Repayment of Loans.............................................20
3.02 Interest.......................................................20
3.03 Extension Option; Extension Fee................................20
Section 4. Payments; Computations; Etc.......................................21
4.01 Payments.......................................................21
4.02 Computations...................................................22
4.03 Setoff.........................................................22
4.04 Minimum Amounts................................................22
4.05 Certain Notices................................................22
Section 5. Yield Protection and Illegality...................................23
5.01 Additional Costs...............................................23
5.02 Illegality.....................................................24
5.03 Limitation on Types of Loans...................................25
5.04 Compensation...................................................25
Section 6. Conditions Precedent..............................................26
6.01 Initial Loan...................................................26
6.02 Initial and Subsequent Loans...................................32
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Page
6.03 Acquisition Loans..............................................34
6.04 Expansion Loans.............................................35
6.05 Additional Loans...............................................35
Section 7. Representations and Warranties....................................35
7.01 Corporate Existence............................................36
7.02 Financial Condition............................................36
7.03 Litigation.....................................................36
7.04 No Breach......................................................36
7.05 Corporate Action...............................................36
7.06 Approvals......................................................36
7.07 Use of Loans...................................................37
7.08 ERISA..........................................................37
7.09 Taxes..........................................................37
7.10 Investment Company Act.........................................37
7.11 Hazardous Materials............................................37
7.12 Equal Employment and Non-Discrimination........................39
7.13 Title..........................................................39
7.14 Ownership; REIT Status.........................................39
7.15 Conditions of Properties.......................................40
7.16 Solvency.......................................................40
7.17 REMIC Loan.....................................................40
7.18 Insurance......................................................40
7.19 Lien Priority..................................................40
7.20 Improvements...................................................40
7.21 Condemnation...................................................40
7.22 Zoning and Other Laws..........................................41
7.23 No Management Agreement........................................41
7.24 Contracts......................................................41
7.25 Permits........................................................41
7.26 Utilities......................................................41
7.27 Certificates of Occupancy......................................41
7.28 Assessments....................................................41
7.29 Ground Lease...................................................42
7.30 Leases.........................................................42
7.31 Out-Parcels....................................................42
7.32 VF Agreement...................................................42
Section 8. Covenants of the Borrower.........................................42
8.01 Financial Statements...........................................42
8.02 Litigation, Etc................................................45
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Page
8.03 Corporate Existence, Etc.......................................45
8.04 Insurance......................................................46
8.05 Prohibition of Fundamental Changes and Transfers...............46
8.06 Limitation on Liens............................................47
8.07 Leasing........................................................48
8.08 Business.......................................................48
8.09 Dividend Payments..............................................49
8.10 REMIC Loan.....................................................49
8.11 Transactions with Affiliates...................................49
8.12 Use of Proceeds................................................49
8.13 Ground Lease...................................................49
8.14 Deferred Maintenance...........................................50
8.15 Financial Covenants............................................52
8.16 Property Management............................................52
8.17 Environmental Matters..........................................52
Section 9. Events of Default.................................................54
Section 10. Miscellaneous....................................................57
10.01 Waiver........................................................57
10.02 Notices.......................................................57
10.03 Expenses, Etc.................................................57
10.04 Amendments, Etc...............................................58
10.05 Successors and Assigns........................................58
10.06 Assignments and Participations................................59
10.07 Survival......................................................59
10.08 Captions......................................................60
10.09 Counterparts..................................................60
10.10 Governing Law; Submission to Jurisdiction.....................60
10.11 Waiver of Jury Trial..........................................60
10.12 Marshalling; Recapture........................................60
10.13 Cross Collateralization.......................................60
10.14 Severability..................................................61
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SCHEDULES
Schedule A - Initial Properties
Schedule B - Promissory Note
Schedule C - Notice of Borrowing
Schedule D - Reports and Other Materials
Schedule E - Contracts
Schedule F - Initial Eligible Out-Parcels
Schedule G - Existing Anchor Leases
Schedule H - Initial Allocated Title Amounts
Schedule I - SNDA Tenants
Schedule J - Initial Deferred Maintenance
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LOAN AGREEMENT dated as of February 19, 1997 among FAC REALTY,
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "Borrower"), and NOMURA ASSET CAPITAL CORPORATION, a
corporation organized under the laws of the State of Delaware (together with its
permitted successors and assigns, the "Lender").
RECITALS
The Borrower has requested that the Lender make loans to it in
an aggregate principal amount not exceeding $150,000,000 at any one time
outstanding. The Lender is prepared to make such loans upon the terms hereof.
Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice-versa):
"Acquisition Loan" shall mean a Loan the proceeds of which are
used to purchase or refinance one or more Acquisition Properties and to pay
costs incidental to the acquisition of such Acquisition Properties, including
reasonable and necessary due diligence costs, legal, accounting and title
insurance fees and reserves necessary for the repair and rehabilitation of such
Acquisition Properties.
"Acquisition Mortgage" shall mean a Mortgage made on an
Acquisition Property in connection with an Acquisition Loan.
"Acquisition Property" shall mean a Property (other than the
Initial Properties), owned by (or leased as an entirety to) the Borrower, all or
part of the purchase price of which is paid or refinanced with a Loan; and shall
also mean the Borrower's interest in such Property, if the Borrower does not own
fee title thereto.
"Additional Costs" shall have the meaning assigned to such
term in Section 5.01.
"Additional Loan" shall mean a Loan for which the Borrower
qualifies as a result of either or both of the Additional Properties becoming a
Collateral Property pursuant to Section 2.12.
"Additional Mortgage" shall mean a Mortgage made on an
Additional Property in connection with an Additional Loan.
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"Additional Properties" shall mean the Borrower's properties
at E. Mill and 200 Lackey Street, Boaz, Alabama and 2824 South Eason Boulevard,
Tupelo, Mississippi.
"Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, spouse and children) of such individual
and any trust whose principal beneficiary is such individual or one or more
members of such immediate family and any Person who is controlled by any such
member or trust. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 5% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate
of a corporation solely by reason of his or her being an officer or director of
such corporation.
"Allocated Loan Amount" shall mean, in respect of any
Property, as at any date of determination thereof, the product of the Allocation
Factor for such Property multiplied by the outstanding principal balance of the
Loans on such date.
"Allocated Title Amount" shall mean (i) with respect to each
Initial Collateral Property and each Additional Property, the amount set forth
for it on Schedule H, and (ii) with respect to any Acquisition Property, an
amount equal to the product of 1.25 and the greater of (A) the purchase price
paid by the Borrower for such Acquisition Property or (B) the original principal
amount of the Acquisition Loan made with respect to such Acquisition Property,
provided that the Allocated Title Amount for any Collateral Property shall not
exceed the maximum principal amount secured by the Mortgage on such Collateral
Property, if any, as set forth in such Mortgage.
"Allocation Factor" shall mean, as at any date of
determination, for each Property, the percentage of the Available Amount on such
date that is attributable to the Property NOI of such Property, assuming that
(i) the reduction in the Available Amount pursuant to clause (ii) of the
definition thereof (on account of the REMIC Loan balance) is attributable solely
to the FSA Properties; and (ii) the portion of such reduction attributable to
each FSA Property is an amount equal to (A) the Property NOI of such FSA
Property on such date, divided by (B) the aggregate Property NOI of all the FSA
Properties on such date.
"Anchor Leases" shall mean the leases listed on Schedule G
hereto and any comparable major leases of space in Properties that the Lender
hereafter reasonably determines to be anchor leases.
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"Applicable Margin" shall mean 2.25% per annum.
"Approval Information" shall have the meaning assigned to such
term in Section 2.07.
"Assignments" shall mean, collectively, the respective
Assignments of Leases and Rents (or Amended and Restated Assignments of Leases
and Rents) relating to the respective Collateral Properties.
"Available Amount" shall mean as of any date of determination,
subject to reduction pursuant to Sections 8.13(b) and 3.03, (i) the sum of (A)
the result obtained by dividing (x) the aggregate Property NOI on such date for
all of the Properties that are factory outlet centers by (y) the product of 1.6
multiplied by the Required Constant, plus (B) the result obtained by dividing
(x) the aggregate Property NOI on such date for all of the Properties that are
community shopping centers by (y) the product of 1.4 multiplied by the Required
Constant; minus (ii) outstanding principal balance of the REMIC Loan on such
date.
"Borrower" shall have the meaning assigned to such term in the
preamble.
"Business Day" shall mean any day on which commercial banks
are authorized to or required to close in New York City and, for purposes of
determining the LIBOR Rate, which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Capital Expenditures" shall mean, for any period as to any
Person, expenditures (including the aggregate amount of Capital Lease
Obligations incurred during such period) made by such Person or any of its
Consolidated Subsidiaries to acquire, construct or replace fixed assets, plant
and equipment (including renewals, improvements and replacements, but excluding
repairs) during such period, computed in accordance with GAAP.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property
(including equipment) which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person under GAAP
(including Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board) and, for purposes of this Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP (including such Statement No. 13).
"Cash Collateral Agreement" shall mean the Cash Collateral
Account, Pledge and Security Agreement dated as of the date hereof among the
Borrower, the Lender and Centura Bank, as modified and supplemented and in
effect from time to time.
"CERCLA" shall have the meaning assigned to such term in
Section 7.11.
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"Closing Date" shall mean the date on which the conditions set
forth in Sec tions 6.01 and 6.02 shall have been fulfilled.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean any and all property and assets of the
Borrower from time to time subject to the Lien of any Security Document.
"Collateral Properties" shall mean, collectively, the Initial
Collateral Properties and the Acquisition Properties and Additional Properties
which at the time in question are included in the Collateral.
"Commitment" shall mean the obligation of the Lender to make
Loans in an aggregate amount at any one time outstanding up to but not exceeding
$150,000,000 (as the same may be reduced or terminated at any time or from time
to time pursuant to Section 2.03).
"Consolidated Subsidiary" shall mean, as to any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
GAAP.
"Debt Service" shall mean, for any period with respect to any
Person, the greater of (i) the sum of (A) all payments of principal of
Indebtedness of such Person scheduled to be made during such period plus (B) all
Interest Expense payable by such Person during such period or (ii) the payments
of principal and Interest Expense that would be payable during such period if
the amount of such Payments were at an annual rate equal to the product of (A)
the outstanding principal amount of such Indebtedness multiplied by (B) the
Required Constant; provided, however, that, for purposes of Section 8.15, "Debt
Service" shall have the meaning set forth in clause (i) of this definition.
"Debt Service Ratio" shall mean, as of any date of
determination, the ratio of (i) the sum of (A) the aggregate Property NOI of all
of the Collateral Properties on such date plus (B) the aggregate Net Cash Flow
of all the FSA Properties on such date, to (ii) Debt Service of the Borrower for
such period ending on the last day of the calendar month ending on or most
recently ended prior to such date.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of Default.
"Dividend Payment" shall mean as to any Person, any dividend
or any partnership distribution (in cash, property or obligations) on, or any
other payment or distribution on account of, or the setting apart of money for a
sinking or other analogous fund for, the purchase,
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redemption, retirement or other acquisition of, any shares of any class of stock
of such Person (but excluding dividends payable solely in shares of common stock
of such Person) or any portion of any partnership interest (whether general or
limited) of such Person.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Eligible Out-Parcels" shall mean, at any given time, the
unimproved separate out-parcels that are part of the Properties. The Eligible
Out-Parcels included in the Initial Properties as of the date hereof are listed
on Schedule F hereto. An Out-Parcel in an Acquisition Property will be an
Eligible Out-Parcel only if approved as such by the Lender.
"Environment" shall mean soil, surface waters, ground waters,
land, stream sediments, surface or subsurface strata and ambient air.
"Environmental Claim" shall mean any claim, investigation,
proceeding, action, order, directive, summons, complaint, citation, notice or
inquiry from any governmental authority which could or does result in any
Environmental Damages.
"Environmental Condition" shall mean any condition with
respect to the Environment, whether or not yet discovered, at, on or under the
Collateral Properties, which could or does result in any Environmental Damages.
"Environmental Damages" shall mean all claims, judgments,
damages (including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, costs and expenses of investigation and defense of any
Environmental Claim which are incurred by the Lender or the Borrower in respect
of the Collateral Properties as a result of (i) the existence of Hazardous
Materials at, on, under or off the Collateral Properties, or (ii) the violation
or threatened violation of any Environmental Law by the Borrower on any of the
Collateral Properties.
"Environmental Indemnity Agreement" shall mean the
Environmental Indemnity Agreement dated as of the date hereof between the
Borrower and the Lender, as modified and supplemented and in effect from time to
time.
"Environmental Laws" shall mean any and all federal, state and
local statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the Environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
Environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
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"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Borrower or is under common
control (within the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" shall have the meaning assigned to such
term in Section 9.
"Event of Loss" shall mean with respect to any Property (i)
any damage to or destruction of such Property or (ii) any taking by condemnation
or eminent domain or other similar proceeding involving loss of all or part of
such Property (other than for temporary use).
"Existing Collateral Documents" shall mean the mortgages,
deeds of trust and other agreements, instruments and documents securing the
Existing Loan.
"Existing Lender" shall mean Bank One, Dayton, N.A., a
national banking association, as agent for itself and certain other lenders.
"Existing Loan" shall mean the loan evidenced by the Existing
Note.
"Existing Note" shall mean that certain Note dated April 25,
1996 made by the Borrower to Existing Lender in the principal amount of
$75,000,000.
"Extension Fee" shall mean the fee payable by the Borrower to
the Lender in connection with the extension of the Revolving Credit Termination
Date, if any, pursuant to Section 3.03, which shall equal one-half of one
percent (0.5%) of the Commitment as of February 18, 1999.
"FSA" shall mean FSA Properties, Inc., a Delaware corporation
and a Wholly- Owned Subsidiary of the Borrower.
"FSA Properties" shall mean the properties identified as such
on Schedule A hereto, which are owned by FSA and are subject to the REMIC Loan
Documents; excluding at any given time any of such properties that shall have
been the subject of a Release in accordance with Section 2.08.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"Gap Note" shall mean the promissory note dated the Closing
Date, made by the Borrower to the Lender in the principal amount of $75,000,000.
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"Ground Lease" shall mean the Consolidated, Amended and
Restated Lease Agreement dated as of December 1, 1996 between The Boaz Downtown
Development Authority and the Borrower, covering the Additional Property in
Boaz, Alabama, as it may be modified and amended from time to time in accordance
herewith.
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or with
respect to, Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock of any corporation, or an agreement to purchase,
sell or lease (as lessee or lessor) property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of his,
her or its obligations or an agreement to assure a creditor against loss, and
including causing a bank to open a letter of credit for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall
have a correlative meaning.
"Hazardous Materials" shall have the meaning assigned to such
term in Section 7.11.
"Including" shall mean "including, without limitation".
"Indebtedness" shall mean, as to any Person: (i) indebtedness
created, issued or incurred by such Person for borrowed money (whether by loan
or the issuance and sale of debt securities); (ii) obligations of such Person to
pay the deferred purchase or acquisition price of property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or respective services rendered; (iii) Indebtedness of others secured
by a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (iv) obligations of
such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person; (v) Capital Lease Obligations and other lease obligations arising under
leases that are in the nature of title retention agreements of such Person; and
(vi) Indebtedness of others Guaranteed by such Person.
"Initial Collateral Properties" shall mean the properties
identified as such on Schedule A hereto.
"Initial Loan" shall mean the Loan made on the Closing Date
the proceeds of which are used to refinance all of the Initial Collateral
Properties.
"Initial Mortgages" shall have the meaning assigned to such
term in Section 6.01(g).
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"Initial Properties" shall mean the properties listed on
Schedule A hereto.
"Interest Expense" shall mean, for any period for any Person,
the sum of all interest in respect of Indebtedness accrued or capitalized during
such period (whether or not actually paid during such period).
"Interest Payment Dates" shall mean, with respect to any Loan,
the eleventh (11th) day of each calendar month.
"Interest Period" shall mean, with respect to any Loan, (i)
initially, the period from the date such Loan is made through the first day
thereafter that is the tenth (10th) day of a calendar month (notwithstanding
that the Interest Payment Date may not be the eleventh (11th) day of such month
because the eleventh (11th) day of such month is not a Business Day), and (ii)
thereafter, the respective periods from the eleventh (11th) day of each calendar
month through the tenth (10th) day of each following calendar month
(notwithstanding that the Interest Payment Date may not be the eleventh (11th)
day of such month because the eleventh (11th) day of such month is not a
Business Day); except that if any Interest Period would otherwise commence
before and end after the Revolving Credit Termination Date, such Interest Period
shall end on the Revolving Credit Termination Date.
"Jurisdictional Capped Mortgage" shall have the meaning
assigned to such term in Section 6.02.
"Leased Collateral Property" shall mean the Additional
Property in Boaz, Alabama, if and when it becomes a Collateral Property pursuant
to Section 2.12, and any Acquisition Property in which the Borrower's interest
is as a lessee under a ground lease that has been approved by the Lender (which
approval will not be unreasonably withheld).
"Lender" shall have the meaning assigned to such term in the
preamble.
"Lender Fee" shall have the meaning assigned to such term in
Section 2.09.
"Lender's Notice" shall have the meaning assigned to such term
in Section 5.02.
"LIBOR Rate" shall mean with respect to any Interest Period,
the 30-day London interbank offered rate for United States dollar deposits as of
11:00 a.m. (London time) on the date which is two Business Days prior to the
first day of such Interest Period, in each case as quoted on Telerate page 3750
or on such replacement system as is then customarily used to quote the London
interbank offered rate. If two or more such rates appear on Telerate page 3750
or associated pages or on such replacement system, the rate in respect of such
Interest Period shall be the arithmetic mean of such offered rates (rounded
upward to the nearest 1/16).
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"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset, including the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
"Limited Release Property" shall mean any of the Initial
Properties located in Branson, Missouri; Nashville, Tennessee; Smithfield, North
Carolina; Vacaville, California; North Bend, Washington; or Las Vegas, Nevada.
"Loan Documents" shall mean, collectively, this Agreement, the
Note, the Cash Collateral Agreement, the Environmental Indemnity Agreement, the
Security Documents and all other documents and agreements evidencing or securing
the Loans or otherwise obligating the Borrower in connection therewith.
"Loans" shall mean the loans provided for by Section 2.01 and
shall include the Initial Loan, the Additional Loans and the Acquisition Loans.
"MAI" shall mean a Member of the Appraisal Institute.
"Major Property" shall mean any of the Initial Collateral
Properties in Nashville, Tennessee, Smithfield, North Carolina, Branson,
Missouri or Georgetown, Kentucky; or any Acquisition Property designated as a
Major Property by the Lender and comparable to the aforementioned Major
Properties in terms of its Property NOI relative to the aggregate Property NOI
of all the Collateral Properties.
"Management Agreements" shall mean the management agreements
(if any) entered into from time to time with respect to any Collateral
Properties, in each case as modified and supplemented (without prejudice to
Section 8.16) and in effect from time to time.
"Management Fee" shall mean, for purposes of computing
Property Expenses for any Collateral Property, the property management fee (if
any) with respect to such Collateral Property under the Management Agreement (if
any) for such Collateral Property.
"Manager" shall mean any manager under the Management
Agreements.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the condition (financial or otherwise), business, performance,
properties, assets or operations of the Borrower and its Consolidated
Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform its
obligations under any Loan Document to which it is a party, (iii) the legality,
validity or enforceability of any Loan Document or the rights and remedies of
the Lender under any Loan Document, (iv) the perfection or priority of the Liens
on the Collateral, or (vi) the Property NOI or operation of any Major Property.
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"Mortgage" shall mean each mortgage (or deed of trust),
assignment of leases and rents and security agreement, or similar instrument, or
a modified, restated or consolidated form thereof, executed by the Borrower in
favor of or for the benefit of the Lender, covering each of the Collateral
Properties, including the respective properties and interests identified in the
schedules thereto, and shall include each of the Initial Mortgages, Additional
Mortgages and the Acquisition Mortgages, as each such mortgage (or deed of
trust), assignment of leases and rents and security agreement, or similar
instrument, shall be modified and supplemented and in effect from time to time.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by the
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"NACC Refinancing" shall mean a debt refinancing by the Lender
(other than advances of Loans hereunder), the collateral for which shall be one
or more of the Properties and the proceeds of which shall be used to repay all
or part of the Loans.
"Net Cash Flow" shall mean, as at any date of determination,
an amount equal to (i) the Property NOI of the FSA Properties on such date minus
(ii) the Debt Service of FSA for the twelve-month period for which such Property
NOI is determined.
"NOI" shall have the meaning set forth in the definition of
Property NOI herein, except that, as used in such definition, (i) the term
"Property" shall instead be deemed to refer to each real property interest owned
by the Borrower or any of its Consolidated Subsidiaries, (ii) references to FSA
shall be deemed to include each of the Borrower's Consolidated Subsidiaries and
(iii) the term "Property Expenses" shall have the meaning set forth in the
definition thereof herein, but with the same modifications therein as are
described in the foregoing clauses (i) and (ii).
"Note" shall mean the promissory note provided for by Section
2.05.
"Participation Agreement" shall have the meaning assigned to
such term in Section 10.06(c).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Investments" of any Person shall mean: (a) direct
obligations of the United States of America, or of any agency thereof, or
obligations guaranteed as to principal and interest by the United States of
America, or of any agency thereof, in either case maturing not more than 90 days
from the date of acquisition thereof by such Person; (b) deposit accounts with
or certificates of deposit and bankers' acceptances which are fully FDIC-insured
or issued by any bank or trust company organized under the laws of the United
States of America or any state
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thereof and the short term unsecured debt obligations of which are rated A-1 or
better by Standard & Poor's Corporation ("S&P") or P-1 or better by Moody's
Investors Services, Inc. ("Moody's"), maturing not more than 90 days from the
date of acquisition thereof by such Person; (c) commercial paper rated A-1 or
better by S&P or P-1 or better by Moody's, maturing not more than 90 days from
the date of acquisition thereof by such Person; (d) Investments in money market
funds rated AAAm or AAAm-G by S&P or Aaa by Moody's; and (e) repurchase
agreements in respect of obligations of the type described in clause (a) above
if the counterparty's short term unsecured debt obligations are rated A-1 or
better by S&P or P-1 or better by Moody's.
"Permitted Liens" shall have the meaning assigned to such term
in Section 8.06.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by the Borrower or any ERISA Affiliate and which is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount payable by the Borrower under this Agreement or the
Note or any other Loan Document that is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the period from
and including the due date to but excluding the date on which such amount is
paid in full equal to 500 basis points above the LIBOR Rate as in effect from
time to time plus the Applicable Margin.
"Principal Office" shall mean the principal office of the
Lender, located at 2 World Financial Center, New York, New York 10281 or any
other office designated as such in writing by the Lender.
"Properties" shall mean, collectively, the Collateral
Properties and the FSA Properties (and shall also mean the Borrower's leasehold
interest therein in the case of any Leased Collateral Property).
"Property Expenses" shall mean, for any Property, all
operating expenses payable by the Borrower or FSA, as applicable, relating to
such Property including the following items (provided, however, that Property
Expenses shall not include Debt Service, Interest Expense, Capital Expenditures,
non-cash items such as depreciation and amortization and any extraordinary
one-time expenditures not considered operating expenses under GAAP):
(i) all expenses for the operation of such Property including
Management Fees (if any) in respect thereof (or, if self-managed, the
actual cost of managing the
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Property), all insurance premiums and expenses, accounting expenses,
advertising expenses, expenses for architectural services, bank
charges, utility charges, expenses for extermination, cleaning and
trash removal services, expenses relating to window washing,
landscaping and security services, reasonable and necessary legal
expenses incurred in connection with the operation of such Property,
marketing costs (but not including (A) any expenses incurred in
connection with a sale or other capital transaction or (B) the cost of
Required Repairs paid or reimbursed from the Required Repair Account);
(ii) impositions, water charges, property and real estate
taxes, sewer rents, other than fines, penalties, interest on such
impositions (or portions thereof) that are payable by reason of the
Borrower's or FSA's failure to pay an imposition timely; and
(iii) the cost of routine interior and exterior maintenance,
repairs and minor alterations, the cost of which has been expensed
under GAAP.
"Property NOI" shall mean, as of any date of determination
thereof, for each Property, an amount equal to (i) all rental revenue and
operating income (including actual rental income and other income, base rents,
percentage rents, common area maintenance charges, property tax recoveries,
insurance recoveries, Consumer Price Index rent adjustments and other
miscellaneous income items) of the Borrower or FSA from the ownership and
operation of such Property (but excluding income from advance payments,
deposits, escrows or a sale or other capital transaction) computed on an accrual
basis in accordance with GAAP for the twelve-month period ending on or most
recently ended prior to such date of determination, minus (ii) all Property
Expenses incurred by the Borrower or FSA with respect to such Property during
such period, computed on an accrual basis in accordance with GAAP; as such
amount shall be adjusted (I) by adding thereto (to the extent not already
included in the foregoing clause (i)) base rentals that would have been payable
in such period pursuant to leases of space at such Property that are in full
force and effect (and not subject to a right of cancellation) as of the date of
determination but under which base rentals were not payable for some or all of
such period, (II) by subtracting therefrom the product of $1.00 multiplied by
the number of square feet in the gross leasable area of such Property that is
not subject to Anchor Leases, (III) by accounting for rentals when receivable
(rather than on a straight-lined basis), and (IV) as otherwise required by the
Lender to reflect provisions for factors that would, in the Lender's reasonable
opinion, impact such Property's cash flow (such as, without limitation, the
exclusion from revenues of non-recurring items such as lease termination
payments).
"Regulatory Change" shall mean any change after the date of
this Agreement in United States Federal, state or foreign law, rules or
regulations or the adoption or making after such date of any interpretation or
directive applying to a class of financial institutions including the Lender of
or under any United States Federal, state or foreign laws, rules or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
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"Related Person" shall mean, with respect to any specified
Person, any other Person that is an Affiliate of the specified Person or any
limited partner of the specified Person (if such Person is a limited
partnership) or any shareholder of the specified Person (if such Person is a
corporation).
"Release" shall mean (i) any satisfaction, release, assignment
instrument, deed of reconveyance or similar instrument or instruments, each in
recordable form and otherwise in form reasonably satisfactory to the Borrower,
but without any representation or warranty of the Lender necessary to release
any Collateral Property (or portion thereof) from the Lien of all applicable
Security Documents or (ii) a confirmation by the Lender that the Release
Conditions for the sale of an FSA Property have been met.
"Release Amount" shall mean, with respect to any Release
Property, as at any date of determination thereof, an amount equal to 1.25
multiplied by the Allocated Loan Amount for such Release Property as of such
date; provided that the Release Amount for any Release Property which
constitutes the only Property at such time shall not be less than an amount
equal to the then outstanding principal amount of the Loans plus interest
accrued thereon and all other amounts due under the Loan Documents.
"Release Conditions" shall have the meaning assigned to such
term in Section 2.08.
"Release Date" shall have the meaning assigned to such term in
Section 2.08.
"Release Notice" shall have the meaning assigned to such term
in Section 2.08.
"Release Property" shall mean any Property which is proposed
to be or is the subject of a Release.
"REMIC Loan" shall mean the loan to FSA in the original
principal amount of $95,000,000, which was made pursuant to the REMIC Loan
Agreement and is secured by liens on the FSA Properties.
"REMIC Loan Documents" shall mean the REMIC Note and the other
documents evidencing, securing and otherwise relating to the REMIC Loan.
"REMIC Note" shall mean that certain Consolidated, Amended and
Restated Promissory Note dated as of May 22, 1995 made by FSA to The Travelers
Insurance Company in the principal amount of $95,000,000.
"Required Constant" shall mean, as at any date of
determination thereof, an amount equal to the greater of (i) 10.09% or (ii) the
product of (A) twelve (12) multiplied by (B) the percentage that, when
multiplied by the original principal amount of a given Indebtedness (at
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the beginning of a given period), will produce a monthly payment amount that
will fully amortize such principal, with interest at the Assumed Rate, over 25
years. The "Assumed Rate" shall be a rate per annum equal to the sum of 1.75%
plus the Treasury Yield per annum, on the date of determination, of U.S.
Treasury Securities with a maturity of 10 years. The "Treasury Yield" shall be
determined by reference to the most recent Federal Reserve Statistical Release
Section 15(519) or any comparable successor publication which has become
publicly available on the Business Day immediately preceding the date of
determination (or, if such Statistical Release is no longer published, any
publicly available source of similar market data acceptable to the Lender).
"Required Repair Account" shall have the meaning assigned to
such term in Section 8.14.
"Required Repair Fund" shall have the meaning assigned to such
term in Section 8.14.
"Required Repairs" shall have the meaning assigned to such
term in Section 8.14.
"Revolver Period" shall have the meaning assigned to such term
in Section 2.01.
"Revolving Credit Termination Date" shall mean February 18,
1999 (or if the date on which the entire outstanding principal amount of the
Loans is due and payable has been extended pursuant to Section 3.03, February
18, 2000) or such earlier date resulting from acceleration.
"Security Documents" shall mean, collectively, the Cash
Collateral Agreement, the Assignments, the Pledge, the Mortgages and all Uniform
Commercial Code financing statements required by this Agreement and the Security
Documents to be filed with respect to the security interests in personal
property and fixtures created pursuant to the Security Documents and all other
documents and agreements executed or delivered to the Lender by the Borrower in
connection with any of the foregoing documents.
"Subsidiary" shall mean, with respect to any Person, any
corporation of which at least a sufficient number of the outstanding shares of
stock having by the terms thereof ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more of
the Subsidiaries of such Person or by such Person and one or more of the
Subsidiaries of such Person. "Wholly-Owned Subsidiary" shall mean, with respect
to any Person, any such corporation of which all of such shares, other than
directors' qualifying shares, are so owned or controlled.
"Substitute Rate" shall have the meaning assigned to such term
in Section 5.02.
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"Substitute Spread" shall have the meaning assigned to such
term in Section 5.02.
"Title Companies" shall have the meaning assigned to such term
in Section 6.01(i).
"Total Asset Value" shall mean, as at any date of
determination, an amount equal to the sum of (i) the NOI on such date that is
attributable to Properties that are community shopping centers, divided by
0.095, plus (ii) all other NOI on such date divided by 0.11.
"VF" shall have the meaning assigned to such term in Section
8.12.
"VF Agreement" shall have the meaning assigned to such term in
Section 8.12.
"VF Leases" shall have the meaning assigned to such term in
Section 8.12.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Lender hereunder shall be prepared, in accordance with GAAP. All
calculations made for the purposes of determining compliance with the terms of
this Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP.
(b) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8, the Borrower will not
change the last day of its fiscal year from December 31, or the last days of the
first three fiscal quarters in each of its fiscal years from March 31, June 30
and September 30, respectively.
Section 2. Facility.
2.01 Loans. The Lender agrees, subject to the terms of this
Agreement, to make Loans to the Borrower in Dollars during the period (the
"Revolver Period") from and including the date hereof to but not including the
Revolving Credit Termination Date in an aggregate principal amount at any one
time outstanding to the Borrower up to but not exceeding the amount of the
Commitment as then in effect. Subject to the terms of this Agreement, during
such period the Borrower may borrow, prepay and reborrow all or any portion of
the amount of the Commitment; provided that the aggregate principal amount of
Loans at any one time outstanding to the Borrower shall not exceed the amount of
the Commitment as then in effect.
2.02 Borrowings. The Borrower shall give the Lender notice of
each borrowing of Loans as provided in Section 4.05 (and, if applicable, 2.07)
hereof. On the date specified for each borrowing of a Loan hereunder, the Lender
shall, subject to the terms and conditions of this
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Agreement, make available the amount of such Loan to the Borrower by
transferring the same, in immediately available funds, in an account of the
Borrower designated by the Borrower in writing; provided, however, that, to the
extent the Initial Loan is being applied to obtain the assignment of the
Existing Loan to the Lender, such portion of the Initial Loan shall be disbursed
directly to the Existing Lender. Borrowings hereunder shall occur not more than
one time during any calendar month.
2.03 Changes of Commitment. The Borrower shall have the right
to terminate or reduce the Commitment at any time or from time to time, provided
that: (i) the Borrower shall give notice of each such termination or reduction
as provided in Section 4.05; (ii) each partial reduction shall be in an amount
at least equal to $1,000,000; and (iii) if after giving effect to such
termination or reduction of the Commitment the outstanding principal amount of
the Loans shall exceed the Commitment, then the Borrower shall prepay the Loans
in an amount equal to such excess together with interest accrued thereon to the
date of prepayment plus any amounts payable in respect of such prepayment
pursuant to Section 5.04. The Commitment once terminated or reduced may not be
reinstated or increased.
2.04 Fees.
(a) The Borrower shall pay to the Lender, on the Closing Date,
a non- refundable structuring fee in the amount of $750,000.
(b) The Borrower shall pay to the Lender on each date on which
a Loan is made hereunder a nonrefundable fee in an amount equal to one-half of
one percent (0.5%) of the principal amount of the Loan being made on such date;
provided, however, that the fees under this paragraph (b) shall not exceed, in
the aggregate, $750,000.
2.05 Note. The Loans shall be evidenced by a single amended,
restated and consolidated promissory note of the Borrower in the form of
Schedule B hereto, which shall consolidate the indebtedness evidenced by the Gap
Note and the Existing Note, and amend and restate the terms thereof. The date,
amount, interest rate of each Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of the Note, endorsed by the
Lender on the schedule attached to the Note or any continuation thereof which
notations and endorsement shall be controlling absent demonstrable error;
provided that the failure of the Lender to make any such notation or endorsement
shall not affect the obligations of the Borrower hereunder or under the Note.
2.06 Optional Prepayments of Loans. Subject to Section 4.04,
the Borrower shall have the right to prepay Loans at any time or from time to
time in whole or in part, provided that: (i) the Borrower shall give the Lender
notice of each such prepayment as provided in Sec tion 4.05; and (ii) the
Borrower shall pay interest pursuant to Section 3.02 on the principal
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<PAGE>
amount prepaid, accrued to the prepayment date, together with any amounts due
under Section 5.04(a) in respect of such prepayment, on the prepayment date.
2.07 Acquisition Loans. The Borrower shall give the Lender at
least 15 Business Days' prior written notice of a request for a borrowing of an
Acquisition Loan. Such notice shall specify the amount of the Acquisition Loan
to be borrowed, the date of borrowing (which shall be a Business Day), and the
name, type and location of the Acquisition Property to be purchased with the
proceeds of such Acquisition Loan. The Borrower shall provide to the Lender the
following information (the "Approval Information") for each Acquisition Property
proposed to be acquired with the proceeds of an Acquisition Loan, which
information shall be in form and substance reasonably satisfactory to the Lender
and shall be provided to the Lender at least 15 Business Days' prior to the
proposed borrowing date: (i) an itemized budget for the twelve month period
commencing on a date reasonably near the date of such borrowing request, (ii) if
available (after the Borrower's reasonable efforts to obtain), the audited
financial statements for the two most recent years and unaudited quarterly
statements for the twelve-month period on a date reasonably near the date of
such borrowing request, (iii) if available (after the Borrower's reasonable
efforts to obtain), historical operating reports, (iv) if available (after the
Borrower's reasonable efforts to obtain), a rent roll and delinquency report and
tenant sales information, (v) copies of the contract of sale and, if available
(after the Borrower's reasonable efforts to obtain), all leases, material
contracts and permits, (vi) a written appraisal by an MAI appraiser or a market
study, (vii) an environmental audit of the type described in Section 6.01(j),
(viii) a property condition report, including a structural engineering report
identifying, among other things, deferred maintenance and the cost thereof and a
ten-year schedule of anticipated capital expenditures and the annual cost
thereof, (ix) a title report and survey, (x) copies of current real estate tax
bills and (xi) such other information in the Borrower's possession or control as
the Lender may reasonably request. The Approval Information need not include
item (ii), (iii), (iv) or (viii) if the applicable Acquisition Property consists
entirely of unimproved land. The Borrower acknowledges that the Lender shall not
be obligated to make an Acquisition Loan prior to the date which is 15 Business
Days' after Lender's receipt of the Approval Information relating to such
Acquisition Loan and shall not be obligated to make an Acquisition Loan at any
time unless the Lender approves such Acquisition Loan in accordance with Section
6.03. Within 10 Business Days of receipt by the Lender of the Approval
Information, the Lender shall notify the Borrower in writing whether the Lender
so approves the requested Acquisition Loan and, if not, shall state the
reason(s) therefor. If the Lender approves such Acquisition Loan, such
Acquisition Loan shall be made, subject to the terms of this Agreement and any
other conditions reasonably required by the Lender at the time of funding, on
the borrowing date requested by the Borrower. Failure by the Lender to respond
to the Borrower's request for an Acquisition Loan within such 10 Business Day
period shall be deemed a rejection of such request.
2.08 Releases Upon Prepayment. Subject to Sections 2.06, 4.04
and 4.05, the Borrower shall have the right to prepay the Loans and to obtain a
Release in respect of any Release Property upon compliance with the provisions
of this Section 2.08. The Borrower shall exercise its rights under this Section
by delivering a written notice (a "Release Notice") to the
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Lender which shall refer to this Section, identify the Release Property and be
accompanied by a counterpart of the Release in form for execution by the Lender
and by a certificate of a senior officer of the Borrower certifying that the
Release Conditions have been satisfied. Subject to the terms hereof, the Lender
shall execute, acknowledge and deliver, or cause to be executed, acknowledged
and delivered, to the Borrower such counterpart within ten Business Days after
receipt thereof. The obligation of the Lender to deliver a Release in respect of
any Release Property shall be subject to the fulfillment of the following
conditions (the "Release Conditions"):
(a) No Default shall have occurred and be continuing as of the
date of the Release Notice or as of the date (the "Release Date") that the
Lender delivers the applicable Release;
(b) the Borrower shall pay to the Lender on the Release Date
an amount equal to not less than the Release Amount in respect of the Release
Property plus interest accrued to the Release Date on the principal amount of
the Release Amount plus any amounts payable in respect of such prepayment
pursuant to Section 5.04;
(c) after giving effect to such Release and the payments
contemplated by clause (b) above, the outstanding principal balance of the Loans
shall not exceed the Available Amount, and the Borrower shall provide the Lender
with a certificate of a senior financial officer of the Borrower setting forth
in reasonable detail computations indicating compliance with this Release
Condition;
(d) such Release is in connection with a bona fide,
arms-length sale (or exchange) of such Release Property, to a purchaser that is
not a Related Person of the Borrower, on fair market terms and conditions;
(e) if such Release Property is a Limited Release Property, it
is the first or second Limited Release Property to become actually released as a
Release Property;
(f) the Lender shall have received such updates or
confirmations relating to the title policies for the remaining Collateral
Properties as the Lender may reasonably request; and
(g) the Borrower shall have delivered to the Lender such
documents amending the Loan Documents to reflect such Release and such other
documents as the Lender or counsel to the Lender shall reasonably request, in
each case in form and substance reasonably satisfactory to the Lender.
If a Release is made in connection with (and concurrently with) the acquisition
by the Borrower of an Acquisition Property in exchange for a Release Property,
then the Borrower shall have the right to reduce the Release Amount, which would
otherwise be payable in connection with such
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<PAGE>
Release, by an amount (not exceeding such Release Amount) equal to the
Acquisition Loan to which the Borrower would otherwise be entitled in connection
with such acquisition, in which event such Acquisition Loan shall be reduced by
the same such amount (but such reductions shall not excuse the Borrower from the
satisfaction of the requirements hereof for such Release and such Acquisition
Loan).
2.09 Refinancing Fees. If the Borrower shall directly or
indirectly (through Affiliates) refinance all or any part of the Loans with any
form of debt or equity (including through the issuance of any debt or equity
securities, whether sold publicly or through a private placement), then the
Borrower shall pay to the Lender (in addition to the payment of the Loans and
all other amounts payable hereunder) on the closing date of such refinancing or
repayment, as the case may be, a fee (the "Lender Fee") in the amount of one
percent (1%) of the amount (if any) by which (i) eighty percent (80%) of the
aggregate principal amount of the Loans which is refinanced or repaid exceeds
(ii) the portion (if any) of such principal amount that is refinanced with an
NACC Refinancing. The prepayment of Loans in connection with a Release in
accordance with Section 2.08 shall not be considered to be a refinancing for
purposes of this Section 2.09.
2.10 Loss Event. If any Event of Loss occurs with respect to
any Collateral Property, the Borrower shall prepay the Loans to the extent
required by Section 3 of the applicable Mortgage. If any Event of Loss occurs
with respect to an FSA Property, the Borrower shall prepay the Loans in an
amount equal to the lesser of (i) the amount (if any) of the proceeds of such
Event of Loss that are not applied (A) to prepay the REMIC Loan (or to pay other
amounts due to the holder thereof in connection with such prepayment), (B) to
restore such FSA Property or (C) to pay costs reasonably incurred in the
collection of such proceeds or (ii) the amount, if any, by which the outstanding
principal balance of the Loans exceeds the Available Amount as of the date of
such Event of Loss.
2.11 Appraisals. The Lender shall be entitled at any time to
obtain an appraisal or market study by an appraiser satisfactory to the Lender
with respect to any or all of the Properties. The Lender shall pay all
reasonable fees for any appraisals and market studies performed pursuant to this
Section 2.11, except the Borrower shall pay all such fees for appraisals and
market studies performed for the Lender if performed after the occurrence of an
Event of Default.
2.12 Additional Loans. Within a reasonable time after the date
hereof, the Lender shall notify the Borrower as to whether the environmental
condition of the Additional Properties is satisfactory to it. If the Lender so
notifies the Borrower that the environmental condition of an Additional Property
is satisfactory, then the Borrower shall have the right to receive an Additional
Loan hereunder with respect to such Additional Property, subject to the
fulfillment, within 30 days after the giving of such notice by the Lender, of
the conditions set forth in Section 6.05. If the environmental condition of an
Additional Property is satisfactory to the Lender and such conditions are
satisfied within such 30-day period, then such Additional
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<PAGE>
Property shall become a Collateral Property. If the environmental condition of
either Additional Property is not satisfactory to the Lender, or the Borrower
does not fulfill the conditions set forth in Section 6.05 with respect to such
Additional Property within such 30-day period, then the Borrower shall not be
entitled to receive an Additional Loan with respect to such Additional Property,
and such Additional Property shall not become a Collateral Property, unless the
Borrower requests an Additional Loan with respect thereto and the Lender, in its
sole discretion, thereafter determines that the environmental condition of such
Collateral Property has become satisfactory, and the Borrower fulfills the
conditions set forth in Section 6.05 with respect thereto within 30 days after
notice thereof from the Lender to the Borrower.
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans. The Borrower will pay to the Lender
the principal of the outstanding Loans, together with accrued but unpaid
interest thereon and all other amounts payable to the Lender under the Loan
Documents, and each Loan shall mature, on the Revolving Credit Termination Date.
3.02 Interest. Subject to Section 5.02, the Borrower will pay
to the Lender interest on the unpaid principal amount of each Loan for the
period from and including the date of such Loan to but excluding the date such
Loan shall be paid in full, at the lesser of (i) the LIBOR Rate (as in effect
from time to time) for such Interest Period plus the Applicable Margin, and (ii)
the highest rate permitted by law in each of the states in which a Collateral
Property is located. Notwithstanding the foregoing, upon the occurrence and
during the continuance of any Event of Default, the Borrower will pay to the
Lender interest at the applicable Post-Default Rate on any unpaid principal of
each Loan and (to the fullest extent permitted by law) on all other amounts
payable by the Borrower hereunder or under the Note or under the other Loan
Documents for the period from and including the date of such Event of Default to
but excluding the date the same is paid in full or such Event of Default shall
have been cured. Accrued interest on each Loan shall be payable (i) on the
Interest Payment Dates and (ii) upon the payment or prepayment thereof (but only
on the principal amount so paid or prepaid), except that interest payable at the
Post-Default Rate shall be payable from time to time on demand.
3.03 Extension Option; Extension Fee. After December 18, 1998,
but not later than January 18, 1999 the Borrower may notify the Lender in
writing that the Borrower desires to extend the Revolving Credit Termination
Date to February 18, 2000. Upon receipt of such request to extend the Revolving
Credit Termination Date, the Lender will promptly confirm to the Borrower in
writing that the Revolving Credit Termination Date will be extended to February
18, 2000 upon the satisfaction of the following conditions:
(a) no Event of Default or Default exists at the time such
request is made and on February 18, 1999;
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(b) the Borrower delivers to the Lender a certificate from a
senior financial officer of the Borrower confirming the accuracy of the
information contained in clause (a) above;
(c) the Commitment is not less than $50,000,000 as of February
18, 1999;
(d) the Borrower pays the Extension Fee in Dollars to the
Lender not later than February 18, 1999; and
(e) either (i) the Borrower shall have delivered to
the Lender a statement signed by VF confirming that each of the VF outlet
centers covered by the VF Leases in the Properties listed in Schedule 4.15 to
the VF Agreement achieved "breakeven" (as such term is used and defined in
Section 4.15 of the VF Agreement) in 1998 or (ii) the Loan Amount does not
exceed the Available Amount, determined without including the Property NOI from
any of such Properties for which such confirmation shall not have been made (or
shall not have been obtained and delivered) ("Excluded VF Properties").
If the Revolving Credit Termination Date is extended pursuant to this Section
3.03, but the condition set forth in the foregoing clause (e)(i) shall not have
been fulfilled, then from and after February 18, 1999 (until such time, if any,
as such condition is fulfilled), the Available Amount shall be determined
without including the Property NOI of the Excluded VF Properties.
Section 4. Payments; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
under this Agreement and the Note shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Lender at
the account of the Lender last specified by notice to the Borrower, not later
than 4:00 p.m. New York time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day).
(b) All payments of principal of the Loans under this
Agreement (including prepayments pursuant to Section 2.06 or 2.08 or as a result
of the acceleration of the Loans pursuant to Section 9) shall be applied to the
Loans in such manner and order of priority as the Lender shall elect in its sole
and absolute discretion; provided, however, that no payment shall be applied to
principal unless and until all past due interest and all interest in respect of
principal being paid has been paid in full. Notwithstanding the foregoing, the
amounts secured by any Jurisdictional Capped Mortgage (as defined in Section
6.02(c)) shall not be reduced in connection with any payment of principal unless
(i) the Property covered thereby is the subject of
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a permitted Release concurrent with such payment or (ii) the aggregate maximum
principal amount secured by such Jurisdictional Capped Mortgage(s) shall equal
or exceed the total principal amount of all Loans then outstanding (in which
case the Lender will determine in its sole discretion which Mortgages comprising
such Jurisdictional Capped Mortgages are to be reduced).
(c) If the due date of any payment under this Agreement or the
Note would otherwise fall on a day which is not a Business Day such date shall
be extended to the next succeeding Business Day.
4.02 Computations. Interest on Loans shall be computed on the
basis of a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
4.03 Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of set-off or counterclaim the Lender may
otherwise have, the Lender shall be entitled, at its option, to offset balances
held by it or any of its Affiliates for account of the Borrower (or amounts due
from it to the Borrower) at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of the Loans, or any other
amount payable to the Lender hereunder, which is not paid when due (regardless
of whether such balances are then due to the Borrower), in which case it shall
promptly notify the Borrower thereof, provided that the Lender's failure to give
such notice shall not affect the validity thereof; provided, however, that the
Lender shall not have any right under this Section 4.03 as to any tenant
security deposits or other monies held in trust by the Borrower for third
parties.
4.04 Minimum Amounts. Each borrowing of the Loans and each
voluntary prepayment of principal of the Loans shall be in an amount at least
equal to $1,000,000.
4.05 Certain Notices. Notices by the Borrower to the Lender of
any termination or reduction of the Commitment, of borrowings of Loans and of
prepayments of Loans shall be irrevocable and shall be effective only if
received by the Lender not later than 5:00 p.m. New York time on the number of
Business Days prior to the date of the relevant termination, reduction,
borrowing, or prepayment specified below (or such longer period as is specified
in 2.07 in the case of the borrowing of Acquisition Loans):
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Number of
Business
Notice Days Prior
Termination or
reduction of Commitment 15
Borrowing or
prepayment of Loans 5
Each such notice of termination or reduction of the Commitment shall specify the
amount of the Commitment to be terminated or reduced. Each such notice of
prepayment shall specify the Loans to be prepaid and the amount (subject to
Section 4.04), and the date of prepayment (which shall be a Business Day). Each
notice of borrowing of Loans shall be substantially in the form of Schedule C
hereto and shall specify the amount (subject to Section 4.04) to be borrowed,
the date of borrowing (which shall be a Business Day), the Debt Service Ratio
and Available Amount immediately prior to and immediately after such borrowing
and shall be accompanied by such other information as the Lender may reasonably
request. Each notice of borrowing by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in clauses (a), (b) and
(e) of Section 6.02 (both as of the date of such notice and, unless the Borrower
otherwise notifies the Lender prior to the date of such borrowing, as of the
date of such borrowing).
Section 5. Yield Protection and Illegality.
5.01 Additional Costs.
(a) The Borrower shall pay to the Lender from time to time
such amounts as the Lender may reasonably determine to be necessary to
compensate it for any increase in costs which the Lender reasonably determines
are attributable to its making or maintaining any Loans or its obligation to
make any Loans hereunder, or any reduction in any amount receivable by the
Lender hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:
(i) imposes or modifies any reserve or similar
requirement on financial institutions of a type that includes the
Lender with respect to extensions of credit secured by real estate or
any commitment therefor (including the Commitment); or
(ii) imposes any other condition affecting this
Agreement or the Note (or any of such extensions of credit) or the
Commitment and other extensions of credit generally.
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If the Lender requests compensation from the Borrower under this Section
5.01(a), the Borrower may, by notice to the Lender, suspend the obligation of
the Lender to make Loans until the Regulatory Change giving rise to such request
ceases to be in effect.
(b) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), the Borrower shall pay directly to
the Lender from time to time on request such amounts as are reasonably necessary
to compensate the Lender for any costs which are attributable to the maintenance
by the Lender, pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law) of any court or
governmental or monetary authority, or pursuant to any risk-based capital
guideline or other requirement (whether or not having force of law and whether
or not the failure to comply therewith would be unlawful) heretofore or
hereafter issued by any government or governmental or supervisory authority,
which is applicable generally to financial institutions of a type that includes
the Lender, with respect to extensions of credit secured by real estate, of
capital in respect to the Commitment or the Loans (such compensation to be in an
amount equal to any reduction of the rate of return on assets or equity of the
Lender to a level below that which the Lender could have achieved but for such
law, regulation, interpretation, directive or request).
(c) The Lender will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Lender to compensation
under paragraph (a) or (b) of this Section 5.01 as promptly as practicable, but
in any event within 90 days, after the Lender obtains actual knowledge thereof;
provided, however, that if the Lender fails to give such notice within 90 days
after it obtains actual knowledge of such an event, the Lender shall, with
respect to compensation payable pursuant to this Section 5.01 in respect of any
costs resulting from such event, only be entitled to payment under this Section
5.01 for costs incurred from and after the date 90 days prior to the date that
the Lender does give such notice. The Lender will furnish to the Borrower a
certificate setting forth the basis and amount of each request by the Lender for
compensation under paragraph (a) or (b) of this Section 5.01. Determinations and
allocations by the Lender for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to Section 5.01(a), on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable by
it in respect of Loans, and of the amounts required to compensate the Lender
under this Section 5.01, shall be conclusive absent manifest error.
5.02 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Lender to honor its
obligation to make or maintain Loans bearing interest based upon a margin over
the LIBOR Rate hereunder then (i) the Lender shall promptly give notice (a
"Lender's Notice") to the Borrower thereof, (ii) the Lender's obligation to make
Loans bearing interest based upon a margin over the LIBOR Rate shall be
suspended until such time as the Lender may again make and maintain Loans
bearing interest based upon a margin over the LIBOR Rate and (iii) the Lender
shall, in the Lender's Notice, establish the interest rate applicable to the
Loans at the equivalent spread (the "Substitute Spread"), taking into account
the amount of the Loans and the creditworthiness of the Borrower, above an index
used for variable rate loans, which is the best available alternative to
approximate LIBOR, as
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reasonably determined by the Lender (the "Substitute Rate"), in which case the
interest rate applicable to the Loans shall be a rate equal to the Substitute
Rate in effect from time to time plus the Substitute Spread, so long as such
condition remains in effect.
5.03 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of the LIBOR Rate
for any Interest Period, the Lender determines (which determination shall be
conclusive) that quotations of interest rates for the deposits referred to in
the definition of "LIBOR Rate" in Section 1.01 necessary for purposes of
determining rates of interest on the Loans are not being provided; then the
Lender shall give the Borrower prompt notice thereof, and shall, in such notice,
establish the interest rate applicable to the Loans at the Substitute Rate plus
the Substitute Spread, in which case the interest rate applicable to the Loans
shall be a rate equal to the Substitute Rate in effect from time to time plus
the Substitute Spread, so long as such condition remains in effect.
5.04 Compensation. The Borrower shall pay to the Lender, upon
the request of the Lender, such amount or amounts as shall be sufficient (in the
reasonable opinion of the Lender) to compensate it for any actual out-of-pocket
loss, cost or expense, of the type included in what is commonly referred to as
"breakage costs", which the Lender reasonably determines is attributable to:
(a) any voluntary payment or prepayment of a Loan for any
reason (including the acceleration of the Loans pursuant to Section 9)
on a date other than the last day of the Interest Period for such Loan,
except for (i) a prepayment of a Release Amount in connection with a
Release or (ii) a prepayment made to the extent necessary to cure any
non-compliance with a covenant in Section 8.15 or 8.16; or
(b) any failure by the Borrower for any reason (including the
failure of any of the conditions precedent specified in Section 6 to be
satisfied) to borrow a Loan on the date for such borrowing specified in
the relevant notice of borrowing given pursuant to Section 4.05.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or prepaid or
not borrowed for the period from the date of such payment or failure to borrow
to the last day of the then current Interest Period for such Loan (or, in the
case of a failure to borrow, the Interest Period for such Loan which would have
commenced on the date specified for such borrowing) at the applicable rate of
interest for such Loan provided for herein over (ii) the cost of funds to the
Lender of making such Loan (as reasonably determined by the Lender).
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Section 6. Conditions Precedent.
6.01 Initial Loan. The obligation of the Lender to make the
Initial Loan hereunder is subject to the receipt by the Lender of the following
documents, each of which shall be reasonably satisfactory to the Lender in form
and substance:
(a) Corporate and Partnership Documents. The following
documents, each certified as indicated below:
(i) a copy of the articles of incorporation of the
Borrower, as amended, certified by the Secretary of State of
its jurisdiction of organization, and a certificate as to the
good standing of and organizational documents filed by the
Borrower, from the relevant Secretary of State, dated as of a
recent date; and
(ii) a certificate of the Secretary or an Assistant
Secretary of the Borrower dated the Closing Date and
certifying that (A) attached thereto are true and complete
copies of (x) the articles of incorporation and by-laws of the
Borrower, as in effect on the date of such certificate, and
(y) resolutions duly adopted by the board of directors of the
Borrower authorizing the execution, delivery and performance
of the Loan Documents and the borrowings hereunder, and (B)
such resolutions have not been modified, rescinded, amended or
revoked and are in full force and effect.
(b) Incumbency. A certificate of an officer of the Borrower as
to the incumbency and specimen signature of each other officer of the
Borrower executing the Loan Documents (and the Lender may conclusively
rely on such certificate until it receives notice in writing to the
contrary from the Borrower); and a certificate of another officer of
the Borrower as to the incumbency and specimen signature of the officer
executing such certificate.
(c) Officer's Certificate. A certificate of a senior financial
officer of the Borrower confirming, to the best of his or her
knowledge, the fulfillment of the conditions set forth in clauses (a),
(b) and (e) of Section 6.02.
(d) Opinion of Counsel to the Borrower. An opinion of counsel
to the Borrower with respect to such matters (exclusive of
environmental matters) as the Lender may reasonably request and
otherwise in form and substance reasonably satisfactory to the Lender.
(e) Local Counsel Opinions. Opinions of counsel to the
Borrower or Lender in each of the states in which the Initial
Properties are located with respect to such matters as the Lender may
reasonably request and otherwise in form and substance reasonably
satisfactory to the Lender.
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(f) Assignment of Existing Loan. (i) The executed original of
the Existing Note, duly endorsed by the Existing Lender to the order of
the Lender, (ii) to the extent reasonably required by the Lender,
instruments terminating, and discharging of record, all of the Existing
Collateral Documents other than the mortgage(s) and the deed(s) of
trust that secure the Existing Note and cover the Initial Collateral
Properties in Tennessee and Florida, and (iii) the executed original
recorded counterpart of such mortgage(s) and such deed(s) of trust, and
(iv) assignments of such mortgage(s) and such deed(s) of trust to the
Lender, duly executed by the Existing Lender.
(g) Notes and Mortgages. The Gap Note and the Note, duly
completed and executed; and duly recorded first Mortgages (the "Initial
Mortgages") which shall constitute valid first mortgage liens on the
fee simple title to the Initial Collateral Properties and which shall
secure the Loans and the Borrower's obligations under the Loan
Documents, subject only to such Liens, restrictions, easements and
other title exceptions as shall be approved by the Lender; provided
that, with respect to any Jurisdictional Capped Mortgage, such Mortgage
shall secure the principal amount of the Loans only to the extent of
the Allocated Title Amount of the Initial Collateral Property in
question.
(h) Loan Documents. Each of the other Loan Documents, duly
executed, delivered and acknowledged where appropriate by the Borrower.
(i) Title Insurance. Policies of title insurance with respect
to the Initial Mortgages, on forms of and issued by Chicago Title
Insurance Company or one or more other title companies reasonably
satisfactory to the Lender (the "Title Companies"), showing fee simple
title vested in the Borrower and insuring the first priority of the
Liens created under the Initial Mortgages in an amount for each Initial
Collateral Property equal to the Allocated Title Amount for such
Initial Property, subject only to such Liens, restrictions, easements
and other title exceptions as shall be approved by the Lender, together
with, as may be required by the Lender, such reinsurance schedules and
agreements in respect of all then existing title insurance policies for
the Collateral Properties in amounts and otherwise in form and
substance reasonably satisfactory to the Lender and executed by the
Title Companies; provided that the Lender agrees to conserve the amount
of title insurance premiums, to the extent feasible, by tying together
title policies subject to an aggregate limit of $150,000,000 in
coverage. Such policies shall also contain such endorsements and
affirmative insurance provisions as the Lender may reasonably require
in light of the severity of the risk, availability of coverage or
endorsement in the jurisdiction, and cost (and expressly excluding
zoning coverage if the requirements of Section 6.01(r) are otherwise
met, unless the cost is nominal and no zoning opinion is required). In
addition, the Borrower shall have paid to the Title Companies all
expenses and premiums of the Title Companies in connection with the
issuance of such policies and an amount equal to the recording and
stamp taxes (including
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mortgage recording taxes) payable in connection with recording the
Initial Mortgages in the appropriate county land offices.
(j) Environmental Audit. Evidence satisfactory to the Lender
that, except has been disclosed in writing to the Lender, (i) there are
no pending or threatened claims, suits, actions or proceedings arising
out of or relating to the existence of any Hazardous Materials at, in,
on or under any Initial Collateral Property, (ii) each Initial
Collateral Property is in full compliance with all Environmental Laws
applicable to such Initial Property, (iii) no Hazardous Materials exist
at, in, on or under such Initial Collateral Property, other than
supplies and materials used in cleaning, painting and other activities
conducted in the normal course of operating such Initial Collateral
Property as a shopping center, and consumer products offered for retail
sale by tenants in the ordinary course of their business, provided all
such Hazardous Materials are stored, handled, contained and disposed of
in compliance with Environmental Laws, and (iv) the Borrower has
complied (or has made arrangements to comply) with the recommendations
of all environmental consultant(s) referred to below. Such evidence
shall include (1) an environmental audit (which shall include a visual
survey, a record review and an area reconnaissance and a Phase I
environmental study and, if the Lender shall request, a Phase II
environmental study) conducted and certified by a qualified,
independent environmental consultant licensed by the relevant state(s)
in which each Initial Collateral Property is located, which audit shall
include a recommendation of any remedial action which is appropriate
together with the estimated cost and expected time to complete such
remedial action, (2) evidence that all required approvals from all
governmental and quasi-governmental authorities having jurisdiction
with respect to the Initial Collateral Properties, if any, have been
obtained, and (3) such other environmental reports, inspections and
investigations as the Lender shall reasonably require, prepared, in
each instance, by engineers or other consultants satisfactory to the
Lender. All such audits, approvals, reports, inspections and
investigations shall be paid for by the Borrower and shall be
satisfactory, in form and substance, to the Lender.
(k) Insurance. Certificates of insurance evidencing the
existence of all insurance required to be maintained by the Borrower
pursuant to the Loan Documents and the designation of the Lender as the
loss payee thereunder with respect to the Initial Collateral Properties
to the extent required by the Loan Documents, such certificates to be
in such form and contain such information as is specified in the Loan
Documents. In addition, an original prepaid policy or policies of
general liability insurance, boiler and machinery insurance, fire and
other casualty insurance (including earthquake insurance, if
appropriate and if available at commercially reasonable rates), and
such other types of insurance as the Lender may reasonably deem
appropriate, all in such amounts as are required under the Loan
Documents providing full extended coverage and naming the Lender, in
each instance, as the first mortgagee under a New York Standard
Mortgagee Clause (or local equivalent) or otherwise covering the
Lender's interest in each Initial Collateral Property in a manner
reasonably satisfactory to the Lender. All insurance shall
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be issued by an insurance company or companies reasonably acceptable to
the Lender. If any Initial Collateral Property, or any part thereof, is
located in an area designated by the U.S. Secretary of Housing and
Urban Development as an area having special flood hazards and in which
flood insurance is available under the National Flood Insurance Act of
1968, as amended, then such insurance shall be furnished.
(l) Operating Statements. Operating statements for each
Initial Property for each of the two calendar years most recently ended
prior to the Closing Date in form and substance reasonably satisfactory
to the Lender, and in each case reviewed by certified public
accountants reasonably acceptable to the Lender in connection with such
accountants' preparation of audited annual financial statements,
together with operating statements for each Initial Property for the
twelve-month period ended December 31, 1996, in form and substance
reasonably satisfactory to the Lender, in each case certified by the
chief financial officer of the Borrower.
(m) UCC Financing Statements. UCC-1 financing statements
covering fixtures and personalty at, on or relating to each Initial
Collateral Property, in each case appropriately completed and duly
executed and delivered to the Lender for filing in the appropriate
governmental offices to perfect the security interest therein.
(n) Searches. UCC filing searches, tax lien searches, judgment
searches, real estate tax searches and municipal department searches
setting forth any and all code violations, with respect to the Borrower
and each Initial Collateral Property in all relevant jurisdictions and
in each county where an Initial Collateral Property is located, and UCC
filing searches and judgment searches with respect to FSA in the
Secretary of State's office of the state in which its principal place
of business is located; demonstrating as at a recent date the existence
of no Liens, violations or title matters with respect to the Borrower,
FSA or any Initial Collateral Property except as shall be reasonably
approved by the Lender, together with evidence that any filing fees or
recording taxes payable in connection with any such searches have been
paid.
(o) Market Study. A written market study of each Initial
Collateral Property reasonably satisfactory, in form and substance, to
the Lender. The fees for such market studies shall be paid by the
Borrower.
(p) Survey. A survey of each Initial Collateral Property,
prepared by a licensed or registered land surveyor satisfactory to the
Lender, in compliance with the minimum standard detail requirements for
land title surveys adopted by the American Land Title Association and
American Congress on Surveying and Mapping, and certified to the
Lender, the Borrower, the Title Companies and any other parties
requested by the Lender as of a certification date approved by the
Lender. Each survey shall show the dimensions and total square foot
area of the Initial Collateral Property in question, all interior lot
lines of such Initial Collateral Property, the dimensions and locations
of all
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buildings, parking areas and other improvements situated on such
Initial Collateral Property, all sewer, electric, gas and telephone
utilities affecting such Initial Collateral Property, all easements,
reservations and rights of way pertaining to or affecting each Initial
Collateral Property, all encroachments onto or from such Initial
Collateral Property, the location and name of all streets adjacent to
such Initial Collateral Property, all modes of ingress and egress to
and from such Initial Collateral Property and such other details as to
such Initial Collateral Property (and any property abutting such
Initial Collateral Property) as may be reasonably requested by the
Lender.
(q) Legal Description. A satisfactory legal description of
each Initial Collateral Property which is consistent, in all material
respects, with the survey thereof delivered pursuant to Section
6.01(p).
(r) Zoning Compliance, Etc. Evidence (which may be in the form
of zoning letters or the like from applicable governmental authorities)
reasonably satisfactory to the Lender that all improvements on the
Initial Collateral Properties have been constructed and are being used
and operated in full compliance with (i) all applicable zoning,
subdivision, environmental and other laws, orders, rules, regulations
and requirements of all governmental or quasi-governmental authorities
having jurisdiction with respect to the Initial Collateral Properties,
and (ii) all building permits issued in respect of the Initial
Collateral Properties and a copy of the certificate of occupancy
certified by the Borrower for each Initial Collateral Property.
(s) Budget. An itemized budget for the operation of each
Initial Property for the twelve (12)-month period ending December 31,
1997, which budget(s) shall be reasonably satisfactory, in form and
substance, to the Lender.
(t) Leases. Abstracts (and, to the extent required by the
Lender, certified copies) of all leases affecting any of the Initial
Collateral Properties and abstracts of all major leases (as reasonably
determined by the Lender) affecting any of the FSA Properties.
(u) Material Contracts. Copies of all material contracts and
agreements relating to each Initial Collateral Property, under which
the Borrower is obligated to pay more than $50,000 per year, including
all material service contracts and management or operating agreements
covering or affecting each Initial Collateral Property, and all
permits, approvals and licenses issued with respect to each Initial
Collateral Property.
(v) Access. Evidence (which may appear on a survey or a title
policy) that each Initial Collateral Property has access for ingress
and egress between such Initial Collateral Property and all public
roadways in the immediate vicinity of such Initial Collateral Property.
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(w) Utility Services. Evidence (which may appear on a survey
or a title policy) that all utility services required for each Initial
Collateral Property are available and in adequate supply at the
boundaries of such Initial Collateral Property and are not subject to
curtailment, termination or revocation.
(x) Property Condition Report. Reports covering the structural
condition of each Initial Collateral Property together with "as-built"
plans and specifications prepared, in each instance, by an engineer or
other professional reasonably satisfactory to the Lender, and in each
instance containing (i) such professional's recommendation for the
performance of capital expenditures, or repairs or deferred
maintenance, together with an estimate of the cost and the expected
time to complete such recommended work, and (ii) a schedule of
anticipated capital expenditures during the next ten years, together
with such professional's estimate of the annual cost thereof.
(y) Tax Assessment. Evidence that each Initial Collateral
Property is assessed separate and apart from any other property for
local property tax and subdivision purposes.
(z) Fees and Expenses. Evidence (including payment
instructions given by the Borrower) that (1) all fees and expenses due
and payable to the Lender, including the fees and expenses referred to
in Section 11.03, to the extent then due and payable, have been paid in
full, and (2) all mortgage, mortgage recording and intangible taxes and
recording charges required to be paid in connection with the execution,
delivery or recording of the Security Documents, as well as all title
premiums and other title and survey charges, have been paid in full.
(aa) Reserves. Payment by the Borrower of any and all reserves
for deferred maintenance and/or environmental remediation as may be
required by Lender based on the reports referred to in clauses (j) and
(x) above.
(bb) Rent Roll, Etc. A rent roll and delinquency report for
each Initial Property, in form and substance satisfactory to the
Lender, certified by a senior financial officer of the Borrower.
(cc) Loan Amount. Evidence that the amount of the Loan to be
made on the Closing Date does not exceed the Available Amount
determined as of the Closing Date.
(dd) Estoppel. Estoppel certificates, in substantially the
form previously approved by the Lender or otherwise in form and
substance reasonably satisfactory to Lender, from (i) each of the
tenants of the Properties that is required by the Lender, (ii) the
holder of the REMIC Loan, and (iii) the lessor under the Ground Lease.
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(ee) Other Documents. Such other documents relating to the
transactions contemplated hereby as the Lender or counsel to the Lender
may reasonably request.
6.02 Initial and Subsequent Loans. The obligation of the
Lender to make any Loan to the Borrower upon the occasion of each borrowing
hereunder (including the initial borrowing) is subject to the further conditions
precedent that:
(a) Default. Both immediately prior to such Loan and also
after giving effect thereto, no Default shall have occurred and be
continuing.
(b) Representations. The representations and warranties made
by the Borrower in Section 7 and in the other Loan Documents shall be
true and complete in all material respects on and as of the date of the
making of such Loan with the same force and effect as if made on and as
of such date.
(c) Recording Taxes.
(i) The Borrower shall have paid all mortgage,
mortgage recording and intangible taxes payable (if any) in each
jurisdiction in which any Collateral Property is located and shall have
delivered to the Lender, at commercially reasonable cost, any and all
supplemental or additional mortgages, in form and substance
satisfactory to the Lender (or otherwise containing terms and
conditions substantially similar to those contained in the then
existing applicable Jurisdictional Capped Mortgages in existence on the
date hereof), as may be reasonably required by the Lender in connection
with such Loan to better perfect the Lender's security interests in
then-existing Collateral Properties.
(ii) Without limiting the generality of the
foregoing, and notwithstanding anything to the contrary contained in
any Mortgage, the Borrower and the Lender specifically acknowledge and
agree that, to the extent there has been a payment of principal in
connection with the Loans which results in the aggregate outstanding
principal amount of the Loans being less than the aggregate maximum
principal amount of the Loans secured by any particular Jurisdictional
Capped Mortgage (whether or not such aggregate outstanding principal
amount of the Loans was originally less than the aggregate maximum
principal amount of the Loans secured by such Jurisdictional Capped
Mortgage prior to such payment), then (A) the Borrower may thereafter
be required to pay additional mortgage recording taxes in connection
with any future advance or re-advance pursuant to this Agreement if
necessary under applicable law for the Jurisdictional Capped Mortgages
in existence at or prior to such advance or re-advance to secure, in
accordance with applicable law, the amount of such advance or
re-advance up to the aggregate maximum original principal amount
secured by such Jurisdictional Capped Mortgage(s), and (B) if and to
the extent that the Lender reasonably determines that any such
additional mortgage recording taxes are so due and payable in
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connection with any such future advance or re-advance, the Borrower
shall pay such additional mortgage recording taxes to the appropriate
governmental taxing authorities, and shall duly execute and deliver to
the Lender any and all supplemental or additional mortgages and
consolidation agreements in form and substance reasonably satisfactory
to the Lender (or otherwise containing terms and conditions
substantially similar to those contained in the then existing
applicable Jurisdictional Capped Mortgages in existence on the date
hereof) as may be reasonably required by the Lender in connection
therewith.
(iii) As used herein, "Jurisdictional Capped
Mortgages" shall collectively mean, for each state, all of the
Mortgage(s) now or hereafter covering Collateral Property located in
such state (and, if the Borrower requests, separate Jurisdictional
Capped Mortgages for each such Collateral Property) which secure a
maximum original principal amount of indebtedness which is less than
the Commitment, whether for the purpose of limiting the debt secured by
such Mortgage and the mortgage recording taxes payable in connection
therewith or otherwise with the Lender's approval, which will not be
unreasonably withheld; and the "aggregate maximum principal amount of
the Loans secured by any such Jurisdictional Capped Mortgage(s)" shall
mean the aggregate maximum original principal amount of the Loan
secured by all of the Mortgages covering Collateral Property in such
state, as specified in such Mortgages.
(d) Title Updates. With respect to Loans other than the
Initial Loans, if requested by the Lender (and, in determining whether
or not to make such request, the Lender shall consider, among other
things, the magnitude of such Loan and the length of time since the
previous title continuations), the Lender shall have received a notice
of title continuation and an endorsement to each of the existing title
insurance policies covering the Collateral Properties insuring that
since the making of the last Loan there has been no change in the state
of title or priority of the Lender's Lien and no survey exceptions not
theretofore approved by the Lender, together with other evidence
satisfactory to the Lender that no mechanic's liens or other Liens have
been filed and remain filed with respect to the Collateral Properties,
which endorsement shall have the effect of (i) updating the date of the
existing title insurance policies covering the Collateral Properties to
the date of the making of such Loan and insuring that the priority of
the Lender's Lien is not subject to any intervening liens arising
between the date of the existing title policies and the date of the
making of such Loan and (ii) increasing (subject to any existing tie-in
endorsements) the coverage of the existing title insurance policies by
an amount equal to the amount of the Loan then being made, together
with, as may be required by the Lender, such reinsurance schedules and
agreements in respect of all existing title insurance policies for the
Collateral Properties in amounts and otherwise in form and substance
satisfactory to the Lender and executed by the Title Companies;
provided that with respect to Collateral Properties located in the
State of Texas (and other states with similar statutory or regulatory
prohibitions) the Borrower shall not have any obligation to deliver
such notice of title continuation or endorsement for any such
Collateral Property but shall deliver to the Lender in lieu thereof a
clean abstract issued by the Title Company
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or letter from the Title Company in form and substance reasonably
satisfactory to the Lender indicating that there does not exist any
unreleased Lien on any such Collateral Property on the date of the
making of such Loan and indicating that the state of title and priority
of the Lender's Lien with respect to such Collateral Property on the
date of the making of such Loan have not been impaired from the state
of title and priority of the Lender's Lien since the making of the last
Loan. Lender shall have also received such updates relating to the
tie-in endorsement(s) relating to such title policies as the Lender may
reasonably request.
(e) Available Amount. Immediately after giving effect to such
Loan and the concurrent acquisition (if any) of a Collateral Property,
the aggregate outstanding principal balance of the Loans shall not be
more than the Available Amount (determined as of the date of such
borrowing).
(f) Accommodation Documents. The Borrower shall have executed
and delivered to the Lender such documents and agreements and taken
such action including executing such amendments or supplements to the
Loan Documents, which in the sole but reasonable discretion of the
Lender, are necessary so that the Lender shall not (in the sole
discretion of the Lender) be required to qualify to do business in or
obtain any licenses or authorization in any jurisdiction in which any
Collateral Property is or will be located (after giving effect to such
Loan).
(g) Fees and Expenses. (1) All fees and expenses payable to
the Lender, including the fees and expenses referred to in Sections
2.04 and 10.03, to the extent then due and payable, shall have been (or
contemporaneously are being) paid in full and (2) all title premiums
and other title and survey charges shall have been (or
contemporaneously are being) paid in full.
(h) Officer's Certificate. A certificate of a senior officer
of the Borrower certifying that to the best of his/her knowledge after
due inquiry the conditions set forth in clauses (a), (b) and (e) of
this Section 6.02 are satisfied.
(i) Other Documents. Such other documents relating to such
transactions as the Lender may reasonably request.
6.03 Acquisition Loans. The obligation of the Lender to make
any Acquisition Loan to the Borrower is subject to the conditions precedent
that:
(a) The Borrower shall have complied in all material
respects with all of the conditions precedent listed (i) in clauses (b), (c),
(e), (g), (h), (i), (k), (m), (n), (q), (r), (y), (z), (aa) and (ee) of Section
6.01 with respect to the Collateral Property being acquired as if such
Acquisition Loan were an Initial Loan and the Collateral Property being acquired
were an Initial Property or the "Initial Properties", as such terms are used in
Section 6.01; (ii) in clauses (a) and
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(d) of Section 6.01 if any changes therein have occurred since last delivered;
and (iii) in Sections 2.07 and 6.02; provided, however, that the forms of
documentation delivered in connection with the foregoing shall be deemed
satisfactory if substantially in the same form as for the Initial Loan (with
such changes as may be necessary to reflect different facts or legal
requirements);
(b) The Borrower shall have obtained and delivered to
the Lender estoppel certificates from such tenants at such Collateral Property
as the Lender shall reasonably require, in a form reasonably acceptable to the
Lender; and
(c) The Borrower shall have executed, acknowledged
and delivered to the Lender amendments to each of the Loan Documents, in form
and substance satisfactory to the Lender, incorporating the Loan and the
Collateral Property in question therein, except to the extent that a failure to
so amend would not result in a Material Adverse Effect.
6.04 Expansion Loans. The obligation of the Lender to make
Loans for expansion purposes is subject to the conditions precedent set forth in
Section 6.02 (including Section 6.02(e)), but shall not be subject to the
provisions of Section 2.07 or Section 6.03, irrespective of whether such
expansions involve (i) the purchase of property neighboring a Property for the
purpose of expanding such Property, and constructing an expansion thereon, or
(ii) the construction of an expansion on an existing Property within the
boundaries of such Property or (iii) the acquisition or construction of any
other property for expansion purposes; provided that the Property NOI from such
expansion shall not be included in the Property NOI of the Properties (for
purposes of determining the Available Amount or otherwise) unless or until a
Mortgage shall have been recorded against the property that contains such
expansion and Borrower shall have complied with the other conditions set forth
in Section 6.03 with respect thereto.
6.05 Additional Loans. The obligation of the Lender to make an
Additional Loan with respect to either of the Additional Properties is subject
to the fulfillment by the Borrower in all material respects of all of the
conditions precedent listed (i) in clauses (b), (c), (e), (g), (h), (i) and (k)
through (bb) of Section 6.01 with respect to such Additional Property as if such
Additional Loan were an Initial Loan and such Additional Property were an
Initial Property or the "Initial Properties" as such terms are used in Section
6.01 (and, to the extent applicable, with respect to the Borrower's leasehold
title in the case of the Additional Property in Alabama); (ii) in clauses (a)
and (d) of Section 6.01 if any changes therein have occurred since last
delivered; and (iii) in Section 6.02; provided, however, that the forms of
documentation delivered in connection with the foregoing shall be deemed
satisfactory if substantially in the same form as for the Initial Loan (with
such changes as may be necessary to reflect different facts or legal
requirements).
Section 7. Representations and Warranties. The
Borrower represents and warrants to the Lender that:
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7.01 Corporate Existence. The Borrower: (a) is a corporation
duly organized and validly existing under the laws of the jurisdiction of its
organization; (b) has all requisite power, and has all governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (c) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Material Adverse Effect.
7.02 Financial Condition. The financial statements delivered
to the Lender pursuant to Section 6.01(l) fairly present the financial condition
and results of operations of the Borrower on the dates and for the periods
covered thereby. Since the date of the most recent of such financial statements,
there has been no material adverse change in the financial condition or
operations of the Borrower from that set forth in such financial statement.
7.03 Litigation. Except as disclosed to the Lender in writing
prior to the date of this Agreement, there are no legal or arbitral proceedings
or any proceedings by or before any governmental or regulatory authority or
agency, now pending or (to the knowledge of the Borrower) threatened against the
Borrower or any of its Subsidiaries which, if adversely determined, could have
a Material Adverse Effect.
7.04 No Breach. None of the execution and delivery of this
Agreement or any other Loan Document, the consummation of the transactions
herein and therein contemplated and compliance with the terms and provisions
hereof and thereof will conflict with or result in a breach of, or require any
consent (except such consents as have been obtained) under, the charter or
by-laws of the Borrower, or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority or agency, or
any agreement or instrument to which the Borrower or any of its Subsidiaries is
a party or by which any of them is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or (except for the
Lien arising under the Security Documents) result in the creation or imposition
of any Lien upon any of the revenues or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
7.05 Corporate Action. The Borrower has all necessary
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the other Loan Documents; the execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents have
been duly authorized by all necessary corporate action on its part; and each of
this Agreement and the other Loan Documents has been duly and validly executed
and delivered by the Borrower and constitutes, and the Note when executed and
delivered for value will constitute, its legal, valid and binding obligation,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general and to general principles of equity.
7.06 Approvals. Except for the recording or filing of the
Security Documents as contemplated by this Agreement, no authorizations,
approvals or consents of, and no filings or
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registrations with, any governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by the Borrower of this
Agreement and the other Loan Documents or for the validity or enforceability
thereof.
7.07 Use of Loans. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying margin stock and no part of the proceeds of
any Loan hereunder will be used to buy or carry any margin stock.
7.08 ERISA. The Borrower and the ERISA Affiliates have
fulfilled their respective obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or any Plan or
Multiemployer Plan (other than to make contributions in the ordinary course of
business).
7.09 Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by them; except such taxes which
are being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained as required by Section 8.03. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes and other governmental charges are, in the opinion of the
Borrower, adequate. Except as otherwise disclosed to the Lender in writing,
there are not presently pending any special assessments against the Collateral
or any part thereof.
7.10 Investment Company Act. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
7.11 Hazardous Materials. To the best of the Borrower's
knowledge, after due inquiry and investigation, except as disclosed in Schedule
D hereto or in any environmental reports or audits furnished to the Lender
pursuant hereto, the Borrower and its Subsidiaries have obtained all permits,
licenses and other authorizations which any of them is required to obtain under
all Environmental Laws, and the Borrower and its Subsidiaries are in compliance
with the terms and conditions of all such permits, licenses and authorizations,
and are also in compliance in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder. In addition, except
as disclosed in Schedule D hereto or in any environmental reports or audits
furnished to the Lender pursuant hereto:
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(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and, to the best of the Borrower's
knowledge, no investigation or review is pending or threatened, by any
governmental or other entity with respect to any alleged failure by the
Borrower or any of its Subsidiaries to have any permit, license or
authorization required in connection with the conduct of the business
of the Borrower or any of its Subsidiaries with respect to any
generation, treatment, storage, recycling, transportation, release or
disposal, or any release as defined in 42 U.S.C. ss. 9601(22), of any
substance regulated under Environmental Laws ("Hazardous Materials")
generated by the Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries has
handled any Hazardous Materials on any property now owned or leased by
it to an extent that it has, or may reasonably be expected to have, a
Material Adverse Effect.
(c) No polychlorinated biphenyls are, to the best of the
Borrower's knowledge, present at any property now owned or leased by
the Borrower or any of its Subsidiaries.
(d) To the best of the Borrower's knowledge, no asbestos is
present at any property now owned or leased by the Borrower or any of
its Subsidiaries, except for asbestos that is not in friable condition
and does not violate Environmental Law.
(e) There are no underground storage tanks, active or
abandoned, at any property now owned or leased by the Borrower or any
of its Subsidiaries, except for tanks that are in compliance with
Environmental Law.
(f) To the best of the Borrower's knowledge, no Hazardous
Materials have been released, at, on or under and continue to affect
any property now owned or leased by the Borrower or any of its
Subsidiaries.
(g) To the best of the Borrower's knowledge, neither the
Borrower nor any of its Subsidiaries has transported or, to the best of
the Borrower's knowledge, arranged for the transportation of, any
Hazardous Material to any location which is listed on the National
Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed
for possible inclusion on the National Priorities List by the
Environmental Protection Agency in CERCLIS or on any similar state list
or which is the subject of federal, state or local enforcement actions
or, to the Borrower's knowledge, other investigations which may
reasonably be expected to lead to claims against the Borrower or any of
its Subsidiaries for clean-up costs, remedial work, damages to natural
resources or for personal injury claims, including, but not limited to,
claims under CERCLA.
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(h) No oral or written notification of a release of a
Hazardous Material has been filed by or on behalf of the Borrower or
any of its Subsidiaries and no property now owned or leased by the
Borrower is listed or proposed for listing on the National Priority
List promulgated pursuant to CERCLA, on CERCLIS or on any similar state
list of sites requiring investigation or clean-up.
(i) To the best of the Borrower's knowledge, (i) there are no
Liens arising under or pursuant to any Environmental Laws on any of the
real property or properties owned or leased by the Borrower or any of
its Subsidiaries, and (ii) no government actions have been taken or are
in process which could subject any of such properties to such Liens and
(iii) neither the Borrower nor any of its Subsidiaries is required to
place any notice or restriction relating to the presence of Hazardous
Materials at any property owned or leased by it in any deed to such
property.
(j) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in
the possession of the Borrower or any of its Subsidiaries in relation
to the Borrower's period of ownership of the Initial Collateral
Properties or the Additional Properties which have not been made
available to the Lender.
7.12 Equal Employment and Non-Discrimination. The Borrower and
its Subsidiaries have received no notice that they have not complied with all
applicable federal, state and local legal requirements regarding equal
employment opportunity and non-discrimination (including the requirements of
Executive Order 11246).
7.13 Title. The Borrower is the sole beneficial owner of, and
has good and marketable title to, all of the tangible property and assets
reflected as owned by it in the financial statements referred to in Section 7.02
and good and valid leasehold interests in all properties held under lease, and
none of such properties or assets will be subject to any Lien (other than
Permitted Liens). The Borrower has good and marketable title to all of the
Collateral, free and clear of all Liens, other than Permitted Liens. FSA is the
sole beneficial owner of, and has good and marketable title to, all of the FSA
Properties, free and clear of all Liens, other than Liens securing the REMIC
Loan and other Permitted Liens.
7.14 Ownership; REIT Status. The Borrower currently qualifies
and is taxed as a real estate investment trust under Subchapter M of the Code,
and FSA currently qualifies as a "Qualified REIT Subsidiary" (as defined in such
Subchapter M). The Borrower is the owner of all of the issued and outstanding
capital stock of FSA, all of which capital stock has been validly issued, is
fully paid and nonassessable and is owned by FSA free and clear of all
assignments, pledges and security interests (other than a security interest in
favor of the Lender) and free and clear of all warrants, options and rights to
purchase. Neither the Borrower nor FSA has any obligation to any Person to
purchase or repurchase any ownership interest in it.
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7.15 Conditions of Properties. To the best of the Borrower's
knowledge, except as set forth in the Property Condition Reports provided to the
Lender, the buildings, structures and improvements included on or within each of
the Properties are structurally sound, free of material damage and waste, and in
good repair, and all mechanical, electrical, heating, air conditioning,
drainage, sewer, water and plumbing systems are in proper working order. The
Borrower has performed the repairs and other work that is described as having
been performed in Schedule J hereto.
7.16 Solvency. None of the transactions contemplated by the
Loan Documents will be or have been made with an actual intent to hinder, delay
or defraud any present or future creditors of the Borrower, and the Borrower is
not and will not be rendered insolvent by such transactions or will have
received fair and reasonably equivalent value in good faith for the grant of the
Liens created by the Security Documents. The Borrower is able to pay its debts
as they become due, including contingent obligations reasonably likely to become
due.
7.17 REMIC Loan. The outstanding principal balance of the
REMIC Loan is $92,790,091 as of the Closing Date. The Borrower has delivered to
Lender true and complete copies of all of the material REMIC Loan Documents (as
amended to date). Neither the Borrower nor FSA has received any notice of any,
and to the best of the Borrower's knowledge there exists no, default, and no
event or circumstance which, with notice or the passage of time, or both, would
constitute a default, that has occurred and is continuing under the REMIC Loan
Documents.
7.18 Insurance. Each Collateral Property is covered by
insurance of the type and in the amounts and provided by the carriers required
by the Mortgage encumbering such Collateral Property. Each FSA Property is
covered by insurance of the type and in the amounts and provided by the carriers
required by the REMIC Loan Documents.
7.19 Lien Priority. The Mortgages will constitute valid,
subsisting and enforceable first priority Liens and perfected security interests
on the Borrower's interests in the Collateral Properties, including all
buildings and fixtures owned by the Borrower which constitute part of such
Collateral Properties under applicable law, and all additions, alterations and
replacements made at any time with respect to the foregoing, subject only to
Permitted Liens.
7.20 Improvements. Except as disclosed in the surveys or title
insurance policies delivered to Lender hereunder, to the best of the Borrower's
knowledge, based on such surveys and policies, all improvements comprising a
portion of any Collateral Property lie wholly within the boundary and building
restriction lines of such Collateral Property and no improvements on adjoining
properties encroach upon any Collateral Property in any respect.
7.21 Condemnation. There is no proceeding pending or, to the
best of the Borrower's knowledge, threatened, for the total or partial taking of
any Property.
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7.22 Zoning and Other Laws. Each Property and the use and
operation thereof, separate and apart from any other properties, constitutes a
legal use under applicable zoning regulations and complies in all material
respects with all applicable requirements of law and all applicable insurance
requirements, and complies with the applicable provisions of the Americans with
Disabilities Act and all applicable regulations issued thereunder and each
similar applicable state law and regulation.
7.23 No Management Agreement. As of the date hereof, the
Borrower is not a party to and is not bound by any Management Agreement relating
to any of the Collateral Properties and is not otherwise obligated to pay any
property management or similar fees to any third party. If the Borrower shall be
a party to or bound by any Management Agreement relating to any of the
Collateral Properties on any other date when the representations and warranties
in this Section 7 are required to be remade, then the Borrower shall have made
available to the Lender true and correct copies of such Management Agreements
and all amendments thereto.
7.24 Contracts. Schedule E sets forth a description of each
contract or other agreement (including all amendments thereto) to which the
Borrower or any Affiliate thereof is a party which is material to the value,
operation or legality of any Property other than any such contract or agreement
which may be terminated on thirty days' or less notice and without any material
penalty, or which does not require the payment of money by the Borrower in
excess of $50,000 per year. The information set forth in such Schedule is
correct and complete in all material respects as of the date hereof. A correct
and complete copy of each contract or other agreement and management agreement
(including all such amendments) specified on Schedule E has been provided to the
Lender and each thereof is unmodified (except as set forth on Sched ule E) and
in full force and effect, and neither the Borrower nor, to the best of the
Borrower's knowledge, any other party to any thereof is in default thereunder.
7.25 Permits. Except for permits relating to Hazardous
Materials (which are provided for in Section 7.11(a)), there has been issued in
respect of each Property all permits and governmental approvals necessary or
required to own, operate, use and occupy such Property in the manner currently
operated. Each such permit is in full force and effect and the Borrower has not
received any notice of violation or revocation thereof. No other permits are
required from any governmental entity in order to operate such Property as it is
now operated.
7.26 Utilities. The Borrower has not received any notice of
actual or threatened reduction or curtailment of any utility service now
supplied to any Property.
7.27 Certificates of Occupancy. The Borrower has not received
any notice of actual or threatened cancellation or suspension of any currently
existing certificate of occupancy for any portion of any Property and all such
certificates of occupancy are in full force and effect.
7.28 Assessments. Except as otherwise disclosed to the Lender
in writing, the Borrower has not received any notice of actual or threatened
special assessments or
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reassessments of any Property which is not reflected on financial information
previously provided to Lender.
7.29 Ground Lease. The Borrower has delivered to Lender a true
and complete copy of the Ground Lease. The Ground Lease is unmodified (except as
permitted hereunder) and in full force and effect. The Borrower is not, and, to
the best of the Borrower's knowledge, the lessor under the Ground Lease is not,
in default under the Ground Lease.
7.30 Leases. Except for leases with tenants listed as "SNDA
Tenants" on Schedule I hereto, all leases affecting each Initial Collateral
Property are, by their terms, subject and subordinate to the Mortgage covering
such Property as provided in the standard lease forms approved by the Lender.
Each tenant at an Initial Collateral Property whose lease departs from such
provision in such standard lease form and requires Lender to execute and
deliver, as a condition to such subordination, a non-disturbance agreement with
respect thereto is listed as a "SNDA Tenant" on Schedule I hereto.
7.31 Out-Parcels. None of the Eligible Out-Parcels (which has
not been released pursuant to Section 8.05) generates any revenue or income.
7.32 VF Agreement. The Borrower has delivered to the Lender a
true and complete copy of the VF Agreement (exclusive of exhibits and schedules
other than Schedule 4.15) and all amendments and supplements thereto.
Section 8. Covenants of the Borrower. The Borrower agrees that
so long as the Commitment is in effect and until payment in full of all Loans
hereunder, all interest thereon and all other amounts payable by the Borrower
hereunder:
8.01 Financial Statements. The Borrower shall deliver or cause
to be delivered to the Lender:
(a) as soon as available and in any event within 40
days after the end of each quarter, unaudited statements of income,
retained earnings and changes in financial position (or of cash flow,
as the case may be) of the Borrower and FSA for such quarter and for
the period from the beginning of the respective fiscal year to the end
of such period, and the related balance sheet as at the end of such
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding
fiscal year, accompanied by a certificate of a senior financial officer
of the Borrower, which certificate shall state that said financial
statements fairly present the financial condition and results of
operations, as the case may be, of the Borrower and FSA, as at the end
of, and for, such period (subject to normal year-end audit
adjustments);
(b) as soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, consolidated
and consolidating statements of income,
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retained earnings and changes in financial position of the Borrower and
its Consolidated Subsidiaries for such year and the related
consolidated and consolidating balance sheets as at the end of such
year, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the preceding fiscal year,
prepared in accordance with GAAP and accompanied by an unqualified
opinion thereon of one of the six largest accounting firms in the
United States or other independent certified public accountants of
recognized national standing acceptable to the Lender, which opinion
shall state that said consolidated and consolidating financial
statements fairly present the consolidated and consolidating financial
condition and results of operations of the Borrower and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year;
(c) promptly upon their becoming available, copies of
all registration statements and regular periodic reports, including
10K's, 10Q's, 8K's, and annual reports, which the Borrower or FSA shall
have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange;
(d) promptly upon the mailing thereof to the
shareholders of the Borrower generally, or made available generally to
the public, copies of all financial statements, reports, proxy
statements and press releases so mailed or made available;
(e) as soon as possible, and in any event within ten
days after the Borrower knows or has reason to know that any of the
events or conditions specified below with respect to any Plan or
Multiemployer Plan have occurred or exist, a statement signed by a
senior financial officer of the Borrower setting forth details
respecting such event or condition and the action, if any, which the
Borrower or any ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed with or given
to PBGC by the Borrower or an ERISA Affiliate with respect to such
event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of
any Plan;
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(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Borrower or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been taken by
PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by the
Borrower or any ERISA Affiliate under Section 4201 or 4204 of
ERISA from a Multiemployer Plan, or the receipt by the
Borrower or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate
or has terminated under Section 4041A of ERISA; and
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against the Borrower or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days;
(f) promptly after the Borrower knows that any
Default has occurred, a written notice of such Default describing the
same in reasonable detail and, together with such notice or as soon
thereafter as reasonably practicable, a description of the action that
the Borrower has taken and proposes to take with respect thereto;
(g) as soon as available but in any event within 20
days after the end of each calendar month, a report (certified by a
senior financial officer of the Borrower) setting forth for each
Property: (i) a profit and loss statement and income statement, (ii) a
detailed statement of operations (including an analysis on a
month-to-month and year-to-date basis showing and explaining any
variance between the results of actual operations and the projected
results of operations), and (iii) a detailed calculation of Property
NOI for such Property;
(h) as soon as available and in any event within 20
days after the end of each calendar month, operating statements showing
all elements of income and expenses for the operation of each Property,
occupancy rates, rent rolls (identifying the leased premises, names of
all tenants, units leased, monthly rental and all other charges payable
under each lease, date to which paid, term of lease, date of occupancy,
date of expiration, any and every material special provision,
concession or inducement granted to tenants) and a delinquency report
for each Property and such other relevant information with respect to
each Property as reasonably requested by the Lender, in each case
certified by a senior financial officer of the Borrower;
(i) promptly upon receipt thereof, copies of all
reports and information delivered under the Management Agreements (if
any); and
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(j) as soon as available and in any event within 25
days after the end of each calendar quarter a compilation of sales
reports furnished during or in respect of such quarter to the Borrower
by tenants at the Properties; and
(k) from time to time such other reasonable
information regarding the business, affairs or financial condition of
the Borrower, FSA or any of their respective Subsidiaries (including
any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA) and such additional statements,
reports, projections, budget and other information regarding any
Property or the Collateral as the Lender may reasonably request.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
senior financial officer of the Borrower (i) to the effect that no Default has
occurred and is continuing (or, if any Default has occurred and is continuing,
describing the same in reasonable detail and describing the action that the
Borrower has taken and proposes to take with respect thereto) and (ii) setting
forth in reasonable detail the Available Amount and computations necessary to
determine whether the Borrower is in compliance with Section 8.15, at the end of
the respective quarterly period or fiscal year.
8.02 Litigation, Etc. The Borrower will promptly give to the
Lender notice of (i) all legal or arbitral proceedings, and of all proceedings
by or before any governmental or regulatory authority or agency, and any
material development in respect to such legal or other proceeding affecting the
Borrower or FSA, except proceedings which (A) if adversely determined, would not
have a Material Adverse Effect (taking into account the applicable insurance
coverage) or (B) the Borrower reasonably determines to be without merit and
actively defends and (ii) any notice by any public authority of its intention to
acquire any Property of the Borrower or any portion thereof.
8.03 Corporate Existence, Etc. The Borrower will, and will
cause FSA to, preserve and maintain its corporate existence and all of its
material rights, privileges and franchises; comply with the requirements of all
applicable laws, rules, regulations and orders of governmental or regulatory
authorities if failure to comply with such requirements would have a Material
Adverse Effect; pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained; maintain all of its properties used or useful in its business
in good working order and condition, ordinary wear and tear excepted; and permit
representatives of the Lender, during normal business hours and upon reasonable
prior notice, and consistent with the rights of tenants under their leases, to
examine, copy and make extracts from its books and records, to inspect its
properties, and to discuss its business and affairs with its officers, all to
the extent reasonably requested by the Lender. The Borrower will continue to
qualify and be taxed as a real estate investment trust under Subchapter M of the
Code and listed on the New York
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Stock Exchange, NASDAQ or the American Stock Exchange; and will cause FSA to
continue to qualify as a "Qualified REIT Subsidiary" (as defined in such
Subchapter M).
8.04 Insurance. The Borrower will, and will cause FSA to, keep
insured by financially sound and reputable insurers all property of a character
usually insured by entities engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such entities and carry such other insurance as is usually
carried by such entities.
8.05 Prohibition of Fundamental Changes and Transfers.
(a) Without the prior written consent of the Lender, the
Borrower will not enter into, or permit FSA to enter into, any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). Except as otherwise permitted
in this Agreement, the Borrower will not convey, sell, transfer or otherwise
dispose of any Collateral Property or the Collateral, and will not permit FSA to
convey, sell, transfer or otherwise dispose of any FSA Property, without the
prior written consent of the Lender. The Borrower will not, as landlord, lease
all or substantially all (as an entirety) of any Collateral Property, and will
not permit FSA, as landlord, to lease all or substantially all (as an entirety)
of any FSA Property, without the prior written consent of the Lender (except as
permitted under Section 8.07).
(b) Notwithstanding the provisions of Section 2.08 or 8.05(a),
the Borrower shall have the right, from time to time, to convey, free and clear
of the Lien of the Security Documents, without payment of a Release Amount, one
or more of the Eligible Out-Parcels, in a bona-fide, arms-length sale or ground
lease of such Eligible Out-Parcel(s) to a purchaser that is not a Related Person
of the Borrower (a "Third Party Sale"), and the Lender shall execute,
acknowledge and deliver a Release of any such Eligible Out-Parcel being so sold
and conveyed within ten Business Days after receipt of the Borrower's written
request for such Release; provided (i) such request shall refer to this Section,
identify such Eligible Out-Parcel and be accompanied by a counterpart of such
Release in form for execution by the Lender, (ii) no Default shall have occurred
and be continuing as of the date of such request and the Borrower shall have
delivered to the Lender a certificate of a senior officer of the Borrower
confirming such fact and certifying that such sale qualifies as a Third-Party
Sale, (iii) no Default shall have occurred and be continuing as of the date of
such Release, and (iv) Lender shall have received such assurance as it shall
reasonably require that the portion of the Collateral Property not being
conveyed will not be adversely affected by such conveyance (including, without
limitation, assurance that such Collateral Property will constitute a separate
legal parcel and tax lot, in compliance with all zoning and other legal
requirements, with undiminished legal access to public roads, and will not be
affected by any Liens that are not Permitted Liens).
(c) Notwithstanding the provisions of Section 2.08 or 8.05(a),
Lender shall not unreasonably withhold its consent to the conveyance by the
Borrower, free and clear of the
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Lien of the Security Documents, without payment of a Release Amount, of a
portion of a Collateral Property for the benefit of such Collateral Property,
such as the dedication of a road to public use; provided such portion does not
contain (and the ownership thereof by the Borrower is not integral to) an
income-producing improvement.
(d) Notwithstanding the provisions of Section 8.05(a), Lender
shall not unreasonably withhold its consent to the conveyance of the Collateral
Properties, subject to the Mortgages and the other Security Documents, to
Qualified REIT Subsidiaries, provided (i) such conveyances do not adversely
affect or impair the Lender's security or its rights or remedies under the Loan
Documents, (ii) if requested by the Lender, the Borrower shall pledge the stock
of such Qualified REIT Subsidiaries to the Lender as additional Collateral, and
(iii) the Borrower and such Qualified REIT Subsidiaries execute and deliver to
the Lender such agreements and other documents as the Lender shall reasonably
require in connection therewith.
8.06 Limitation on Liens. The Borrower will not, nor will it
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of their Properties, assets or revenues, whether now owned or
hereafter acquired, except the following ("Permitted Liens"):
(a) Liens imposed by any governmental authority for taxes,
assessments or charges not yet delinquent or which are being contested
in good faith and by appropriate proceedings (and, with respect to the
Borrower and the Collateral Properties, in accordance with the
Mortgages relating thereto) if adequate reserves with respect thereto
are maintained on the books of the Borrower in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days after the
Borrower's receipt of notice thereof or which are being contested in
good faith and by appropriate proceedings (and, with respect to the
Borrower and the Collateral Properties, in accordance with the
Mortgages relating thereto);
(c) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds, bonds to
secure construction of improvements and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of property or minor imperfections in title
thereto which, in the aggregate, are not material in amount, and
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which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the
business of the Borrower or the owner of the affected Property;
(f) Liens on the Collateral arising or permitted to exist
under the Loan Documents and Liens set forth in any title policies
covering the Properties;
(g) Liens on the FSA Properties arising or permitted to exist
under the REMIC Loan Documents;
(h) any extension, renewal or replacement of the foregoing,
provided, however, that the Liens permitted hereunder shall not be
spread to cover any additional Indebtedness or property (other than a
substitution of like property); and
(i) any Lien that the Lender expressly approves, which
approval shall not be unreasonably withheld in the case of a Lien
granted by the Borrower or a Subsidiary that is not in the nature of a
Lien on real property granted to secure Indebtedness.
8.07 Leasing.
(a) The Borrower shall not, without the prior written consent
of the Lender, which will not be unreasonably withheld, (i) enter into,
modify, amend or terminate any Lease (as such term is defined in the
Mortgages) that covers more than 20,000 rentable square feet of space
in a Collateral Property or more than 20% of the aggregate rentable
square feet of space in a Collateral Property, or (ii) terminate,
reduce or postpone any amount payable by the tenant under, or shorten
the term of, any Lease of space in a Collateral Property unless such
action does not materially adversely affect the value of such
Collateral Property (after taking into account any planned alternative
use of such space, in the case of a Lease termination). If the Lender
fails to respond to a request for consent under this Section 8.07
within ten Business Days, such consent shall be deemed to have been
granted.
(b) The Borrower shall use diligent, good faith efforts to
obtain and deliver to the Lender, within 120 days after the date
hereof, subordination, non-disturbance and attornment agreements in
substantially the form previously approved by the Lender or otherwise
in form and substance reasonably satisfactory to Lender, executed by
each of the tenants of the Properties that is identified as an "SNDA
Tenant" on Schedule I hereto.
8.08 Business. Without the Lender's consent, which shall not
be unreasonably withheld, the Borrower shall not, and shall not cause or permit
any of its Subsidiaries to, conduct or engage in any business or activity other
than the acquisition, ownership, development, construction, leasing, operation
and management of factory outlet centers, community retail
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centers and other retail properties, and activities (including ancillary office
use) incidental or related thereto.
8.09 Dividend Payments. Without the Lender's prior written
consent, the Borrower will not declare or make any Dividend Payment at any time
that an Event of Default that could be cured by the payment of money shall have
occurred and be continuing or at any time that the Borrower shall fail to comply
with Section 8.15. In determining whether to give or withhold such consent, the
Lender shall take into account any detrimental affect that the failure to make
such Dividend Payment might have on the Borrower's qualification as a real
estate investment trust.
8.10 REMIC Loan. The Borrower shall cause FSA to perform and
observe all of FSA's covenants and obligations under the REMIC Loan Documents in
accordance with the terms thereof. The Borrower shall not permit any
modification, supplement or refinancing of the REMIC Loan or any of the REMIC
Loan Documents, with the prior written consent of the Lender, which will not be
unreasonably withheld.
8.11 Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Borrower will not, and will not permit FSA to,
directly or indirectly enter into any transaction directly or indirectly with or
for the benefit of an Affiliate, unless the monetary or business consideration
arising therefrom would be substantially as advantageous to the Borrower or FSA
as the monetary or business consideration which would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
8.12 Use of Proceeds. The Borrower will use the proceeds of
the Loans hereunder solely (i) to repay indebtedness outstanding on the date
hereof, (ii) to cause the assignment to the Lender of the Existing Loan, (iii)
to purchase or refinance the purchase of Acquisition Properties, (iv) to pay the
cost of expanding the Properties, (v) to pay transaction costs associated with
the foregoing, and (vi) for general corporate purposes; provided that the Lender
shall not have any responsibility as to the use of any of such proceeds; and
provided further that a portion of the Initial Loan shall be used to pay in full
the obligations of the Borrower owing to VF Factory Outlet, Inc. ("VF") pursuant
to Section 4.14 of that certain Asset and Real Estate Purchase Agreement dated
April 16, 1993 (the "VF Agreement"), and Section 46 of each of the Leases to
which VF is a party (collectively, the "VF Leases"), the amount of which
obligations the Borrower represents and warrants to be in the amount of
$2,016,000 plus interest.
8.13 Ground Lease. The following provisions shall be
applicable if the Additional Property in Alabama becomes a Collateral Property:
(a) Except as required pursuant to Section 8.13(b), or in
connection with the Borrower's acquisition of fee title to the premises demised
under the Ground Lease (and the concurrent spreading of the lien of the related
Mortgage to such fee title), the Borrower shall not modify, amend, terminate,
surrender or waive any of its rights or options under the Ground
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Lease, and shall perform and observe all of the terms and conditions of the
Ground Lease to be performed and observed by it thereunder and do all things
necessary to preserve and maintain its right, title and interest as lessee
thereunder in full force and effect.
(b) The Borrower shall use diligent good faith efforts to
cause the Ground Lease to be modified by an amendment substantially in the form
heretofore approved by the Lender within 120 days after the date hereof. Unless
and until the Ground Lease is so modified, and an executed original of such
amendment is delivered to the Lender, the Lender shall have the right, in its
sole discretion (i) to deem the Available Amount to have been reduced by an
amount equal to the sum of (A) the amount (the "Option Amount") required under
the Ground Lease to acquire fee title to the premises demised thereunder,
pursuant to the purchase option contained therein (the "Option"), plus (B) the
amount by which the Available Amount would be reduced if the Borrower were to
own such fee title (as a result of the increase in Property Expenses
attributable to the amount by which annual real estate taxes on such premises
would exceed annual rent under the Ground Lease), and (ii) if an Event of
Default shall have occurred and be continuing, (A) to exercise the Option on
behalf of the Borrower, (B) to cause the lessor under the Ground Lease to convey
fee title to such premises to the Borrower in accordance with the Option, and
(C) to disburse the Option Amount to the lessor under the Ground Lease, on
behalf of the Borrower, as an advance of the Loan (in which event the lien of
the Mortgage covering the Ground Lease will be spread to cover such fee title).
The Borrower hereby irrevocably constitutes and appoints the Lender as the
attorney-in-fact for the Borrower, with full power and authority to act in its
name and on its behalf in order to carry out the provisions of the foregoing
clause (ii). Such power of attorney is a special power of attorney, coupled with
an interest, but shall terminate upon the earlier of (x) the payment in full of
the Loan and all of the Borrower's obligations under the Loan Documents or (y)
the execution and delivery of the Ground Lease amendment pursuant to this
Section 8.13(b).
8.14 Deferred Maintenance.
(a) The Borrower shall perform the repairs and deferred
maintenance at the Initial Collateral Properties described in Schedule J hereto
(the "Required Repairs"). The Borrower shall complete each of the Required
Repairs on or before the deadline for same set forth on Schedule J. Amounts
hereafter deposited with the Lender pursuant to this Section 8.14 (the "Required
Repair Fund") with respect to Acquisition Properties shall be held by the Lender
in an account or subaccount (the "Required Repair Account") in the Lender's name
at Centura Bank or another financial institution selected by the Lender in its
sole discretion and shall be invested in Permitted Investments; and earnings
thereon shall be added to the Required Repair Fund.
(b) The Borrower hereby pledges, assigns and grants a security
interest to the Lender, as security for payment of all sums due in respect of
the Loan and the performance of all other terms, conditions and covenants of the
Loan Documents on the Borrower's part to be paid and performed, all of the
Borrower's right, title and interest in and to the Required Repair Fund
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and the Required Repair Account. The Borrower shall not, without obtaining the
prior written consent of the Lender, further pledge, assign or grant any
security interest in the Required Repair Fund or the Required Repair Account or
permit any Lien to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming the Lender as the secured party, to be
filed with respect thereto.
(c) The Lender shall disburse to the Borrower Required Repair
Funds (if any) in the Required Repair Account upon satisfaction by the Borrower
of each of the following conditions: (i) the Borrower shall submit to the Lender
a written request for payment at least five Business Days prior to the date on
which the Borrower requests such payment to be made, (ii) on the date such
request is received by the Lender and on the date such payment is to be made, no
Default or Event of Default shall exist and remain uncured, (ii) the Lender
shall have received a certificate from a responsible officer of the Borrower (A)
indicating that, to the best of his or her knowledge, one or more Required
Repairs have been completed (1) in a good and workmanlike manner, and (2) in
accordance with all applicable legal requirements, such certificate to be
accompanied by a copy of each license, permit or other approval required by any
governmental authority in connection such Required Repairs, (B) identifying each
Person in privity with the Borrower that supplied materials or labor in
connection with such Required Repairs and (C) stating that each such Person has
been (or will with such requested payment be) paid in full, such certificate to
be accompanied by a copy of appropriate lien waivers or other evidence of
payment satisfactory to the Lender, (iv) at the Lender's option, a title search
for the relevant Collateral Property indicating that such Collateral Property is
free from all liens, claims and other encumbrances not previously approved by
the Lender, and (v) the Lender shall have received such other evidence it shall
reasonably request that such Required Repairs have been completed and have been
or will be paid for. The Lender shall be required to make only one disbursement
per month from the Required Repair Account and such disbursement shall be made
only upon satisfaction of each condition contained in this Section 8.14(c). Upon
completion of all Required Repairs in accordance with the terms hereof, the
Lender shall disburse to the Borrower any amounts then remaining in the Required
Repair Account.
(d) It shall be a Default if the Borrower does not complete
the Required Repairs within one year after the Closing Date. Upon the occurrence
of an Event of Default, the Lender, at its option, may withdraw all Required
Repair Funds from the Required Repair Account and apply such funds either to
completion of the Required Repairs or toward payment of the Indebtedness
hereunder in such order, proportion and priority as the Lender may determine in
its sole discretion. The Lender's right to withdraw and apply Required Repair
Funds shall be in addition to all other rights and remedies provided under this
Agreement and the other Loan Documents.
(e) Upon the Borrower's acquisition of each Acquisition
Property, the Borrower shall comply with the provisions of Section 8.14(a), and
thereafter shall comply with the other provisions of this Section 8.14, with
respect to repairs and deferred maintenance at such
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Acquisition Property, to the extent required by the Lender as a condition to its
approval of the acquisition of each Acquisition Property.
8.15 Financial Covenants. As of the end of each calendar
quarter during the Term, (i) the aggregate principal amount of the Indebtedness
of the Borrower and its Consolidated Subsidiaries, on a consolidated basis,
shall not be more than 72% of the Total Asset Value, and (ii) the aggregate NOI
of the Borrower and its Consolidated Subsidiaries, on a consolidated basis,
shall not be less than 130% of the aggregate Debt Service of the Borrower and
its Consolidated Subsidiaries, on a consolidated basis, for the twelve-month
period ending with such calendar quarter.
8.16 Property Management. The Borrower shall either manage
each of the Collateral Properties itself or shall cause each of the Collateral
Properties to be managed solely pursuant to Management Agreements approved by
Lender, with a Manager approved by Lender. If the Borrower enters into any such
Management Agreement(s), then (i) the Borrower shall perform and observe all of
the material terms, covenants and conditions of the Management Agreements to be
performed and observed by it and promptly deliver to the Lender a true copy of
each notice the Borrower gives of any default by the Manager in the performance
or observance of any of the terms, covenants or conditions of the Manager
contained in a Management Agreement and any notice received by the Borrower of
any default of any of its obligations contained in the Management Agreements;
(ii) the Borrower shall not terminate the Management Agreements or (except
pursuant to the Security Documents) assign its interest therein or consent to
the assignment by the Manager of its interest therein; and (iii) upon the
Lender's request, the Borrower shall exercise each option (if any) to extend or
renew the term of the Management Agreements. In the event that (A) there shall
have occurred and be continuing an Event of Default or (B) the Debt Service
Ratio shall be less than 1.15 at the end of any calendar quarter, the Lender may
by notice to the Borrower instruct the Borrower to remove the Manager (if any)
with respect to any or all of the Collateral Properties and to designate a
property manager acceptable to the Lender, in which event the Borrower shall so
remove the Manager (if any) and so designate a manager, unless no Event of
Default is continuing and, within 20 Business Days after the giving of such
notice, the Borrower prepays the Loans in an amount sufficient to reduce the
annual Debt Service to an amount which, if substituted for the Debt Service used
to determine such Debt Service Ratio, would produce a Debt Service Ratio of not
more than 1.15. The Borrower shall not, without the prior written consent of the
Lender, enter into any property management agreement concerning the Collateral
Properties, or modify, terminate or waive any rights under, any Management
Agreements.
8.17 Environmental Matters.
(a) The Borrower shall, at its sole cost and expense, and
shall cause FSA at its sole cost and expense to, comply in all material respects
with all Environmental Laws applicable to their respective Properties and use
good faith efforts to ensure that all operations, businesses and activities
conducted thereon are in material compliance with all Environmental Laws.
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(b) If the Borrower shall receive any notice or other
communication relating to any Property from any governmental authority
concerning any actual, alleged, suspected or threatened violation of or
liability under any Environmental Laws or any Environmental Condition, or that
any representation or warranty herein relating to Hazardous Materials is not or
is no longer accurate in any material respect, including any notice or other
communication from any governmental authority concerning any actual or
threatened Environmental Claim, then the Borrower shall deliver to the Lender,
within ten (10) days after receipt of such notice or communication, a written
description of such violation, liability, or actual or threatened event or
condition. Receipt of such notice shall not be deemed to create any obligation
on the part of the Lender to defend or otherwise respond to such notification.
The Borrower shall, or shall cause FSA to, promptly take all actions necessary
to defend such Environmental Claim or clean up or remedy such Environmental
Condition in compliance with all Environmental Laws.
(c) Upon the Lender's reasonable request, the Borrower shall,
at its sole cost and expense, take, or cause FSA at its sole cost and expense to
take, all actions required by law and necessary to ensure that there is no
Hazardous Material at, on or under their respective Properties in quantities or
concentrations other than those permitted by applicable Environmental Laws. The
Borrower shall reasonably promptly provide to the Lender copies of all
environmental site assessments or environmental audit reports, or updates of
such assessments or reports that are generated in connection with the above
activities. The Borrower's obligations hereunder shall arise upon the reasonable
request of the Lender, taking into account all of the circumstances, including
the conducting of tests in the past and with due regard to the likelihood of
finding Hazardous Materials on the Properties regardless of whether any
governmental authority has taken or threatened any action with respect to the
presence of any Hazardous Materials at, on or under the applicable Property. If
the Borrower fails to discharge any of its obligations hereunder, the Lender
shall have the right, but not the obligation, in its reasonable discretion, at
the Borrower's sole cost and expense, to take such reasonable actions that the
Lender reasonably deems necessary or advisable, including the removal or cleanup
of any Hazardous Materials at, on or under the Properties. The Borrower grants,
and, unless violative of the REMIC Loan, shall cause FSA to grant, the Lender
and its employees, contractors and agents an irrevocable and non-exclusive
license, upon reasonable prior notice, to enter upon the Properties to conduct
such activities in accordance with the preceding sentence. All reasonable costs
and expenses incurred by the Lender under this subsection shall be due and
payable by the Borrower on demand.
(d) Following and during the continuance of an Event of
Default, subject to the rights of tenants, the Borrower shall permit, and,
subject to the REMIC Loan Documents, shall cause FSA to permit, Lender to enter
upon the Properties at any reasonable time to conduct an inspection of such
Properties, to determine compliance with all applicable Environmental Laws and
to take any and all other actions that the Lender deems reasonably necessary or
advisable, including the removal or cleanup of any Hazardous Materials in
quantities or concentrations which violate applicable Environmental Laws at, on
or under the applicable Property. Following and during the continuance of an
Event of Default, the Borrower grants, and
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shall cause FSA to grant, the Lender and its employees, contractors and agents
an irrevocable and nonexclusive license to enter upon the Properties and to
perform such tests on the Properties necessary to conduct such reviews and
investigations in accordance with the preceding sentence. All reasonable costs
and expenses incurred by the Lender under this subsection shall be due and
payable by the Borrower on demand.
(e) The Borrower shall not knowingly cause any material
violation of any applicable Environmental Laws at, on or under any of the
Properties by the Borrower, FSA or their respective agents, employees,
contractors or invitees.
(f) Without limiting the generality of the foregoing
provisions of this Section 8.17, the Borrower agrees (i) to promptly provide
such additional information as the Lender may reasonably request regarding the
environmental condition of the Properties in Lebanon, Missouri, Graceville,
Florida, Mineral Wells, Texas and Corsicana, Texas (including, if requested,
updated environmental audit reports), and (ii) with respect to the Property in
Graceville, Florida, (A) to provide to the Lender, within 60 days after the date
hereof, evidence reasonably satisfactory to the Lender that (x) the friable
asbestos-containing material that was disclosed in the environmental report
furnished to the Lender has been removed, and (y) the test well has been
abandoned in compliance with Environmental Laws, and (B) if required by
Environmental Laws, to report to the appropriate governmental authority the
former presence of an underground storage tank.
Section 9. Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing:
(a) The Borrower shall default in the payment when due of any
principal of or interest on any Loan or any other amount payable by it
hereunder or under the other Loan Documents; or
(b) (i) The Borrower or any of its Subsidiaries shall default
in the payment when due of any principal of or interest on any of its
other Indebtedness having an aggregate principal balance of $500,000 or
more; or (ii) any event specified in any note, agreement, indenture or
other document evidencing or relating to any Indebtedness of the
Borrower or any of its Subsidiaries having an aggregate principal
balance of $500,000 or more shall occur if the effect of such event is
to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be involuntarily prepaid in full
(whether by redemption, purchase or otherwise), prior to its stated
maturity; or
(c) Any material representation, warranty or certification
made or deemed made in any Loan Document (or in any modification or
supplement thereto) by the Borrower or in any certificate furnished to
the Lender pursuant to any other provisions
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<PAGE>
hereof or thereof shall prove to have been false or misleading as of
the time made or furnished in any material respect; or
(d) (i) The Borrower shall default in the performance of any
of its obligations under Section 8.05, 8.06, 8.08, 8.09, 8.10, 8.12,
8.13 or 8.16; or (ii) an Event of Default (as defined in the Mortgages)
shall occur under any Mortgage; or (iii) the Borrower shall default
(beyond any applicable notice and grace periods) in the performance of
any of its obligations under the Environmental Indemnity Agreement; or
(iv) the Borrower shall default in the performance of its obligations
under Section 8.15 and the Borrower shall not within 5 Business Days of
such default prepay the Loans in the amount necessary so that the
Borrower shall be in compliance with Section 8.15; or
(e) The Borrower or any of its Subsidiaries shall admit in
writing its inability to, or be generally unable to, pay its debts as
such debts become due; or
(f) The Borrower or any of its Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code (as now or hereafter in effect), (iv) file a petition
as debtor seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, or (vi)
take any action for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of the Borrower or any of its Subsidiaries, in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower or such Subsidiary or
of all or any substantial part of its assets, or (iii) similar relief
in respect of the Borrower or such Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of 120 or more days; or an order for relief against the
Borrower or such Subsidiary shall be entered in an involuntary case
under the Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in
excess of $500,000 in the aggregate shall be rendered by a court or
courts against the Borrower and/or any of its Subsidiaries and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured,
within
55
<PAGE>
30 days from the date of entry thereof and the Borrower or the relevant
Subsidiary shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal; or
(i) An event or condition specified in Section 8.01(e) shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events
or conditions, the Borrower or any ERISA Affiliate shall incur or in
the opinion of the Lender shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination
of the foregoing) which is, in the determination of the Lender,
material in relation to the consolidated financial condition, business
operations or prospects taken as a whole of the Borrower and its
Subsidiaries; or
(j) Except for expiration or termination in accordance with
its terms or this Agreement, any of the Security Documents or the
Environmental Indemnity Agreement shall be terminated or shall cease to
be in full force and effect, as a result of the unpermitted action or
inaction of the Borrower; or any of the Security Documents shall be
declared null and void, or shall fail to create the Liens, rights,
powers and privileges purported to be created thereby (including a
perfected security interest in and Lien on all of the Collateral,
subject to no equal or prior Lien other than Permitted Liens) as a
result of the unpermitted action or inaction of the Borrower; or
(k) The Borrower shall be terminated, dissolved or liquidated
(as a matter of law or otherwise); or proceedings shall be commenced by
or on behalf of any Person seeking the termination, dissolution or
liquidation of the Borrower and such proceedings (commenced by any
Person other than the Borrower) shall continue undismissed, or an
order, judgment or decree approving or ordering any such proceedings
shall be entered and continue unstayed and in effect, for a period of
60 or more consecutive days; or
(l) Without the Lender's prior written consent, any Property
or any part thereof or interest therein becomes subject to any
easement, covenant, lien, charge, mortgage or other encumbrance whether
junior or senior to any related Mortgage, except for the Permitted
Liens; or
(m) Without the Lender's prior written consent, the leases,
rents, income or revenues of any Property are assigned, pledged or
otherwise encumbered or become subject to any lien, charge or mortgage,
except for Permitted Liens; or
(n) Without the Lender's prior written consent, any Property
or any part thereof or interest therein is sold, assigned, transferred,
conveyed or otherwise disposed of or is the subject of any attempted
sale, assignment, transfer or conveyance, in each case except as
expressly permitted under this Agreement; or
56
<PAGE>
(o) the Borrower shall default in the performance of any of
its other obligations in this Agreement or any other Loan Document and
such default shall continue unremedied for a period of 30 days after
notice thereof to the Borrower by the Lender, or such longer period
(not to exceed 180 days) as may be reasonably necessary to remedy such
default; provided, that the Borrower commences to remedy such default
within said initial 30-day period and thereafter diligently prosecutes
such remedy to completion.
THEREUPON: (i) during the continuance of an Event of Default other than one
referred to in clause (f) or (g) of this Section 9, the Lender may, by notice to
the Borrower, terminate the Commitment and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Borrower hereunder and under the Note (including any amounts
payable under Section 5.04) to be forthwith due and payable, whereupon such
amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Borrower; and (ii) in the case of the occurrence of an Event of
Default referred to in clause (f) or (g) of this Section 9, the Commitment shall
automatically be terminated and the principal amount then outstanding of, and
the accrued interest on, the Loans and all other amounts payable by the Borrower
hereunder and under the Note (including any amounts payable under Section 5.04)
shall become automatically immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrower.
Section 10. Miscellaneous.
10.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement or the Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or the Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
10.02 Notices. All notices and other communications provided
for herein (including any modifications of, or waivers or consents under, this
Agreement) shall be given or made in writing and telecopied, mailed by certified
or registered mail or delivered by hand to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such party
in a notice to each other party. Except as otherwise provided in this Agreement,
all such communications shall be deemed to have been duly given when transmitted
by telecopier with receipt confirmed, personally delivered or, in the case of a
mailed notice, upon receipt or refusal, in each case given or addressed as
aforesaid.
10.03 Expenses, Etc. The Borrower agrees to pay or reimburse
the Lender for paying: (a) all reasonable out-of-pocket expenses of the Lender
(including the reasonable fees
57
<PAGE>
and expenses of Kaye, Scholer, Fierman, Hays & Handler, and any local counsel to
the Lender), in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement, the Note and the other Loan Documents and the making
of the Loans hereunder (including all reasonable out-of-pocket expenses of the
Lender (including fees and expenses of counsel to the Lender) in connection with
the preparation, negotiation, review and execution of any documents required
pursuant to Section 6 in connection with the making of each Loan), and (ii) any
amendment, modification or waiver of any of the terms of this Agreement or the
other Loan Documents; (b) all reasonable costs and expenses of the Lender
(including reasonable counsel fees and expenses) in connection with any Default
and any enforcement or collection proceedings resulting therefrom including in
connection with any bankruptcy, insolvency, liquidation, reorganization,
moratorium or other similar proceedings involving the Borrower or FSA or a
"workout" of the Loans; (c) all transfer, stamp, documentary or other similar
taxes, assessments or charges levied by any governmental or revenue authority in
respect of this Agreement, the other Loan Documents or any other document
referred to herein or therein and all costs, expenses, taxes, assessments and
other charges incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement, the other
Loan Documents or any document referred to therein; and (d) all taxes and
assessments, recording fees, registration taxes, title insurance premiums,
appraisal fees, costs of surveys, fees of third-party consultants and all other
out-of-pocket fees and expenses reasonably incurred by the Lender in connection
with any Collateral (including any mortgage loan servicing fees). The Borrower
hereby agrees to indemnify the Lender and its directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses (including the reasonable fees and
disbursements of counsel) incurred by any of them arising out of or by reason of
any claim of any Person relating to or arising out of any Loan Document or
resulting from the ownership or financing of any Collateral or any Property or
any investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any actual or
proposed use by the Borrower of the proceeds of any of the Loans (but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the Lender or any other Person to
be indemnified).
10.04 Amendments, Etc. Any provision of this Agreement may be
amended or modified only by any instrument in writing signed by the Borrower and
the Lender.
10.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Without limiting the foregoing, in connection
with any assignment of the Loans pursuant to Section 10.06(b), the Lender may,
subject to Section 10.06(b), assign or otherwise transfer all of its rights and
remedies under this Agreement to the assignee, and such assignee shall thereupon
become vested with all of the rights and obligations in respect thereof granted
to the Lender herein or otherwise. Each representation and agreement made by the
Borrower in this Agreement shall be deemed to run to and each reference to the
Lender herein shall be deemed to refer to the Lender and all of its successors
and assigns.
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<PAGE>
10.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations
hereunder or under the Note without the prior consent of the Lender.
(b) The Lender may, at its sole cost and expense, assign any
of the Loans and all or any portion of the Note without the prior consent of the
Borrower.
(c) The Lender may, at its sole cost and expense, sell or
agree to sell to one or more other Persons a participation in all or any part of
any Loan or Loans made or to be made and the collateral security therefor, but
such participant shall not have any rights or benefits under this Agreement or
the Note or the other Loan Documents (the participant's rights against the
Lender in respect of such participation to be those set forth in the agreement
(the "Participation Agreement") executed by the Lender in favor of the
participant). The Borrower shall not be required to respond to any notices or
demands of a participant, to make any payments to the participant or to pay for
any expenses payable by the Lender to the participant or incurred by the Lender
or the participant in connection with such participation. All amounts payable by
the Borrower to the Lender under Section 5 shall be determined as if the Lender
had not sold or agreed to sell any participations in such Loan and as if the
Lender were funding all of such Loan in the same way that it is funding the
portion of such Loan in which no participations have been sold. In no event
shall the Lender be obligated to the participant under the Participation
Agreement to take or refrain from taking any action hereunder or under the Note
or under the other Loan Documents except that the Lender may agree in the
Participation Agreement that it will not, without the consent of the
participant, agree to (i) the increase or extension of the term, or the
extension of the time or waiver of any requirement for the reduction or
termination, of the Commitment, (ii) the extension of any date fixed for the
payment of principal of or interest on the related Loan or Loans, (iii) the
reduction of any payment of principal thereof, (iv) the reduction of the rate at
which interest is payable thereon to a level below the rate at which the
participant is entitled to receive interest in respect of such participation or
(v) except as provided in the Loan Documents, release or otherwise terminate the
Lien on any of the Collateral.
(d) The Lender may furnish any information the Borrower or any
of its Subsidiaries in the possession of the Lender from time to time to
assignees and participants (including prospective assignees and participants).
10.07 Survival. The obligations of the Borrower under Sections
5.01, 5.04 and 10.03 shall survive the repayment of the Loans and the
termination or expiration of the Commitment and any Release of the Collateral
pursuant to the Loan Documents (including, without limitation, pursuant to
Section 2.08). In addition, each representation and warranty made, or deemed to
be made by a notice of borrowing of any Loan, hereunder shall survive the making
of such Loan and the Lender shall not be deemed to have waived, by reason of
making such Loan, any Default or Event of Default which may arise by reason of
such representation or
59
<PAGE>
warranty proving to have been false or misleading, notwithstanding that the
Lender may have had notice or knowledge or reason to know that such
representation or warranty was false or misleading.
10.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
10.09 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
10.10 Governing Law; Submission to Jurisdiction. This
Agreement and the Note shall be governed by, and construed in accordance with,
the law of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State Court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
10.11 Waiver of Jury Trial. THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.12 Marshalling; Recapture. The Lender shall be under no
obligation to marshall any assets in favor of the Borrower. To the extent the
Lender receives any payment by or on behalf of the Borrower, which payment or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to the Borrower, or its estate,
trustee, receiver, custodian or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by the amount so repaid shall be reinstated by the amount
so repaid and shall be included within the liabilities of the Borrower to the
Lender as of the date such initial payment, reduction or satisfaction occurred.
10.13 Cross Collateralization. The Borrower covenants and
agrees that in the case of an Event of Default (i) the Lender shall have the
right to pursue all of its rights and remedies in one proceeding, or separately
and independently in separate proceedings from time to time, as the Lender, in
its sole and absolute discretion, shall determine from time to time, (ii) the
Lender is not required to either marshall assets, sell Collateral in any inverse
order of
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alienation, or be subject to any "one action" or "election of remedies" law or
rule, (iii) the exercise by the Lender of any remedies against any one item of
Collateral will not impede the Lender from subsequently or simultaneously
exercising remedies against any other item of Collateral, and (iv) all Liens and
other rights, remedies or privileges provided to the Lender shall remain in full
force and effect until the Lender has exhausted all of its remedies against the
Collateral and all Collateral has been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Loans.
10.14 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be construed in order to carry out the intentions of the
parties hereto as nearly as may be possible and (ii) the invalidity or
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<PAGE>
unenforceability of any provision hereof in any jurisdiction shall not effect
the validity or enforceability of such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
FAC REALTY, INC.
By: /s/ Patrick M. Miniutti
Name: Patrick M. Miniutti
Title: Executive Vice
President and C.F.O.
Address for Notices:
11000 Regency Parkway
Cary, North Carolina 27511
Telecopier No.: 919-462-8799
Attn: C. Cammack Morton
with copies to:
Michaela M. Twomey, Esq.
FAC Realty, Inc.
1095 Old Cedar Road
McLean, Virginia 22102
Telecopier No: (703) 506-9137
and
Mayer, Brown & Platt
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-1882
Telecopier No: (202) 861-0473
Attn: Keith J. Willner, Esq.
62
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NOMURA ASSET CAPITAL CORPORATION
By: /s/ John M. Burke
Name: John M. Burke
Title:
Address for Notices:
311 South Wacker Drive
Suite 6100
Chicago, Illinois 60606
Telecopier No.: (312) 408-9510
Attn: John M. Burke
with copies to:
2 World Financial Center
Building B
New York, New York 10281
Telecopier No.: (212) 667-1014
Attn: Sheryl McAfee
and
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-7156
Attn: Stephen Gliatta, Esq.
63
<PAGE>
SCHEDULE A
[Initial Properties]
SCHEDULE A
[Initial Properties]
A-1
<PAGE>
FAC REALTY TRUST, INC. LOCATION ADDRESSES:
Initial Collateral Properties:
Smithfield, NC. Factory Stores of America
1025 Industrial Park Drive
Smithfield, NC. 27577
Lake Park, GA. Factory Stores of America
5244 Jewell Futch Road
Lake Park, GA. 31636
Georgetown, KY. Factory Stores of America
401 Outlet Center Drive
Georgetown, KY. 40324
Tri-Cities, TN. Factory Stores of America
354 Shadowtown Road
Blountville, TN. 37617
Nashville, TN. Factory Stores of America
2434 Music Valley Drive
Nashville, TN. 37214
Branson, MO. Factory Shoppes at Branson Meadows
4562 Gretna Road
Branson, MO. 65616
Corsicana, TX. Factory Stores of America
316 Factory Outlet Drive
Corsicana, TX. 75110
Graceville, FL. Factory Stores of America
950 Prim Avenue
Graceville, FL. 32440
Hempstead, TX. Factory Stores of America
805 Factory Outlet Drive
Hempstead, TX. 77445
Lebanon, MO. Factory Stores of America
2020 Industrial Drive
Lebanon, MO. 65536
Livingston, TX. Factory Stores of America
440 US 59 Loop South
Livingston, TX. 77351
<PAGE>
Mineral Wells, TX. Factory Stores of America
4500 Highway 180 East
Mineral Wells, TX. 76067
Nebraska City, NE. Factory Stores of America
1001 Nebraska State Hwy. 2
Nebraska City, NE. 68410
Story City, IA. Factory Stores of America
324 Factory Outlet Drive
Story City, IA. 50248
Sulphur Springs, TX. Factory Stores of America
614 Radio Road
Sulphur Springs, TX. 75482
FSA Properties:
Arcadia, LA. Factory Stores of America
700 Factory Outlet Drive
Arcadia, LA. 71001
Crossville, TN. Factory Stores of America
323 Industrial Parkway, Exit 320
Crossville, TN. 38555
Carrollton, KY. Factory Stores of America
R.D. 3, Box 110
Carrollton, KY. 41008
Draper, UT. Factory Stores of America
12101 South Factory Outlet Drive
Draper, UT. 84020
Hanson, KY. Factory Stores of America
100 Factory Outlet Drive
Hanson, KY. 42413
Iowa, LA. Factory Stores of America
800 Factory Outlet Drive
Iowa, LA. 70647
Mesa, AZ. Factory Stores of America
2050 South Roslyn Place
Mesa, AZ. 85208
<PAGE>
Tucson, AZ. Factory Stores of America
5120 South Julian Drive
Tucson, AZ. 85706
Union City, TN. Factory Stores of America
601 Sherwood Drive
Union City, TN. 38261
West Frankfort, IL. Factory Stores of America
1000 Factory Outlet Drive
West Frankfort, IL. 62896
Casa Grande, AZ. Casa Grande Factory Stores
440 North Camino Mercado
Casa Grande, AZ. 85222
Conway, NH. Factory Stores of America
Rt. 16 & Washington Street
Conway, NH. 03818
Kittery, ME. Factory Stores of America
US Route 1
Kittery, ME. 03904
Lake George, NY. Factory Stores of America
1476 Rt. 9, P.O. Box 3214-7
Lake George, NY. 12845
LaMarque, TX. Factory Stores of America
11001 Delany Road
LaMarque, TX. 77568
Las Vegas, NV. Las Vegas Factory Stores
9155 Las Vegas Blvd.
Las Vegas, NV. 89123
North Bend, WA. Factory Stores of America
461 South Fork Ave., S-W
Suite E-1
North Bend, WA. 98045
Vacaville, CA. Factory Stores at Vacaville
321 Nut Tree Road
Vacaville, CA. 95687
<PAGE>
A-1
<PAGE>
SCHEDULE B
[Form of Note]
AMENDED, RESTATED AND CONSOLIDATED PROMISSORY NOTE
$150,000,000 February __, 1997
New York, New York
FOR VALUE RECEIVED, FAC REALTY, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to NOMURA ASSET CAPITAL CORPORATION
(the "Lender"), at the account of the Lender, the principal sum of ONE HUNDRED
FIFTY MILLION DOLLARS (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower under the Loan
Agreement), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the Loan
Agreement, and to pay interest on the unpaid principal amount of each such Loan,
at such office, in like money and funds, for the period commencing on the date
of such Loan until such Loan shall be paid in full, at the rates per annum and
on the dates provided in the Loan Agreement.
The date, amount and interest rate of each Loan made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, endorsed by the Lender on the schedule attached hereto or any
continuation thereof.
This Note is the Note referred to in the Loan Agreement (as
modified and supplemented and in effect from time to time, the "Loan Agreement")
dated as of the date hereof between the Borrower and the Lender and evidences
Loans made by the Lender thereunder. Capitalized terms used in this Note have
the respective meanings assigned to them in the Loan Agreement.
This Note consolidates the indebtedness heretofore evidenced
by the Existing Note and the Gap Note, original copies of which are attached
hereto as Exhibit A and Exhibit B, respectively, and amends and restates the
terms of the Existing Note and the Gap Note, which are superseded in their
entirety hereby.
B-1
<PAGE>
The Loan Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for prepayments
of Loans upon the terms and conditions specified therein.
This Note constitutes a "Renewal Note" pursuant to Florida
Statute Section 201.09. Documentary stamps in the amount of $9,275.00 were paid
on the Mortgage recorded in Official Record Book 613, on Page 0002, of the
Public Records of Jackson County, Florida (the "Original Mortgage") based upon
the then value of the Florida property secured by the Original Mortgage in the
amount of $2,650,000.00. The Original Mortgage as modified by that certain
Modified, Restated and Consolidated Mortgage of even date herewith between
Borrower and Lender encumbering the Florida property (the "Modified Mortgage")
secures a Maximum Principal Amount of $3,629,378.00 (which Maximum Principal
Amount is equal to the value of the Florida property secured by the Modified
Mortgage). Accordingly, additional documentary stamps are being paid
concurrently with the execution hereof in the amount of $3,427.90 based upon the
difference between the Maximum Principal Amount secured in the amount of
$3,629,378.00 and the value of the Florida property at the time of the Original
Mortgage in the amount of $2,650,000.00 (upon which documentary stamps have been
paid) which is a difference of $979,378.00.
This Note also constitutes a renewal note in payment of an
existing short-term note for purposes O.C.G.A. Sections 48-6-60 through 48-6-77
and the Rules promulgated by the Department of Revenue, Property Tax Division,
pursuant thereto, all as in effect as of the date of this Note.
FAC REALTY, INC.
By: __________________________
Name: Patrick M. Miniutti
Title: Executive Vice President
B-2
<PAGE>
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts, set forth
below, subject to the payments and prepayments of principal set forth below:
Principal Amount Amount Paid Unpaid Principal
Date Made of Loan or Prepaid Amount
--------- ---------------- ----------- ----------------
B-3
<PAGE>
SCHEDULE C
Notice of Borrowing
, 199
Nomura Asset Capital Corporation
311 South Wacker Drive
Suite 6100
Chicago, Illinois 60606
Attention: Mr. John Burke
Ladies and Gentlemen:
We refer to the Loan Agreement dated as of February , 1997 (as
amended or otherwise modified from time to time, the "Loan Agreement"), between
the undersigned (the "Borrower") and Nomura Asset Capital Corporation (the
"Lender").
Capitalized terms used herein without definition shall have
the meanings ascribed to them in the Loan Agreement.
The Borrower hereby gives the Lender notice pursuant to
Section 4.05 of the Loan Agreement that the Borrower requests a Loan under the
Loan Agreement and, in that connection, sets forth below the information
relating to such proposed borrowing (the "Proposed Borrowing") as required by
Section 4.05 of the Loan Agreement.
(i) The aggregate principal amount of the Proposed Borrowing
is $ , --------------- which, together with the aggregate principal amount of
the other Loans outstanding ($ ) --------------- will not exceed the amount of
the Commitment.
(ii) The Business Day of the Proposed Borrowing is , 19 .
- -------------------- ---
(iii) The Debt Service Ratio on the date hereof is .
(iv) The Available Amount on the date hereof is .
(v) The Debt Service Ratio on the date immediately following
the Proposed Borrowing will be .
(vi) The Available Amount on the date immediately following
the Proposed Borrowing will be .
C-1
<PAGE>
The undersigned hereby certifies to the Lender that to the
best of his/her knowledge after due inquiry as of the date set forth above, and
as of the date of the Proposed Borrowing, (i) both immediately prior to the date
of the Proposed Borrowing and also after giving effect thereto, no Default has
occurred and is continuing, and (ii) each representation and warranty of the
Borrower in Section 7 of the Loan Agreement and in the other Loan Documents is
true and complete in all material respects on and as of the date of the Proposed
Borrowing with the same force and effect as though made on and as of such date.
Very truly yours,
FAC REALTY, INC.
By:
Name:
Title:
C-2
<PAGE>
SCHEDULE D
Reports and Other Materials
None
D-1
<PAGE>
SCHEDULE E
Contracts
CONTRACT LIST
(Contracts of $50,000 +)
<TABLE>
<CAPTION>
CENTER SERVICE CONTRACT AMOUNT
<S> <C> <C> <C>
Branson, MO Waste Management BFI Waste Systems NTE $6,300/month
Crossville, TN Janitonal Maintenance Jacob B. Heardon $4,551/month
Draper, UT Janitorial Maintenance MDM Enterprises $5,900/month
Graceville, FL Janitorial/Landscaping Hayes By Three $4,169/month
LaMarque, TX Janitorial Maintenance M&M Maintenance $5,521/month
Las Vegas, NV Electric Signage Young Electric Sign Co. $4,855/month
Las Vegas, NV Janitorial Maintenance Complete Company, Inc. $7,900/month
Lathrop, CA Electric Signage Young Electric Sign Co. $7,118/month
Mesa, AZ Janitorial Maintenance Enmar, Inc. $4,989/month
Nashville,TN Waste Disposal BFI Waste Systems $4,206/month
Nashville, TN Janitorial Maintenance M&R Cleaning $6,000/month
Vacaville, CA Landscaping Redwood Landscaping $4,321/month
Vacaville, CA Security Burns International Security NTE $75,000/year
</TABLE>
<PAGE>
E-1
<PAGE>
SCHEDULE F
Initial Eligible Out Parcels
ARCADIA, LA. 16.9 Acres
BRANSON, MO. 1.5 Acres
3.0 Acres
1.0 Acre (Ground Lease)
CARROLLTON, KY. 11.3 Acres
CORSICANA, TX. 10.5 Acres
CROSSVILLE, TN. 4.7 Acres
DRAPER, UT. 5.6 Acres
1.0 Acres
4.8 Acres (SOLD)
2.7 Acres (SOLD)
GRACEVILLE, FL. 8.0 Acres
3.2 Acres
1.7 Acres
.6 Acres
HANSON, KY. 7.9 Acres
3.1 Acres
HEMPSTEAD, TX. 4.2 Acres
1.5 Acres
IOWA, LA. 4.2 Acres (Ground Lease)
1.8 Acres (Ground Lease)
LA MARQUE, TX. .9 Acres
LEBANON, MO. 10.5 Acres
LIVINGSTON, TX. 6.7 Acres
MESA, AZ. 8.0 Acres
2.4 Acres (SOLD)
MINERAL WELLS, TX. 5.9 Acres
NEBRASKA CITY, NE. 7.3 Acres
1.2 Acres
.9 Acres
SMITHFIELD, NC. 2.4 Acres
2.1 Acres
STORY CITY, IA. 5.6 Acres
SULPHUR SPRINGS, TX. 2.3 Acres
.7 Acres
UNION CITY, TN. 10.4 Acres
4.5 Acres
WEST FRANKFORT, IL. 7.9 Acres
TOTAL 178.9 ACRES
F-1
<PAGE>
SCHEDULE G
Existing Anchor Leases
<TABLE>
<CAPTION>
Total non- anchor Anchor s.f. Anchor Tenant S.F.
- -----------------------------------------------
FAC Portfolio SF S.F.
- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Smithfield 355,758 251,758 104,000 Carolina Pottery 104,000
2 Lake Park 140,025 90,648 49,377 Carolina Pottery 49,377
3 Georgetown 176,615 112,934 63,681 Carolina Pottery 63,681
4 Tri Cities 132,908 71,508 61,400 Carolina Pottery 61,400
5 Nahsville 285,808 261,733 24,075 Reading China 24,075
6 Branson 287,522 209,122 78,400 Reading China 22,560
V.F. Outlet 30,340
Speigel 25,500
7 Boaz 111,909 48,415 63,494 V.F. Outlet 63,494
8 Corsicana 63,605 9,830 53,775 V.F. Outlet 53,775
9 Graceville 83,962 41,505 42,457 V.F. Outlet 42,457
10 Hempstead 63,605 9,830 53,775 V.F. Outlet 53,775
11 Lebanon 83,464 41,386 42,078 V.F. Outlet 42,078
12 Livingston 63,605 9,830 53,775 V.F. Outlet 53,775
13 Mineral Wells 63,609 9,786 53,823 V.F. Outlet 53,823
14 Nebraska City 89,646 36,048 53,598 V.F. Outlet 53,598
15 Story City 112,405 58,621 53,784 V.F. Outlet 53,784
16 Sulphur Springs 84,917 39,549 45,368 V.F. Outlet 45,368
17 Tupelo 66,591 18,933 47,658 V.F. Outlet 47,658
18 Arcadia 89,528 35,881 53,647 V.F. Outlet 53,647
19 Crossville 118,785 69,739 49,046 V.F. Outlet 49,046
20 Carrolton 63,896 9,978 53,918 V.F. Outlet 53,918
21 Draper 185,281 136,779 48,502 V.F. Outlet 48,502
22 Hanson 63,891 9,996 53,895 V.F. Outlet 53,895
23 Iowa 130,753 77,101 53,652 V.F. Outlet 53,652
24 Mesa 167,213 118,954 48,259 V.F. Outlet 48,259
25 Tucson 127,575 66,245 61,330 V.F. Outlet 61,330
26 Union City 60,229 10,323 49,906 V.F. Outlet 49,906
27 West Frankfort 91,063 37,135 53,928 V.F. Outlet 53,928
28 Casa Grande 141,828 116,972 24,856 Westpoint Stevens 24,856
29 Conway 24,740 24,740 0
30 Kittery 24,620 24,620 0
31 Lake George 43,650 43,650 0
32 La Marque 176,071 150,807 25,264 Westpoint Stevens 25,264
33 Las Vegas 229,958 186,355 20,220 Westpoint Stevens 20,220
23,383 V.F. Outlet 23,383
34 North Bend 223,383 197,243 26,140 V.F. Outlet 26,140
35 Vacaville 447,745 421,521 26,224 V.F. Outlet 26,224
------------ ------------ ---------------- --------------
Total 4,676,163 3,059,475 1,616,688 1,616,688
============ ============================= ==============
G-1
<PAGE>
SCHEDULE H
Initial Allocated Title Amounts
</TABLE>
<TABLE>
<CAPTION>
(To be drawn) (available) Title Insurance
Center Value per cap Weighted % Allocated loan $ Allocated loan $ Allocation at 1.25%
10.5% $85,000,000 $100,000,000 $125,000,000
<S> <C> <C> <C> <C> <C> <C>
Smithfield $25,104,981 19.8% $16,853,618 $19,827,786 $24,784,732
Lake Park $5,536,866 4.4% $3,717,040 $4,372,989 $5,466,236
Georgetown $11,646,545 9.2% $7,818,625 $9,198,382 $11,497,978
Tri Cities $4,257,003 3.4% $2,857,835 $3,362,159 $4,202,699
Nashville $32,700,959 25.8% $21,952,993 $25,827,050 $32,283,813
Branson $12,037,956 9.5% $8,081,388 $9,507,516 $11,884,395
Boaz $6,303,153 5.0% $4,231,468 $4,978,198 $6,222,747
Corsicana $2,026,721 1.6% $1,360,590 $1,600,694 $2,000,867
Graceville $3,629,378 2.9% $2,436,494 $2,866,464 $3,583,080
Hempstead $2,067,425 1.6% $1,387,916 $1,632,842 $2,041,053
Lebanon $3,694,784 2.9% $2,480,403 $2,918,122 $3,647,652
Livingston $2,459,756 1.9% $1,651,297 $1,942,702 $2,428,378
Mineral Wells $2,191,489 1.7% $1,471,203 $1,730,827 $2,163,533
Nebraska City $3,770,524 3.0% $2,531,249 $2,977,940 $3,722,426
Story City $3,539,378 2.8% $2,376,075 $2,795,382 $3,494,228
Sulphur Springs $3,314,286 2.6% $2,224,965 $2,617,606 $3,272,007
Tupelo $2,333,949 1.8% $1,566,840 $1,843,341 $2,304,176
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
0 $0 0.0% $0 $0 $0
Total $126,615,152 100% $85,000,000 $100,000,000 $125,000,000***
FSA Properties $187,654,238
excess cashflow
less loan balance $92,906,907
Value of excess cashflow $94,747,331
Total value $221,362,483
</TABLE>
H-1
<PAGE>
SCHEDULE I
SNDA TENANTS
BOAZ, ALABAMA
Banister
Hit or Miss
BRANSON, MISSOURI
Bugle Boy
Spiegel
totes
U.S. Factory Outlet
CORSICANA, TEXAS
Banister
GEORGETOWN, KENTUCKY
Bugle Boy
Leggs, Hanes, Bali
totes
GRACEVILLE, FLORIDA
Banister
Corning
Factory Outlet Deli
HEMPSTEAD, TEXAS
Banister
LAKE PARK, GEORGIA
Big & Tall Casual Male
Bugle Boy
Designs
Florsheim
Hush Puppies
Westport, Ltd.
1
<PAGE>
LEBANON, MISSOURI
Banister
totes
LIVINGSTON, TEXAS
Banister
MINERAL WELLS, TEXAS
Banister
NASHVILLE, TENNESSEE
Big Dog
Bugle Boy
Capacity
Carters
Leggs, Hanes, Bali
Levis
London Fog
totes
Toy Liquidators
NEBRASKA CITY, NEBRASKA
STORY CITY, IOWA
Banister
Danskin
Toy Liquidators
SMITHFIELD, NORTH CAROLINA
Adolfo
American Tourister
Banister
Big Dog
Bon Worth
Book Warehouse
Boot Factory
Bugle Boy
Carters
Casual Male Big & Tall
Florsheim
2
<PAGE>
Jones of New York
Leggs, Hanes, Bali
Liz Claiborne
London Fog
Mikasa
Music For a Song
Nine West
Royal Doulton
Specials
totes
Van Heusen
Westport, Ltd.
Westport Woman
SULPHUR SPRINGS, TEXAS
Kitchen Collection
TRI-CITIES, TENNESSEE
Bon Worth
Bugle Boy
Foozles
Leggs, Hanes, Bali
TUPELO, MISSISSIPPI
Banister
U.S. Factory Outlet
3
<PAGE>
<PAGE>
SCHEDULE J
Initial Deferred Maintenance
None
J-1
<PAGE>
