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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
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/X/ ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM ________________ TO ________________
COMMISSION FILE NUMBER 1-12923
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WESTFIELD AMERICA, INC.
(Exact name of registrant as specified in its charter)
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MISSOURI 43-0758627
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11601 WILSHIRE BOULEVARD 90025
12TH FLOOR (Zip Code)
LOS ANGELES, CALIFORNIA
(Address of principal executive offices)
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Registrant's telephone number, including area code: (310) 478-4456
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Securities registered pursuant to Section 12(b) of the Act:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, $0.01 par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by checkmark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-K. / /
The aggregate market value of the shares of common stock held by
non-affiliates was approximately $219.9 million based on the closing price as
reported by the New York Stock Exchange for such shares on March 28, 2000.
The number of the Registrant's shares of common stock outstanding was
73,346,541 as of March 28, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the Annual Meeting of Shareholders to be
held on May 8, 2000 are incorporated by reference into Part III.
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WESTFIELD AMERICA, INC.
FORM 10-K
INDEX
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ITEM NO. PAGE
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PART I
1. Business.................................................... 1
2. Properties.................................................. 16
3. Legal Proceedings........................................... 22
4. Submission of Matters to a Vote of Security Holders......... 22
PART II
5. Market for Registrant's Common Equity and Related
Shareholder Matters....................................... 23
6. Selected Financial Data..................................... 24
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 26
7A. Quantitative and Qualitative Disclosure about Market Risk... 37
8. Financial Statements and Supplementary Data................. 38
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 38
PART III
10. Directors and Executive Officers of the Registrant.......... 39
11. Executive Compensation...................................... 39
12. Security Ownership of Certain Beneficial Owners and
Management................................................ 39
13. Certain Relationships and Related Transactions.............. 39
PART IV
14. Exhibits, Consolidated Financial Statements, Financial
Statement Schedules and Reports on Form 8-K............... 39
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PART I
ITEM 1: BUSINESS
GENERAL
Westfield America, Inc. (the "Company"), a Missouri corporation, is a
publicly traded real estate investment trust ("REIT") specializing in enclosed
shopping centers. At December 31, 1999, the Company had interests in 38 major
shopping centers branded as "Westfield Shoppingtowns". The Company's portfolio
of Westfield Shoppingtowns includes clusters of shopping centers in major
markets in the east coast, midwest and west coast. Westfield Shoppingtowns serve
10 percent of the U.S. population. The Company has shopping centers in eight
states, comprising 35.6 million square feet of retail and office space.
Currently, the Company is the largest regional shopping center owner in
California with interests in 20 shopping centers.
During 1999, the Company acquired Palm Desert Town Center, sold Los Cerritos
Center and conveyed 50% joint venture interests in Valley Fair and UTC. In 1998,
the Company acquired interests in 16 shopping centers with approximately
15.7 million square feet, increasing its portfolio to 38 shopping centers. As a
result of its clustering strategy, the Company is the largest owner of shopping
centers in the suburban markets of San Diego, Los Angeles, San Jose, St. Louis,
Connecticut and Washington D.C. Also in 1998, the Company launched its Westfield
Shoppingtown brand nationally with a multi-media campaign promoting the
Company's commitment to providing a quality shopping experience through customer
service and community commitment. The Company's branding strategy is designed to
build customer loyalty, solidify market penetration and promote store sales
growth at its shopping centers.
The Company has been engaged for over 40 years in the business of owning,
acquiring, financing, operating, leasing, developing and redeveloping regional
and super-regional shopping centers. As of December 31, 1999, the Company's
portfolio of 38 shopping centers (the "Centers") consisted of 23 super-regional
shopping centers with approximately 25.3 million square feet of space, 12
regional shopping centers with approximately 8.3 million square feet of space,
three power centers with approximately 1.4 million square feet of space and
seven office buildings adjacent to its Centers with approximately 600,000 square
feet of space, representing approximately 71.0%, 23.3%, 4.0% and 1.7%,
respectively, of the Company's 35.6 million square feet of retail and office
space generally referred to as gross leasable area ("Total GLA"). The Company
also owns 12 separate department store properties (the "May Properties") that
are net leased to the May Department Stores Company (the "May Company") and
certain other real estate investments. The Centers, the May Properties and other
real estate investments are referred to collectively as the "Properties." The
Company's Westfield Shoppingtowns were 94% leased as of December 31, 1999.
As of December 31, 1999, Westfield Shoppingtowns had 130 Anchors (department
stores generally totaling more than 80,000 square feet) totaling approximately
20.6 million square feet of gross leasable area ("Anchor GLA"), or 57.7% of
Total GLA. The Centers also had 4,780 Mall Stores occupying approximately
14.4 million square feet of leasable area ("Mall GLA"), or 40.6% of Total GLA.
Mall Stores consist of Mini-Majors (retail stores generally occupying between
20,000 and 80,000 square feet of leasable space and theaters) Mall Shops (retail
stores less than 20,000 square feet of leasable space) and free standing
buildings outside a center in the parking areas. For the year ended
December 31, 1999, the Mall Shops reported sales of approximately $3.2 billion
(or $344 on a comparable per square foot basis), Anchors' sales were estimated
by the Company to exceed $4.2 billion and Mini-Majors reported sales in excess
of $0.4 billion.
The Company is externally managed and advised by Westfield Holdings Limited
("WHL"), an Australian public company and leading developer and manager of one
of the largest portfolios of retail properties in the world. WHL's management
portfolio consists of 81 shopping centers containing approximately 62.5 million
square feet of space and over 12,750 Mall Stores in Australia, New Zealand and
the
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United States. The Company has engaged a property management company (the
"Manager), an asset management company (the "Advisor") and a development company
(the "Developer") to provide property management, asset management and
development services to the Company under agreements that are renewable
annually. Each of the Manager, Advisor and Developer is a wholly-owned
subsidiary of WHL, giving the Company access to WHL's worldwide management
expertise and resources.
In 1994, the Company reorganized itself as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). In order to be treated as a REIT for
income tax purposes, the Company must meet the minimum distribution requirements
as well as certain asset, income and other tests specified by the Code. The
Company intends to conduct its business so as to continue to satisfy the REIT
provisions under the Code, including making distributions to its shareholders
sufficient to meet the minimum distribution requirements.
In 1997, the Company changed its name from CenterMark Properties, Inc. to
Westfield America, Inc.
In 1998, the Company completed the exchange of its interests in most of the
Centers and other assets for interests ("Partnership Units") in Westfield
America Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"). In conjunction with its 1999 and 1998 acquisitions, the Operating
Partnership issued units in the Operating Partnership to unrelated third parties
("Investor Unit Rights") in exchange for certain interests. The Investor Unit
Rights are held by various unrelated third parties who may under certain
circumstances exchange their Investor Unit Rights for cash or, at the discretion
of the Company, shares of the Company's common stock.
THE COMPANY'S STRATEGY FOR OPERATIONS AND GROWTH
OVERALL STRATEGY
The Company's goal is to increase per share Funds from Operations (as
defined in Item 7 below) and thereby improve the long-term value of the Company
and return to shareholders through: (i) the redevelopment, expansion and market
repositioning of its portfolio of Centers; (ii) the improvement of the operating
performance of its Centers through an intensive management approach; (iii) the
acquisition of additional super-regional and regional shopping centers; and
(iv) strategic property sales and joint ventures. Although no assurances can be
given, the Company plans to achieve these objectives through a variety of
methods discussed below.
REDEVELOPMENT, EXPANSION AND MARKET REPOSITIONING
The Company believes that redevelopment, repositioning and expansion are key
to maximizing the use and performance of its assets and increasing its income
growth and capital appreciation. The Company continually evaluates the
redevelopment potential of its Centers, including those that have undergone
redevelopment in the past five years. Due to the financial and regulatory
burdens presented by the development of new regional shopping centers, an
ongoing program of redevelopment and repositioning provides a cost-efficient
means of ensuring that the Company's existing Centers compete effectively within
their existing markets and are able to attract new customers.
Redevelopment and expansions have been recently completed or substantially
completed at the following Centers:
- Westfield Shoppingtown Meriden, in Meriden Connecticut, is a four-anchor
regional shopping center with 144 Mall Stores. The Center was expanded to
include a single-level 90,000 square foot Lord & Taylor store and an
additional 70,000 square feet of new Mall Stores, which were opened in
September 1999. The total cost of this redevelopment was $37.5 million.
- Westfield Shoppingtown Crestwood, in St. Louis Missouri, is a three-anchor
super-regional shopping center with 148 Mall Stores. The $7.2 million
redevelopment added approximately 27,000
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square feet of Mall Stores, maximizing the retailing potential of the
connection between the Sears and Dillard's wing. The project was completed
in October 1999.
- Westfield Shoppingtown Mid Rivers, in St. Peters, Missouri, is a
four-anchor super-regional shopping center with 159 Mall Stores. The
addition of a new 15-screen, stadium-style theater, and approximately
28,000 square feet of Mall Stores, including a Chili's restaurant outside
the Center, was completed in December 1999. A 45,000 square foot Best Buy
is scheduled for completion in March 2000. The total projected cost of
this redevelopment is $19.8 million.
- Westfield Shoppingtown Connecticut Post, in Milford Connecticut, is a
three-anchor regional shopping center with 137 Mall Stores. The
$28 million redevelopment is scheduled to add a new two-level 195,000
square foot Sears as well as approximately 44,000 square feet of Mall
Stores adjacent to Sears on both levels. Sears is scheduled to open in
spring 2000 and the Mall Stores are scheduled to open progressively
thereafter.
- Westfield Shoppingtown Annapolis, in Annapolis, Maryland, a five-anchor
super-regional shopping center with 165 Mall Stores, is replacing the
existing theater with a new 53,000 square foot multi-screen stadium
seating Crown Theater. In addition to the theater, the expansion will
include approximately 16,000 square feet of Mall Stores and restaurants in
an open-air entertainment district plus the reconfiguration of
approximately 18,000 square feet of existing space. The $22 million
redevelopment is scheduled for completion in summer 2000.
OTHER CURRENT REDEVELOPMENTS
Redevelopments are currently underway or are scheduled to begin in 2000 at
the following Centers:
- Westfield Shoppingtown Valley Fair, in San Jose, California, a
three-anchor super-regional shopping center with 173 Mall Stores, has
completed the first phase of its $150 million redevelopment with the
completion of two parking structures that accommodate 2,250 cars. The
redevelopment will add a new 225,000 square foot Nordstrom and
approximately 275,000 square feet of Mall Stores, plus the reconfiguration
of approximately 56,000 square feet of existing space. Completion of the
new Nordstrom building and mall expansion is anticipated for fall 2001.
The reconfiguration of the existing Nordstrom building into mall stores is
planned to be completed in the spring of 2002.
- Westfield Shoppingtown Independence Mall, in Wilmington, North Carolina,
is a three-anchor shopping center with 88 Mall Stores. The redevelopment
plan incorporates a new Dillard's Department Store as a fourth anchor, the
addition of 164,000 square feet of Mall Stores, a food court, restaurants
and a renovation of the existing center. This $53 million redevelopment
will position Independence Mall to increase its market share and capture
growth in the trade area.
- Westfield Shoppingtown West County, in Des Peres, Missouri, is a
two-anchor regional shopping center with 61 Mall Stores. The $200 million
redevelopment will transform West County into a 1.2 million square foot
premier property and will include a flagship Famous-Barr, Lord & Taylor, a
remodeled JCPenney and Missouri's first Nordstrom store, along with the
addition of 170 new Mall Stores.
- Westfield Shoppingtown Promenade, in Woodland Hills, California, is a
two-anchor regional shopping center with 70 Mall Stores. The proposed
redevelopment would convert this Center from a traditional mall into a
lifestyle/entertainment center through the addition of entertainment,
restaurant and complementary retail tenants. The proposed redevelopment is
estimated to cost $30 million.
- Westfield Shoppingtown Parkway Plaza, in El Cajon, California, is a
four-anchor super-regional shopping center with 192 Mall Stores. The
Center includes a series of stand-alone buildings that the
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Company plans to redevelop into a power center with a number of nationally
branded mini-major tenants. The proposed redevelopment is estimated to
cost $12.5 million.
In addition to the redevelopments described above, the Company has
identified the following Centers for redevelopment over the next five years
which it believes will result in future income growth and capital appreciation:
- Westfield Shoppingtown South County, in St. Louis, Missouri, is a
three-anchor regional shopping center with 100 Mall Stores. A new Sears
department store and approximately 80,000 square feet of Mall Stores is
planned in addition to renovating the existing common area.
- Westfield Shoppingtown Wheaton, in Wheaton, Maryland, is a super-regional
shopping center with 140 Mall Stores. An additional Anchor department
store and 125,000 square feet of Mall Stores is planned along with a
renovation of the existing Center.
- Westfield Shoppingtown Topanga in Woodland Hills, California, is a
three-anchor super-regional shopping center with 131 Mall Stores. A
redevelopment concept allows for the construction of a new Nordstrom and a
new two-level mall that links Robinson's-May to the new Nordstrom.
- Westfield Shoppingtown Santa Anita in Arcadia, California, is a
four-anchor super-regional shopping center with 164 Mall Stores. The
proposed redevelopment will include an entertainment/ lifestyle expansion
to include a new theater, restaurants and a series of promotional
specialty tenants.
IMPROVEMENT OF OPERATING PERFORMANCE THROUGH INTENSIVE MANAGEMENT
The Manager's role is to increase operating income and capital appreciation
over time. The Manager has in-house capabilities to manage every aspect in the
development and operation of a Center, including initial concept, design,
construction, leasing, day-to-day operations and promotion. With its years of
center management experience, the Manager has developed its intensive management
approach which is designed to increase occupancy levels and Mall Store sales
while at the same time reducing operating costs. In addition to its ability to
redevelop and reposition its Centers, the Manager works to build long-term
relationships with major retailers and institutional investors and adds value
through branding efforts designed to increase traffic and repeat business by
building customer loyalty through customer service and commitment to the
community.
INCREASING OCCUPANCY AND CAPITALIZING ON EMERGING THEMES
Management is continually looking for opportunities to increase occupancy as
a means of enhancing revenues. The Manager works to find ways to expand rentable
area within the existing building envelope by converting non-productive space to
Mall GLA, to add temporary tenants who can improve the merchandise mix and range
of retailers and to capitalize on emerging themes such as the addition of
entertainment and dining complexes. Through its relationships, the Manager is
able to assist national and regional retailers in establishing a market presence
in new markets and to increase penetration within existing markets.
INCREASING TRAFFIC AND SALES THROUGH BRAND POSITIONING, MARKETING AND
CUSTOMER SERVICE
In 1998, the Company launched its Westfield Shoppingtown brand through a
multi-media advertising campaign including network television in its major
markets. The purpose of establishing a brand profile for the Centers is to
increase customer traffic and thereby improve retail sales and, ultimately,
rents. The Westfield Shoppingtown brand represents a quality shopping experience
by providing exceptional customer service, a wide range of retail product
choices and a commitment to the communities served by the Centers. The Company
believes that advertising, promotion, community involvement and customer service
programs will build shopper loyalty, especially with a recognized brand in
multi-center markets. The
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Company's ability to brand its properties is a direct result of its market
penetration and acquisition strategies.
Advertising is critical to maximizing sales at the Centers. The Manager has
an in-house marketing staff and employs an outside advertising agency to provide
advertising, promotional and media services to the Centers. The Manager, on
behalf of the Company, executes a national marketing program to provide shared
advertising, media and community promotions to create a consistent look and
quality in the execution of its marketing program. This strategy is particularly
effective in the Company's multi-center markets of San Diego, Los Angeles, San
Jose, St. Louis, Connecticut and Washington D.C.
The Manager maintains a staff development and review program to promote
efficient and friendly service to both the consumers who shop in the Centers and
the retailers who lease space. A focus on exceptional customer service is
essential to increasing traffic and promoting repeat business. These services
include specially-trained and uniformed customer service representatives, free
strollers and wheelchairs, valet parking and gift vouchers at each Center.
ACQUISITIONS OF NEW CENTERS
The Company's strategy is to selectively acquire regional and super-regional
shopping centers that meet the following investment criteria: (i) property of a
quality consistent with the Company's portfolio, (ii) property with potential
for increased income and value through redevelopment, repositioning, or both,
and, (iii) property that generates sufficient income pending redevelopment to
support the acquisition price. The Company's strategy also includes acquiring
and redeveloping shopping centers that are geographically clustered in stable
and economically strong markets. Strategically clustering its assets allows the
Company to obtain greater efficiencies in leasing, operations, management,
marketing and building the Westfield Shoppingtown brand.
In 1999, the Company invested approximately $231.8 million to acquire
interests in four properties. These include the following Centers which the
Company has branded Westfield Shoppingtowns:
- In August 1999, the Company acquired Palm Desert Town Center in Palm
Desert, California for $82 million. Westfield Shoppingtown Palm Desert is
an enclosed super-regional shopping mall situated on a 64-acre site. The
Center has approximately 870,000 square feet of Total GLA with 138 Mall
Stores and is anchored by two Robinson's-May stores, Macy's Mens and Home
and JCPenney.
- In June 1999, the Company acquired the remaining 50% interest that it did
not previously own in Valley Fair, a super-regional shopping center
located in San Jose, California, from The Rouse Company, for approximately
$107 million plus the assumption of debt with the intention of bringing in
an institutional joint venture partner (discussed below). The Center has
approximately 1.1 million square feet of Total GLA with 173 Mall Stores
and is anchored by Macy's, Macy's Mens and Home and Nordstrom. Funds for
the purchase of Valley Fair were obtained from borrowings under the
Company's unsecured revolving credit facility and the sale of Cerritos,
located in Cerritos, California (discussed below).
- In March 1999, the Company effectively acquired an additional 15% interest
in Independence Mall in Wilmington, North Carolina for approximately
$4.4 million, consisting of cash and limited partnership interests,
resulting in an effective 85% economic interest in the Center. Westfield
Shoppingtown Independence Mall has 693,000 square feet of Total GLA with
88 Mall Stores and is anchored by JCPenney, Sears and Belk Beery.
- In January 1999, the Company acquired the remaining 32% interest it did
not previously own in Wheaton in Wheaton, Maryland, for approximately
$38.4 million consisting of cash and Investor Unit Rights in the Company's
Operating Partnership. Wheaton is a super-regional Center with
1.4 million square feet of total GLA with 140 Mall Stores and is anchored
by May Department Stores, Montgomery Ward and JCPenney.
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During 1998, the Company invested approximately $1.8 billion to acquire
interests in 16 properties. Of those acquisitions, interests in 12 shopping
centers (the "Hahn Centers"), which had 12.3 million square feet of Total GLA,
were acquired from TrizecHahn for approximately $1.4 billion.
DISPOSITIONS
From time to time, the Company reviews its portfolio to identify properties
that do not meet its investment criteria and joint venture opportunities that
provide liquidity for future redevelopments and strategic acquisitions.
In 1999, the Company sold one property and conveyed joint venture interests
in two properties which provided proceeds totaling $223 million, net of related
debt. These include the following:
- In June, the Company sold Cerritos, a super-regional shopping center
located in Cerritos, California to The Macerich Company for approximately
$188 million.
- In June, the Company completed a joint venture transaction (the "Joint
Venture") with J.P. Morgan Investment Management, Inc., acting for a group
of pension trusts ("J.P. Morgan") for two of its properties: Westfield
Shoppingtowns Valley Fair in San Jose, California, and UTC (formerly known
as University Towne Centre) in La Jolla, California. J.P. Morgan
effectively acquired a 50 percent interest in the Joint Venture for
approximately $250 million. Net proceeds from the joint venture totaling
approximately $130 million were used to retire the TrizecHahn acquisition
bridge loan and pay down the unsecured revolving credit facility.
LARGE MULTI-CENTER MARKETS
The Company's overall strategy includes the acquisition and redevelopment of
regional shopping centers that are geographically clustered in stable and
economically strong markets. Strategically clustering its assets provides the
Company with an improved ability to develop its brand, aggressively redevelop
the Centers and work with key retailers to increase sales. Additionally,
clustering allows the Company to obtain greater efficiencies in leasing,
operations, management and marketing.
The Company's current portfolio serves approximately 28 million people, or
10% of the United States population. The majority of the Company's Centers are
clustered in major markets that serve nearly 24.6 million people. The Company's
major markets include San Diego, Los Angeles, San Jose, St. Louis, Connecticut
and Washington D.C., in each of which the Company is the largest owner of
regional shopping centers. A summary of these major markets is as follows:
- SAN DIEGO MARKET
The Company owns seven of the nine regional centers in San Diego and one
power center. The Westfield Shoppingtowns serve 100% of the market's total
population of 2.8 million people. During 1999, the eight Westfield
Shoppingtowns had retail sales exceeding $1.7 billion, with Mall Store
sales of $357 per square foot, a 6.5% increase over the prior year. The
San Diego Centers consist of 7.8 million square feet of Total GLA with
1,061 Mall Stores that were 94% leased at year-end.
- LOS ANGELES MARKET
The Company owns eight of the 28 regional and super-regional centers in
Los Angeles County. The Westfield Shoppingtowns serve over half of the
county's 9.6 million people. During 1999, the eight Westfield
Shoppingtowns had retail sales exceeding $1.4 billion, with Mall Store
sales of $304 per square foot, an increase of 5.7% over the prior year.
The Los Angeles Centers consist of 6.9 million square feet of Total GLA
with 965 Mall Stores that were 94% leased at year-end.
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- SAN JOSE MARKET
The Company owns two of the six regional and super-regional centers in the
San Jose market. The Westfield Shoppingtowns serve over 80% of the
metropolitan area's 1.7 million people. During 1999, the two Westfield
Shoppingtowns had retail sales of approximately $745 million with Mall
Store sales of $571 per square foot, an increase of 9.0% over the prior
year. The Company's San Jose Centers consist of 1.9 million square feet of
Total GLA with 287 Mall Stores that were 98% leased at year-end.
- ST. LOUIS MARKET
The Company owns five of the 11 regional and super-regional centers in St.
Louis. The Westfield Shoppingtowns serve approximately 85% of the market's
2.6 million people. The five Westfield Shoppingtowns had retail sales
exceeding $882 million, with Mall Store sales of $281 per square foot, a
2.2% increase over the prior year. The Company's St. Louis Centers in this
market consist of 5.1 million square feet of Total GLA with 640 Mall
Stores that were 92% leased at year-end.
- CONNECTICUT MARKET
The Company owns four of the ten regional and super-regional centers in
Connecticut. The Westfield Shoppingtowns serve approximately 50% of the
state's 3.3 million people. During 1999, sales from the four Westfield
Shoppingtowns were $759 million, with Mall Store sales of $326 per square
foot, an increase of 6.9% over the prior year. The Company's Connecticut
Centers have Total GLA of 3.6 million square feet with 527 Mall Stores
that were 93% leased at year-end.
- WASHINGTON D.C. MARKET
The Company owns three of the 19 regional and super-regional centers in
the Washington D.C. market. The Company's ownership is concentrated in the
Maryland sub-market to the north of Washington D.C. serving 30 percent of
the region's population of 5 million people. During 1999, sales from the
three Westfield Shoppingtowns were $956 million, with Mall Store sales of
$420 per square foot, an increase of 5.8% over the prior year. The
Company's Maryland Centers have Total GLA of 3.8 million square feet with
477 Mall Stores that were 98% leased at year-end.
THE SHOPPING CENTER BUSINESS
There are several types of retail shopping centers, varying primarily by
size and marketing strategy. Centers with greater than 800,000 square feet of
Total GLA built around three or more Anchors are referred to as super-regional
shopping centers. Centers with Total GLA ranging from 400,000 to 800,000 square
feet built around one to three Anchors are referred to as regional shopping
centers. Centers with Total GLA ranging from 200,000 to 600,000 square feet
built around retailers consisting of Category Killers (large discount retailers
in a specific product niche such as Toys R' Us) and Big Box Retailers (similar
to Category Killers but a wider product offering such as Burlington Coat
Factory) are referred to as power centers. In enclosed super-regional and
regional shopping centers, Anchors are usually located at the ends of enclosed
common area corridors. This layout is intended to maximize pedestrian traffic
for Mall Stores.
Most regional and super-regional shopping centers compete for consumer
retail dollars by offering fashion merchandise, hard goods and services,
generally in an enclosed, climate-controlled environment with convenient
parking. Regional and super-regional shopping centers have differing strategies
for price levels depending upon the market demographics, competition and the
merchants and merchandise offered, from very high-end presentations, at one end,
to a strategy of leasing exclusively to promotional, single category outlet
stores, at the other. Super-regional shopping centers generally have more
variety and assortment than regional shopping centers. Westfield Shoppingtowns
seek to optimize Mall Store mix consistent with market demographics and customer
preferences.
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The following table sets forth the number of Centers in each state and Total
GLA at December 31, 1999:
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NO. OF
SHOPPING PERCENT OF
SHOPPING CENTER LOCATIONS BY STATE CENTERS TOTAL GLA TOTAL GLA
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California..................................... 20 18,878 53.0%
Colorado....................................... 1 471 1.3%
Connecticut.................................... 4 3,598 10.1%
Maryland....................................... 3 3,752 10.5%
Missouri....................................... 6 5,628 15.8%
New York....................................... 1 1,157 3.2%
North Carolina................................. 1 693 1.9%
Washington..................................... 2 1,470 4.2%
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38 35,647 100%
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From 1994 through 1999, the Manager managed all the Centers in which the
Company had an interest, except North County Fair which was managed by
TrizecHahn. On August 1, 1998, the Manager commenced management responsibilities
for the Centers acquired from TrizecHahn. The Centers managed by the Manager are
referred to as "Managed Centers".
ANCHORS
Anchors traditionally have been a major factor in the public's
identification with a shopping center. Anchors generally are department stores
whose merchandise appeals to a broad range of shoppers and continue to be a
major factor in the public's perception of a shopping center. Although the
Centers receive a smaller proportion of their operating income from Anchors than
from Mall Stores on a square foot basis, the Company believes that the Anchors
at a Center generate customer traffic and therefore make a Center desirable for
Mall Store retailers.
Anchors and the owner of a shopping center usually enter into agreements,
generally referred to as "reciprocal easement agreements" or "REAs," covering,
among other things, operational matters and initial construction and future
expansion. Anchors generally retain certain rights to approve or disapprove
future renovations or expansions of the shopping center, and the REAs usually
are recorded as encumbrances on all of the real property within the shopping
center. Many of the Anchors own their stores, the land under them and adjacent
parking areas. Others enter into long-term leases at rents that are lower than
the rents generally charged to Mall Store retailers.
As of December 31, 1999, Anchors at the Centers occupied approximately
20.5 million square feet of gross leasable area ("Anchor GLA"), or 57.5% of
Total GLA, and accounted for less than 2.0% of the Company's total revenue in
1999. Anchors range in size from approximately 57,000 square feet to 401,000
square feet, with an average of approximately 157,200 square feet. The Centers
have 129 Anchors operating under 20 trade names including Dayton-Hudson,
Dillard's, Federated, JCPenney, Macy's, Mervyn's, Montgomery Ward, Nordstrom,
Robinson's-May and Sears.
Westfield Shoppingtowns Downtown Plaza, Northwest Plaza, Fox Hills and
Wheaton have office buildings connected to the Centers comprising a total of
approximately 600,000 square feet of office space or 1.7% of Total GLA.
8
<PAGE>
The following table indicates the parent company of each occupied Anchor at
the Centers, the number of stores owned or leased by each Anchor, Anchor GLA,
percentage of Anchor GLA to Total GLA and the base rent of each Anchor as of
December 31, 1999:
<TABLE>
<CAPTION>
1999
NUMBER OF ANCHOR PERCENTAGE OF TOTAL ANNUALIZED
NAME ANCHOR STORES GLA TOTAL GLA BASE RENT
- ---- ------------- -------------- ------------- ----------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
May Department Stores
Robinson's-May........................ 14 2,341 6.6% $ 113
Famous-Barr........................... 6 1,098 3.1 776
Filene's.............................. 4 705 2.0 479
Hecht's............................... 3 596 1.7 200
Lord & Taylor......................... 4 438 1.2 --
Meier & Frank......................... 1 118 0.3 --
--- ------ ---- -------
Sub-Total............................... 32 5,296 14.9 1,568
--- ------ ---- -------
JCPenney................................ 25 3,819 10.7 2,612
Macy's.................................. 21 3,720 10.4 1,740
Sears................................... 18 3,164 9.0 883
Nordstrom............................... 9 1,282 3.6 777
Montgomery Ward......................... 7 1,154 3.2 756
Dayton Hudson
Mervyn's.............................. 7 600 1.7 155
Target................................ 1 122 0.3 252
--- ------ ---- -------
Sub-Total............................... 8 722 2.0 407
--- ------ ---- -------
Dillard's............................... 4 708 2.0 1,199
Kmart................................... 1 191 0.5 1,517
Belk Beery.............................. 1 176 0.5 --
Bon Marche.............................. 1 113 0.3 211
Shopko.................................. 1 81 0.2 --
Lamonts................................. 1 57 0.2 200
--- ------ ---- -------
Total................................... 129 20,483 57.5% $11,870
=== ====== ==== =======
</TABLE>
MALL STORES
As of December 31, 1999, the Centers had approximately 4,780 Mall Stores and
national or regional chains leased approximately 94% of the Mall GLA. The five
Mall Store retailers accounting for the largest percentage of Mall Stores'
effective rent (i.e., base rent plus percentage rent) in 1999 were: The Limited
Stores (The Limited, Limited Express, Lane Bryant, Lerner's, Structure,
Victoria's Secret), The Venator Group (Footlocker, Kinney Shoes and others), The
Gap (The Gap, Gap Kids, Banana Republic), Hallmark and Eddie Bauer, Inc.
9
<PAGE>
The following table sets forth certain information with respect to the ten
largest Mall Store retailers (through their various operating divisions) in
terms of Mall GLA, as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE PERCENTAGE OF
MALL STORES OF TOTAL 1999 TOTAL MALL STORE
TENANT LEASED MALL GLA TOTAL MALL GLA EFFECTIVE RENT EFFECTIVE RENT
- ------ ----------- --------- -------------- -------------- ----------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
The Limited Stores............. 153 1,093,963 7.6% $24,659 7.7%
Venator Group.................. 143 507,298 3.5 13,300 4.2
The Gap........................ 45 340,708 2.4 9,441 3.0
Burlington Coat Factory........ 2 171,199 1.2 1,198 0.4
Hallmark Specialty............. 38 158,710 1.1 3,742 1.2
Toys R Us...................... 5 150,197 1.0 1,501 0.5
Eddie Bauer.................... 22 139,220 1.0 3,368 1.1
Musicland Group, Inc........... 27 134,580 0.9 3,571 1.1
Contempo Casuals............... 33 130,497 0.9 3,636 1.1
Payless Shoes.................. 36 121,800 0.8 3,127 1.0
--- --------- ---- ------- ----
504 2,948,172 20.4% $67,543 21.3%
=== ========= ==== ======= ====
</TABLE>
SALES
From 1997 to 1999, reported sales for Mall Shops increased from
$1.8 billion to $3.2 billion. Total sales for Mall Shops affect revenue and
profitability levels of the Company because they determine the amount of minimum
rent the Company can charge, the percentage rent it realizes, and the
recoverable expenses (common area maintenance, real estate taxes, etc.) the
retailers can afford to pay.
The table below sets forth Mall Shop sales for Managed Centers in the east
coast, the midwest and west coast regions of the United States.
<TABLE>
<CAPTION>
EAST COAST CENTERS MIDWEST CENTERS WEST COAST CENTERS TOTAL CENTERS
----------------------- ----------------------- ----------------------- -----------------------
SALES PERCENTAGE SALES PERCENTAGE SALES PERCENTAGE SALES PERCENTAGE
YEAR (MILLIONS) INCREASE (MILLIONS) INCREASE (MILLIONS) INCREASE (MILLIONS) INCREASE
- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999..................... $941 8.5% $383 4.6% $1,917 4.9% $3,241 5.9%
1998..................... 867 2.7 366 80.3 1,828 137.7 3,061 68.6
1997..................... 844 20.5 203 14.7 769 25.9 1,816 22.0
</TABLE>
Reported sales per square foot for Mall Shops located at the Managed Centers
for the years ended December 31, 1997 to 1999 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Reported sales per square foot.......................... $344 $330 $310
Increase from prior year................................ 4.2% 6.5% 4.4%
Increase from prior year on a comparable Mall Store
basis................................................. 6.0% 4.2% 4.4%
</TABLE>
The Company believes these sales levels enhance its ability to obtain higher
rents from retailers.
10
<PAGE>
LEASING
Leasing percentages are calculated on the basis of signed leases, excluding
temporary leases which have a term of less than one year. The following table
sets forth leased status for the Managed Centers in the east coast, the midwest
and the west coast regions of the United States.
<TABLE>
<CAPTION>
EAST COAST MIDWEST WEST COAST TOTAL
DECEMBER 31, CENTERS CENTERS CENTERS CENTERS
- ------------ ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
1999.......................................... 95% 92% 93% 94%
1998.......................................... 95% 93% 92% 93%
1997.......................................... 94% 91% 94% 93%
</TABLE>
COSTS OF OCCUPANCY
Management believes that in order to continue to increase Funds from
Operations (as defined in Item 7 below), Mall Store retailers must be able to
operate profitably. A factor contributing to retailer profitability is cost of
occupancy, which consists of base rents and expense recoveries; therefore, as
sales levels increase, the retailer can afford to pay a higher rent. From 1997
to 1999, sales per square foot have continued to increase, thereby giving the
Company an opportunity to increase effective rents without raising a retailer's
total occupancy cost beyond its ability to pay.
The following table sets forth base rents and expense recoveries as a
percentage of sales for reporting Mall Shop retailers at the Managed Centers.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Occupancy costs as a percentage of sales:
Base rents................................ 7.8% 7.8% 8.4%
Expense recoveries........................ 4.2 4.2 4.6
---- ---- ----
Total..................................... 12.0% 12.0% 13.0%
==== ==== ====
</TABLE>
LEASES
Generally, Mall Store leases are for ten-year terms and provide for
retailers to pay rent comprised of fixed and variable components. The fixed
component, referred to as "base" or "minimum" rent, is often subject to steps,
or contractual increases according to a negotiated schedule. The variable rent
component is based upon a percentage of a retailer's gross sales in excess of a
minimum annual amount. In some cases, retailers only pay base rent and, in a few
cases, retailers only pay percentage rent.
Virtually all of the leases for Mall Stores contain provisions that allow
the Centers to recover certain operating costs and expenses (including certain
capital expenditures) with respect to the common areas (including parking
facilities), all buildings, roofs and facilities within the Centers, as well as
insurance and property taxes. During 1999, the Centers recovered approximately
96% of these costs and expenditures in the form of expense recoveries from
tenants.
LEASE EXPIRATIONS
The expiration of leases present shopping center owners with the opportunity
to increase base and percentage rents, modify lease terms, improve retailer mix,
relocate existing retailers, reconfigure or expand retailer spaces and introduce
new retailers and retail concepts to the shopping center. The Company endeavors
to increase base rent levels in the Centers in part through negotiating
terminations of leases of underperforming retailers and renegotiating expired
leases.
11
<PAGE>
The following table shows scheduled lease expirations over the next ten
years based upon Mall Store leases in place at December 31, 1999.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE ANNUALIZED PERCENTAGE OF BASE
NUMBER OF MALL GLA OF MALL GLA BASE RENT (PSF) BASE RENT REPRESENTED
YEAR ENDING LEASES EXPIRING LEASES REPRESENTED BY OF EXPIRING RENT OF BY EXPIRING
DECEMBER 31, EXPIRING (SQ. FT.) EXPIRING LEASES LEASES EXPIRING LEASES LEASES
- --------------------- --------- --------------- --------------- --------------- --------------- ------------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
2000 525 1,052,844 7.3% $28.23 $29,722 9.4%
2001 421 805,019 5.6 30.58 24,614 7.8
2002 422 907,143 6.3 29.59 26,839 8.5
2003 524 1,061,298 7.4 30.13 31,979 10.1
2004 561 1,284,135 8.9 29.26 37,580 11.9
2005 519 1,278,665 8.9 30.45 38,930 12.3
2006 326 1,067,931 7.4 27.33 29,188 9.2
2007 354 1,071,084 7.4 29.88 32,009 10.1
2008 322 1,114,305 7.7 27.11 30,207 9.6
2009 229 911,260 6.3 27.65 25,199 8.0
</TABLE>
MALL SHOP RENTAL RATES
The following table contains average base and effective rent (base rent plus
percentage rent) on a per square foot basis of the Mall Shops at Managed
Centers.
<TABLE>
<CAPTION>
EXISTING MALL SHOP LEASES
---------------------------
EFFECTIVE
AS OF DECEMBER 31, BASE RENT RENT
- ------------------ --------- ---------
<S> <C> <C>
1999............................................ $30.35 $30.98
1998............................................ 28.72 29.22
1997............................................ 28.11 28.70
</TABLE>
As leases have expired, the Company has generally sought to rent the
available space, either to the existing retailer or a new retailer, at rental
rates that are higher than those of the expiring leases, since the average rent
for leases in place is generally less than the market rate for such space.
The following table illustrates increases in Mall Shop rental rates for the
Managed Centers.
<TABLE>
<CAPTION>
LEASES EXPIRING LEASE EXECUTED
YEAR DURING THE PERIOD(1) DURING THE PERIOD(2) PERCENT INCREASE
- ---- -------------------- -------------------- ----------------
<S> <C> <C> <C>
1999....................... $25.99 $36.51 40.5%
1998....................... 25.19 32.81 30.3%
1997....................... 27.20 29.22 7.4%
</TABLE>
- ------------------------
(1) Represents average base rent for the final year of occupancy and includes
scheduled expirations, early terminations, abandonments and negotiated
buyouts.
(2) Represents average base rent for the initial year of occupancy including
renewals.
Minimum rents at Mall Stores are expected to grow as a result of contractual
rent increases in existing leases. Although there can be no assurances that such
contractual increases will be realized, or that
12
<PAGE>
contractual increases are indicative of possible future increases, base rent at
the Centers is expected to increase by approximately $20.7 million over the next
five years through these contractual increases.
<TABLE>
<CAPTION>
CUMULATIVE EXISTING
EXISTING CONTRACTUAL CONTRACTUAL
YEAR RENT INCREASES RENT INCREASES
- ---- -------------------- -------------------
<S> <C> <C>
2000...................................... $7,539,040 $7,539,040
2001...................................... 4,199,621 11,738,661
2002...................................... 3,812,172 15,550,833
2003...................................... 3,085,741 18,636,574
2004...................................... 2,088,876 20,725,450
</TABLE>
As required by generally accepted accounting principles ("GAAP"),
contractual rent increases are recognized as rental income using the straight
line method over the respective lease term which may result in the recognition
of income not currently billable under the terms of the lease. The amount of
contractual rent recognized for GAAP purposes in excess of rent billed for the
years ended December 31, 1999, 1998 and 1997 was $4.1 million, $4.2 million and
$3.1 million, respectively.
SEASONALITY
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when retailer occupancy and retail
sales are typically at their highest levels. In addition, shopping malls achieve
a substantial portion of their specialty (temporary retailer) rents during the
holiday season. As a result of the above, earnings are generally highest in the
fourth quarter of each year.
The following table summarizes certain 1999, 1998 and 1997 quarterly data
for the Managed Centers:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
1999 QUARTERLY DATA:
Mall Shop Sales.................... $659,438 $729,237 $733,418 $1,118,513
Revenues........................... $145,599 $145,197 $146,498 $ 159,872
Percentage Leased.................. 91% 92% 93% 94%
1998 QUARTERLY DATA:
Mall Shop Sales.................... $615,302 $685,548 $688,089 $1,071,951
Revenues........................... $ 87,933 $ 86,807 $108,469 $ 145,072
Percentage Leased.................. 92% 93% 93% 93%
1997 QUARTERLY DATA:
Mall Shop Sales.................... $298,716 $316,178 $325,834 $ 506,591
Revenues........................... $ 69,482 $ 69,087 $ 80,209 $ 83,031
Percentage Leased.................. 91% 92% 92% 93%
</TABLE>
COMPETITION
All of the Centers are located in developed retail and commercial areas,
many of which compete with other mall or neighborhood shopping centers within
their primary trade area. The amount of rentable space in the Center's trade
area, the quality of facilities and the nature of stores at such competing
shopping centers could each have a material adverse effect on the Company's
ability to lease space and on the rents the Company can obtain. In addition,
retailers at the Centers face increasing competition from other forms of
retailing, such as discount shopping centers, outlet malls, catalogues, discount
shopping clubs, telemarketing and internet retailing. Other real estate
investors, including other REITs, compete for acquisition of new retail shopping
centers.
13
<PAGE>
Although the Company believes its Centers can compete effectively within
their trade areas, the Company must also compete with other owners, managers and
developers of retail shopping centers. Those competitors that are not REITs may
be at an advantage to the extent they can use operating cash flows to finance
projects, while the Company (and its REIT competitors) will be required by the
Code to distribute significant amounts of its operating cash flows to
shareholders. If the Company should require funds, it may have to borrow when
the cost of capital is high. Moreover, increased competition could adversely
affect the Company's revenues and Funds from Operations.
ENVIRONMENTAL MATTERS
Various Federal, state and local environmental laws subject property owners
and operators to liability for the costs of removal of certain hazardous
substances released, or remediation of hazardous conditions, on a property.
These laws often impose liability without regard to whether the owner or
operator knew of, or was responsible for, the release of the hazardous
substances. The presence of hazardous substances, or the failure to properly
remediate conditions caused by hazardous substances, may adversely affect the
owner's ability to sell a property or to borrow using the property as
collateral. The presence of hazardous substances, may also cause the owner to
incur substantial cleanup costs. Entities that arrange for the disposal or
treatment of hazardous substances may also be liable for the costs of removal or
remediation at the facility to which they sent the substances. Certain other
laws regulate the management of, and may impose liability for, personal injuries
associated with exposure to asbestos-containing material or other regulated
materials. If the Company renovates or demolishes any of the Centers, the
Company may incur substantial costs for the removal and disposal of
asbestos-containing materials.
In connection with the Company's ownership and operation of currently-owned
and formerly-owned properties, the Company and the joint ventures in which the
Company has an interest may be potentially liable for removal or remediation
costs, as well as other costs (including governmental fines and costs related to
injuries to persons and property) resulting from environmental conditions at
these properties.
An independent consultant has reviewed existing environmental reports to
identify environmental conditions at Company-owned Centers and certain
properties that the Company formerly owned. A majority of the reports were
prepared for entities other than the Company. In some cases, the Company
commissioned additional or follow-up investigations by various outside
consultants. However, there can be no assurance (i) that circumstances have not
changed since any investigations were completed (ii) that the investigation and
related report revealed all potential environmental liabilities; (iii) that the
reports are accurate, or (iv) that prior owners or operators of the properties
have not created a potential environmental liability unknown to the Company.
Based on these investigations and the Company's knowledge of the operation
of its properties, the Company believes that many of its Centers and properties
that the Company formerly owned contain, or have contained, petroleum storage
tanks and automobile service operations. These tanks and operations have, or may
have, resulted in soil or groundwater contamination. Further, the Company is
aware of asbestos-containing materials in each of the Centers and in at least
some of the properties that the Company formerly owned.
Although there can be no assurances, the Company does not believe that
environmental conditions at any of the Centers and properties that the Company
formerly owned will have a material adverse effect on the Company's business,
financial condition or results of operations. There can be no assurance that
environmental laws will not become more stringent in the future or that the
environmental conditions on or near the Centers and properties will not have a
material adverse effect on individual properties or on the Company as a whole in
the future.
14
<PAGE>
INSURANCE ARRANGEMENTS
The Company believes, based in part on the advice of its insurance advisors,
that its insurance covering fire, flood, earthquake and comprehensive liability
is adequate having regard to the insurable risks and insured limits customarily
carried for similar properties. Earthquake insurance is subject to a deductible
equal to 5% of the total insured value of each Center and a combined annual
aggregate loss limit of $200 million on the Centers.
EMPLOYEES
The Company has engaged the Manager to provide property management and
leasing services, the Advisor to provide asset management services and the
Developer to provide development and redevelopment planning and implementation
services. The Company has no employees.
EXECUTIVE OFFICES
The Company's executive offices and the headquarters of the Company's
Manager, Advisor and Developer are located at 11601 Wilshire Boulevard, Los
Angeles, California 90025 (telephone 310/478-4456).
15
<PAGE>
ITEM 2: PROPERTIES
The following table sets forth certain information about each of the Company's
Centers at December 31, 1999:
<TABLE>
<CAPTION>
ECONOMIC PERCENTAGE OF MALL OCCUPANCY COST 1999 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1999 DECEMBER 31, 1999 (PER SQ. FT.)
- ----------------------- ---------- ---------- ---------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SAN DIEGO
Horton Plaza, ........... 100 866,000 505,000 98% 13.5% $412
San Diego, California
Mission Valley, ......... 76 1,372,000 579,000 98 10.5 288
San Diego, California
Mission Valley West, .... 76 215,000 215,000 96 4.0 490
San Diego, California
North County Fair, ...... 100 1,259,000 378,000 88 13.2 366
Escondido,
California.............
Parkway Plaza, .......... 100 1,113,000 510,000 94 11.6 334
El Cajon, California
Plaza Bonita, ........... 100 820,000 312,000 87 12.2 337
National City,
California
Plaza Camino Real, ...... 40 1,121,000 403,000 92 13.1 320
Carlsbad, California
UTC, .................... 50 1,037,000 442,000 92 11.0 402
San Diego, California
---------- ---------- --- ----- ----
7,803,000 3,344,000 94% 12.0% $357
---------- ---------- --- ----- ----
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ----------------------- --------------------------- ---------------------------
<S> <C> <C>
SAN DIEGO
Horton Plaza, ........... Opened 1985 Macy's, Mervyn's, Nordstrom
San Diego, California
Mission Valley, ......... Opened 1961 AMC 20-Screen Theatre, Bed,
San Diego, California Redeveloped 1975/1983/1997 Bath & Beyond, Macy's Home
& Furniture, Montgomery
Ward, Nordstrom Rack,
Robinson's-May
Mission Valley West, .... Opened 1961 Borders Books, Gateway
San Diego, California Redeveloped 1997/1998 Computers, Golfsmith,
Gordon Biersh Brewing Co.,
Marshalls, Old Navy
North County Fair, ...... Opened 1986 JCPenney, Macy's,
Escondido, Nordstrom, Robinson's-May
California............. (two stores), Sears
Parkway Plaza, .......... Opened 1972 JCPenney, Mervyn's,
El Cajon, California Robinson's-May, Sears
Plaza Bonita, ........... Opened 1981 JCPenney, Mervyn's,
National City, Montgomery Ward,
California Robinson's-May
Plaza Camino Real, ...... Opened 1969 JCPenney, Macy's (two
Carlsbad, California Redeveloped 1979/1989 stores), Robinson's-May,
Sears
UTC, .................... Opened 1977 Macy's, Nordstrom,
San Diego, California Robinson's-May, Sears
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
ECONOMIC PERCENTAGE OF MALL OCCUPANCY COST 1999 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1999 DECEMBER 31, 1999 (PER SQ. FT.)
- ----------------------- ---------- ---------- ---------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
LOS ANGELES
Eagle Rock, ............. 100 467,000 157,000 87% 15.8% $177
Los Angeles, California
Eastland, ............... 100 767,000 565,000 100 2.3 207
West Covina, California
Fox Hills, .............. 100 893,000 323,000 90 16.4 313
Culver City, California
Palm Desert, ............ 100 870,000 375,000 N/A 14.0 303
Palm Desert, California
Promenade, .............. 100 600,000 330,000 N/A 9.1 265
Woodland Hills,
California
Santa Anita, ............ 90 1,096,000 392,000 88 14.3 332
Arcadia, California
Topanga, ................ 100 1,049,000 371,000 100 12.8 375
Canoga Park, California
West Covina, ............ 100 1,175,000 527,000 91 14.8 283
West Covina, California
---------- ---------- ---- ----- ----
6,917,000 3,040,000 94% 12.4% $304
---------- ---------- ---- ----- ----
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ----------------------- --------------------------- ---------------------------
<S> <C> <C>
LOS ANGELES
Eagle Rock, ............. Opened 1973 Montgomery Ward,
Los Angeles, California Robinson's-May
Eastland, ............... Opened 1957 Baby's R' Us, Bed, Bath &
West Covina, California Redeveloped 1979/1997 Beyond, Marshall's,
Mervyn's, Old Navy, Ross
Dress for Less, Target
Fox Hills, .............. Opened 1975 JCPenney, Macy's,
Culver City, California Robinson's-May, 18,000 s.f.
Office Building
Palm Desert, ............ Opened 1983 JCPenney, Macy's, Macy's
Palm Desert, California Men's & Home, Robinson's-
May (two stores)
Promenade, .............. Opened 1973 AMC-14 Theatre, Macy's (two
Woodland Hills, stores)
California
Santa Anita, ............ Opened 1974 JCPenney, Macy's,
Arcadia, California Nordstrom, Robinson's-May
Topanga, ................ Opened 1964 Montgomery Ward, Nordstrom,
Canoga Park, California Redeveloped 1984/1992/1994 Robinson's-May, Sears
West Covina, ............ Opened 1975 JCPenney, Macy's,
West Covina, California Redeveloped 1990/1993 Robinson's-May, Sears
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
ECONOMIC PERCENTAGE OF MALL OCCUPANCY COST 1999 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1999 DECEMBER 31, 1999 (PER SQ. FT.)
- ----------------------- ---------- ---------- ---------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
NORTHERN CALIFORNIA
Downtown Plaza, ......... 100 1,193,000 406,000 94% 13.3% $331
Sacramento, California
Solano, ................. 100 1,038,000 479,000 81 10.1 330
Fairfield, California
---------- ---------- ---- ----- ----
2,231,000 885,000 87% 11.8% $330
---------- ---------- ---- ----- ----
SAN JOSE REGION
Oakridge, ............... 100 800,000 332,000 98% 11.6% $370
San Jose, California
Valley Fair, ............ 50 1,127,000 458,000 98 9.5 685
San Jose, California
---------- ---------- ---- ----- ----
1,927,000 790,000 98% 10.0% $571
---------- ---------- ---- ----- ----
OTHER WEST COAST
Capital Mall, ........... 100 600,000 237,000 91% 7.9% $302
Olympia, Washington
Vancouver, .............. 50 870,000 329,000 93 8.3 266
Vancouver, Washington
Westland, ............... 100 471,000 138,000 97 4.0 191
Denver, Colorado
---------- ---------- ---- ----- ----
1,941,000 704,000 93% 7.0% $263
---------- ---------- ---- ----- ----
WEST COAST TOTAL 20,819,000 8,763,000 93% 11.8% $350
========== ========== ==== ===== ====
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ----------------------- --------------------------- ---------------------------
<S> <C> <C>
NORTHERN CALIFORNIA
Downtown Plaza, ......... Opened 1971 Macy's (two stores),
Sacramento, California 283,000 s.f. Office Space
Solano, ................. Opened 1981 Best Buy, Edwards 16
Fairfield, California Theater, JCPenney, Macy's,
Mervyn's, Sears
SAN JOSE REGION
Oakridge, ............... Opened 1973 Macy's, Montgomery Ward,
San Jose, California Sears
Valley Fair, ............ Opened 1986 Macy's (two stores),
San Jose, California Nordstrom
OTHER WEST COAST
Capital Mall, ........... Opened 1978 Bon Marche, JCPenney,
Olympia, Washington Lamonts, Mervyn's
Vancouver, .............. Opened 1977 JCPenney, Meier & Frank,
Vancouver, Washington Redeveloped 1979/1993 Mervyn's, Nordstrom, Sears
Westland, ............... Opened 1960 Sears, Super K-mart
Denver, Colorado Redeveloped 1978/1994
WEST COAST TOTAL
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
ECONOMIC PERCENTAGE OF MALL OCCUPANCY COST 1999 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1999 DECEMBER 31, 1999 (PER SQ. FT.)
- ----------------------- ---------- ---------- ---------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ST. LOUIS
Crestwood, .............. 100 1,017,000 414,000 95% 12.4% $298
St. Louis, Missouri
Mid Rivers, ............. 100 969,000 394,000 84 12.4 295
St. Peters, Missouri
Northwest Plaza, ........ 100 1,798,000 683,000 96 13.9 257
St. Ann, Missouri
South County, ............. 100 762,000 268,000 90 10.6 302
St. Louis, Missouri
West County, ............ 100 583,000 152,000 91 14.4 238
Des Peres, Missouri
---------- ---------- ---- ----- ----
5,129,000 1,911,000 92% 11.3% $281
---------- ---------- ---- ----- ----
OTHER MID WEST
West Park, .............. 100 499,000 226,000 89 13.8 202
Cape Girardeau,
Missouri
---------- ---------- ---- ----- ----
MID WEST TOTAL 5,628,000 2,137,000 92% 12.7% $271
---------- ---------- ---- ----- ----
CONNECTICUT
Connecticut Post, ....... 100 777,000 384,000 84% 14.8% $317
Milford, Connecticut
Enfield, ................ 100 716,000 295,000 96 14.8 251
Enfield, Connecticut
Meriden, ................ 100 911,000 374,000 100 14.1 301
Meriden, Connecticut
Trumbull, ............... 100 1,194,000 497,000 94 13.6 392
Trumbull, Connecticut
---------- ---------- ---- ----- ----
3,598,000 1,550,000 93% 14.2% $326
---------- ---------- ---- ----- ----
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ----------------------- --------------------------- ---------------------------
<S> <C> <C>
ST. LOUIS
Crestwood, .............. Opened 1957 Dillard's, Famous-Barr,
St. Louis, Missouri Redeveloped 1984/1999 Sears
Mid Rivers, ............. Opened 1987 Crown-14 Theater,
St. Peters, Missouri Redeveloped 1990/1996/1999 Dillard's, Famous-Barr,
JCPenney, Sears
Northwest Plaza, ........ Opened 1965 Dillard's, Famous-Barr,
St. Ann, Missouri Redeveloped 1989 JCPenney, Sears, 154,000
s.f. Office Building
South County, ............. Opened 1963 Dillard's, Famous-Barr,
St. Louis, Missouri Redeveloped 1979 JCPenney
West County, ............ Opened 1969 Famous-Barr, JCPenney
Des Peres, Missouri Redeveloped 1985
OTHER MID WEST
West Park, .............. Opened 1981 Famous-Barr, JCPenney,
Cape Girardeau, Redeveloped 1984 Shopko
Missouri
MID WEST TOTAL
CONNECTICUT
Connecticut Post, ....... Opened 1960 Filene's, JCPenney, Sears
Milford, Connecticut Redeveloped 1991/1999 (opening spring 2000)
Enfield, ................ Opened 1971 Filene's, JCPenney, Sears
Enfield, Connecticut Redeveloped 1987/1997/1998
Meriden, ................ Opened 1971 Filene's, JCPenney, Lord &
Meriden, Connecticut Redeveloped 1988/1993/1999 Taylor, Sears
Trumbull, ............... Opened 1962 Filene's, JCPenney, Lord &
Trumbull, Connecticut Redeveloped 1982/1987/1990 Taylor, Macy's
1992
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
ECONOMIC PERCENTAGE OF MALL OCCUPANCY COST 1999 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1999 DECEMBER 31, 1999 (PER SQ. FT.)
- ----------------------- ---------- ---------- ---------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
WASHINGTON
Annapolis, .............. 100 1,113,000 421,000 98% 12.3% $435
Annapolis, Maryland
Montgomery Mall, ........ 100 1,249,000 464,000 99 12.8 470
Bethesda, Maryland
Wheaton, ................ 100 1,390,000 572,000 97 11.7 317
Wheaton, Maryland
---------- ---------- ---- ----- ----
3,752,000 1,457,000 98% 12.4% $420
---------- ---------- ---- ----- ----
OTHER EAST COAST
Independence Mall, ...... 85 693,000 229,000 99% 10.6% $325
Wilmington, North
Carolina
South Shore, ............ 100 1,157,000 299,000 94 15.3 393
Bay Shore, New York
---------- ---------- ---- ----- ----
1,850,000 528,000 96% 13.6% $363
---------- ---------- ---- ----- ----
EAST COAST TOTAL 9,200,000 3,535,000 95% 13.2% $372
---------- ---------- ---- ----- ----
35,647,000 14,435,000 94% 12.0% $344
========== ========== ==== ===== ====
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ----------------------- --------------------------- ---------------------------
<S> <C> <C>
WASHINGTON
Annapolis, .............. Opened 1980 Crown Theaters (opening
Annapolis, Maryland Redeveloped 1983/1994/1998 summer 2000), Hecht's,
1999 JCPenney, Lord & Taylor,
Montgomery Ward, Nordstrom
Montgomery Mall, ........ Opened 1968 Hecht's, JCPenney,
Bethesda, Maryland Redeveloped 1976/1982/1984 Nordstrom, Sears
1991
Wheaton, ................ Opened 1960 Hecht's, JCPenney,
Wheaton, Maryland Redeveloped 1987 Montgomery Ward, 188,000
s.f. Office Space
OTHER EAST COAST
Independence Mall, ...... Opened 1979 Belk Beery, JCPenney, Sears
Wilmington, North
Carolina
South Shore, ............ Opened 1963 JCPenney, Lord & Taylor,
Bay Shore, New York Redeveloped 1997/1998 Macy's, Sears
EAST COAST TOTAL
</TABLE>
20
<PAGE>
MORTGAGE AND OTHER SECURED DEBT ON PORTFOLIO PROPERTIES
The following table sets forth certain information regarding debt secured by
the Company's interests in the Centers, including the Company's pro rata share
of mortgages encumbering Centers in which the Company has less than a 100%
interest. All mortgage debt is nonrecourse to the Company. The information set
forth below is as of December 31, 1999.
<TABLE>
<CAPTION>
EARLIEST DATE ON
EFFECTIVE ANNUAL DEBT BALANCE DUE ON WHICH THE NOTE
INTEREST PRINCIPAL BALANCE SERVICE MATURITY MATURITY CAN BE PREPAID
PROPERTY PLEDGED AS COLLATERAL RATE (000'S) (000'S) DATE (000'S) WITHOUT PENALTY
- ------------------------------ --------- ----------------- ----------- -------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Annapolis....................... 8.29% 144,380 12,927 12/11/09 129,694 9/2009
Downtown Plaza.................. 8.29% 85,861 7,688 12/11/09 77,128 9/2009
Eagle Rock...................... 8.29% 16,840 1,508 12/11/09 15,127 9/2009
Eastland........................ 8.29% 41,487 3,715 12/11/09 37,267 9/2009
South Shore..................... 8.29% 88,432 7,918 12/11/09 79,437 9/2009
--------- ------- ---------
377,000 33,756 338,653
--------- ------- ---------
Capital Mall.................... 6.16% 30,025 1,850 12/11/01 30,025 12/2001
Crestwood....................... 6.16% 73,682 4,540 12/11/01 73,682 12/2001
Enfield......................... 6.16% 30,796 1,898 12/11/01 30,796 12/2001
Fox Hills....................... 6.16% 47,200 2,908 12/11/01 47,200 12/2001
Horton Plaza.................... 6.16% 113,100 6,968 12/11/01 113,100 12/2001
Mid Rivers...................... 6.16% 56,990 3,511 12/11/01 56,990 12/2001
Northwest Plaza................. 6.16% 85,511 5,268 12/11/01 85,511 12/2001
Oakridge........................ 6.16% 45,400 3,797 12/11/01 45,400 12/2001
Parkway Plaza................... 6.16% 83,300 5,133 12/11/01 83,300 12/2001
Plaza Bonita.................... 6.16% 75,524 4,653 12/11/01 75,524 12/2001
West Covina..................... 6.16% 83,152 5,123 12/11/01 83,152 12/2001
West Park....................... 6.16% 29,420 1,814 12/11/01 29,420 12/2001
--------- ------- ---------
754,100 47,463 754,100
--------- ------- ---------
Solano.......................... 7.00% 18,556 1,788 7/01/18 -- 7/2018
Solano.......................... 7.00% 22,532 2,108 1/01/06 18,572 1/2006
--------- ------- ---------
41,088 3,896 18,572
--------- ------- ---------
Topanga......................... 7.77% 43,714 3,180 2/01/02 42,827 2/2002
Topanga......................... 7.00% 59,518 10,068 2/01/02 54,856 11/2001
--------- ------- ---------
103,232 13,248 97,683
--------- ------- ---------
Meriden......................... 7.62% 64,000 8,357 11/12/01 28,735 1/2000
Meriden......................... 7.80% 32,311 5,038 11/12/01 16,750 1/2000
--------- ------- ---------
96,311 13,395 45,485
--------- ------- ---------
May Department Stores........... 6.39% 14,001 2,489 2/04/04 -- 2/2004
May Department Stores........... 7.33% 55,167 5,342 2/04/14 -- 2/2014
--------- ------- ---------
69,168 7,831 --
--------- ------- ---------
Montgomery Mall................. 7.72% 158,773 13,630 5/01/10 121,515 3/2010
North County Fair............... 7.00% 72,399 6,399(1) 5/30/22 -- 6/2004
Trumbull........................ 7.15% 131,694 14,183 7/01/00 130,727 4/2000
Secured line of credit(2)....... 7.43% 150,766 11,202 12/15/02 150,766 12/1999
--------- ------- ---------
Total wholly-owned............ 1,954,531 165,003 1,657,501
--------- ------- ---------
Santa Anita..................... 7.00% 41,004 4,171 2/01/04 34,653 11/2003
Santa Anita..................... 7.00% 14,165 1,457 2/01/04 11,947 11/2003
--------- ------- ---------
55,169 5,628 46,600
Independence Mall............... 6.92% 27,474 2,395 8/04/03 25,530 12/1999
Mission Valley.................. 6.78% 56,850 3,854 12/31/04 56,850 12/1999
Plaza Camino Real............... 9.50% 14,497 1,508 6/01/00 14,497 3/2000
Vancouver....................... 9.78% 15,453 1,691 5/13/02 14,917 2/2002
Valley Fair..................... 7.93% 86,647 6,666 6/22/03 137,500 6/1999
University Towne Center......... 7.20% 39,743 3,670 1/01/06 33,698 1/2006
--------- ------- ---------
Total Proportionate Joint
Ventures...................... 295,833 25,412 329,592
--------- ------- ---------
Total........................... 2,250,364(3) 190,415 1,987,093
========= ======= =========
</TABLE>
21
<PAGE>
(1) Contingent interest is owed at 30% of receipts in excess of $8.3 million.
(2) For the secured line of credit the properties pledged as collateral include
Connecticut Post, Palm Desert, Promenade, South County, Westland and
Wheaton.
(3) A reconciliation of the Company's pro rata share of debt secured by the
Company's interest in the Centers to the consolidated indebtedness as of
December 31, 1999, is as follows:
<TABLE>
<CAPTION>
(000'S)
----------
<S> <C>
Pro Rata share of debt secured by the Company's interests in
the Centers............................................... $2,250,364
Less: Pro Rata share of mortgages encumbering unconsolidated
partnership Centers....................................... (183,814)
Plus: Minority interest in mortgages encumbering
consolidated Centers...................................... 24,499
Unsecured consolidated indebtedness......................... 301,088
----------
Consolidated indebtedness................................... $2,392,137
==========
</TABLE>
ITEM 3: LEGAL PROCEEDINGS
The Company currently is neither subject to any material litigation nor, to
management's knowledge, is any material litigation currently threatened against
the Company other than routine litigation and administrative proceedings arising
in the ordinary course of business. Based on consultation with counsel,
management believes that these items will not have a material adverse impact on
the Company's consolidated financial position or results of operations.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
22
<PAGE>
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades on the New York Stock Exchange ("NYSE"),
under the symbol "WEA." The following table sets forth the per share intra-day
high and low for the quarter based on intra-day trading as reported by the NYSE
and declared distributions for the Company's common stock on a quarterly basis
for 1998, 1999 and for the first quarter 2000 (to March 28, 2000).
<TABLE>
<CAPTION>
DECLARED
HIGH LOW CLOSE DISTRIBUTION
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
2000
First Quarter (to March 28, 2000)...... $14.50 $12.13 $13.63 $ 0.37
1999
Fourth Quarter......................... $14.88 $12.00 $12.31 $0.3625
Third Quarter.......................... 16.06 13.56 13.88 0.3625
Second Quarter......................... 17.44 15.06 15.06 0.3625
First Quarter.......................... 18.25 14.78 17.44 0.3625
1998
Fourth Quarter......................... $18.13 $15.88 $17.25 $ 0.355
Third Quarter.......................... 17.88 15.69 17.13 0.355
Second Quarter......................... 18.44 16.75 18.38 0.355
First Quarter.......................... 18.75 16.81 17.63 0.355
</TABLE>
The number of shareholders of record of the Company's common stock was 126,
as of March 28, 2000.
The Company intends to continue to pay regular quarterly distributions to
the holders of its common and preferred stock. The 1999 distributions include a
distribution declared on December 17, 1999 to shareholders of record on
December 31, 1999 of $37.0 million including $0.3625 per common share for the
quarter ended December 31, 1999. For the years ended December 31, 1999 and 1998,
the Company declared distributions per common share of $1.45 and $1.42,
respectively.
On August 16, 1999, the Company issued 477,778 shares of Series E cumulative
convertible redeemable preferred stock (the "Series E Preferred Stock"). The
Series E Preferred Stock was issued to Westfield America Trust ("WAT"), the
Company's largest shareholder, in exchange for gross proceeds of $86,000,040,
and has a par value of $1.00 per share and a liquidation value of $180 per
share. The Series E Preferred Stock is not convertible into the Company's common
stock, unless (i) the conversion is approved by the shareholders of the Company,
which consent the Company will seek to obtain at its next annual meeting or
(ii) the Series E Preferred Stock is sold to an individual or entity to whom the
Company may issue its common stock without shareholder approval. Subject to the
foregoing, each share of Series E Preferred Stock is currently convertible into
10 shares of common stock of the Company, subject to adjustment. All of the
Series E Preferred Stock was offered and sold to WAT pursuant to the exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), provided by Section 4(2) of the Act.
23
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
The following table sets forth historical and consolidated financial data
for the Company and should be read in conjunction with the Company's
Consolidated Financial Statements and the Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Annual Report on Form 10-K. The Company's
Consolidated Financial Statements are not necessarily indicative of the future
financial position and results of operations of the Company. The Company
believes that the book value of its real estate assets, which reflects the
historical cost of such real estate assets, less accumulated depreciation, is
less than the current market value of its properties.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER, 31
---------------------------------------------------------
1999 1998 1997 1996 1995
--------- ----------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Minimum rents............................. $ 344,099 $ 226,089 $ 147,971 $105,295 $ 74,727
Tenant recoveries......................... 147,379 91,909 64,662 44,423 32,335
Percentage rents.......................... 12,300 10,467 4,175 3,991 1,690
--------- ----------- --------- -------- --------
Total revenues.......................... 503,778 328,465 216,808 153,709 108,752
Expenses:
Operating................................. 155,688 97,359 64,156 47,339 33,532
Management fees........................... 10,218 6,264 4,074 3,191 1,828
Advisory fees............................. 9,788 6,140 -- 2,600 --
General and administrative................ 1,816 1,519 949 808 776
Depreciation and amortization............. 112,625 76,926 53,913 38,596 29,150
--------- ----------- --------- -------- --------
Operating income.......................... 213,643 140,257 93,716 61,175 43,466
Interest expense, net..................... (184,496) (106,852) (57,472) (40,233) (27,916)
--------- ----------- --------- -------- --------
29,147 33,405 36,244 20,942 15,550
Equity in net income of unconsolidated
real estate affiliates.................. 9,259 5,949 3,887 3,707 4,412
Interest and other income................. 17,990 17,196 9,212 1,110 1,884
Gain on sale of investments, net.......... 1,971 53,895 -- -- --
Minority interest in earnings of
consolidated real estate affiliates..... (4,068) (4,257) (2,478) (1,063) --
--------- ----------- --------- -------- --------
Net income................................ $ 54,299 $ 106,188 $ 46,865 $ 24,696 $ 21,846
========= =========== ========= ======== ========
Net income allocable to diluted common
shares.................................... $ 17,339 $ 88,569 $ 35,437 $ 20,432 $ 21,843
========= =========== ========= ======== ========
Earnings per diluted common share........... $ 0.23 $ 1.20 $ 0.54 $ 0.42 $ 0.48
========= =========== ========= ======== ========
Distributions declared per diluted common
share..................................... $ 1.45 $ 1.42 $ 1.59 $ 1.51 $ 1.68
========= =========== ========= ======== ========
</TABLE>
24
<PAGE>
SELECTED FINANCIAL DATA, CONTINUED:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA(1)................................. $ 369,663 $ 256,931 $ 177,858 $ 124,352 $102,199
FFO(2).................................... $ 177,023 $ 140,839 $ 111,271 $ 75,842 $ 65,792
Cash flows provided by operating
activities.............................. $ 153,898 $ 101,938 $ 92,871 $ 55,244 $ 41,937
Cash flows (used in) provided by investing
activities.............................. $ (178,004) $(1,346,534) $ (560,965) $ (90,969) $ 6,529
Cash flows provided by (used in) financing
activities.............................. $ 5,278 $1,258,865 $ 472,368 $ 42,454 $(62,722)
FFO allocable to diluted common
shares(2)............................... $ 132,602 $ 120,557 $ 100,555 $ 71,578 $ 65,789
Weighted average number of diluted common
shares.................................. 76,619 73,901 65,548 49,063 44,978
Ratio of earnings to fixed charges(3)..... 1.28x 1.54x 1.92x 1.77x 2.25x
Ratio of earnings to combined fixed
charges and preferred stock
dividends(3)............................ 1.07x 1.33x 1.61x 1.60x 2.25x
Ratio of FFO to fixed charges(2),(3)...... 1.94x 2.28x 2.87x 2.78x 3.35x
Ratio of FFO to combined fixed charges and
preferred stock dividends(2),(3)........ 1.61x 1.97x 2.40x 2.52x 3.35x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investments in real estate, net........... $3,468,138 $3,690,258 $1,848,501 $1,310,434 $829,484
Total assets.............................. $3,603,661 $3,820,639 $1,969,630 $1,341,854 $841,990
Notes payable............................. $2,392,137 $2,641,015 $1,107,425 $ 770,625 $426,781
Minority interest......................... $ 33,180 $ 42,605 $ 25,123 $ 54 $ --
Shareholders' equity...................... $ 659,840 $ 746,119 $ 770,380 $ 518,530 $380,419
</TABLE>
- ------------------------
(1) EBITDA, or earnings before interest, taxes, depreciation and amortization,
represents the Company's share of net income before interest, taxes, gain on
sale of investments, depreciation and amortization. EBITDA should not be
construed as an alternative to operating income (as determined in accordance
with GAAP) as an indicator of the Company's operating performance or to cash
flows from operating activities (as determined in accordance with GAAP), nor
as a measure of liquidity and other consolidated income or cash flow
statement data (as determined in accordance with GAAP). The Company believes
that EBITDA is an effective measure of shopping center operating performance
because EBITDA is unaffected by the debt and equity structure of the
property owner.
(2) FFO, or Funds From Operations ("FFO") is computed in accordance with
standards established by the White Paper on FFO approved by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT") in March 1995, which defines FFO as net income (loss) (computed
in accordance with GAAP) excluding gains (or losses) from debt restructuring
and sales of property, plus real estate related depreciation and
amortization and after adjustments for unconsolidated real estate
affiliates. FFO should not be considered as an alternative to net income
(determined in accordance with GAAP), as a measure of the Company's
financial performance or to cash flows from operating activities (determined
in accordance with GAAP), as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash needs, including
its ability
25
<PAGE>
to make distributions. In addition, FFO as computed by the Company may not
be comparable to similarly titled figures reported by other REITs. The
Company believes that FFO is an effective measure of the Company's operating
performance because analysts and investors usually use FFO in analyzing the
operating results of real estate companies rather then using earnings per
share.
(3) Fixed charges consist of interest, including capitalized interest and
amortization of deferred loan fees.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the "Selected
Financial Data" and the Company's Consolidated Financial Statements and Notes
thereto. Historical results set forth in "Selected Financial Data" and the
Company's Consolidated Financial Statements are not necessarily indicative of
the future financial position and results of operations of the Company.
GENERAL BACKGROUND
Fluctuations in the Company's results of operations from year to year were
primarily affected by acquisitions and dispositions that occurred during each of
the years ending December 31, 1999, 1998 and 1997. The following is a summary of
the acquisitions and dispositions:
1999 ACQUISITIONS AND DISPOSITIONS:
In 1999, the Company invested approximately $231.8 million to acquire
interests in four Centers, as follows:
<TABLE>
<S> <C>
Wheaton Plaza -- The remaining 32% interest not previously owned by the
Company acquired in January 1999.
Independence Mall -- An additional 15% interest effectively acquired in March
1999.
Valley Fair -- The remaining 50% interest not previously owned by the
Company acquired in June 1999 and subsequently joint
ventured as discussed below.
Palm Desert -- 100% interest acquired in August 1999.
</TABLE>
The interests in Centers acquired in 1999 were acquired with proceeds from
the Company's unsecured revolving credit facility, the issuance of Series E
Preferred Stock totaling $86.0 million, the issuance of partnership interests
and Investor Unit Rights valued at $21.4 million, and the sale of Cerritos as
discussed below.
In 1999, the Company sold one property and conveyed joint venture interests
in two properties which provided proceeds totaling $223.0 million, net of
related debt, as follows:
<TABLE>
<S> <C>
Cerritos -- 100% interest sold in June 1999.
Valley Fair -- 50% interest joint ventured in June 1999.
UTC -- 50% interest joint ventured in June 1999.
</TABLE>
The proceeds from the sale of Cerritos were used to acquire a 50% interest
in Valley Fair. The proceeds from the Valley Fair and UTC joint venture were
used to pay down the unsecured revolving credit facility and to provide
liquidity for future redevelopments and strategic acquisitions.
The Centers acquired in 1999, sold in 1999 and conveyed to a joint venture
in 1999, are referred to as "1999 Acquisition Centers".
26
<PAGE>
At December 31, 1999 and for the year then ended, the Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of 32
Centers, UTC through the point in time in which this center was deconsolidated,
the equity in income of six unconsolidated real estate affiliates, 12 separate
department store properties net leased to the May Company under financing
leases, certain other real estate investments, and the Garden State Plaza loan
(as discussed below under the 1997 Acquisitions).
1998 ACQUISITIONS:
In 1998, the Company invested approximately $1.8 billion to acquire
interests in 16 centers, including a portfolio of 12 shopping centers from
TrizecHahn for approximately $1.4 billion. The Properties acquired in 1998 were
as follows:
<TABLE>
<S> <C>
HAHN CENTERS:
UTC -- 100% interest acquired in July 1998.
Valley Fair -- 50% managing, non-controlling interest acquired in July
1998.
Solano -- 100% interest acquired in September 1998.
Parkway Plaza -- 100% interest acquired in September 1998.
Fox Hills -- 100% interest acquired in October 1998.
Oakridge -- 100% interest acquired in October 1998.
Downtown Plaza -- 100% interest acquired in October 1998.
Horton Plaza -- 100% interest acquired in October 1998.
Capital Mall -- 49% managing, non-controlling interest acquired in
October 1998 and the remaining 51% interest acquired in
December 1998.
North County Fair -- the remaining 55% interest not previously owned by the
Company acquired in October 1998.
Cerritos -- 50% managing, non-controlling interest acquired in July
1998 and the remaining 50% interest acquired in November
1998.
Santa Anita -- 39.7% managing, non-controlling interest acquired in
September 1998 and an additional 50% interest acquired in
December 1998, which provided the Company with a
controlling interest in the property.
OTHER ACQUISITIONS:
Crestwood -- 100% interest acquired in January 1998.
Promenade -- 100% interest acquired in June 1998.
Independence Mall -- 60% interest acquired in August 1998 and an additional
10% interest acquired in October 1998.
Topanga -- the remaining 58% interest not previously owned by the
Company acquired in November 1998.
</TABLE>
The Centers acquired in 1998 (referred to as the "1998 Acquisition Centers")
were acquired with proceeds obtained from the Company's unsecured revolving
credit facility, the issuance of shares of the Company's Series C Preferred
Stock and Series D Preferred Stock totaling $275 million, the issuance of new
unsecured debt, the issuance of Notes to Australian investors (the "Capital
Notes") totaling $301.1 million, the assumption of debt, the exercise of
warrants in WHL (the "WHL Warrants") and
27
<PAGE>
subsequent sale of WHL shares for $99.7 million and the issuance of partnership
interests and Investor Unit Rights valued at $32.3 million.
At December 31, 1998 and for the year then ended, the Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of 29
Centers, the equity in income of five unconsolidated real estate affiliates, the
equity in income of North County Fair, Topanga, Cerritos, Santa Anita and
Capital Mall through the point in time at which these Centers became
consolidated, 12 separate department store properties net leased to the May
Company under financing leases, certain other real estate investments, the
Garden State Plaza Loan (discussed below) and the exercise of the WHL Warrants.
1997 ACQUISITIONS:
<TABLE>
<S> <C>
Garden State Plaza Loan -- In May 1997, the Company made a participating loan
totaling $145 million to two wholly-owned affiliates of WHL.
The loan is secured by the affiliates' 50% partnership
interest in Garden State Plaza, a super-regional shopping
center located in Paramus, New Jersey.
WHL Warrants -- In May 1997, the Company acquired 49 million
non-transferable WHL Warrants each of which entitled the
Company to acquire one WHL ordinary share at a price equal
to AUS $4.67.
Wheaton -- 68% managing, controlling interest acquired in June 1997.
Annapolis -- adjacent land and the remaining 70% interest not
previously owned by the Company acquired in June 1997.
Meriden -- the remaining 50% interest not previously owned by the
Company acquired in September 1997.
Northwest Plaza -- 100% interest acquired in December 1997.
</TABLE>
The Centers acquired in 1997 (referred to as the "1997 Acquisition Centers")
were funded from proceeds obtained from the Company's initial public offering in
May 1997 (the "Offering"), the Company's unsecured corporate credit facility and
an exchange of a portion of the Company's interest in a department store
property net leased to the May Company.
At December 31, 1997 and for the year then ended, the Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of 17
Centers, the equity in income of five unconsolidated real estate affiliates, the
equity in income of Annapolis and Meriden until these centers became
consolidated, 12 separate department store properties net leased to the May
Company under financing leases, certain other real estate investments, and the
Garden State Plaza Loan.
RESULTS OF OPERATIONS
COMPARISONS OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
TOTAL REVENUES increased $175.3 million or 53% to $503.8 million for the
year ended December 31, 1999 compared to $328.5 million for the same period in
1998. The increase is the result of the addition of the 1999 and 1998
Acquisition Centers, which contributed $160.7 million or 92% of the increase in
total revenues. Excluding the total revenues generated by the 1999 and 1998
Acquisition Centers, total revenues increased $14.6 million due to increased
rents generated by completed redevelopments at Westfield Shoppingtown Eastland,
Enfield, Meriden, Mission Valley-West and South Shore and higher minimum rents
and specialty leasing throughout the portfolio.
TOTAL EXPENSES increased $101.9 million or 54% to $290.1 million for the
year ended December 31, 1999 as compared to $188.2 million for the same period
in 1998. The increase is due primarily to operating expenses at the 1999 and
1998 Acquisition Centers, which contributed $89.6 million or 88% of the increase
28
<PAGE>
in total expenses. Excluding the total expenses incurred by the 1999 and 1998
Acquisition Centers, total expenses increased $12.3 million due to increased
operating costs and depreciation as a result of the recently completed
redevelopments and a higher advisory fee as a result of a full year of
operations of the 1998 Acquisition Centers.
INTEREST EXPENSE, net of capitalized interest, increased $77.6 million or
73% to $184.5 million for the year ended December 31, 1999 as compared to
$106.9 million for the same period in 1998, due primarily to borrowings under
the Company's secured line of credit and secured debt assumed and issued in
conjunction with the 1998 Acquisition Centers.
EQUITY IN INCOME OF UNCONSOLIDATED REAL ESTATE AFFILIATES increased
approximately $3.4 million to $9.3 million for the year ended December 31, 1999
as compared to $5.9 million for the same period in 1998 due primarily to the
acquisition of joint venture interests in Westfield Shoppingtown Valley Fair in
July 1998 and partnership interests in Independence Mall in 1999 and 1998, and
the conveyance of a joint venture interest in UTC in June 1999, partially offset
by the acquisition of the remaining 58% interest in Topanga in November of 1998.
GAIN ON SALE OF INVESTMENTS was $2.0 million for the year ended
December 31, 1999 as a result of the sale of Cerritos. For the same period in
1998, the Company recognized a net gain of $53.9 million due primarily to the
sale of investments in April 1998, net of a loss from reversal of certain
interest rate swap agreements originally completed in connection with the
TrizecHahn acquisition.
INTEREST AND OTHER INCOME increased $0.8 million to $18.0 million for the
year ended December 31, 1999 as compared to $17.2 million for the same period in
1998. The increase is due to an increase in participation interest earned on the
Garden State Plaza Loan and interest earned on temporary investments.
Net income decreased $51.9 million or 49% to $54.3 million from
$106.2 million for the same period in 1998 for the reasons discussed above.
COMPARISONS OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
TOTAL REVENUES increased $111.7 million or 52% to $328.5 million for the
year ended December 31, 1998 as compared to $216.8 million for the same period
in 1997. The increase is the result of the addition of the 1998 and 1997
Acquisition Centers, which contributed $104.6 million or 94% of the increase in
total revenues. Excluding the total revenues generated by the 1998 and 1997
Acquisition Centers, total revenues increased $7.1 million due to completed
redevelopments, increased occupancy, higher base rents and higher percentage
rents due to higher sales throughout the portfolio.
TOTAL EXPENSES increased $65.1 million or 53% to $188.2 million for the year
ended December 31, 1998 as compared to $123.1 million for the same period in
1997. The increase was due primarily to the addition of the 1998 and 1997
Acquisition Centers, which contributed a combined $53.1 million or 82% of the
increase in total expenses. Excluding the total expenses as a result of the 1998
and 1997 Acquisition Centers, total expenses increased $12.0 million due
primarily to the advisory fee totaling $6.1 million, which first became payable
by the Company to the Advisor in 1998, and an increase in depreciation due
primarily to redevelopments placed into service in 1998 and 1997.
INTEREST EXPENSE, net of capitalized interest, increased $49.4 million or
86% to $106.9 million for the year ended December 31, 1998 as compared to
$57.5 million for the same period in 1997, due primarily to increased borrowings
under the Company's secured and unsecured loan facilities, the Capital Notes and
debt assumed and issued in conjunction with the acquisition of the 1998 and 1997
Acquisition Centers.
EQUITY IN NET INCOME OF UNCONSOLIDATED REAL ESTATE AFFILIATES increased
approximately $2.0 million to $5.9 million for the year ended December 31, 1998
as compared to $3.9 million for the same period in 1997, due primarily to the
acquisition of joint venture interests in Valley Fair, Independence Mall,
Capital
29
<PAGE>
Mall, Cerritos and Santa Anita, which were partially offset by the acquisition
of the remaining 55% interest in North County Fair in October 1998 and 58%
interest in Topanga in November 1998.
INTEREST AND OTHER INCOME increased $8.0 million to $17.2 million for the
year ended December 31, 1998 as compared to $9.2 million for the same period in
1997. The increase was due to a full year of interest earned on the Garden State
Plaza Loan and interest earned on temporary investments.
NET INCOME increased $59.3 million to $106.2 million for the year ended
December 31, 1998 due primarily to a net gain of $53.9 million that resulted
from the sale of investments in April 1998, net of a loss from the reversal of
certain interest rate swap agreements in August 1998. Excluding this net gain,
net income increased $5.4 million or 12% to $52.3 million for the year ended
December 31, 1998 as compared to $46.9 million for the same period in 1997 for
the reasons discussed above.
CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
Cash and cash equivalents decreased $18.8 million for the year ended
December 31, 1999 due to cash used in investing activities in excess of cash
generated by operating and financing activities. Net cash provided by operating
activities totaled $153.9 million which represents cash flow generated by a full
year of operations for the 1999 and 1998 Acquisition Centers, rents generated by
completed redevelopments and the operations of the Company's existing portfolio.
The net cash used in investing activities during the year ended December 31,
1999 totaled $178.0 million due to the acquisition of the 1999 Acquisition
Centers and to fund other capital expenditures totaling $354.4 million, cash
contributions to fund redevelopment at Westfield Shoppingtown Valley Fair of
$8.9 million and an increase in restricted cash totaling $14.2 million due to
escrow accounts established in conjunction with secured financings, partially
offset by cash provided by investing activities from the sale of Cerritos
totaling $188.7 million, distributions received from unconsolidated real estate
affiliates of $8.0 million and notes receivable and deferred financing lease
receivable repayments totaling $2.8 million. The net cash flow provided by
financing activities totaled $5.3 million due to proceeds generated from the
conveyance of joint venture interests in UTC and Valley Fair which totaled
$158.3 million, the issuance of cumulative convertible redeemable preferred
stock totaling $84.9 million and the sale of a liquidity option for
$4.0 million, issued in conjunction with the conveyance of joint venture
interests in UTC and Valley Fair, partially offset by net distributions paid to
preferred and common shareholders totaling $139.6 million, net borrowings and
related costs totaling $97.1 million and cash distributions totaling
$5.2 million paid to minority interests in consolidated real estate affiliates.
YEAR ENDED DECEMBER 31, 1998
Cash and cash equivalents increased $14.3 million for the year ended
December 31, 1998 due to excess cash generated by operating activities and
financing activities over cash used in investing activities. Net cash provided
by operating activities totaled $101.9 million which represents cash flow
generated by the 1998 Acquisition Centers, a full year of operations of the 1997
Acquisition Centers, a full year of interest income earned on the Garden State
Plaza Loan and the operations of the Company's existing portfolio. The net cash
used in investing activities during the year ended December 31, 1998 totaled
$1,346.5 million due primarily to the acquisition of the 1998 Acquisition
Centers and cash used to fund renovations, expansions, tenant allowances and
other capital expenditures totaling $1,465.3 million which was partially offset
by investment proceeds obtained from the sale of WHL Stock totaling
$99.7 million, $9.8 million in cash distributions received from unconsolidated
real estate affiliates, notes receivable and deferred financing leases
receivable repayments totaling $4.9 million and restricted cash used in the
redevelopment of Mission Valley--West totaling $4.4 million. The net cash flow
provided by financing activities totaled $1,258.9 million primarily as a result
of net borrowings and related costs totaling $1,113.6 million obtained to fund
the purchase of the 1998 Acquisition Centers and $275.0 million in proceeds
generated from the issuance of convertible preferred stock which was partially
offset by cash distributions paid to preferred and common shareholders totaling
$117.0 million, stock issuance costs totaling $8.8 million and cash
distributions totaling $3.9 million paid to minority interests in consolidated
real estate affiliates.
30
<PAGE>
YEAR ENDED DECEMBER 31, 1997
Cash and cash equivalents increased $4.3 million for the year ended
December 31, 1997 due to excess cash generated by operating activities and
financing activities over cash used for investing activities. Net cash provided
by operating activities totaled $92.9 million which represents cash flow
generated by the 1997 Acquisition Centers, a full year of operations for the
Centers acquired in 1996, interest income earned on the Garden State Plaza Loan
and the operations of the Company's existing portfolio. The net cash used in
investing activities totaled $561.0 million due primarily to the acquisition of
the 1997 Acquisition Centers and cash used to fund renovations, expansions,
tenant allowances and other capital expenditures totaling $385.2 million,
funding of the Garden State Plaza Loan totaling $145.0 million, the purchase of
WHL Warrants totaling $15.2 million and an increase in restricted cash totaling
$28.3 million due to the funding of the Mission Valley--West construction loan.
The cash used in investing activities was partially offset by investment
proceeds obtained from cash distributions received from unconsolidated real
estate affiliates totaling $10.0 million and notes receivable and deferred
financing lease receivable repayments totaling $2.6 million. The net cash flow
provided by financing activities totaled $472.4 million primarily as a result of
net borrowings and related costs totaling $285.1 million obtained to fund the
purchase of the 1997 Acquisition Centers and $300.4 million in net proceeds
generated from the issuance of common and preferred stock in conjunction with
the Offering which was partially offset by cash distributions paid to preferred
and common shareholders totaling $111.7 million and cash distributions totaling
$1.4 million paid to minority interests in consolidated real estate affiliates.
FFO FUNDS FROM OPERATIONS
The Company computes FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of NAREIT in March 1995
which defines FFO as net income (loss) (computed in accordance with GAAP),
excluding gains (or losses) from debt restructuring and sales of property, plus
real estate related depreciation and amortization and after adjustments for
unconsolidated real estate affiliates. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP) as a measure of
the Company's financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Company's liquidity,
nor is it indicative of funds available to fund the Company's cash needs,
including its ability to make distributions. In addition, FFO as computed by the
Company may not be comparable to similarly titled figures reported by other
REITs. The Company believes that FFO is an effective measure of the Company's
operating performance because analysts and investors usually use FFO in
analyzing the operating results of real estate companies rather than using
earnings per share.
The following is a summary of the Company's FFO and a reconciliation of net
income to FFO for the periods presented:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
Funds from Operations......................... $177,023 $140,839 $111,271
======== ======== ========
Increase in Funds from Operations from prior
period...................................... 25.7% 26.6% 46.7%
Reconciliation:
Net income.................................. $ 54,299 $106,188 $ 46,865
Income allocable to Investor Unit Rights.... 1,942 -- --
Gain on sale of investments................. (1,971) (53,895) --
Depreciation and amortization:
Deferred financing leases................. 2,287 2,138 2,044
Consolidated properties................... 112,625 76,926 53,913
Unconsolidated real estate affiliates..... 8,930 10,753 9,456
Minority interest portion................. (1,089) (1,271) (1,007)
-------- -------- --------
Funds from Operations......................... $177,023 $140,839 $111,271
======== ======== ========
</TABLE>
31
<PAGE>
EBITDA EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
The Company believes that there are several important factors that
contribute to the ability of the Company to increase rent and improve
profitability of its shopping centers, including aggregate retailer sales
volume, sales per square foot, occupancy levels and retailer costs. Each of
these factors has a significant effect on EBITDA. The Company believes that
EBITDA is an effective measure of operating performance because EBITDA is
unaffected by the debt and equity structure of the property owner. EBITDA:
(i) does not represent cash flow from operations as defined by GAAP;
(ii) should not be considered as an alternative to net income (determined in
accordance with GAAP) as a measure of the Company's overall performance;
(iii) is not indicative of cash flows from operating, investing and financing
activities (determined in accordance with GAAP); and (iv) is not an alternative
to cash flows (determined in accordance with GAAP) as a measure of the Company's
liquidity.
The Company's EBITDA after minority interest plus its pro-rata share of
EBITDA of unconsolidated real estate affiliates increased from $177.9 million in
1997 to $369.7 million in 1999. The growth in EBITDA reflects the addition of
Total GLA, increased rental rates, increased retailer sales, improved occupancy
levels and effective control of operating costs.
The following is a summary of the Company's EBITDA and a reconciliation of
EBITDA to FFO (which has been reconciled to the Company's net income above) for
the periods presented:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
EBITDA........................................ $369,663 $256,931 $177,858
======== ======== ========
Increase in EBITDA from prior period.......... 43.9% 44.5% 43.0%
Reconciliation:
Funds from Operations....................... $177,023 140,839 111,271
Interest expense:
Consolidated properties................... 184,496 106,852 57,472
Unconsolidated real estate affiliates..... 9,999 10,193 9,858
Minority interest portion................. (1,855) (953) (743)
-------- -------- --------
EBITDA........................................ $369,663 $256,931 $177,858
======== ======== ========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
During 1999, the Company completed several financings and raised capital to
repay and refinance existing debt and to fund acquisitions as further discussed
below.
In December 1999, the Company closed a $377 million financing and a secured
line of credit with total availability of $450 million. These loans were used to
retire the Company's $600 million unsecured corporate credit facility. At
December 31, 1999, the Company had $299.2 million undrawn under the secured line
of credit which will be used to fund acquisition and redevelopment activities
and as a revolving working capital facility. Through its hedging activities, the
Company has fixed borrowings under the secured line of credit at an average rate
of 7.43%.
As of December 31, 1999, the Company's balance of cash and cash equivalents
was $6.4 million, not including its proportionate share of cash held by
unconsolidated real estate affiliates.
During the third quarter ended September 30, 1999, the Company refinanced
secured debt with a ten-year commercial mortgage loan from Prudential Mortgage
Capital and New York Life Insurance Company, secured by Westfield Shoppingtown
Montgomery Mall, totaling $159 million with a fixed interest rate of 7.72%. This
refinancing retired first mortgages on Westfield Shoppingtown South County
32
<PAGE>
and Westfield Shoppingtown West County and facilitates separate construction
loans for future redevelopments at these properties.
In August 1999, the Company issued $86 million of Series E cumulative
convertible redeemable preferred stock. Each share of preferred stock is
convertible into ten shares of the Company's common stock at the equivalent of
$18.00 per share and has a dividend rate equal to the greater of 8.5% or ten
times the dividend per share declared on the Company's common stock. All of
these shares were sold to Westfield America Trust ("WAT"), an affiliate of the
Company and are not convertible into common stock until approved by the
Company's shareholders, which the Company will seek to obtain at its next annual
shareholders' meeting. Of the $86 million raised, $82 million was used to
acquire Palm Desert Town Center.
In June 1999, the Company effectively transferred a 50% joint venture
interest in UTC and Valley Fair to J.P. Morgan for approximately $250 million,
including the assumption of debt. Net proceeds from the J.P. Morgan Joint
Venture totaled approximately $130 million and were used to retire the
TrizecHahn acquisition bridge loan and pay down the Company's unsecured
revolving credit facility.
Concurrently with the closing of the Joint Venture with J.P. Morgan, the
Company refinanced an existing $100 million Valley Fair loan with a new
$275 million loan facility from Canadian Imperial Bank of Commerce and Hypo
Bank, which included a $110 million construction loan commitment for the Valley
Fair redevelopment. Excess proceeds from the refinancing were used to pay down
the Company's unsecured revolving credit facility.
In June 1999, the Company sold Cerritos and used a portion of the proceeds
to retire secured debt. The remaining $93 million, plus an additional
$14 million obtained from the Company's unsecured revolving credit facility, was
used to acquire the remaining 50% interest in Valley Fair that the Company did
not previously own, from the Rouse Company.
In May 1999, the Company closed on a $102 million loan facility with PNC
Bank, which included a $38 million construction loan commitment for the
Westfield Shoppingtown Meriden redevelopment. At the closing, PNC Bank funded
$64 million which was used to pay down the unsecured revolving credit facility.
Additionally, in May 1999, the Downtown Plaza first mortgage totaling
$93 million was refinanced through the Company's unsecured revolving credit
facility.
The Company's consolidated indebtedness at December 31, 1999 was
$2,392.1 million, of which $2,262.7 million is fixed rate debt and
$129.4 million is variable rate debt after considering interest rate protection
agreements totaling $1.3 billion. The interest rate on the fixed rate debt
ranges from 6.10% to 8.38%. The Company's pro-rata share of debt-to-total market
capitalization, based on the common stock share price at December 31, 1999 was
58.5%, excluding the Capital Notes from the numerator. The maturity dates of
consolidated indebtedness range from 2000 to 2022. Scheduled principal
amortization and balloon payments in connection with maturing mortgage
indebtedness over the next five years and thereafter are set forth in the table
below:
<TABLE>
<CAPTION>
AMOUNT
YEAR (IN THOUSANDS)
- ---- --------------
<S> <C>
2000........................................................ $145,918
2001........................................................ 965,902
2002........................................................ 362,263
2003........................................................ 114,625
2004........................................................ 139,703
Thereafter.................................................. 663,726
</TABLE>
The Company believes that redevelopment, repositioning and expansion are key
to maximizing the use and performance of its assets and increasing its income
growth and capital appreciation. The Company
33
<PAGE>
continually evaluates the redevelopment potential of its Properties, including
Properties that have undergone redevelopment in the past five years. Due to the
financial and regulatory burdens presented by the development of new regional
shopping centers, the Company believes that an on-going redevelopment program
provides a cost efficient means of ensuring that the Company's existing Centers
compete effectively within their existing markets and are able to attract new
customers.
Capital expenditures and capitalized leasing costs totaled $129.5 million,
$60.9 million, and $70.0 million for the years ended December 31, 1999, 1998 and
1997, respectively. The following table shows the components of capital
expenditures and capitalized leasing costs.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
Renovations and expansions............................ $105.3 $46.5 $61.2
Tenant allowances..................................... 14.0 8.9 5.5
Capitalized leasing costs............................. 7.2 4.6 2.9
Other capital expenditures............................ 3.0 0.9 0.4
------ ----- -----
Total............................................... $129.5 $60.9 $70.0
====== ===== =====
</TABLE>
Capital expenditures were financed by external funding and recovery of costs
from retailers where applicable. The Company is currently involved in several
development projects and had outstanding commitments totaling approximately
$73.3 million as of December 31, 1999, which will be funded through existing
mortgage debt, new mortgage debt and the secured line of credit.
The historical sources of capital used to fund the Company's operating
expenses, interest expense, recurring capital expenditures and non-recurring
capital expenditures (such as major building renovations and expansions) have
been: (i) FFO, (ii) the issuance of secured and unsecured debt and (iii) the
issuance of equity. The Company anticipates that development projects, expansion
projects and potential acquisitions will be funded by external financing
sources.
The Company anticipates that its FFO will provide the necessary funds on a
short-term and long-term basis for its operating expenses, interest expense on
outstanding indebtedness and all distributions to the shareholders in accordance
with REIT requirements. Sources for recurring and non-recurring capital
expenditures on a short-term and long-term basis, such as major building
renovations and expansions, as well as for scheduled principal payments,
including balloon payments on outstanding indebtedness are expected to be
obtained from: (i) additional debt financing, (ii) additional equity and
(iii) working capital reserves.
Although no assurance can be given, the Company believes that it will have
access to capital resources sufficient to satisfy the Company's cash
requirements and expand and develop its business in accordance with its strategy
for growth.
DISTRIBUTIONS
A distribution was declared on December 17, 1999 to shareholders of record
on December 31, 1999 of $37.0 million including $0.3625 per common share for the
quarter ended December 31, 1999, which is equal to $1.45 per common share on an
annualized basis. The Company intends to pay regular quarterly distributions to
holders of its preferred and common stock.
INFLATION
Inflation has remained relatively low during the past three years and has
had a minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the retailers' leases contain
34
<PAGE>
provisions designed to lessen the impact to the Company. Such provisions include
clauses enabling the Company to receive percentage rentals based on retailer's
gross sales, which generally increase as prices rise, contractual rent steps
which increase rental rates during the term of the lease, or both. In addition,
the remaining terms of the existing leases are for an average period of less
than ten years, which may enable the Company to replace existing leases with new
leases at higher effective rentals if rents on the existing leases are below the
then existing market rate. Substantially all of the leases, except for most
Anchor leases, require the retailers to pay a proportionate share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Company's exposure to increases in cost and operating
expenses resulting from inflation.
Inflation may however, have a negative effect on some of the Company's other
operating items. Interest and general and administrative expense may be
adversely affected by inflation as these costs could increase at a rate higher
than rents. The Company enters into interest rate swap contracts as a means of
reducing its exposure to fluctuations in interest rates; however, there can be
no assurance that the Company will not be adversely affected by increases in
interest rates. Also, for leases with stated rent increases, inflation may have
a negative effect because the rent increases specified in these leases could be
lower than the increase in inflation at any given time.
IMPACT OF YEAR 2000
The Company and its affiliates use the Manager's information systems. As of
March 28, 2000, the Manager's hardware and software applications experienced no
significant disruptions due to what is commonly referred to as the "Y2K Issue"
which includes reference to the fact that certain computer programs were written
using two digits rather than four to define the applicable year.
The Company and its affiliates exchange electronic data with certain outside
vendors in the banking and payroll processing areas. The Manager has been
advised by these vendors that their systems are Year 2000 compliant and as of
March 28, 2000 has experienced no significant disruptions in the systems. The
Manager is not aware of any other vendors, suppliers, or external agents with a
Y2K Issue that would materially affect the Company's results of operations,
liquidity, or capital resources. However, the Manager has no means of ensuring
that external agents are Year 2000 compliant, and there can be no assurance that
the Manager has identified all such external agents. The Company will continue
to monitor its mission critical computer hardware and software applications and
those of its suppliers and vendors throughout the year 2000 to ensure that any
latent Year 2000 matters that may arise are addressed promptly.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report includes, and future public filings and oral and written
statements by the Company and its management may include, statements (other than
the consolidated financial-statements and other statements of historical fact)
that are subject to risks and uncertainties. Forward-looking statements include
the information concerning possible future results of operations, earnings,
expenses, cash flows, funds from operations and other capital resources of the
Company (including with respect to increased revenues and rental rates, cost
savings and operating efficiencies) and market trends set forth under (a) Item
1. "Business--The Shopping Center Business,--Costs of Occupancy,--Mall Shop
Rental Rates,--The Company's Strategy for Operations and Growth,--Insurance
Arrangements,--Competition and--Environmental Matters," (b) Item 3."--Legal
Proceedings," (c) Item 5. "Market for Registrant's Common Equity and Related
Shareholder Matters," (d) Item 7. "Management's Discussion and Analysis of
Financial Condition, --Results of Operations,--Liquidity and Capital
Resources,--Distributions,--Inflation and--Impact of Year 2000," and
(e) statements preceded by, followed by or that include the words "believes,"
"expects," "may," "will," "anticipates," "intends," "plans," "estimates,"
"proposes," "scheduled," or other similar expressions.
35
<PAGE>
Forward-looking statements are made based on management's current
expectations and belief concerning future developments and their potential
effects on the Company. There can be no assurance that future developments will
be in accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management. Many of the
factors that will determine these results are beyond the Company's ability to
control or predict.
The following important factors, and those important factors described
elsewhere in this report (including without limitation those discussed in
"Business," "Managements' Discussion and Analysis of Financial Condition and
Results of Operations" and "Legal Proceedings"), or in other Securities and
Exchange Commission filings, could affect (and in some cases have affected) the
Company's' actual results and could cause such results to differ materially from
estimates or expectations reflected in such forward-looking statements:
(i) risks generally inherent in real estate investment, such as changes in the
national economic climate, the regional economic climate (including the impact
of local employers or industry concentrations on the economic climate) or local
real estate conditions; perceptions by retailers or shoppers of the safety,
convenience and attractiveness of a shopping center, trends in the retail
industry; competition for retailers, changes in market rental rates and vacancy
rates, the ability to collect rent from retailers, the need to periodically
renovate, repair and relet space and the costs thereof; the ability of an owner
to provide adequate management and maintenance and insurance, and increased
operating costs, as well as changes in governmental regulations, zoning or tax
laws; (ii) the ability of the Company to successfully redevelop properties
(including the ability to complete the redevelopment, to complete construction
within the estimated time frame and budget or to realize anticipated occupancy
and rental rates from completed projects), or to achieve anticipated operating
results from acquired properties; (iii) competition from other shopping centers
and other forms of retailing; (iv) the impact of the financial condition of
Anchors and major tenants on the Centers' operations, including the bankruptcy
or insolvency of Anchors or retailers or the decision of any Anchor or major
tenant to not renew its lease when it expires; (v) the Company's ability to make
scheduled payments of principal or interest on, or to refinance its obligations
with respect to its indebtedness and to comply with the covenants and
restrictions contained in the instruments governing such indebtedness, which
will depend on its future operating performance and cash flow, which are subject
to prevailing economic conditions, prevailing interest rate levels, and
financial, competitive, business and other factors beyond its control, including
changes in consumer buying patterns, regulatory developments and increased
operating costs; and (vi) the Company's ability to continue to qualify as a REIT
for federal income tax purposes and the taxation of the Company as a regular
corporation if it were to lose that status, the 100% tax on net income from
transactions that constitute prohibited transactions pursuant to the rules
relating to REITs under the Code; and possible taxation of the Company with
respect to built-in gain on disposition of certain property if such property
disposed of during a ten-year period; and the possibility of a dramatic decrease
in cash available for distributions if any such taxes become payable.
While the Company periodically reassesses material trends and uncertainties
affecting the operations and financial condition in connection with its
preparation of Management's Discussion and Analysis of Results of Operations and
Financial Condition contained in its quarterly and annual reports, the Company
does not intend to review or revise any particular forward-looking statement
referenced in this report in light of future events, even if new information,
future events or other circumstances have made them incorrect or misleading.
The information referred to above should be considered by investors when
reviewing any forward-looking statements contained in this report, in any
documents incorporated herein by reference, in any of the Company's public
filings or press releases or in any oral statements made by the Company or any
of its officers or any other persons acting on its behalf. For those statements,
the Company intends to avail itself of the protection of the safe harbor from
liability with respect to forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
36
<PAGE>
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In the normal course of business the Company enters into interest rate swap
contracts to reduce its exposure to fluctuations in interest rates. Net interest
differentials to be paid or received related to these contracts are accrued as
incurred or earned. Any gain or loss from terminating swap contracts is
recognized in the period the swap contract or related debt is terminated or
reversed. Unamortized gains or losses are recognized in income when the related
debt matures or is extinguished. The Company's policy is to maintain fixed rate
borrowing (including fixed rate mortgages and interest rate swaps) for
approximately 75% of forecast debt for a term of not more than ten years.
Additional hedging may be entered into for up to 100% of forecast debt if
interest rates are considered by management to be favorable.
It is the Company's policy to enter into interest rate swap contracts to
hedge fluctuations in interest rates only to the extent necessary to meet its
objectives as stated above. The Company does not enter into interest rate swap
contracts for speculative purposes.
Interest rate exchange agreements are contractual agreements between the
Company and third parties to exchange fixed and floating interest payments
periodically without the exchange of the underlying principal amounts (notional
amounts). The agreements consist of swaps and involve the future receipt of a
floating rate based on LIBOR and the payment of a fixed rate. In the unlikely
event that a counterparty fails to meet the terms of an interest rate swap
contract, the Company's exposure is limited to the interest rate differential
between the contract rate and the market rate on the notional amount. The
Company does not anticipate non-performance by any of the counterparties.
The following is a summary of fixed rate debt, average fixed interest rate
and average remaining term to maturity for the Company's pro rata share of fixed
rate debt and variable rate debt that has been fixed through the use of interest
rate swap contracts:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
($ IN THOUSANDS)
<S> <C> <C>
Principal amount of fixed rate debt.................. $1,135,067 $ 777,911
Principal amount of other current fixed rate payable
instruments........................................ 1,287,000 1,700,000
---------- ----------
$2,422,067 $2,477,911
========== ==========
Fixed rate debt as a percentage of total notes
payable............................................ 94.9% 91.4%
========== ==========
Average effective fixed rate (inclusive of margins)
of total borrowings and hedges, including delayed
start swaps........................................ 7.39% 7.09%
========== ==========
Average remaining term (in years) of total fixed rate
borrowings and hedges, including delayed start
swaps.............................................. 8.0 9.1
========== ==========
Interest coverage ratio for the quarter ended........ 2.2 1.9
========== ==========
</TABLE>
The Company has entered into one foreign currency exchange agreement related
to the Capital Notes in order to eliminate its exposure to fluctuations in
exchange rates.
The estimated fair value of the Company's financial instruments has been
determined by the Company, using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily required
in interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions or estimation methodologies may have a material
effect on the estimated fair value amounts.
37
<PAGE>
For purposes of the Securities and Exchange Commission's market risk
disclosure requirements, the Company has estimated the fair value of its
financial instruments at December 31, 1999. The fair value estimates presented
herein are based on pertinent information available to management as of
December 31, 1999. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, as of December 31, 1999,
future estimates of fair value and the amounts which may be paid or realized in
the future may differ significantly from the amounts presented below.
INTEREST RATE SENSITIVITY
PRINCIPAL (NOTIONAL) AMOUNT BY CONTRACT MATURITY DATE
<TABLE>
<CAPTION>
ESTIMATED
FAIR VALUE
2000 2001 2002 2003 2004 THEREAFTER TOTAL 12/31/99
-------- -------- --------- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(AMOUNTS IN THOUSANDS EXCEPT INTEREST RATES)
ASSETS:
Participating loan to
affiliates.......... -- -- -- -- -- $145,000 $ 145,000 $ 145,000
Average rate.......... -- -- -- -- -- 8.5% -- --
Direct financing
leases receivable... $ 2,447 $ 2,617 $ 2,799 $ 2,994 $ 3,203 $ 66,867 $ 80,927 $ 70,731
LIABILITIES:
Notes Payable--fixed
rate................ $145,918 $ 15,129 $ 111,135 $ 14,262 $139,703 $663,726 $1,089,873 $1,065,201
Average rate.......... 7.15% 7.19% 7.32% 7.21% 6.92% 7.83%
Notes
Payable--variable
rate................ -- $950,773 $ 251,128 $ 100,363 -- -- $1,302,264 $1,302,264
Average rate.......... -- L(1)+.85% L(1)+1.80% L(1)+2.56% -- --
INTEREST RATE SWAP
CONTRACTS:
Current swaps where
the Company receives
L(1)................ -- $100,000 $ 287,000 $ 200,000 $100,000 $600,000 $1,287,000 $ 27,697
Average rate.......... -- 5.95% 6.10% 6.00% 6.00% 5.75%
Deferred swaps where
the Company receives
L(1)................ -- -- $ 70,000 -- -- $540,000 $ 610,000 $ 21,047
Average rate.......... -- -- 6.80% -- -- 6.13%
</TABLE>
- ------------------------------
(1) L refers to the London Interbank Offered Rate (or "LIBOR").
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements and Financial Statement
Schedules contained in Item 14.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
38
<PAGE>
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item will be contained in the Company's
definitive proxy statement for its 2000 annual meeting of shareholders which
will be filed on or before April 30, 2000 and is incorporated herein by
reference.
ITEM 11: EXECUTIVE COMPENSATION
The information required by this item will be contained in the Company's
definitive proxy statement for its 2000 annual meeting of shareholders which
will be filed on or before April 30, 2000 and is incorporated herein by
reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item will be contained in the Company's
definitive proxy statement for its 2000 annual meeting of shareholders which
will be filed on or before April 30, 2000 and is incorporated herein by
reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item will be contained in the Company's
definitive proxy statement for its 2000 annual meeting of shareholders which
will be filed on or before April 30, 2000 and is incorporated herein by
reference.
ITEM 14: EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULE AND REPORTS ON FORM 8-K
(a) 1. See page F-1 for a listing of consolidated financial statements submitted
as part of this report.
2. Financial statement schedules, other than schedules which are part of the
consolidated financial statements included in (a)(1) have been omitted
since the required information is either included in the Consolidated
Financial Statements, not present, or not present in amounts sufficient
to require submission of the schedule.
3. Exhibits submitted with this report as filed with the Securities and
Exchange Commissions and those incorporated by reference to the other
filings are listed on the exhibit index.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter ended
December 31, 1999.
(c) See (a) (3) above for a listing of the exhibits included as part of this
report.
39
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets as of December 31, 1999 and
1998...................................................... F-3
Consolidated Statements of Income for Years ended December
31, 1999, 1998 and 1997................................... F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years ended December 31, 1999, 1998 and 1997...... F-5
Consolidated Statements of Cash Flows for the Years ended
December 31, 1999, 1998 and 1997.......................... F-6
Notes to Consolidated Financial Statements.................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
Westfield America, Inc.:
We have audited the accompanying consolidated balance sheets of Westfield
America, Inc. and Subsidiaries, (the "Company"), as of December 31, 1999 and
1998 and the related consolidated statements of income, shareholders' equity and
cash flows for each of the years in the three year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Westfield America, Inc. and Subsidiaries as of December 31, 1999 and 1998 and
the consolidated results of operations and cash flows for each of the years in
the three year period ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States.
Los Angeles, California Ernst & Young LLP
January 26, 2000
F-2
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Land........................................................ $ 454,267 $ 457,801
Buildings, improvements and equipment....................... 2,990,537 3,185,969
Less accumulated depreciation............................... (444,831) (340,727)
---------- ----------
Net property and equipment................................ 2,999,973 3,303,043
Construction in progress.................................... 67,115 20,254
Investments in unconsolidated real estate affiliates........ 175,123 138,747
Participating loan to affiliates............................ 145,000 145,000
Direct financing leases receivable.......................... 80,927 83,214
---------- ----------
Net investment in real estate............................. 3,468,138 3,690,258
Cash and cash equivalents................................... 6,444 25,272
Restricted cash............................................. 40,008 25,820
Accounts receivable, net of allowance of $7,366 and $8,400
in 1999 and 1998, respectively............................ 47,632 45,325
Deferred expenses and other assets, net..................... 41,439 33,964
---------- ----------
Total assets.............................................. $3,603,661 $3,820,639
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable............................................... $2,392,137 $2,641,015
Accounts payable and accrued expenses....................... 119,680 82,658
Distribution payable........................................ 37,824 33,242
---------- ----------
Total liabilities......................................... 2,549,641 2,756,915
---------- ----------
Minority interests.......................................... 33,180 42,605
Series C, D and E preferred stock........................... 361,000 275,000
Common stock................................................ 733 731
Series A and B preferred stock.............................. 121,000 121,000
Additional paid-in capital.................................. 538,107 624,388
---------- ----------
Total shareholders' equity................................ 659,840 746,119
---------- ----------
Total liabilities and shareholders' equity................ $3,603,661 $3,820,639
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
--------- --------- --------
<S> <C> <C> <C>
REVENUES:
Minimum rents............................................. $ 344,099 $ 226,089 $147,971
Tenant recoveries......................................... 147,379 91,909 64,662
Percentage rents.......................................... 12,300 10,467 4,175
--------- --------- --------
Total revenues............................................ 503,778 328,465 216,808
--------- --------- --------
EXPENSES:
Operating................................................. 155,688 97,359 64,156
Management fees........................................... 10,218 6,264 4,074
Advisory fee.............................................. 9,788 6,140 --
General and administrative................................ 1,816 1,519 949
Depreciation and amortization............................. 112,625 76,926 53,913
--------- --------- --------
Total expenses.......................................... 290,135 188,208 123,092
--------- --------- --------
OPERATING INCOME............................................ 213,643 140,257 93,716
INTEREST EXPENSE, net....................................... (184,496) (106,852) (57,472)
OTHER INCOME:
Equity in income of unconsolidated real estate
affiliates.............................................. 9,259 5,949 3,887
Gain on sale of investments, net.......................... 1,971 53,895 --
Interest and other income................................. 17,990 17,196 9,212
--------- --------- --------
INCOME BEFORE MINORITY INTEREST............................. 58,367 110,445 49,343
Minority interest in earnings of consolidated real estate
affiliates................................................ (4,068) (4,257) (2,478)
--------- --------- --------
NET INCOME.................................................. $ 54,299 $ 106,188 $ 46,865
========= ========= ========
Net income allocable to preferred shares.................... $ 37,260 $ 17,619 $ 11,428
Net income allocable to common shares....................... 17,039 88,569 35,437
--------- --------- --------
$ 54,299 $ 106,188 $ 46,865
========= ========= ========
EARNINGS PER COMMON SHARE:
Basic..................................................... $ 0.23 $ 1.21 $ 0.54
========= ========= ========
Diluted................................................... $ 0.23 $ 1.20 $ 0.54
========= ========= ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic..................................................... 73,343 73,334 65,505
========= ========= ========
Diluted................................................... 76,619 73,901 65,548
========= ========= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PREFERRED PAID-IN RETAINED SHAREHOLDERS'
STOCK STOCK CAPITAL EARNINGS EQUITY
-------- --------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1997................ $527 $ 94,000 $424,003 $ -- $ 518,530
Net income for the year ended
December 31, 1997...................... -- -- -- 46,865 46,865
Issuance of common stock................. 204 -- 305,796 -- 306,000
Issuance of preferred stock.............. -- 27,000 -- -- 27,000
Cost of stock issuances.................. -- -- (32,616) -- (32,616)
Redemption of senior preferred stock..... -- -- (57) -- (57)
Distributions on preferred stock......... -- -- -- (11,428) (11,428)
Distributions on common stock............ -- -- (71,163) (35,437) (106,600)
Adjustment to investment cost basis...... -- -- 22,686 -- 22,686
---- -------- -------- -------- ---------
BALANCES, DECEMBER 31, 1997.............. 731 121,000 648,649 -- 770,380
Net income for the year ended
December 31, 1998...................... -- -- -- 106,188 106,188
Issuance of common stock................. -- -- 140 -- 140
Cost of stock issuances.................. -- -- (8,834) -- (8,834)
Distributions on preferred stock......... -- -- -- (17,619) (17,619)
Distributions on common stock............ -- -- (15,567) (88,569) (104,136)
---- -------- -------- -------- ---------
BALANCES, DECEMBER 31, 1998.............. 731 121,000 624,388 -- 746,119
Net income for the year ended
December 31, 1999...................... -- -- -- 54,299 54,299
Issuance of common stock................. 2 -- 138 -- 140
Redemption of senior preferred stock..... -- -- (1) -- (1)
Cost of stock issuances (Note 10)........ -- -- (1,109) -- (1,109)
Sale of liquidity option (Note 4)........ -- -- 4,000 -- 4,000
Distributions on preferred stock......... -- -- -- (37,260) (37,260)
Distributions on common stock............ -- -- (89,309) (17,039) (106,348)
---- -------- -------- -------- ---------
BALANCES, DECEMBER 31, 1999.............. $733 $121,000 $538,107 $ -- $ 659,840
==== ======== ======== ======== =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
--------- ----------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................. $ 54,299 $ 106,188 $ 46,865
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 112,625 76,926 53,913
Amortization of deferred loan fees.................... 5,356 2,468 419
Equity in income of unconsolidated real estate
affiliates.......................................... (9,259) (5,949) (3,887)
Minority interests in earnings of consolidated real
estate affiliates................................... 4,068 4,257 2,478
Gain on sale of investments, net...................... (1,971) (53,895) --
Issuance of common stock to independent directors..... 140 140 --
Changes in assets and liabilities:
Accounts receivable, net.............................. 1,760 (11,545) (10,824)
Deferred expenses and other assets.................... (8,495) (10,014) (5,069)
Accounts payable and accrued expenses................. (4,625) (6,638) 8,976
--------- ----------- ---------
Net cash flows provided by operating activities......... 153,898 101,938 92,871
--------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and acquisitions................... (354,453) (1,465,296) (385,155)
Participating loan to affiliates........................ -- -- (145,000)
Purchase of WHL Warrants................................ -- -- (15,184)
Proceeds from sale of investments....................... 188,731 99,670 --
Cash distributions received from unconsolidated real
estate affiliates..................................... 8,004 9,812 10,013
Cash contributions to unconsolidated real estate
affiliates............................................ (8,885) -- --
Direct financing leases receivable repayments........... 2,287 2,138 2,044
Notes receivable repayments............................. 500 2,720 622
Increase in restricted cash............................. (14,188) 4,422 (28,305)
--------- ----------- ---------
Net cash flows used in investing activities............. $(178,004) $(1,346,534) $(560,965)
--------- ----------- ---------
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUES ON THE FOLLOWING PAGE.
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
----------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock.............. $ 86,000 $ 275,000 $ 27,000
Proceeds from issuance of common stock................. -- -- 436,500
Issuance of liquidity option........................... 4,000 -- --
Redemption of common stock............................. -- -- (130,500)
Redemption of senior preferred stock................... (1) -- (57)
Cost of stock issuances................................ (1,109) (8,834) (32,616)
Cash distributions paid to preferred shareholders...... (33,928) (13,184) (10,938)
Cash distributions paid to common shareholders......... (105,760) (103,766) (100,721)
Cash distributions paid to minority interests.......... (5,171) (3,914) (1,409)
Proceeds received from the conveyance of joint venture
interests............................................ 158,343 -- --
Proceeds from notes payable............................ 1,193,055 1,309,109 651,765
Principal payments on notes payable.................... (1,290,151) (195,546) (366,656)
----------- ---------- ---------
Net cash flows provided by financing activities........ 5,278 1,258,865 472,368
----------- ---------- ---------
Net (decrease) increase in cash and cash equivalents... (18,828) 14,269 4,274
CASH AND CASH EQUIVALENTS, beginning of period........... 25,272 11,003 6,729
----------- ---------- ---------
CASH AND CASH EQUIVALENTS, end of period................. $ 6,444 $ 25,272 $ 11,003
=========== ========== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized)................... $ 187,971 $ 105,307 $ 58,514
=========== ========== =========
</TABLE>
NONCASH INVESTING AND FINANCING INFORMATION PROVIDED IN NOTES 8 AND 11.
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE, UNIT, PER SHARE AND FLOOR AREA AMOUNTS)
1. ORGANIZATION:
Westfield America, Inc. (the "Company"), a Missouri corporation, is
primarily in the business of owning, operating, leasing, developing,
redeveloping and acquiring super-regional and regional retail shopping centers
in major metropolitan areas in the United States. The Company is a publicly
traded real estate investment trust ("REIT"), with interests in 38 major
shopping centers branded nationwide as "Westfield Shoppingtowns". The Company's
portfolio of Westfield Shoppingtowns includes clusters of regional and
super-regional shopping centers located in eight states in the east coast,
midwest and west coast regions of the United States.
The Company, through its controlling interest in Westfield America Limited
Partnership (the "Operating Partnership") and its other subsidiaries and
affiliates, owns interests in a portfolio of 23 super-regional shopping centers,
12 regional shopping centers, three power centers (individually a "Center" and
collectively the "Centers"), 12 separate department store properties which are
net leased under financing leases to The May Department Stores Company and
certain other real estate investments (collectively the "Properties").
The Company is externally managed and advised by Westfield Holdings Limited
("WHL"), an affiliate of the Company and an Australian public company. The
Company has engaged a property management company (the "Manager"), an asset
management company (the "Advisor") and a development company (the "Developer")
to provide property management, asset management and development services to the
Company under agreements that are renewable annually. Each of the Manager,
Advisor and Developer is a wholly-owned subsidiary of WHL giving the Company
access to WHL's worldwide management expertise and resources. The Company
changed its name from CenterMark Properties, Inc. to Westfield America, Inc., in
conjunction with its initial public offering in May 1997 (the "Offering").
The Company is organized and operated as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). In order to be treated as a REIT for
income tax purposes, the Company must meet the minimum distribution requirements
as well as certain asset, income and other tests specified by the Code. The
Company intends to conduct its business so as to continue to satisfy the REIT
provisions under the Code, including making distributions to its shareholders
sufficient to meet the minimum distributions requirements.
In 1998, the Company completed the exchange of its interests in most of the
Centers and other assets for partnership interests ("Partnership Units") in the
Operating Partnership. Also, in 1998 and 1999, the Operating Partnership issued
units in the Operating Partnership to unrelated third parties ("Investor Unit
Rights") in exchange for certain interests acquired. The Investor Unit Rights
are held by various unrelated third parties who may under certain circumstances
exchange their Investor Unit Rights for cash or, at the discretion of the
Company, shares of the Company's common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The Company conducts its business through its Operating Partnership, wholly
owned subsidiaries and affiliates. The consolidated financial statements include
the accounts of the Company and all subsidiaries over which the Company is able
to exercise significant control. The Company does not consider itself to be in
control when the other partners have important approval rights over major
actions. Investments in
F-8
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT, PER SHARE AND FLOOR AREA AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
non-controlled real estate affiliates are accounted for using the equity method.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
INVESTMENT IN REAL ESTATE:
Buildings, improvements and equipment are stated at cost. Costs related to
the acquisition, development, construction and improvement of properties are
capitalized. Interest, real estate taxes, insurance and other development
related costs incurred during construction periods are capitalized and
depreciated on the same basis as the related assets. Expenditures for repairs
and maintenance are charged to expense when incurred. Certain repair and
maintenance costs are chargeable to the retailers as provided in their leases.
Such reimbursements are included in tenant recoveries in the Consolidated
Statements of Income. Depreciation is computed using the straight-line method
over the estimated useful life of each property, which generally ranges from 3
to 50 years.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments with an original
maturity of three months or less at date of purchase to be cash equivalents.
RESTRICTED CASH:
Restricted cash represents funds totaling $25,649 set aside to pay operating
and capital expenditures on properties that are collateral for secured loan
facilities and funds totaling $14,359 to be utilized in the redevelopment of
Annapolis.
REVENUE RECOGNITION:
Shopping center space is generally leased to specialty retailers under
leases that are accounted for as operating leases. Minimum rent revenues are
recognized on a straight-line basis over the respective lease term. Percentage
rents are recognized on an accrual basis as earned. Recoveries from retailers
are recognized as income in the period during which the applicable costs are
incurred.
ACCOUNTS RECEIVABLE:
Accounts receivable include amounts billed to retailers, deferred rent
receivables arising from straight-lining of rents and accrued recoveries from
retailers. Management periodically evaluates the collectibility of these
receivables and adjusts the allowance for doubtful accounts to reflect the
amounts estimated to be uncollectible.
DEFERRED EXPENSES AND OTHER ASSETS:
Deferred expenses and other assets include costs associated with notes
payable, retailer leases and prepaid expenses. Costs associated with obtaining
notes payable are amortized based on the effective interest rate method. Costs
related to leasing activities are capitalized and amortized over the initial
term of the related lease.
F-9
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT, PER SHARE AND FLOOR AREA AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:
The Company enters into interest rate swap contracts to reduce its exposure
to fluctuations in interest rates. Net interest differentials to be paid or
received related to these swap contracts are accrued as incurred or earned. Any
gain or loss from terminating swap contracts is recognized in the period the
swap contract or related debt is terminated or reversed. Unamortized gains or
losses are recognized in income when the related debt matures or is
extinguished. At December 31, 1999, the Company also holds a foreign exchange
hedge agreement.
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133 "Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 2000. The Statement
permits early adoption as of the beginning of any fiscal quarter after its
issuance. The Company expects to adopt the new Statement effective January 1,
2001. The Statement will require the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value and reflected as income or expense. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of derivatives
will either be offset against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings.
EARNINGS PER SHARE:
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects the assumed conversion of all
dilutive securities using the treasury stock method.
INCOME TAXES:
The Company has elected to be treated as a REIT for income tax purposes. As
a REIT, the Company is required to meet the minimum distribution requirements as
well as certain asset, income and other tests specified by the Code. No
provision for income taxes has been included in the Company's consolidated
financial statements because the Company will generally not be liable for
federal income taxes, provided it continues to distribute all of its REIT
taxable income and otherwise continues to qualify as a REIT. State income and
franchise taxes are minimal and included in general and administrative expense.
SEGMENT REPORTING:
Effective January 1, 1998, the Company adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and Related Information." Statement
No. 131 establishes standards for the way public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. Statement No. 131 also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. Because management views the Company as operating in a single
business segment, as described in Note 1, the adoption of Statement No. 131 did
not result in additional disclosure of segment information.
F-10
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT, PER SHARE AND FLOOR AREA AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
USE OF ESTIMATES:
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
RECLASSIFICATION:
Certain amounts in the 1998 and 1997 consolidated financial statements were
reclassified to conform with the 1999 presentation.
3. ACQUISITIONS:
During 1999, the Company invested $231,810 to acquire interests in the
following properties:
In August 1999, the Company acquired Palm Desert Town Center in Palm Desert,
California for $82,010. Westfield Shoppingtown Palm Desert is an 870,000 square
foot super-regional shopping center with five anchors and 138 specialty stores.
Funds for the purchase of Palm Desert were obtained from the issuance of $86,000
of Series E cumulative convertible redeemable preferred stock as further
described in footnote 10.
In June 1999, the Company acquired the remaining 50% interest it did not
previously own in Valley Fair, a super-regional shopping center located in San
Jose, from The Rouse Company, for approximately $107,000 plus the assumption of
debt. Funds for the acquisition of Valley Fair were obtained from the proceeds
from the sale of Cerritos discussed below and borrowings under the Company's
unsecured revolving credit facility.
In March 1999, the Company acquired an additional 15% interest in
Independence Mall for approximately $4,400 consisting of $2,200 of cash and
122,857 partnership units that may be converted into an equivalent number of
Investor Unit Rights in the Operating Partnership or may be exchanged for cash,
or at the discretion of the Company, shares of the Company's common stock. This
acquisition effectively gives the Company an 85% economic interest in the
property.
In January 1999, the Company acquired the remaining 32% of Wheaton Plaza it
did not previously own for approximately $38,400 consisting of 1,185,857
Investor Unit Rights and a cash distribution of $19,200. This acquisition
effectively gives the Company a 100% economic interest in the property.
F-11
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT, PER SHARE AND FLOOR AREA AMOUNTS)
3. ACQUISITIONS: (CONTINUED)
During 1998, the Company invested approximately $1,800,000 to acquire
interests in 16 shopping centers, including 12 shopping centers from TrizecHahn
Centers, Inc. ("TrizechHahn"). Interests in the Centers acquired from TrizecHahn
(the "Hahn Centers") and other third-parties are as follows:
<TABLE>
<CAPTION>
PROPERTY LOCATION INTEREST ACQUIRED
- -------- ------------------ ---------------------------------------------------
<S> <C> <C>
HAHN CENTERS:
Capital Mall......... Olympia, WA 49% managing, non-controlling interest acquired in
October 1998 and the remaining 51% interest
acquired in December 1998.
Cerritos............. Cerritos, CA 50% managing, non-controlling interest acquired in
July 1998 and the remaining 50% interest acquired
in November 1998.
Downtown Plaza....... Sacramento, CA 100% interest acquired in October 1998.
Fox Hills............ Culver City, CA 100% interest acquired in October 1998.
Horton Plaza......... San Diego, CA 100% interest acquired in October 1998.
North County Fair.... Escondido CA The remaining 55% interest not previously owned by
the Company acquired in October 1998.
Oakridge............. San Jose, CA 100% interest acquired in October 1998.
Parkway Plaza........ El Cajon, CA 100% interest acquired in September 1998.
Santa Anita.......... Arcadia, CA 39.7% managing, non-controlling interest acquired
in September 1998 and an additional 50% interest
acquired in December 1998, which provided the
Company with a controlling interest in the
property.
Solano............... Fairfield, CA 100% interest acquired in September 1998.
UTC (University Towne
Center).............. San Diego, CA 100% interest acquired in July 1998.
Valley Fair.......... San Jose, CA 50% managing, non-controlling interest acquired in
July 1998.
OTHER ACQUISITIONS:
Crestwood............ St. Louis, MO 100% interest acquired in January 1998.
Independence Mall.... Wilmington, NC 60% interest acquired in August 1998 and an
additional 10% interest acquired in October 1998.
Promenade............ Woodland Hills, CA 100% interest acquired in June 1998.
Topanga.............. Canoga Park, CA The remaining 58% interest not previously owned by
the Company acquired in November 1998.
</TABLE>
In conjunction with the above acquisitions, the Company assumed mortgage
debt as described in Note 8.
F-12
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT, PER SHARE AND FLOOR AREA AMOUNTS)
3. ACQUISITIONS: (CONTINUED)
During 1997, the Company invested approximately $349,000 to acquire the
following properties.
<TABLE>
<CAPTION>
PROPERTY LOCATION INTEREST ACQUIRED
- -------- ------------------ ---------------------------------------------------
<S> <C> <C>
Northwest Plaza...... St. Ann, MO 100% interest acquired in December 1997.
Meriden.............. Meriden, CT The remaining 50% interest not previously owned by
the Company acquired in September 1997.
Annapolis............ Annapolis, MD The remaining 70% interest not previously owned by
the Company plus an additional 13.2 acre parcel of
land adjacent to the Center acquired in June
1997.
Wheaton.............. Wheaton, MD 68% managing, non controlling interest acquired in
June 1997.
</TABLE>
Additionally, in May 1997, the Company made a participating loan totaling
$145,000 (the "Garden State Plaza Loan") to two wholly-owned, indirect
subsidiaries of WHL ("Borrower") which have a combined 50% partnership interest
in Westland Garden State Plaza Limited Partnership, the owner of Garden State
Plaza, a super-regional shopping center located in Paramus, New Jersey. The
non-recourse loan provides for interest only at a fixed annual rate of 8.5% and
is secured by the Borrowers' 50% indirect interest in Garden State Plaza. The
Company is entitled to receive participating interest payments based on 80% of
the borrowers' share of the adjusted cashflow (as defined) from Garden State
Plaza subject to an annual aggregate limit of fixed and participating interest
in an amount equal to 11%. The loan matures in May 2007. During the years ended
December 31, 1999, 1998, and 1997, the Company earned participating interest of
$3,625, $2,420 and $728, respectively.
4. DISPOSITIONS:
In June 1999, the Company sold Cerritos, a super-regional shopping center
located in Cerritos, California to The Macerich Company for approximately
$188,000.
On June 23, 1999, the Company completed a joint venture transaction (the
"Joint Venture") with J.P. Morgan Investment Management, Inc., acting for a
group of pension trusts ("J.P. Morgan"), which effectively transferred a 50%
interest in University Towne Center ("UTC") and Valley Fair to J.P. Morgan for
approximately $246,000 including the assumption of debt totaling approximately
$120,000. Concurrently, the Company sold an option (the "Liquidity Option") to
J. P. Morgan for $4,000. The Liquidity Option gives J.P. Morgan the right, under
certain circumstances, to exchange its interest in the Joint Venture, or its
interest in either Center, for shares of the Company's common stock. Upon
exercise of the Liquidity Option, J.P. Morgan will receive shares of the
Company's common stock equal to J. P. Morgan's share of funds from operations
("FFO") (as defined) in the Joint Venture, or a Center (as applicable), for the
preceding four calendar quarters divided by the Company's FFO per share (as
defined) for the same period. As a result of the Liquidity Option, the Company
accounted for the sale of interests in Valley Fair and UTC as a financing
transaction.
In August 1998, the Company recognized a loss totaling $11,806, resulting
from the reversal of certain deferred interest rate swap agreements. This loss
was netted against the gain from the sale of investments for purposes of
consolidated financial statement presentation.
F-13
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
4. DISPOSITIONS: (CONTINUED)
In 1997, the Company acquired 49 million non-transferable warrants (the "WHL
Warrants") to acquire ordinary shares of WHL. In April 1998, with the consent of
WHL, the Company exercised the WHL Warrants by electing to receive the profit
element of the WHL Warrants. As a result of the exercise, the Company received
20,339,066 WHL ordinary shares that the Company sold in April 1998 for proceeds
totaling $99,670.
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE AFFILIATES:
As of December 31, 1999, the Company's economic interest in each
unconsolidated real estate affiliate is as follows:
<TABLE>
<CAPTION>
ECONOMIC
PROPERTY LOCATION INTEREST
- --------------------- ---------------- --------
<S> <C> <C>
Independence Mall Wilmington, NC 85.0%
Plaza Camino Real Carlsbad, CA 40.0%
UTC La Jolla, CA 50.0%
Valley Fair San Jose, CA 50.0%
Vancouver Vancouver, WA 50.0%
West Valley Canoga Park, CA 42.5%
</TABLE>
A summary of the condensed combined balance sheets and statements of income
for unconsolidated real estate affiliates is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
CONDENSED COMBINED BALANCE SHEETS 1999 1998
- --------------------------------- --------- ---------
<S> <C> <C>
Investment in real estate:
Land, building and improvements, at cost............ $ 642,914 $ 490,214
Less accumulated depreciation and amortization...... (46,264) (46,908)
Construction in progress............................ 54,589 5,081
--------- ---------
Net investment in real estate......................... 651,239 448,387
Other notes payable................................... (352,250) (185,674)
Other net assets and liabilities and outside
interests........................................... (123,866) (123,966)
--------- ---------
Investments in unconsolidated real estate
affiliates.......................................... $ 175,123 $ 138,747
========= =========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
CONDENSED COMBINED STATEMENTS OF INCOME 1999 1998 1997
- --------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Total revenues................................. $ 75,398 $ 82,620 $75,789
Costs and expenses:
Operating, general and administrative........ 21,225 25,231 22,568
Interest expense, net........................ 18,610 24,025 21,982
Depreciation and amortization................ 12,409 16,867 18,314
-------- -------- -------
Net income..................................... 23,154 16,497 12,925
Outside interests' share of income............. (13,895) (10,548) (9,038)
-------- -------- -------
Equity in income of unconsolidated real estate
affiliates................................... $ 9,259 $ 5,949 $ 3,887
======== ======== =======
</TABLE>
F-14
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE AFFILIATES: (CONTINUED)
Significant accounting policies used by the unconsolidated real estate
affiliates are similar to those used by the Company.
6. LEASES:
DIRECT FINANCING LEASES RECEIVABLE:
The Company owns certain properties that are leased to The May Department
Stores Company under direct financing leases. The leases' initial terms expire
in September 2017, and may be renewed for up to 14 additional five-year terms.
The May Department Stores Company has the option to purchase each property under
these leases at fair market value during the last 16 months of the initial term
or any of the renewal option terms.
The direct financing lease receivables are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Minimum lease payments receivable....................... $139,870 $147,750
Less unearned income.................................... (58,943) (64,536)
-------- --------
Direct financing leases receivable.................... $ 80,927 $ 83,214
======== ========
</TABLE>
Excluding options to extend, the future minimum rentals to be received by
the Company on the direct financing leases as of December 31, 1999, are as
follows:
<TABLE>
<S> <C>
2000........................................................ $ 7,880
2001........................................................ 7,880
2002........................................................ 7,880
2003........................................................ 7,880
2004........................................................ 7,880
Thereafter.................................................. 100,470
--------
$139,870
========
</TABLE>
PROPERTY RENTAL:
Substantially all of the property owned by the Company is leased to
third-party retailers under operating leases as of December 31, 1999. Lease
terms vary between retailers and some leases include percentage rental payments
based on sales volume.
F-15
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
6. LEASES: (CONTINUED)
Future minimum rental revenues under noncancelable operating leases as of
December 31, 1999, are as follows:
<TABLE>
<S> <C>
2000........................................................ $ 287,372
2001........................................................ 270,617
2002........................................................ 250,461
2003........................................................ 226,392
2004........................................................ 191,817
Thereafter.................................................. 706,962
----------
$1,933,621
==========
</TABLE>
These amounts do not include percentage rentals which may become receivable
under certain leases on the basis of retailer sales in excess of stipulated
minimums.
GROUND LEASES:
The Company leases the land underlying portions of several of its Centers.
Future minimum annual ground lease payments for ground leases in effect as of
December 31, 1999 are as follows:
<TABLE>
<S> <C>
2000........................................................ $ 1,383
2001........................................................ 1,388
2002........................................................ 1,399
2003........................................................ 1,399
2004........................................................ 1,393
Thereafter.................................................. 41,240
-------
$48,202
=======
</TABLE>
These amounts do not include participation rentals which may become payable
under certain ground leases on the basis of gross rental receipts in excess of a
stipulated minimum.
7. DEFERRED EXPENSES AND OTHER ASSETS:
Deferred expenses and other assets are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Lease costs, net of accumulated amortization of $11,413
and $10,867 in 1999 and 1998, respectively.............. $20,381 $16,178
Loan costs, net of accumulated amortization of $8,199 and
$4,070 in 1999 and 1998, respectively................... 16,560 11,286
Prepaid and other assets.................................. 4,498 6,500
------- -------
$41,439 $33,964
======= =======
</TABLE>
F-16
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
8. NOTES PAYABLE:
A summary of notes payable is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Secured line of credit with a group of banks with a maximum
commitment
of $450,000, interest only payable monthly at LIBOR +
1.30% (7.43%
effective rate at December 31, 1999), due in 2002 with an
option
to extend................................................. $ 150,766 $ --
Unsecured subordinated notes to Australian investors,
interest payable semi-annually at LIBOR + 2.32% (8.38%
effective rate at December 31, 1999), due in equal
installments in 2001, 2002 and 2003....................... 301,088 301,088
Collateralized note payable, interest only payable monthly
at LIBOR + 0.53% (6.16% effective rate at December 31,
1999) due in 2001......................................... 754,100 746,100
Senior collateralized non-recourse notes, interest at 6.39%,
principal and interest payable quarterly, due in 2004..... 14,001 16,782
Senior collateralized non-recourse notes bearing interest at
7.33%, interest only payable quarterly until 2004,
principal and interest payable quarterly thereafter, due
in 2014................................................... 55,167 55,167
Collateralized non-recourse note payable to an insurance
company, interest at an effective rate of 7.15%, principal
and interest payable monthly, due in 2000................. 131,694 136,456
Collateralized commercial mortgage notes due in 2004,
interest only payable monthly at 6.78%.................... 75,000 75,000
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and
interest payable monthly, due in 2018..................... 18,556 19,026
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and
interest payable monthly, due in 2006..................... 22,532 23,043
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and
interest payable monthly, due in 2022..................... 72,399 73,745
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and
interest payable monthly, due in 2002..................... 59,518 61,603
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.77%, principal and
interest payable monthly, due in 2002..................... 43,714 --
Collateralized non-recourse notes payable to an insurance
company, effective interest at 7.00%, principal and
interest payable monthly, due in 2004..................... 61,518 63,488
Collateralized non-recourse notes payable to insurance
companies, interest at 7.72%, principal and interest
payable monthly, due in 2010.............................. 158,773 --
Collateralized commercial mortgage notes due in 2009,
effective interest at 8.29%. Principal and interest
payable monthly........................................... 377,000 --
Collateralized term loan, interest only payable monthly at
LIBOR + 1.50% (7.62% effective rate at December 31, 1999),
due in 2001............................................... 64,000 --
</TABLE>
F-17
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
8. NOTES PAYABLE: (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Collateralized construction loan with a maximum commitment
of $37,500, interest only payable monthly at LIBOR + 1.75%
(7.80% effective rate at December 31, 1999), due in
2001...................................................... $ 32,311 $ --
Unsecured revolving credit facility with a group of banks
with a maximum commitment of $600,000, interest only at
LIBOR + 1.00%. This note was repaid and retired in
December 1999............................................. -- 490,000
Unsecured bridge facility with a group of banks, interest
only at LIBOR + 1.75%. This note was repaid and retired in
June 1999................................................. -- 100,000
Secured bridge facility with a group of banks, interest only
at LIBOR + 1.75%. This note was repaid and retired in June
1999...................................................... -- 95,000
Secured bridge facility with a group of banks, interest only
at LIBOR + 1.50%. This note was repaid and retired in
January 1999.............................................. -- 44,000
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.20%, principal and
interest payable monthly, due in 2006. This note is
included in investments in unconsolidated real estate
affiliates upon the conveyance of 50% joint venture
interests in UTC to J.P. Morgan (see Notes 4 and 11)...... -- 81,041
Collateralized non-recourse notes to an insurance company,
interest only at 6.51%. This note was repaid and retired
in September 1999......................................... -- 167,000
Collateralized non-recourse note payable to a bank, interest
only at LIBOR + 2.00%. This note was repaid and retired in
May 1999.................................................. -- 92,476
---------- ----------
$2,392,137 $2,641,015
========== ==========
</TABLE>
In December 1999, the Company obtained a secured line of credit from a group
of banks with total availability of $450,000 of which $299,234 was undrawn at
December 31, 1999. Also in December 1999, the Company closed a $377,000 mortgage
financing secured by certain properties owned by the Company. The proceeds from
these loans were used to retire the Company's unsecured corporate credit
facility and to provide working capital.
In September 1999, the Company refinanced secured debt totaling $167,000
with a new ten-year $159,000 commercial loan secured by Montgomery Mall. The
proceeds were used to retire first mortgages on South County and West County.
In May 1999, the Company obtained a secured loan totaling $101,500 of which
$64,000 was used to pay down the Company's unsecured corporate credit facility
and $37,500 was made available to fund the redevelopment at Meriden. At
December 31, 1999, there was $5,189 available under the construction financing.
F-18
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
8. NOTES PAYABLE: (CONTINUED)
In June 1998, the Company issued $301,088 of unsecured subordinated notes
("Capital Notes") to Australian investors, repayable in three equal installments
due in June 2001, 2002 and 2003. The Capital Notes, which are listed on the
Australian Stock Exchange, are denominated in Australian dollars. In conjunction
with the issuance of the Capital Notes, the Company entered into interest rate
swap and foreign currency hedge agreements which effectively fixed the interest
and principal payments due to holders of the Capital Notes in U.S. dollars and
fixed the interest rate at 8.38%. The unrealized gain on the interest rate swap
and foreign currency hedge agreements was approximately $5,403 at December 31,
1999 as compared to an unrealized loss of $12,551 at December 31, 1998. The
Capital Notes have not been, and will not be, registered under the Securities
Act of 1933, as amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
At December 31, 1998, notes payable include mortgages assumed in conjunction
with the acquisition of the Hahn Centers totaling $352,819. The fixed rate
mortgages assumed were recorded at their estimated fair value at the time of
their assumption.
The mortgage debt secured by North County Fair also requires the Company to
pay contingent interest equal to 30% of the excess of gross rental receipts over
a stipulated minimum. During the years ended December 31, 1999, 1998 and 1997,
contingent interest totaled $1,283, $668 and $587, respectively.
In conjunction with the acquisition of Topanga, the Company assumed a
mortgage balance with a fair value of $61,603 at December 31, 1998. The assumed
mortgage was recorded at its estimated fair value at the time of its assumption.
In conjunction with the issuance of collaterized commercial notes ("Notes")
in 1997 totaling $75,000, the Company entered into an interest rate cap
agreement and interest rate floor agreement which effectively fixed the floating
rate on the Notes at 6.78%.
Interest costs capitalized for the years ended December 31, 1999, 1998 and
1997, were $2,315, $1,558 and $1,404, respectively.
Certain notes payable agreements provide for restrictive covenants relating
to the maintenance of specified financial performance ratios such as minimum net
worth, debt service coverage ratio, loan to value, ownership percentages and
restrictions on future distribution payments. As of December 31, 1999, the
Company was in compliance with these covenants.
The annual maturities of notes payable and the revolving credit facility as
of December 31, 1999, are as follows:
<TABLE>
<S> <C>
2000........................................................ $ 145,918
2001........................................................ 965,902
2002........................................................ 362,263
2003........................................................ 114,625
2004........................................................ 139,703
Thereafter.................................................. 663,726
----------
$2,392,137
==========
</TABLE>
F-19
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
9. INTEREST RATE SWAP CONTRACTS:
It is the Company's policy to enter into interest rate swap contracts only
to the extent necessary to reduce exposure to fluctuations in interest rates.
The Company does not enter into interest rate swap contracts for speculative
purposes. Interest rate swaps are contractual agreements between the Company and
third parties to exchange fixed and floating interest payments periodically
without the exchange of the underlying principal amounts (notional amounts). In
the unlikely event that a counterparty fails to meet the terms of an interest
rate swap contract, the Company's exposure is limited to the interest rate
differential on the notional amount. The Company does not anticipate
non-performance by any of the counterparties.
The Company has also entered into deferred interest rate exchange agreements
to manage future interest rates. The agreements consist of swaps and involve the
future receipt, corresponding with the expiration of existing fixed rate debt,
of a floating rate based on LIBOR and the payment of a fixed rate.
<TABLE>
<CAPTION>
RANGE OF RANGE OF
NOTIONAL AMOUNT FIXED RATES MATURITY DATES
--------------- -------------- -------------------
<S> <C> <C> <C>
Current swaps where the Company is a
receiver of LIBOR....................... $1,287,000 5.84% to 7.09% 6/30/01 to 12/11/08
Deferred swaps where the Company is a
receiver of LIBOR....................... $ 610,000 5.99% to 6.26% 4/01/02 to 4/01/08
</TABLE>
The net unrealized gain on the interest rate swap contracts was
approximately $48,744 at December 31, 1999.
10. CAPITAL STOCK:
At December 31, 1999 and 1998, the total number of shares authorized, issued
and outstanding were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------------- -------------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
SHARES SHARES SHARES SHARES
AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Common stock, $0.01 par value................. 200,000,000 73,346,541 200,000,000 73,337,691
Excess stock, $0.01 par value................. 205,000,000 -- 205,000,000 --
Non-voting senior preferred stock, $1.00 par
value....................................... 200 -- 200 2
Preferred stock, $1.00 par value of the
following designations:
Cumulative redeemable preferred stock:
Series A.................................... 940,000 940,000 940,000 940,000
Series B.................................... 400,000 270,000 400,000 270,000
Cumulative convertible redeemable preferred
stock:
Series C.................................... 416,667 416,667 416,667 416,667
Series C-1.................................. 138,889 138,889 138,889 138,889
Series C-2.................................. 138,889 138,889 138,889 138,889
Series D.................................... 694,445 694,445 694,445 694,445
Series D-1.................................. 138,889 138,889 138,889 138,889
Series E.................................... 477,778 477,778 -- --
Non-Designated................................ 1,654,443 -- 2,132,221 --
</TABLE>
F-20
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
10. CAPITAL STOCK: (CONTINUED)
Each director who is not an officer of the Company or an employee of WHL is
entitled to annual compensation equal to $20 in cash and $20 in common stock.
The number of shares issued is based on the share price of the Company's common
stock on the anniversary of the director's appointment. In 1999, the Company
issued 8,850 shares of common stock to directors.
SENIOR PREFERRED STOCK:
Prior to redemption, holders of the Company's non-voting senior preferred
stock were entitled to receive, when declared, cash dividends at an annual rate
of $35 per share, payable quarterly. In February, 1999, the Company redeemed the
senior preferred stock at $550 per share, plus unpaid accrued dividends totaling
$16 per share.
SERIES A AND B PREFERRED STOCK:
The holder of the Company's Series A and B preferred stock is entitled to
receive, when declared, cumulative cash dividends equal to the greater of $8.50
per annum per share or an amount currently equal to 6.2461, for Series A
preferred stock, or 6.6667 for Series B preferred stock, times the dollar amount
of dividends declared on the Company's common stock. The Company has an option
to redeem the Series A and Series B preferred stock anytime after July 2003 and
May 2004, respectively, at a redemption price of $100 per share, which is equal
to the liquidation preference.
Concurrently with the issuance of the Series A preferred stock in 1996 and
the Series B preferred stock in 1997, the Company issued warrants (the "1996
Warrants" and "1997 Warrants," respectively) to Westfield America Trust ("WAT"),
an Australian public company and an affiliate of the Company to purchase the
Company's common stock. The 1996 Warrants, which expire in July 2016, entitle
WAT to purchase 6,246,096 shares of the Company's common stock at an exercise
price of $16.01 per share. The 1997 Warrants, which expire in May 2017, entitle
WAT to purchase 2,089,550 shares of the Company's common stock at an exercise
price of $15.00 per share. The holder of the Series A and B preferred stock also
holds WAT Series A and B special options which entitle such holder to exchange
each share of Series A and B preferred stock for WAT ownership units. Upon
receipt of the Series A and B preferred stock, WAT can, with the Company's
consent at such time, surrender the Series A and B preferred stock as
consideration for the exercise of the 1996 and 1997 Warrants.
SERIES C AND D PREFERRED STOCK:
The Series C, C-1, C-2, D and D-1 cumulative convertible redeemable
preferred stock (collectively the "Series C and D Preferred Stock") are separate
designations of preferred stock with similar terms. Holders of the Series C and
D Preferred Stock are entitled to receive, when declared, cumulative cash
dividends equal to the greater of $15.30 per annum per share or an amount equal
to 10.0 times the dollar amount per share declared on the Company's common stock
during the period. At any time, holders of the Company's Series C and D
Preferred Stock have the right to convert all, or any portion, of their shares
into 10 shares of common stock for each share of Series C and D Preferred Stock.
The Company has the option to redeem the Series C and D Preferred Stock anytime
on or after August 2008, at a redemption price of $180 per share, which is equal
to the liquidation preference. The original holders of the Company's Series C
and D Preferred Stock have the right to require the Company to redeem the
Series C and D Preferred Stock if 1) the Company ceases to qualify as a REIT for
federal tax purposes, 2) there is a change in control, as
F-21
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
10. CAPITAL STOCK: (CONTINUED)
defined, or 3) after August 2008, the market price of the Company's common stock
is less than $18.00 per share.
SERIES E PREFERRED STOCK:
In August 1999, the Company issued 477,778 shares of Series E cumulative
convertible preferred stock (the "Series E Preferred Stock") to WAT for $86,000
under terms similar to the Series C and D Preferred Stock. The holder of the
Series E Preferred Stock has substantially the same dividend, liquidation, and
voting rights as the holders of Series C and D Preferred Stock. In addition, the
holder of the Series E Preferred Stock has the same redemption rights as the
holders of Series C and D Preferred Stock, except that the Company can not
redeem, nor can the holder require the Company to redeem, the Series E Preferred
Stock until August 2009. The Series E Preferred Stock have the same conversion
rights as the Series C and D Preferred Stock except that conversion is subject
to approval of the Company's shareholders.
Holders of preferred stock are entitled to dividends before dividends are
distributed to common stockholders. In general, preferred stockholders do not
have voting rights. In special circumstances, such as non-payment of preferred
stock dividends, some classes of preferred stockholders are granted certain
voting rights, such as the right to elect additional directors to the board of
directors. Once all dividends in arrears are restored and paid in full, the
directors elected by the preferred shareholders will cease to be directors and
the number of directors on the board will be reduced accordingly.
COMMON STOCK:
The holders of the Company's common stock vote together as a class on all
matters and are entitled to receive distributions declared after payment of
dividends on preferred stock. A distribution was declared on December 17, 1999
to stockholders of record on December 31, 1999 of $37,040, including $0.3625 per
common share, for the quarter ended December 31, 1999 and was paid on
January 31, 2000. The Company declared distributions of $1.45, $1.42 and $1.59
per common share for the years ended December 31, 1999, 1998, and 1997,
respectively.
In May 1998, the Company entered into a stock subscription agreement ("1998
Subscription Agreement") with WAT. Under the 1998 Subscription Agreement, the
Company has the right to sell, and WAT has the obligation to purchase, up to
A$465,000 (approximately US$303,878 at December 31, 1999) of the Company's
common stock in three equal installments at a 5% discount to the then prevailing
market price of the Company's common stock at June 2001, 2002 and 2003. In lieu
of issuing common stock at each installment date, the Company has the option to
pay the 5% discount in cash or common stock.
OPERATING PARTNERSHIP UNITS:
Under certain circumstances investors in the Operating Partnership may
exchange their Investor Unit Rights for cash or, at the discretion of the
Company, shares of the Company's common stock. Holders of Investor Unit Rights
are entitled to receive from the Operating Partnership, when declared,
distributions per Investor Unit Right equal to the distribution per share paid
to holders of the Company's common stock. At December 31, 1999 and 1998, there
were Investor Unit Rights outstanding of 2,164,235 and 978,328, respectively.
F-22
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
10. CAPITAL STOCK: (CONTINUED)
In 1998 and 1999, the Company acquired partnership interests in Independence
Mall. The acquisition price consisted of cash and partnership units in
affiliated partnerships. Under certain circumstances, the holders of these
partnership units may exchange their units for cash or, at the discretion of the
Company, Investor Unit Rights. At December 31, 1999 and 1998, there were 911,185
and 788,328 partnership units outstanding, respectively.
EARNINGS PER SHARE
The following is a summary of the elements used in calculating basic and
diluted earnings per share ("EPS"):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net income for basic EPS.............................. $ 54,299 $ 106,188 $ 46,865
Add: net income allocable to Investor Unit Rights..... 300 -- N/A
Less: preferred stock dividends....................... (37,260) (17,619) (11,428)
----------- ----------- -----------
Net income for diluted EPS............................ $ 17,339 $ 88,569 $ 35,437
=========== =========== ===========
Weighted average common shares outstanding
(denominator for basic EPS)......................... 73,342,852 73,334,315 65,504,877
Diluted equivalent common shares:
1996 and 1997 Warrants.............................. -- 71,240 42,824
1998 Subscription Agreement......................... 1,111,435 495,024 N/A
Investor Unit Rights................................ 2,164,235 -- N/A
----------- ----------- -----------
Weighted average common shares and common share
equivalents outstanding (denominator for diluted
EPS)................................................ 76,618,522 73,900,579 65,547,701
=========== =========== ===========
EPS:
Basic............................................... $ 0.23 $ 1.21 $ 0.54
=========== =========== ===========
Diluted............................................. $ 0.23 $ 1.20 $ 0.54
=========== =========== ===========
</TABLE>
The Company's preferred shares were not included in the earnings per share
calculation as their effect is antidilutive.
11. NON CASH INVESTING AND FINANCING INFORMATION:
During the year ended December 31, 1999, the Company recorded a decrease in
minority interest totaling $5,213 as a result of the acquisition of a 32%
interest in Wheaton for Investor Unit Rights in January 1999.
Prior to the formation of a Joint Venture with J.P. Morgan in June 1999, UTC
was included in the Company's consolidated accounts. After the Company conveyed
a 50% interest in UTC to J.P. Morgan in conjunction with the Joint Venture
transaction, the Company began accounting for UTC under the equity
F-23
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
11. NON CASH INVESTING AND FINANCING INFORMATION: (CONTINUED)
method. The Company's 50% interest in the fixed assets and liabilities of UTC in
June 1999 were as follows:
<TABLE>
<S> <C>
Land........................................................ $ 9,540
Building and improvements................................... 177,925
Less accumulated depreciation............................... (4,180)
--------
Net investment in real estate............................. 183,285
Note payable................................................ (80,269)
--------
Net investment in UTC....................................... 103,016
Cash proceeds from J.P. Morgan.............................. (50,865)
--------
Non-cash addition to investments in unconsolidated real
estate affiliates......................................... $ 52,151
========
</TABLE>
Topanga was accounted for under the equity method until November 1998, when
the Company acquired the remaining 58% interest that it did not already own.
Topanga is now consolidated with the Company. The Company's 42% interest in the
condensed assets and liabilities of Topanga in November 1998, were as follows:
<TABLE>
<S> <C>
Net investment in real estate............................... $ 37,944
Cash and cash equivalents................................... 913
Accounts and notes receivable............................... 583
Deferred expense and other assets, net...................... 995
Note payable................................................ (23,842)
Accounts payable and accrued liabilities.................... (723)
--------
The Company's investment in Topanga......................... $ 15,870
========
</TABLE>
North County Fair ("NCF") was accounted for under the equity method until
October 1998, when the Company acquired the remaining 55% interest that it did
not already own. NCF is now consolidated with the Company. The Company's 45%
interest in the condensed assets and liabilities of NCF in October 1998, were as
follows:
<TABLE>
<S> <C>
Net investment in real estate............................... $ 25,261
Cash and cash equivalents................................... 1,007
Accounts and notes receivable............................... 1,167
Deferred expense and other assets, net...................... 582
Note payable................................................ (22,191)
Accounts payable and accrued liabilities.................... (939)
--------
The Company's investment in NCF............................. $ 4,887
========
</TABLE>
F-24
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
11. NON CASH INVESTING AND FINANCING INFORMATION: (CONTINUED)
Meriden was accounted for under the equity method until September 1997 when
the Company acquired the remaining 50% interest that it did not already own.
Meriden is now consolidated with the Company. The Company's 50% interest in the
condensed assets and liabilities of Meriden in September 1997, were as follows:
<TABLE>
<S> <C>
Net investment in real estate............................... $ 35,373
Cash and cash equivalents................................... 235
Accounts and notes receivable............................... 381
Deferred expense and other assets, net...................... 527
Accounts payable............................................ (291)
Note payable................................................ (25,000)
--------
The Company's investment in Meriden......................... $ 11,225
========
</TABLE>
Annapolis was accounted for under the equity method until June 1997, when
the Company acquired the remaining 70% partnership interest that it did not
already own. Annapolis is now consolidated with the Company. The Company's 30%
interest in the condensed assets and liabilities of Annapolis in June 1997, were
as follows:
<TABLE>
<S> <C>
Net investment in real estate............................... $38,676
Cash and cash equivalents................................... 184
Accounts receivable......................................... 323
Deferred expense and other assets, net...................... 322
Accounts payable............................................ (91)
-------
The Company's investment in Annapolis....................... $39,414
=======
</TABLE>
The Company's purchase of a 68% managing interest in Wheaton, in June 1997,
resulted in an increase in minority interest totaling $24,000.
During 1999, 1998 and 1997, construction in progress totaling $50,301,
$36,570, and $94,473, was placed into service, respectively.
12. INCOME TAXES:
Effective February 12, 1994, the Company elected to be treated as a REIT for
income tax purposes. As a REIT, the Company will not incur significant Federal
income taxes provided it continues to satisfy the various REIT Code
requirements, does not dispose of certain properties and continues to distribute
all of its REIT taxable income. On a per share basis, taxable cash distributions
representing ordinary income to shareholders for the years ending December 31,
1999, 1998, and 1997 were $1.29, $1.64, and $0.65, respectively (unaudited). The
excess of distributions paid (for tax purposes) over the taxable portion of the
distribution, if any, represents a non-taxable return of capital to the
Company's shareholders.
F-25
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
13. RELATED PARTIES:
The Manager entered into an agreement with the Company to manage and lease
the properties in the Company's portfolio beginning January 1, 1995. In
consideration for providing these management services, the Manager is reimbursed
certain recoverable property operating costs including mall related payroll and
is entitled to receive gross fees of 5% of minimum and percentage rents received
by the Company. Property management fees totaling $10,218, $6,264, and $4,074,
net of capitalized leasing fees of $7,164, $4,605, and $2,988 were expensed by
the Company for the years ended December 31, 1999, 1998 and 1997, respectively.
Included in accounts payable and accrued expenses at December 31, 1999 and 1998,
are management fees payable to the Manager totaling $1,461 and $1,299,
respectively.
In addition to the management fees, the Manager was reimbursed for
recoverable operating costs including mall related payroll costs totaling
$21,351, $17,543, and $14,431 for the years ended December 31, 1999, 1998 and
1997, respectively.
The Company entered into a Master Development Framework Agreement with the
Developer under which the Company granted the Developer the exclusive right to
carry out expansion, redevelopment and related works on the Company's wholly
owned shopping centers and to endeavor to have the Developer be appointed by the
relevant partner to carry out similar activities for jointly owned real estate
affiliates. During 1999, 1998 and 1997, the Company reimbursed the Developer
$95,093, $51,224, and $46,859, respectively, for expansion, redevelopment and
related work.
In July 1996, the Company engaged the Advisor to provide a variety of asset
management and investment services subject to supervision of the Company. The
Advisor is entitled to an annual fee equal to 25% of the annual FFO, as defined,
in excess of the Advisory FFO Amount ($152,811 at December 31, 1999), but not to
exceed 55 basis points of the Net Equity Value (as defined) of the Company's
assets. The Advisory FFO amount is increased whenever the Company issues
additional equity. The advisory fee, which first became payable in 1998, was
$9,788 and $6,140 for the years ended December 31, 1999 and 1998, respectively.
Included in interest and other income for the year ended December 31, 1999,
1998 and 1997, is interest income earned on the Garden State Plaza Loan totaling
$15,950, $14,745 and $8,326, respectively.
14. FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's financial instruments have been
determined by the Company using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily required
in interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
The fair value estimates presented below are based on pertinent information
available to management as of December 31, 1999 and 1998. Management is not
aware of any factors that would significantly affect
F-26
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
14. FINANCIAL INSTRUMENTS: (CONTINUED)
the estimated fair value amount. As of December 31, 1999, future estimates of
fair value and the amount that may be paid for or realized in the future may
differ significantly from the amounts presented below.
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Participating loan to an affiliate.............. $ 145,000 $ 145,000 $ 145,000 $ 145,000
Direct financing leases receivable.............. 80,927 70,731 83,214 85,571
Cash............................................ 6,444 6,444 25,272 25,272
Restricted cash................................. 40,008 40,008 25,820 25,820
Accounts and notes receivable................... 47,632 47,632 45,325 45,325
Liabilities:
Notes payable................................... 2,392,137 2,367,465 2,641,015 2,650,376
Accounts payable and accrued expenses........... 119,680 119,680 82,658 82,658
</TABLE>
PARTICIPATING LOAN TO AFFILIATES, CASH, RESTRICTED CASH, ACCOUNTS RECEIVABLE,
AND ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
The carrying amounts of these items are a reasonable estimate of their fair
value.
NOTES PAYABLE AND DIRECT FINANCING LEASES RECEIVABLE:
The fair value of notes payable and direct financing leases receivable are
based upon current market rates for financial instruments with similar terms.
15. COMMITMENTS AND CONTINGENCIES:
The Company is currently involved in several development projects and had
outstanding commitments totaling approximately $73,349 at December 31, 1999.
The Redevelopment Agency of the City of West Covina ("Agency") issued
$51,220 of special tax assessment municipal bonds ("Bonds") to finance land
acquisition for expansion of the shopping center and additional site
improvements. Special taxes levied against the property, together with
incremental property tax, incremental sales tax, and park and ride revenues will
be used to pay the principal and interest on the Bonds and the administrative
expense of the Agency. Principal and interest payments will continue to 2022 in
graduating amounts ranging from $2,030 to $5,289. The Company has the contingent
obligation to satisfy any shortfall in annual debt service requirements after
tenant recoveries.
The Company is subject to the risks inherent in the ownership and operation
of commercial real estate. These include, among others, the risks normally
associated with changes in the general economic climate, trends in the retail
industry, including creditworthiness of retailers, competition for retailers,
changes in tax laws, interest rate levels, the availability of financing, and
potential liability under environmental and other laws.
F-27
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
15. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
Substantially all of the properties have been subjected to Phase I
environmental reviews. Such reviews have not revealed, nor is management aware
of, any probable or reasonably possible environmental costs that management
believes would be material to the consolidated financial statements.
The Company currently is neither subject to any other material litigation
nor, to management's knowledge, is any material litigation currently threatened
against the Company other than routine litigation and administrative proceedings
arising in the ordinary course of business.
16. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly data for 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1999
Total revenues............................ $125,349 $127,222 $119,951 $131,256 $503,778
Net income................................ $ 9,001 $ 12,091 $ 13,556 $ 19,651 $ 54,299
Net income applicable to common shares.... $ 376 $ 3,466 $ 3,997 $ 9,200 $ 17,039
Net income allocable to convertible
partnership units....................... -- -- -- $ 300 $ 300
Earnings per common share:
Basic................................... $ 0.00 $ 0.05 $ 0.05 $ 0.13 $ 0.23
Diluted................................. $ 0.00 $ 0.05 $ 0.05 $ 0.12 $ 0.23(1)
Weighted average shares outstanding:
Basic................................... 73,338 73,342 73,345 73,347 73,343
Diluted................................. 74,326 74,382 74,413 76,724 76,619
1998
Total revenues............................ $ 69,917 $ 68,679 $ 78,661 $111,208 $328,465
Net income................................ $ 12,551 $ 78,647 $ 2,997 $ 11,993 $106,188
Net income (loss) applicable to common
shares.................................. $ 9,828 $ 75,924 $ (2,055) $ 4,872 $ 88,569
Earnings (loss) per common share:
Basic................................... $ 0.13 $ 1.04 $ (0.03) $ 0.07 $ 1.21
Diluted................................. $ 0.13 $ 0.97 $ (0.03) $ 0.07 $ 1.20(1)
Weighted average shares outstanding:
Basic................................... 73,330 73,333 73,337 73,338 73,334
Diluted................................. 73,397 81,192 74,689 74,324 73,901
</TABLE>
- ------------------------
(1) Total earnings per share are calculated based on annual results, which
differ from the summation of quarterly earnings per share.
F-28
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
17. SCHEDULE OF REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION AS OF
DECEMBER 31, 1999:
<TABLE>
<CAPTION>
WESTFIELD SHOPPING BUILDINGS & TOTAL ACCUMULATED ACQUISITION DATE/
TOWN LAND IMPROVEMENTS (2),(4) DEPRECIATION(2) ENCUMBRANCES REDEVELOPMENT DATE
- ------------------ -------- ------------- ---------- --------------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Annapolis............ $ 48,359 $ 182,551 $ 230,910 $ (76,003) $ 144,380 1997/1999
Capital Mall......... -- 57,366 57,366 (1,940) 30,023 1998
Connecticut Post..... 6,356 137,107 143,463 (11,957) --(1) 1994/1999
Crestwood............ 65,640 47,230 112,870 (2,106) 73,682 1998/1999
Downtown Plaza....... -- 151,369 151,369 (4,632) 85,861 1998
Eagle Rock........... 3,624 14,232 17,856 (5,564) 16,840 1994
Eastland............. 16,609 37,525 54,134 (3,850) 41,487 1994/1997
Enfield.............. 8,468 34,281 42,749 (9,052) 30,796 1994/1997
Fox Hills............ 10,224 72,176 82,400 (2,310) 47,200 1998
Horton Plaza......... 838 210,452 211,290 (6,372) 113,100 1998
Meriden.............. 11,375 129,740 141,115 (29,002) 96,311 1997/1999
Mid Rivers........... 10,816 62,837 73,653 (19,385) 56,990 1994/1999
Mission Valley....... 1,774 85,179 86,953 (34,699) 75,000 1994/1997
Mission Valley West.. 537 26,440 26,977 (825) -- 1994/1998
Montgomery Mall...... 32,420 164,714 197,134 (49,895) 158,773 1994
North County Fair.... -- 155,941 155,941 (19,943) 72,399 1998
Northwest Plaza...... 28,401 86,997 115,398 (4,657) 85,511 1997
Oakridge............. -- 79,807 79,807 (2,523) 45,400 1998
Palm Desert.......... 11,244 70,927 82,171 (765) --(1) 1999
Parkway Plaza........ 17,225 149,593 166,818 (4,932) 83,300 1998
Plaza Bonita......... 22,994 80,457 103,451 (29,013) 75,524 1994
Promenade............ 4,583 30,124 34,707 (1,483) --(1) 1998
Santa Anita.......... 11,500 134,579 146,079 (5,419) 61,518 1998
Solano Mall.......... 8,998 83,289 92,287 (2,737) 41,088 1998
South County......... 13,259 36,229 49,488 (13,786) --(1) 1994
South Shore.......... 29,071 153,541 182,612 (12,768) 88,432 1994/1997
Topanga Plaza........ 13,521 134,095 147,616 (20,235) 103,232 1998
Trumbull............. 16,405 168,157 184,562 (15,790) 131,694 1994
West County.......... 6,456 22,648 29,104 (8,995) -- 1994
West Covina.......... 18,922 85,548 104,470 (24,286) 83,152 1994
Westland............. 5,162 13,239 18,401 (4,752) --(1) 1994/1994
West Park............ 2,633 25,871 28,504 (9,865) 29,420 1994
Wheaton Plaza........ 26,853 66,296 93,149 (5,290) --(1) 1999
-------- ---------- ---------- --------- ----------
$454,267 $2,990,537 $3,444,804 $(444,831) $1,871,113
======== ========== ========== ========= ==========
<CAPTION>
WESTFIELD SHOPPING
TOWN DEPRECIABLE LIFE
- ------------------ ----------------
<S> <C>
Annapolis............ 3-20 yrs.
Capital Mall......... 39 yrs.
Connecticut Post..... 3-40 yrs.
Crestwood............ 39yrs.
Downtown Plaza....... 39 yrs.
Eagle Rock........... 5-31.5yrs.
Eastland............. 5-30yrs.
Enfield.............. 3-31.5yrs.
Fox Hills............ 39 yrs.
Horton Plaza......... 39yrs.
Meriden.............. 5-30 yrs.
Mid Rivers........... 3-35 yrs.
Mission Valley....... 3-50 yrs.
Mission Valley West.. 3-50 yrs.
Montgomery Mall...... 5-20 yrs.
North County Fair.... 40 yrs.
Northwest Plaza...... 40 yrs.
Oakridge............. 39 yrs.
Palm Desert.......... 39 yrs.
Parkway Plaza........ 39 yrs.
Plaza Bonita......... 3-39 yrs.
Promenade............ 39 yrs.
Santa Anita.......... 39yrs.
Solano Mall.......... 39 yrs.
South County......... 5-40 yrs.
South Shore.......... 3-40 yrs.
Topanga Plaza........ 3-50 yrs.
Trumbull............. 3-40yrs.
West County.......... 3-20 yrs.
West Covina.......... 3-20yrs.
Westland............. 3-50 yrs.
West Park............ 3-15 yrs.
Wheaton Plaza........ 3-39 yrs.
</TABLE>
F-29
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
17. SCHEDULE OF REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION AS OF
DECEMBER 31, 1999: (CONTINUED)
(1) Properties securing the Company's secured corporate credit facility, which
had an outstanding balance of $150,766 at
December 31, 1999.
(2) The following is a reconciliation of the real estate investment and related
accumulated depreciation from January 1, 1999 to December 31, 1999.
<TABLE>
<S> <C>
Real Estate:
Balance at January 1, 1999................................ $3,643,770
Cash Additions............................................ 421,069
Dispositions(3)........................................... (675,770)
Improvements.............................................. 55,735
----------
Balance at December 31, 1999.............................. $3,444,804
==========
Accumulated Depreciation:
Balance at January 1, 1999................................ $ (340,727)
Depreciation Expense...................................... (108,854)
Dispositions, net(3)...................................... 4,750
----------
Balance at December 31, 1999.............................. $ (444,831)
==========
</TABLE>
(3) Amount primarily represents deletions in conjunction with the sale of
Cerritos and the conveyance of joint venture interests in UTC and Valley
Fair as a result of the J.P. Morgan transaction.
(4) The aggregate cost for federal income tax purposes is $2,875,080.
F-30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
WESTFIELD AMERICA, INC.
BY:
/s/ PETER S. LOWY
-----------------------------------------
Date: March 29, 2000 Peter S. Lowy
DIRECTOR AND CO-PRESIDENT
/s/ RICHARD E. GREEN
-----------------------------------------
Date: March 29, 2000 Richard E. Green
CO-PRESIDENT
/s/ MARK A. STEFANEK
-----------------------------------------
Date: March 29, 2000 Mark A. Stefanek
CHIEF FINANCIAL OFFICER
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*
------------------------------------------- Director and Chairman of the March 28, 2000
Frank P. Lowy Board
*
------------------------------------------- Director and Co-President March 28, 2000
Peter S. Lowy
*
------------------------------------------- Director March 28, 2000
Roy L. Furman
*
------------------------------------------- Director March 28, 2000
Frederick G. Hilmer
*
------------------------------------------- Director March 28, 2000
David H. Lowy
*
------------------------------------------- Director March 28, 2000
Herman Huizinga
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*
------------------------------------------- Director March 28, 2000
Bernard Marcus
*
------------------------------------------- Director March 28, 2000
Larry A. Silverstein
*
------------------------------------------- Director March 28, 2000
Francis T. Vincent, Jr.
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ IRV HEPNER
--------------------------------------
Irv Hepner March 28, 2000
ATTORNEY-IN-FACT
</TABLE>
<PAGE>
EXHIBIT INDEX
3. The following exhibits are included in this report:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- --------------------- ------------------------------------------------------------
<C> <S>
2.1 Agreement for Purchase and Sale of Partnership Interest and
Real Property, dated as of June 4, 1997, between RREEF USA
Fund III/Annapolis, Inc. and Westfield America, Inc. of
Annapolis (Exhibit 2.1(1)).
2.2 Asset Purchase Agreement, dated as of April 6, 1994, between
TrizecHahn Centers, Inc. ("TrizecHahn"), and The Rouse
Company and Westfield America, Inc (the "Company")
(Exhibit 10.1 (2)).
2.3 Amendment No. 1 to Asset Purchase Agreement, dated as of
July 31, 1998, between TrizecHahn, and The Rouse Company
and the Company (Exhibit 10.2(3)).
2.4 Amendment No. 2 to Asset Purchase Agreement, dated as of
August 31, 1998, between TrizecHahn, and The Rouse Company
and the Company (Exhibit 10.3(4)).
2.5 Amendment No. 3 to Asset Purchase Agreement, dated as of
September 23, 1998, between TrizecHahn, and The Rouse
Company and the Company (Exhibit 10.4(4)).
2.6 Amendment No. 4 to Asset Purchase Agreement, dated as of
September 25, 1998, between TrizecHahn, and The Rouse
Company and the Company (Exhibit 10.5(4)).
2.7 Amendment No. 5 to Asset Purchase Agreement, dated as of
October 7, 1998, between TrizecHahn, and The Rouse Company
and the Company (Exhibit 10.6(4)).
2.8 Amendment No. 6 to Asset Purchase Agreement, dated as of
October 22, 1998 between TrizecHahn, and The Rouse Company
and the Company (Exhibit 10.7(5)).
2.9 Amendment No. 7 to Asset Purchase Agreement, dated as of
October 30, 1998, between TrizecHahn, and The Rouse
Company and the Company (Exhibit 10.8(5)).
2.10 Amendment No. 8 to Asset Purchase Agreement, dated as of
November 17, 1998, between TrizecHahn, and The Rouse
Company and the Company (Exhibit 10.9(6)).
2.11 Amendment No. 9 to Asset Purchase Agreement, dated as of
December 3, 1998, between TrizecHahn, and The Rouse
Company and the Company (Exhibit 10.8(7)).
2.12 Amendment No. 10 to Asset Purchase Agreement, dated as of
December 9, 1998, between TrizecHahn, and The Rouse
Company and the Company (Exhibit 10.9(6)).
3.1 Restated Articles of Incorporation of the Company (Exhibit
3.1(8)).
3.2 Second Amended and Restated By-Laws of the Company (Exhibit
3.2(9)).
3.3 Amendment No. 1 to the Second Amended and Restated By-Laws
of the Company (Exhibit 3.3(9)).
3.4 Amendment No. 2 to the Second Amended and Restated By-Laws
of the Company (Exhibit 3.4(9)).
3.5 Amendment No. 3 to the Second Amended and Restated By-Laws
of the Company (Exhibit 3.5(9)).
10.1 Pledge and Security Agreement, together with the Promissory
Note attached thereto, dated as of May 21, 1997, among
Westland Realty, Inc., Westfield Partners, Inc., Westland
Management, Inc. and the Company (Exhibit 10.1(10)).
10.2 WHL Option Deed, dated May 21, 1997, between Westfield
Holdings Limited and the Company (Exhibit 10.2(10)).
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- --------------------- ------------------------------------------------------------
<C> <S>
10.3 Warrant of the Company, dated July 1, 1996
(Exhibit 10.4(11)).
10.4 Common Stock Purchase Warrant of the Company, dated May 1997
(Exhibit 10.4(10)).
10.5 Special Option Deed, dated May 14, 1996 among Westfield
America Management Limited ("WAM"), the Perpetual Trustee
company Limited (the "WAT Trustee") and the Company
(Exhibit 10.6(11)).
10.6 Deed of Variation, dated June 24, 1996, among WAM, the WAT
Trustee and the Company (Exhibit 10.7(11)).
10.7 Special Option Deed, dated May 21, 1997, among WAM, the WAT
Trustee and Stitching Pensionfunds ABP ("ABP")
(Exhibit 10.7(10)).
10.8 Advisory Agreement dated July 1, 1996, between the Company
and Westfield U.S. Advisory, L.P. (the "Advisor")
(Exhibit 10.9(11)).
10.9 First Amendment to Advisory Agreement, dated May 21, 1997,
between the Company and the Advisor (Exhibit 10.9(10)).
10.10 Master Development Framework Agreement, dated July 1, 1996,
between the Company and Westfield Corporation, Inc. (the
"Developer" or "WCI") (Exhibit 10.11(11)).
10.11 First Amendment to Master Development Framework Agreement,
dated May 1997 between the Company and the Developer
(Exhibit 10.11(10)).
10.12 Property Management Letter Agreement, dated July 1, 1996,
between the Company and CenterMark Management Company
("CMC") (Exhibit 10.13(11)).
10.13 First Amendment to Property Management Letter Agreement
dated May 21, 1997, between the Company and CMC
(Exhibit 10.13(10)).
10.14 Management Agreements, dated December 16, 1997 between
Northwest Plaza LLC and Westfield Management Company
("WMC") (including a schedule of substantially identical
agreements) (Exhibit 10.14(10)).
10.15 Amended and Restated Assignments of Management Agreements,
dated May 21, 1997, between the Company and CMC
(Exhibit 10.15(10)).
10.16 Amended and Restated Subcontract of Management Rights, dated
May 21, 1997, between the Company and CMC
(Exhibit 10.16(10)).
10.17 Garden State Plaza Option Agreement, dated July 1, 1996,
between the Company and Westfield Capital Corporation
Finance Pty Limited (Exhibit 10.21(11)).
10.18 First Amendment to Garden State Plaza Option Agreement,
dated as of May 21, 1997 between the Company and Westfield
Capital Corporation Finance Pty Limited
(Exhibit 10.18(10)).
10.19 Trade Name License Agreement, dated July 1, 1996, between
the Company and WCI (Exhibit 10.23(11)).
10.20 First Amendment to Trade Name License Agreement, dated as of
May 21, 1997, between WCI. and the Company
(Exhibit 10.20(10)).
10.21 Registration Rights Agreement, dated May 21, 1997, between
the Company and WHL (Exhibit 10.21(10)).
10.22 Investors Agreement dated May 21, 1997, among the Company,
WHL, the WAT Trustee and WAM, WCI and WAI
(Exhibit 10.22(10)).
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- --------------------- ------------------------------------------------------------
<C> <S>
10.23 Non-Competition Agreement, dated as of May 21, 1997, among
the Company, Frank P. Lowy, David H. Lowy, Peter S. Lowy
and Steven M. Lowy (Exhibit 10.23(10)).
10.24 Subscription Agreement, dated as of May 21, 1997, among WAM,
the WAT Trustee, ABP, and the Company
(Exhibit 10.24(10)).
10.25 Side Letter dated as of May 21, 1997, by WHL
(Exhibit 10.25(10)).
10.26 Credit Agreement, dated as of May 30, 1997, among the
Company, Commonwealth Bank of Australia, Australia and New
Zealand Banking Group Limited, Union Bank of Switzerland
and National Australia Bank Limited (Exhibit 10.1(12)).
10.27 Credit Agreement Amendment, dated as of January 15, 1998,
among Westfield America, Inc., Commonwealth Bank of
Australia and Australia and New Zealand Banking Group
Limited, and Union Bank of Switzerland, New York Branch,
and National Australia Bank Limited, New York Branch
(Exhibit 10.1(13)).
10.28 Secured Revolving Credit Agreement, dated as of December 15,
1999, among the Westfield America Limited Partnership (the
"Operating Partnership"), National Australia Bank Limited,
New York Branch, Commonwealth Bank of Australia, Australia
and New Zealand Banking Group Limited and UBS,AG.
10.29 Deed of Trust, Assignment of Leases and Rent and Security
Agreement with Fixture Filing, dated as of December 15,
1999, from Promenade LLC to Chicago Title Company for the
benefit of National Australia Bank Limited, New York
Branch, Commonwealth Bank of Australia, Australia and New
Zealand Banking Group Limited and UBS, AG.
10.30 Unsecured Indemnity Agreement, dated as of December 15,
1999, by the Operating Partnership, the Company and
Promenade LLC in favor of National Australia Bank Limited,
New York Branch, Commonwealth Bank of Australia, Australia
and New Zealand Banking Group Limited and UBS, AG.
10.31 Loan Agreement, dated as of December 9, 1999 between
Downtown Plaza LLC, Eastland Shopping Center LLC, Westland
South Shore Mall L.P. and UBS Principal Finance LLC.
10.32 Loan Agreement, dated as of December 9, 1999, between
Annapolis Shoppingtown LLC, Annapolis Mall Limited
Partnership Annapolis Land LLC and UBS Principal Finance
LLC.
10.33 Loan Agreement, dated as of December 9, 1999, between Eagle
Rock Plaza LLC and UBS Principal Finance LLC
10.34 Stock Subscription Agreement, dated as of May 29, 1998,
between the Company, the WAT Trustee and WAM
(Exhibit 10.28(10)).
10.35 WAI Subscription Agreement, dated as of June 25, 1998,
between Westfield America, Inc., Westfield American
Investments Pty Limited and Westfield Holdings Limited.
(Exhibit 10.2(2)).
10.36 WAT Subscription Agreement, dated as of June 25, 1998,
between the Company, the WAT Trustee and WAM
(Exhibit 10.3(2)).
10.37 WAT Subscription Agreement, dated as of December 17, 1998,
between the Company, the WAT Trustee and WAM (10.1(14)).
10.38 WAT Subscription Agreement, dated as of July 15, 1999,
between the Company, the WAT Trustee and WAM (10.2(14)).
10.39 Consolidated WEA Capital Note Trust Deed Incorporating the
Deed of Variation No 1, dated June 11, 1998, between the
Company and the WAT Trustee (Exhibit 10.4(2)).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- --------------------- ------------------------------------------------------------
<C> <S>
10.40 Loan Agreement between Fox Hills Mall LLC, Horton Plaza LLC,
Oakridge Mall LLC, Parkway Plaza LLC and The Capital
Company of America LLC, dated as of October 30, 1998
(Exhibit 10.1(7)).
10.41 Assumption and Amendment Agreement by Northwest Plaza LLC,
WEA Crestwood Plaza LLC, Enfield Square LLC, Plaza Bonita
LLC, Plaza West Covina LLC, Mid Rivers Mall LLC, West Park
Partners, L.P., Capital Mall Company, Fox Hills Mall LLC,
Horton Plaza LLC, Oakridge Mall LLC, Parkway Plaza LLC and
The Capital Company of America LLC, dated as of December
9, 1998 (Exhibit 10.2(7)).
10.42 Second Amendment of Loan Agreement, dated as of February 25,
1999, between Northwest Plaza LLC, WEA Crestwood Plaza
LLC, Enfield Square LLC, Bonita LLC, Plaza West Covina
LLC, Mid Rivers Mall LLC, West Park Partners, L.P.,
Capital Mall Company LLC, Fox Hills Mall LLC, Horton Plaza
LLC, Parkway Plaza LLC, Oakridge Mall LLC and the Capital
Company of America LLC (10.3(14)).
10.43 The First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership,
dated as of August 3, 1998 (the "OP Agreement")
(Exhibit 10.3(10)).
10.44 First Amendment to the OP Agreement, dated as of August 12,
1998 (Exhibit 10.4(10)).
10.45 Second Amendment to the OP Agreement, dated as of December
8, 1998 (Exhibit 10.5(10)).
10.46 Third Amendment to the OP Agreement, dated as of December
24, 1998 (Exhibit 10.6(10)).
10.47 Fourth Amendment to the OP Agreement, dated as of December
29, 1998 (Exhibit 10.7(10)).
10.48 Fifth Amendment to the OP Agreement (Exhibit 99.1(15)).
10.49 Management Agreement between May Centers, Inc. ("MCI") and
Mission Valley Partnership, dated April 8, 1986
(Exhibit 10.39(10)).
10.50 First Amendment to Management Agreement between Center Mark
Properties ("CMP") and Mission Valley Partnership, dated
February 1, 1994 (Exhibit 10.40(10)).
10.51 Property Management Agreement between Hahn Property
Management Corporation and Anita Associates, dated January
1, 1989 (Exhibit 10.41(10)).
10.52 First Amendment to Property Management Agreement between
Hahn Property Management Corporation and Anita Associates,
dated July 1, 1993 (Exhibit 10.42(10)).
10.53 Management Agreement between CMP and Plaza Camino Real,
dated February 11, 1994 (Exhibit 10.43(10)).
10.54 Management Agreement between MCI and Topanga Plaza
Partnership, dated December 31, 1985 (Exhibit 10.44(10)).
10.55 First Amendment to Management Agreement [between MCI and
Topanga Plaza Partnership], dated February 1, 1994
(Exhibit 10.45(10)).
10.56 Joint Venture Agreement between MCI and Vancouver
Associates, dated September 29, 1975 (Exhibit 10.46(10)).
10.57 Amendment to Joint Venture Agreement between MCI and
Vancouver Associates, dated May 12, 1976
(Exhibit 10.47(10)).
10.58 Second Amendment to Joint Venture Agreement between May
Centers of Vancouver, Inc. and Vancouver Associates,
September 1, 1990 (Exhibit 10.48(10)).
10.59 Third Amendment to Joint Venture Agreement between May
Centers of Vancouver, Inc. and Vancouver Associates, dated
September 1, 1990 (Exhibit 10.49(10)).
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- --------------------- ------------------------------------------------------------
<C> <S>
10.60 Fourth Amendment to Joint Venture Agreement between
CenterMark Properties of Vancouver, Inc. and Vancouver
Associates, dated January 1, 1992 (Exhibit 10.50(10)).
10.61 Amended and Restated Limited Partnership Agreement of West
Valley Partnership, dated December 31, 1985
(Exhibit 10.51(10)).
10.62 Amendment to Amended and Restated Agreement of Limited
Partnership of West Valley Partnership, dated November 19,
1987 (Exhibit 10.52(10)).
10.63 Assignment of limited partnership interest in West Valley
Partnership, dated August 12, 1988 (Exhibit 10.53(10)).
10.64 Assignment of limited partnership interest in West Valley
Partnership, dated March 10, 1993 (Exhibit 10.54(10)).
10.65 Assignment and Assumption of Property Management Side Letter
Agreement between WEA and Westfield America Limited
Partnership, dated November 12, 1997 (Exhibit 10.55(10)).
11.1 Statements regarding Computation of Per Share Earnings for
the year ended December 31, 1999.
11.2 Statements Regarding Computation of Per Share Earnings for
the year Ended December 31, 1998.
11.3 Statements Regarding Computation of Per Share Earnings for
the year Ended December 31, 1997.
12 Statement regarding Computation of Ratios for the years
ended December 31, 1999, 1998, 1997, 1996 and 1995.
21 List of Subsidiaries of the Company.
23 Consent of Ernst & Young LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
</TABLE>
- ------------------------
(1) Incorporated by reference to designated exhibit to the Company's current
report of Form 8-K filed June 19, 1997.
(2) Incorporated by reference to designated exhibit to the Company's quarterly
report of Form 10-Q for the quarterly period ended June 30, 1998.
(3) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K filed on August 12, 1998.
(4) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K/A, filed on October 16, 1998.
(5) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K, filed on November 13, 1998
(6) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K, filed on December 2, 1998.
(7) Incorporated by reference to designated exhibit to the Company's current
report on form 8-K, filed on February 17, 1999.
(8) Incorporated by reference to designated exhibit to the Company's quarterly
report on Form 10-Q for the quarterly period ended June 30, 1999, filed on
August 16, 1999.
5
<PAGE>
(9) Incorporated by reference to designated exhibit to the Company's quarterly
report on Form 10-Q for the quarterly period ended March 31, 1999, filed on
May 17, 1999.
(10) Incorporated by reference to designated exhibit to the Company's annual
report on Form 10-K for the year ended December, 1998, filed on March 23,
1999
(11) Incorporated by reference to designated exhibit to Amendment No. 2 to the
Company's Registration Statement on Form S-11, filed on April 24, 1997.
(12) Incorporated by reference to designated exhibit to the Company's quarterly
report of Form 10-Q for the quarterly period ended June 30, 1997.
(13) Incorporated by reference to designated exhibit to the Company's quarterly
report of Form 10-Q for the quarterly period ended March 31, 1998.
(14) Incorporated by reference to designated exhibit to the Company's quarterly
report on Form 10-Q for the quarterly period ended September 30, 1999,
filed on November 15, 1999.
(15) Incorporated by reference to designated exhibit to the Company's
registration statement on form S-3, filed on August 24, 1999.
Documents substantially identical to exhibits 10.29 and 10.30, except as to
the grantor and the subject property, have been omitted in reliance on
Rule 12b-31 under the Securities Exchange Act of 1934, as amended. Set forth
below are the material details in which such documents differ from Exhibits
10.29 and 10.30.
<TABLE>
<CAPTION>
GRANTOR SUBJECT PROPERTY
- -------------------------------------------- --------------------------------------------
<S> <C>
WEA Palm Desert LLC (Mortgage) Westfield Shoppingtown Palm Desert
The Connecticut Post Limited Partnership Westfield Shoppingtown Connecticut Post
(Mortgage)
South County Center LLC (Mortgage) Westfield Shoppingtown South County
Westland Town Center LLC (Mortgage) Westfield Shoppingtown Westland
Wheaton Plaza Regional Shopping Center LLP Westfield Shoppingtown Wheaton
(Mortgage)
Westfield America, Inc. (Unsecured Westfield Shoppingtown Palm Desert
Indemnity)
Westfield America, Inc. (Secured Indemnity) Westfield Shoppingtown Connecticut Post
Westfield America, Inc. (Secured Indemnity) Westfield Shoppingtown South County
Westfield America, Inc. (Secured Indemnity) Westfield Shoppingtown Westland
Westfield America, Inc. (Unsecured Westfield Shoppingtown Wheaton
Indemnity)
</TABLE>
6
<PAGE>
Exhibit 10.28
================================================================================
SECURED REVOLVING CREDIT AGREEMENT
dated as of December 15, 1999
among
WESTFIELD AMERICA LIMITED PARTNERSHIP,
as Borrower,
THE BANKS SIGNATORY HERETO,
each as a Bank,
and
NATIONAL AUSTRALIA BANK LIMITED, NEW YORK BRANCH,
as Administrative Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION....................1
SECTION 1.01. Definitions..............................................1
SECTION 1.02. Accounting Terms........................................14
SECTION 1.03. Computation of Time Periods.............................14
SECTION 1.04. Rules of Construction...................................14
ARTICLE II THE LOANS...............................................14
SECTION 2.01. The Loans...............................................14
SECTION 2.02. Purpose.................................................15
SECTION 2.03. Advances, Generally.....................................15
SECTION 2.04. Procedures for Advances.................................15
SECTION 2.05. Additional Conditions to Advances.......................16
SECTION 2.06. Interest Periods; Renewals..............................16
SECTION 2.07. Interest................................................16
SECTION 2.08. Fees....................................................17
SECTION 2.09. Notes...................................................17
SECTION 2.10. Prepayments.............................................17
SECTION 2.11. Termination of Commitments..............................18
SECTION 2.12. Method of Payment.......................................18
SECTION 2.13. Elections, Conversions or Continuation of Loans.........18
SECTION 2.14. Minimum Amounts.........................................18
SECTION 2.15. Certain Notices Regarding Elections, Conversions and
Continuations of Loans..................................19
SECTION 2.16. Late Payment Premium....................................19
SECTION 2.17. Letters of Credit.......................................19
SECTION 2.18. Additions and Releases of Properties....................21
SECTION 2.19. Reappraisals of Properties..............................22
SECTION 2.20. Extension of Maturity Date..............................23
ARTICLE III YIELD PROTECTION; ILLEGALITY; ETC.......................23
SECTION 3.01. Additional Costs........................................23
SECTION 3.02. Limitation on Types of Loans............................24
SECTION 3.03. Illegality..............................................24
SECTION 3.04. Treatment of Affected Loans.............................25
SECTION 3.05. Certain Compensation....................................25
SECTION 3.06. Capital Adequacy........................................26
SECTION 3.07. Substitution of Banks...................................26
ARTICLE IV CONDITIONS PRECEDENT....................................28
SECTION 4.01. Conditions Precedent to the Initial Advance.............28
i
<PAGE>
SECTION 4.02. Conditions Precedent to Advances After the Initial
Advance.................................................32
SECTION 4.03. Deemed Representations..................................32
ARTICLE V REPRESENTATIONS AND WARRANTIES..........................33
SECTION 5.01. Existence...............................................33
SECTION 5.02. Power and Authority; No Conflicts; Compliance With Laws.33
SECTION 5.03. Legally Enforceable Agreements..........................33
SECTION 5.04. Litigation..............................................34
SECTION 5.05. Good Title to Properties................................34
SECTION 5.06. Taxes...................................................34
SECTION 5.07. ERISA...................................................34
SECTION 5.08. No Default on Outstanding Judgments or Orders...........35
SECTION 5.09. No Defaults on Other Agreements.........................35
SECTION 5.10. Government Regulation...................................35
SECTION 5.11. Environmental Protection................................35
SECTION 5.12. Solvency................................................36
SECTION 5.13. Financial Statements....................................36
SECTION 5.14. Valid Existence of Affiliates. Each of..................36
SECTION 5.15. Insurance...............................................36
SECTION 5.16. Separate Tax and Zoning Lot.............................36
SECTION 5.17. Zoning and other Laws; Covenants and Restrictions.......36
SECTION 5.18. Utilities Available.....................................37
SECTION 5.19. Creation of Liens.......................................37
SECTION 5.20. Roads...................................................37
SECTION 5.21. Premises Documents and Leases...........................37
SECTION 5.22. Accuracy of Information; Full Disclosure................37
ARTICLE VI AFFIRMATIVE COVENANTS...................................37
SECTION 6.01. Maintenance of Existence................................37
SECTION 6.02. Maintenance of Records..................................38
SECTION 6.03. Maintenance of Insurance................................38
SECTION 6.04. Compliance with Laws; Payment of Taxes..................38
SECTION 6.05. Right of Inspection.....................................38
SECTION 6.06. Compliance With Environmental Laws......................38
SECTION 6.07. Payment of Costs........................................38
SECTION 6.08. Maintenance of Properties...............................39
SECTION 6.09. Reporting and Miscellaneous Document Requirements.......39
SECTION 6.10. Premises Documents; Leases..............................41
SECTION 6.11. Compliance with Covenants, Restrictions and Easements...41
SECTION 6.12. Management, Leasing and Service Contracts...............42
SECTION 6.13. Correction of Defects...................................42
SECTION 6.14. Estoppel Certificates...................................42
ii
<PAGE>
ARTICLE VII NEGATIVE COVENANTS......................................42
SECTION 7.01. Mergers Etc.............................................42
SECTION 7.02. Interest Rate Hedging...................................42
SECTION 7.03. Control of Borrower and Mortgagors......................43
ARTICLE VIII FINANCIAL COVENANTS.....................................43
SECTION 8.01. Financial Covenants.....................................43
ARTICLE IX EVENTS OF DEFAULT.......................................43
SECTION 9.01. Events of Default.......................................43
SECTION 9.02. Remedies................................................46
ARTICLE X ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS.............46
SECTION 10.01. Appointment, Powers and Immunities of Administrative
Agent...................................................46
SECTION 10.02. Reliance by Administrative Agent........................47
SECTION 10.03. Defaults................................................47
SECTION 10.04. Rights of Administrative Agent as a Bank................47
SECTION 10.05. Sharing of Costs by Banks; Indemnification of
Administrative Agent....................................48
SECTION 10.06. Non-Reliance on Administrative Agent and Other Banks....48
SECTION 10.07. Failure of Administrative Agent to Act..................49
SECTION 10.08. Resignation or Removal of Administrative Agent..........49
SECTION 10.09. Amendments Concerning Agency Function...................49
SECTION 10.10. Liability of Administrative Agent.......................49
SECTION 10.11. Transfer of Agency Function.............................50
SECTION 10.12. Non-Receipt of Funds by Administrative Agent............50
SECTION 10.13. Withholding Taxes.......................................50
SECTION 10.14. Pro Rata Treatment......................................51
SECTION 10.15. Sharing of Payments Among Banks.........................51
SECTION 10.16. Possession of Documents.................................51
ARTICLE XI NATURE OF OBLIGATIONS...................................51
SECTION 11.01. Absolute and Unconditional Obligations..................51
ARTICLE XII MISCELLANEOUS...........................................52
SECTION 12.01. Binding Effect of Request for Advance...................52
SECTION 12.02. Amendments and Waivers..................................52
SECTION 12.03. Usury...................................................53
SECTION 12.04. Expenses; Indemnification...............................53
SECTION 12.05. Assignment; Participation...............................54
SECTION 12.06. Documentation Satisfactory..............................55
SECTION 12.07. Notices.................................................56
SECTION 12.08. Setoff..................................................56
SECTION 12.09. Year 2000...............................................56
iii
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SECTION 12.10. Table of Contents; Headings.............................56
SECTION 12.11. Severability............................................56
SECTION 12.12. Counterparts............................................57
SECTION 12.13. Integration.............................................57
SECTION 12.14. GOVERNING LAW...........................................57
SECTION 12.15. Waivers.................................................57
SECTION 12.16. JURISDICTION; IMMUNITIES................................57
SECTION 12.17. Gross-Up For Taxes......................................58
SECTION 12.18. Confidentiality.........................................59
SECTION 12.19. Termination of Prior Loan...............................59
SECTION 12.20. Environmental Remediation and Holdback..................59
EXHIBIT A - Assignment and Assumption Agreement
EXHIBIT B - Authorization Letter
EXHIBIT C - Note
EXHIBIT D - Assignment and Agreement (Re: Hedging Product)
EXHIBIT E - Solvency Certificate
EXHIBIT F - Notice of Assignment of Lease
EXHIBIT G - Existing Letters of Credit
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SECURED REVOLVING CREDIT AGREEMENT ("this Agreement") dated as of
December 15, 1999 among WESTFIELD AMERICA LIMITED PARTNERSHIP, a limited
partnership organized and existing under the laws of the State of Delaware
("Borrower"), NATIONAL AUSTRALIA BANK LIMITED, NEW YORK BRANCH, as agent for the
Banks (in such capacity, together with its successors in such capacity,
"Administrative Agent"), and NATIONAL AUSTRALIA BANK LIMITED, NEW YORK BRANCH
(in its individual capacity and not as Administrative Agent, "NAB") and the
other lenders signatory hereto (NAB, the other lenders signatory hereto and such
other lenders who from time to time become Banks pursuant to Section 3.07 or
12.05, each a "Bank" and collectively, the "Banks").
Borrower desires that the Banks extend credit as provided herein,
and the Banks are prepared to extend such credit. Accordingly, Borrower, each
Bank and Administrative Agent agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions. As used in this Agreement the following
terms have the following meanings:
"Actual Annual Debt Service" means, as of any date of determination,
actual interest on the Notes for the four (4) calendar quarters ending with the
most recent quarter for which Borrower, Guarantor and Mortgagors are required to
report financial results pursuant to this Agreement; provided, however, that (x)
until such time as four (4) calendar quarters for which results are required to
be reported have elapsed from the date hereof until the date of determination,
Actual Annual Debt Service shall mean interest on the Notes for the period from
the date hereof through the most recent calendar quarter for which financial
results are required to be reported, as of the date of determination, annualized
and (y) to the extent interest rate protection contracts are assigned to
Administrative Agent pursuant to Section 7.02, for purposes of the foregoing
calculations, the interest rate on portions of the outstanding principal amount
of the Notes corresponding to the notional principal amounts covered by the
assigned interest rate protection contracts, for the term covered by such
interest protection contracts, shall be deemed to be fixed or capped, as the
case may be, at the fixed or capped rate under the assigned interest protection
contracts, plus the Applicable Margin.
"Additional Costs" has the meaning specified in Section 3.01.
"Administrative Agent" has the meaning specified in the preamble.
"Administrative Agent's Office" means Administrative Agent's office
located at 200 Park Avenue, 34th Floor, New York, New York 10166, or such other
address in the United States as Administrative Agent may designate by written
notice to Borrower and the Banks.
"Affiliate" means, with respect to any Person (the "first Person"),
any other Person which controls, or is controlled by, or is under common control
with the first Person; provided, however, that the term "Affiliate" shall
exclude Persons who own stock in Guarantor (including, without limitation,
Westfield America Trust and members of the Lowy family) and
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Persons controlled by members of the Lowy family (other than direct or indirect
subsidiaries of Guarantor). The term "control" means the possession, directly or
indirectly, of the power, alone, to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this Secured Revolving Credit Agreement, as
amended, supplemented or modified from time to time.
"Anchor Lease" means a lease demising in excess of 50,000 square
feet of gross leaseable area of the Improvements on any Property or a ground
lease demising a portion of a Property on which a retail or entertainment
establishment of at least 50,000 square feet has been or will be constructed.
"Anchor-Owned Stores" means, for each Property, those department
stores located on parcels contiguous to such Property which, together with the
Improvements on such Property, are being operated as an integrated shopping
center pursuant to the REA.
"Anchors" means, for each Property, those department store companies
which own, occupy and/or operate the related Anchor-Owned Stores or are the
lessee under an Anchor Lease.
"ANZ" means Australia and New Zealand Banking Group Limited.
"Applicable Commitment Fee Rate" means 0.35% per annum.
"Applicable Lending Office" means, for each Bank and for its LIBOR
Loan or Base Rate Loan, as applicable, the lending office of such Bank (or of an
Affiliate of such Bank) designated as such on its signature page hereof or in
the applicable Assignment and Assumption Agreement, or such other office of such
Bank (or of an Affiliate of such Bank) as such Bank may from time to time
specify to Administrative Agent and Borrower as the office by which its LIBOR
Loan or Base Rate Loan, as applicable, is to be made and maintained.
"Applicable Margin" means, with respect to LIBOR Loans, 1.30% per
annum.
"Assignee" has the meaning specified in Section 12.05.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of EXHIBIT A, pursuant to which
a Bank assigns and an Assignee assumes rights and obligations in accordance with
Section 12.05.
"Authorization Letter" means a letter agreement executed by Borrower
in the form of EXHIBIT B.
"Bank" and "Banks" have the respective meanings specified in the
preamble.
"Banking Day" means (1) any day on which commercial banks are not
authorized or required to close in New York City and (2) whenever such day
relates to a LIBOR Loan, an Interest Period with respect to a LIBOR Loan, or
notice with respect to a LIBOR Loan, a day on
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which dealings in Dollar deposits are also carried out in the London interbank
market and banks are open for business in London.
"Base Rate" means, for any day, the higher of (1) the Federal Funds
Rate (or, at any time after a Bank has notified Borrower that it is funding, or
intends to fund, a Base Rate Loan through the Federal Reserve Board's Century
Date Change Special Liquidity Facility (the "Special Facility"), in the case of
such Bank, the effective rate of interest payable by it on the relevant day for
funds obtained from the Special Facility) for such day plus 0.50% or (2) the
Prime Rate for such day.
"Base Rate Loan" means all or any portion (as the context requires)
of a Bank's Loan which shall accrue interest at a rate determined in relation to
the Base Rate.
"Borrower" has the meaning specified in the preamble.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"CBA" means Commonwealth Bank of Australia.
"Closing Date" means the date this Agreement has been executed by
all parties.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and all regulations promulgated thereunder.
"Collateral" means the Mortgaged Property under each Mortgage and
any other collateral now or hereafter given for the Loans.
"Collateral Assignment" means the Collateral Assignment by Guarantor
to Administrative Agent for the benefit of the Banks with respect to a deed of
trust encumbering Wheaton.
"Confidential Information" means, with respect to Administrative
Agent or any Bank (an "Affected Party"), information delivered to such Affected
Party by or on behalf of Borrower, Guarantor, any Mortgagor or any other
Affected Party in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is confidential or proprietary in nature at the
time it is so delivered or information obtained by the Affected Party in the
course of its review of the books or records of Borrower, Guarantor or any
Mortgagor as contemplated herein; provided that such term shall not include
information (1) that was publicly known or otherwise known to such Affected
Party prior to the time it was so disclosed to such Affected Party, (2) that
subsequently becomes publicly known through no act or omission by such Affected
Party or any Person acting on the Affected Party's behalf (it being understood
that confidential or proprietary information provided to or obtained by an
Affected Party by, from or on behalf of Borrower, Guarantor or any Mortgagor
that subsequently becomes publicly known shall nevertheless constitute
"Confidential Information" until it becomes publicly known), (3) that otherwise
becomes known to such Affected Party other than through disclosure by or on
behalf of Borrower, Guarantor or any Mortgagor and is not conspicuously marked
"confidential" or (4) that constitutes financial information delivered to such
Affected Party that is otherwise publicly available.
3
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"Connecticut Post" means the parcel(s) of real property known as
Connecticut Post Shopping Center, located in Milford, Connecticut, owned by
Connecticut Post LP, including the Improvements thereon.
"Connecticut Post LP" means The Connecticut Post Limited
Partnership, a Connecticut limited partnership.
"Continue", "Continuation" and "Continued" refer to the continuation
pursuant to Section 2.13 of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.
"Convert", "Conversion" and "Converted" refer to a conversion
pursuant to Section 2.13 of a Base Rate Loan into a LIBOR Loan or a LIBOR Loan
into a Base Rate Loan, each of which may be accompanied by the transfer by a
Bank (at its sole discretion) of all or a portion of its Loan from one
Applicable Lending Office to another.
"Debt" means, without duplication, (1) indebtedness or liability for
borrowed money, or for the deferred purchase price of property or services
(other than obligations to trade creditors and service providers incurred in the
ordinary course of business), (2) obligations as lessee under Capital Leases,
(3) current liabilities in respect of unfunded vested benefits under any Plan,
(4) obligations under letters of credit issued for the account of any Person,
(5) all obligations arising under bankers' or trade acceptance facilities, (6)
all guarantees, endorsements (other than for collection or deposit in the
ordinary course of business), and other contingent obligations to purchase any
of the items included in this definition, to provide funds for payment, to
supply funds to invest in any Person, or otherwise to assure a creditor against
loss, (7) all obligations secured by any Lien on property owned by the Person
whose Debt is being measured, whether or not the obligations have been assumed
and (8) all obligations under any agreement providing for contingent
participation or other hedging mechanisms with respect to interest payable on
any of the items described above in this definition.
"Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.
"Default Rate" means a variable rate per annum equal to the Base
Rate plus 4% per annum.
"Disposition" means a sale (whether by assignment, transfer or
Capital Lease) of an asset.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Elect", "Election" and "Elected" refer to election, if any, by
Borrower pursuant to Section 2.13 to have all or a portion of an advance of the
Loans be outstanding as LIBOR Loans.
"Engineering Consultant" means such firm as may be designated by
Administrative Agent from time to time for any Property.
"Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.
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"Environmental Law" means any Law relating to pollution or the
environment, including Laws relating to noise or to emissions, discharges,
releases or threatened releases of Hazardous Materials into the work place, the
community or the environment, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"Environmental Notice" means any written complaint, order, citation
or notice from any Governmental Authority (1) affecting or relating to
Borrower's, Guarantor's or any Mortgagor's compliance with any Environmental Law
in connection with any activity or operations at any time conducted by Borrower,
Guarantor or any Mortgagor, (2) relating to the occurrence or presence of or
exposure to or possible or threatened or alleged occurrence or presence of or
exposure to Environmental Discharges or Hazardous Materials at any of
Borrower's, Guarantor's or any Mortgagor's locations or facilities (including
each of the Properties), including, without limitation, (a) the existence of any
contamination or possible or threatened contamination at any such location or
facility and (b) remediation of any Environmental Discharge or Hazardous
Materials at any such location or facility or any part thereof or (3) relating
to any violation or alleged violation of any relevant Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
including any rules and regulations promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of organizations (within the meaning of
Section 414(b) of the Code) as Borrower, Guarantor or any Mortgagor or is under
common control (within the meaning of Section 414(c) of the Code) with Borrower,
Guarantor or any Mortgagor or is required to be treated as a single employer
with Borrower, Guarantor or any Mortgagor under Section 414(m) or 414(o) of the
Code.
"Event of Default" has the meaning specified in Section 9.01.
"Excluded Taxes" means all present and future (1) taxes, levies,
imposts, duties, deductions, withholdings, fees, liabilities and similar charges
imposed on or measured by the overall net income of any Bank (or any office,
branch or subsidiary of such Bank) or franchise taxes, taxes on doing business
or taxes measured by capital or net worth imposed on any Bank (or any office,
branch or subsidiary of such Bank), in each case imposed by the United States or
any political subdivision or taxing authority thereof or therein, or (2) taxes
on or measured by the overall net income of any office, branch or subsidiary of
a Bank or franchise taxes, taxes imposed on doing business or taxes measured by
capital or net worth imposed on any office, branch or subsidiary of such Bank,
in each case imposed by any foreign country or subdivision thereof in which such
Bank's principal office or Applicable Lending Office is located.
"Federal Funds Rate" means, for any day, the rate per annum
(expressed on a 360-day basis of calculation) equal to the weighted average of
the rates on overnight federal funds transactions as published by the Federal
Reserve Bank of New York for such day provided that (1) if such day is not a
Banking Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the immediately preceding Banking Day as so published on the
next succeeding Banking Day and (2) if no such rate is so published on such next
succeeding Banking
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Day, the Federal Funds Rate for such day shall be the average of the rates
quoted by three (3) Federal Funds brokers to Administrative Agent on such day on
such transactions.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
"Fiscal Year" means each period from January 1 to December 31.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.13 (except for changes concurred in by Guarantor's Accountants).
"Good Faith Contest" means the contest of an item if (1) the item is
diligently contested in good faith, and, if appropriate, by proceedings timely
instituted, (2) adequate reserves are established with respect to the contested
item, (3) during the period of such contest, the enforcement of any contested
item is effectively stayed and (4) the failure to pay or comply with the
contested item during the period of the contest is not likely to result in a
Material Adverse Change.
"Governmental Approvals" means any authorization, consent, approval,
license, permit, certification, or exemption of, registration or filing with or
report or notice to, any Governmental Authority.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantor" means Westfield America, Inc., a Missouri corporation,
the general partner of Borrower.
"Guarantor Consolidated Financial Statements" means the consolidated
balance sheet and related consolidated statement of operations and cash flows,
and footnotes thereto, of Guarantor, prepared in accordance with GAAP.
"Guarantor's Accountants" means Ernst & Young LLP, or such other
accounting firm(s) selected by Borrower and reasonably acceptable to the
Required Banks.
"Guaranty" means the Guaranty of Payment from Guarantor to the
Banks, dated the date hereof.
"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any relevant Environmental
Law, including asbestos fibers and friable asbestos, polychlorinated biphenyls,
and any petroleum or hydrocarbon-based products or derivatives.
"Hypothetical Annualized Debt Service" means, as of any date of
determination, an amount equal to the annual payment of principal and interest,
assuming level debt service, required to fully amortize, over a term of thirty
(30) years, an amount equal to the outstanding
6
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principal amount under the Notes plus the total amount of outstanding Letters of
Credit, each as of the date of determination, assuming such amount were to bear
interest at a rate equal to 2.00% per annum in excess of the interpolated rate
on a ten (10)-year United States Treasury Note assumed to be issued as of the
date of determination; provided, however, that to the extent (x) interest rate
protection contracts are assigned to Administrative Agent pursuant to Section
7.02 and (y) such assigned interest rate protection contracts have a remaining
term, as of the date of determination, of at least four (4) years, such
"assumed" interest rate with respect to portions of the outstanding principal
amount of the Notes corresponding to the notional principal amounts covered by
the assigned interest rate protection contracts shall be deemed to be fixed or
capped, as the case may be, at the fixed or capped rate under the assigned
interest rate protection contracts, plus the Applicable Margin.
"Improvements" means, for each Property, all improvements now or
hereafter located thereon.
"Indemnity" means, for each Property, an agreement from Borrower,
Guarantor and the applicable Mortgagor whereby, among other things, the Banks
and Administrative Agent are indemnified regarding Hazardous Materials.
"Initial Advance" means the first advance of proceeds of the Loans.
"Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date the same is advanced, converted from a Base Rate Loan or
Continued, as the case may be, and ending, as Borrower may select pursuant to
Section 2.06, on the numerically corresponding day in the first, second, third
or (if available) fourth or sixth calendar month thereafter, provided that, in
any case, each such Interest Period which commences on the last Banking Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Banking
Day of the appropriate calendar month.
"Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, or rule of common law, now or hereafter in
effect, and any judicial or administrative interpretation thereof by a
Governmental Authority or otherwise, including any judicial or administrative
order, consent decree or judgment.
"Letter of Credit" has the meaning specified in Section 2.17(a).
"LIBOR Base Rate" means, with respect to any Interest Period
therefor, the rate per annum (rounded up, if necessary, to the nearest 1/100 of
1%) that appears on Dow Jones Page 3750 at approximately 11:00 a.m. (London
time) on the date (the "LIBOR Determination Date") two (2) Banking Days prior to
the first day of the applicable Interest Period, for amounts comparable to the
amount requested by Borrower for the same period of time as the Interest Period;
or, if such rate does not appear on Dow Jones Page 3750 as of approximately
11:00 a.m. (London time) on the LIBOR Determination Date, the rate (rounded up,
if necessary, to the nearest 1/100 of 1%) for deposits in Dollars for a period
comparable to the applicable Interest Period that appears on the Reuters Screen
LIBOR Page as of approximately 11:00 a.m. (London time) on the
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LIBOR Determination Date. If such rate does not appear on either Dow Jones Page
3750 or on the Reuters Screen LIBOR Page as of approximately 11:00 a.m. (London
time) on the LIBOR Determination Date, the LIBOR Base Rate for the Interest
Period will be determined on the basis of the offered rates for deposits in
Dollars for an amount comparable to the amount requested by Borrower for the
same period of time as such Interest Period that are offered by four (4) major
banks in the London interbank market at approximately 11:00 a.m. (London time)
on the LIBOR Determination Date. Administrative Agent will request that the
principal London office of each of the four (4) major banks provide a quotation
of its Dollar deposit offered rate. If at least two (2) such quotations are
provided, the LIBOR Base Rate will be the arithmetic mean of the quotations. If
fewer than two (2) quotations are provided as requested, the LIBOR Base Rate
will be determined on the basis of the rates quoted for loans in Dollars to
leading European banks for amounts comparable to such amount requested by
Borrower for the same period of time as such Interest Period offered by major
banks in New York City at approximately 11:00 a.m. (New York time) on the LIBOR
Determination Date. In the event that Administrative Agent is unable to obtain
any such quotation as provided above, it will be deemed that the LIBOR Base Rate
cannot be determined. For purposes of the foregoing definition, "Dow Jones Page
3750" means the display designated as "Page 3750" on the Dow Jones Markets
Service (or such other page as may replace Page 3750 on that service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rates for Dollar deposits); and "Reuters Screen LIBOR Page"
means the display designated as page "LIBOR" on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBOR page on that service for
the purpose of displaying interbank rates from London in Dollars).
"LIBOR Interest Rate" means, for any LIBOR Loan, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) determined by
Administrative Agent to be equal to the quotient of (1) the LIBOR Base Rate for
such LIBOR Loan for the Interest Period therefor divided by (2) one minus the
LIBOR Reserve Requirement for such LIBOR Loan for such Interest Period.
"LIBOR Loan" means all or any portion (as the context requires) of
any Bank's Loan which shall accrue interest at rate(s) determined in relation to
LIBOR Interest Rate(s).
"LIBOR Reserve Requirement" means, for any LIBOR Loan, the rate at
which reserves (including any marginal, supplemental or emergency reserves) are
actually required to be maintained during the Interest Period for such LIBOR
Loan under Regulation D by the applicable Bank against "Eurocurrency
liabilities" (as such term is used in Regulation D).
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment for collateral purposes, deposit arrangement, lien
(statutory or other), or other security agreement or charge of any kind or
nature whatsoever of any third party (excluding any right of setoff but
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable Law of any jurisdiction to evidence any of
the foregoing).
"Loan" and "Loans" have the respective meanings specified in Section
2.01.
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"Loan Commitment" means, with respect to each Bank, the obligation
to make a Loan in the principal amount set forth below or in the applicable
Assignment and Assumption Agreement, as such amount may be modified from time to
time in accordance with the provisions of Section 2.11, 3.07 or 12.05:
Bank Loan Commitment
NAB $200,000,000
CBA 150,000,000
ANZ 50,000,000
UBS 50,000,000
----------
$450,000,000
"Loan Documents" means this Agreement, the Notes, the Mortgage and
related Uniform Commercial Code financing statements for each Property, the
Indemnity for each Property, the Guaranty, the assignment required by paragraph
(22) of Section 4.01 and any subsequent such assignment required by Section 7.02
and related Uniform Commercial Code financing statements, the Collateral
Assignment, the Solvency Certificates and any other documents evidencing or
securing the Loan.
"Major Lease" means a lease demising in excess of 7,500 square feet
of gross leaseable area of the Improvements on any Property.
"Material Adverse Change" means either (1) a material adverse change
in the status of the business, financial condition or properties (taken as a
whole) of Borrower or Guarantor, or of the Mortgagors taken as a whole, or (2)
any event or occurrence of whatever nature which is likely to (x) have a
material adverse effect on the ability of Borrower or Guarantor, or of the
Mortgagors taken as a whole, to perform its or their material obligations under
the Loan Documents or (y) create, in the reasonable judgment of Administrative
Agent, a material risk of sale or forfeiture of any of the Collateral (other
than an immaterial portion thereof) or otherwise impair any of the Banks' rights
to exercise their remedies under the Loan Documents, taken as a whole, or the
enforceability of the Loan Documents, taken as a whole.
"Maturity Date" means December 15, 2002, as such date may be
extended pursuant to Section 2.20.
"Mortgage" means, for each Property, the Mortgage (or Deed of
Trust), Assignment of Leases and Rents and Security Agreement in respect
thereof, in the principal amount of $450,000,000, from the applicable Mortgagor
for the benefit of Administrative Agent, as agent for the Banks, to secure the
payment and performance of the Obligations.
"Mortgaged Property" means, for each Property, the applicable
Mortgagor's interest in the Property, the Improvements thereon and all other
property constituting the "Mortgaged Property", as said quoted term is defined
in the applicable Mortgage.
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"Mortgagor" means, the following Persons, each of which is wholly
owned, directly or indirectly, by Borrower and/or Guarantor: with respect to
Connecticut Post, Connecticut Post LP; with respect to Palm Desert, Palm Desert
LLC; with respect to Promenade, Promenade LLC; with respect to South County,
South County Center LLC; with respect to Westland, Westland Town Center LLC;
with respect to Wheaton, Wheaton Plaza Regional Shopping Center LLP; and with
respect to such other properties as may become Properties pursuant to Section
2.18, the respective owners of such Properties.
"Mortgagor Financial Statements" means, for each Mortgagor, a
balance sheet and related income statement and, in the case of the annual
Mortgagor Financial Statements required by Section 6.09(l), a related statement
of cash flows, and footnotes to the foregoing, of such Mortgagor, prepared in
accordance with GAAP.
"Multiemployer Plan" means a Plan defined as such in Section 3(37)
of ERISA to which contributions have been made by Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"NAB" has the meaning specified in the preamble.
"Non-Excluded Taxes" has the meaning specified in Section 12.17.
"Note" and "Notes" have the respective meanings specified in Section
2.09.
"Obligations" means each and every obligation, promise, covenant and
agreement of Borrower, now or hereafter existing, contained in this Agreement,
the Notes and any of the other Loan Documents, whether for principal,
reimbursement obligations, interest, fees, expenses, late charges, indemnities
or otherwise, and any amendments, supplements, extensions, renewals or
replacements of any of said documents, including but not limited to, all
indebtedness, obligations and liabilities (and all increases or additions
thereto) of Borrower or any Mortgagor to Administrative Agent or any Bank now
existing or hereafter incurred under or arising out of or in connection with
this Agreement, the Notes, the other Loan Documents, or any documents or
instruments executed in connection therewith; in each case whether direct or
indirect, joint or several, absolute or contingent, liquidated or unliquidated,
now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, and
including all indebtedness of Borrower or any Mortgagor under any instrument now
or hereafter evidencing or securing any of the foregoing.
"Outstanding Indebtedness" means, as of any time, all outstanding
indebtedness and liability for borrowed money (which shall be deemed to include
obligations as lessee under Capital Leases), secured or unsecured, of Borrower
and all outstanding indebtedness and liability for borrowed money (which shall
be deemed to include obligations as lessee under Capital Leases), secured or
unsecured, attributable to Borrower's beneficial interest in its consolidated
businesses and unconsolidated joint ventures in which it owns an interest, as
reflected in the Guarantor Consolidated Financial Statements.
"Palm Desert" means to parcel(s) of real property known as Palm
Desert Shopping Center, located in Palm Desert, California, owned by Palm Desert
LLC, including Improvements thereon.
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"Palm Desert LLC" means WEA Palm Desert LLC, a Delaware limited
liability company.
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" and "Participation" have the respective meanings
specified in Section 12.05.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower, Guarantor,
any Mortgagor or any ERISA Affiliate and which is covered by Title IV of ERISA
or to which Section 412 of the Code applies.
"Premises Documents" means, for each Property, the REA for such
Property and the other "Premises Documents," as such term is defined in the
Mortgage for such Property.
"Presence", when used in connection with any Environmental Discharge
or Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.
"Prime Rate" means that rate of interest from time to time announced
by NAB at its Principal Office as its prime commercial lending rate.
"Principal Office" means the principal office of NAB in New York
City, presently located at 200 Park Avenue, 34th Floor.
"Prior Loan" means the unsecured revolving loan to Guarantor of up
to $600,000,000 made pursuant to a Credit Agreement dated as of May 30, 1997, as
amended.
"Pro Rata Share" means, with respect to each Bank, a fraction, the
numerator of which is the amount of such Bank's Loan Commitment and the
denominator of which is the Total Loan Commitment.
"Prohibited Transaction" means any transaction proscribed by Section
406 of ERISA or Section 4975 of the Code and to which no statutory or
administrative exemption applies.
"Promenade" means the parcel(s) of real property known as Promenade
Shopping Center, located in Woodland Hills, California, owned by Promenade LLC,
including the Improvements thereon.
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"Promenade LLC" means Promenade LLC, a Delaware limited liability
company.
"Property" means, respectively, each of Connecticut Post, Palm
Desert, Promenade, South County, Westland and Wheaton and such other properties
as may be added as a Property pursuant to Section 2.18; excluding, however, any
Property that may be released pursuant to said Section.
"Property Capitalized Value" means, as of any date of determination,
the quotient of (1) Property EBITDA for the four calendar quarters ending with
the most recent quarter for which Borrower, Guarantor and Mortgagors are
required to report financial results pursuant to this Agreement, divided by (2)
the Weighted Average Capitalization Rate; provided, however, that if the
circumstances exist that would permit Administrative Agent to apply casualty
insurance proceeds or condemnation awards with respect to a particular Property
to the repayment of the Loans pursuant to Section 1.09 or Section 1.13 of the
Mortgage of such Property (other than in the case of a partial condemnation or
casualty that does not materially affect the income from the Property), then,
immediately upon the occurrence of such circumstances, such Property shall be
deemed to make no contribution to Property Capitalized Value.
"Property EBITDA" means, for any period of time, the sum, for all
Mortgagors, of revenues less operating costs (including general and
administrative expenses) before interest, income taxes, depreciation and
amortization and unusual items (including, without limitation, non-recurring
items such as gains and losses from asset sales), adjusted to eliminate the
effects of straight lining of rents.
"REA" means, for each Property, any reciprocal easement and
operating or similar agreement by and among Mortgagor and one or more Anchors
(together with any agreements supplemental or incidental thereto) pursuant to
which the Improvements and the related Anchor-Owned Stores are being operated as
an integrated shopping center. The REA for each Property is more particularly
described in the Mortgage for such Property.
"Regulation D" and "Regulation U" mean, respectively, Regulation D
and Regulation U of the Board of Governors of the Federal Reserve System.
"Regulatory Change" means, with respect to any Bank, any change
after the date of this Agreement in United States federal, state, municipal or
foreign laws or regulations (including Regulation D) or the adoption or making
after such date of any interpretations, directives or requests applying to a
class of banks including such Bank of or under any United States, federal,
state, municipal or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty (30) day notice
period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg.
ss.2615.
"Required Banks" means, at any time, those Banks having Loan
Commitments aggregating greater than 50% of the aggregate amount of all Loan
Commitments; provided,
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however, that during the existence of an Event of Default, the "Required Banks"
shall be those Banks holding greater than 50% of the then aggregate unpaid
principal amount of the Notes.
"Solvency Certificate" means a certificate in substantially the form
of EXHIBIT E, to be delivered by Borrower, Guarantor and each Mortgagor pursuant
to the terms of this Agreement.
"Solvent" means, when used with respect to any Person, that the fair
value of the property of such Person, on a going concern basis, is greater than
the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person (taking into account, in the case of each Mortgagor,
that it has a right to contribution from each other Mortgagor and/or Borrower
with respect to the obligations under its Mortgage).
"South County" means the parcel(s) of real property known as South
County Shopping Center, located in St. Louis, Missouri, owned by South County
Center LLC, including the Improvements thereon.
"South County Center LLC" means South County Center LLC, a Delaware
limited liability company.
"Specified Hedging Contracts" means, collectively, the interest rate
swap between Guarantor and Australia and New Zealand Banking Group Limited,
having an effective date of January 12, 1998, with respect to a notional amount
of $100,000,000 and the interest rate swap between Guarantor and Commonwealth
Bank of Australia, having an effective date of December 11, 1998, with respect
to a notional amount of $100,000,000.
"Supplemental Fee Letters" means those two (2) certain letter
agreements, dated the date hereof, between Borrower and Administrative Agent
with regard to certain fees in connection with the Loans.
"Title Insurer" means, for each Property, the issuer(s) of the title
insurance policy(ies) insuring the Mortgage thereon.
"Total Loan Commitment" means the sum of the Loan Commitments of all
the Banks.
"UBS" means UBS AG, Stamford Branch.
"United States" and "U.S." mean the United States of America.
"Weighted Average Capitalization Rate" means, (i) initially, 8.25%;
and (ii) thereafter, a rate, redetermined upon any addition or release of a
Property pursuant to Section 2.18 or upon any reappraisal of a Property pursuant
to Section 2.19, equal to, as of the date of determination, the greater of (x)
8.25% or (y) the weighted average for all Properties (based upon the Properties'
respective appraised values pursuant to the appraisals thereof referred to
below) of the quotients of (1) each Property's contribution to Property EBITDA
for the four (4) calendar quarters ending with the most recent quarter for which
Borrower, Guarantor and Mortgagors are required to report financial results
pursuant to this Agreement prior to the most recent appraisal of such Property
pursuant to Section 2.18(b)(v), 2.19 or 4.01(8), as the case
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may be, divided by (2) the appraised value of such Property pursuant to such
most recent appraisal. Notwithstanding the foregoing, if any re-computation of
the Weighted Average Capitalization Rate pursuant to clause (ii) (y) above
results in a Weighted Average Capitalization Rate that is, in the judgment
either of Borrower or the Required Banks, unreasonable, then the rate under said
clause (ii) (y) shall be as may be mutually agreed to by Borrower and the
Required Banks, each acting in good faith.
"Westland" means the parcel(s) of real property known as Westland
Shopping Center, located in Lakewood, Colorado, owned by Westland Town Center
LLC, including the Improvements thereon.
"Westland Town Center LLC" means Westland Town Center LLC, a
Delaware limited liability company.
"Wheaton" means the parcel(s) of real property known as Wheaton
Shopping Center, located in Wheaton, Maryland, owned by Wheaton Plaza Regional
Shopping Center LLP, including the Improvements thereon.
"Wheaton Plaza Regional Shopping Center LLP" means Wheaton Plaza
Regional Shopping Center LLP, a Maryland limited liability partnership.
SECTION 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP, and all
financial data required to be delivered hereunder shall be prepared in
accordance with GAAP.
SECTION 1.03. Computation of Time Periods. Except as otherwise
provided herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
SECTION 1.04. Rules of Construction. Except as otherwise provided or
indicated, when used in this Agreement (1) "or" is not exclusive, (2) a
reference to a Law includes any amendment, modification or supplement to, or
replacement of, such Law, (3) a reference to a Person includes its permitted
successors and permitted assigns, (4) all terms defined in the singular shall
have a correlative meaning when used in the plural and vice versa, (5) a
reference to an agreement, instrument or document shall include such agreement,
instrument or document as the same may be amended, modified or supplemented from
time to time in accordance with its terms or as permitted by the Loan Documents,
(6) all references to Articles, Sections or Exhibits shall be to Articles and
Sections of, and Exhibits to, this Agreement, (7) unless otherwise indicated,
"hereunder", "herein", "hereof" and the like refer to this Agreement as a whole
and (8) all Exhibits and Schedules to this Agreement shall be incorporated into
this Agreement.
ARTICLE II
THE LOANS
SECTION 2.01. The Loans. Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to make a loan to Borrower (each
such loan by a
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Bank, a "Loan"; such loans, collectively, the "Loans") pursuant to which each
Bank shall from time to time advance and re-advance to Borrower an amount equal
to the excess of the amount of such Bank's Loan Commitment over the amount of
all previous advances made by such Bank under its Loan Commitment which remain
unpaid. For purposes of the immediately preceding sentence, a Bank's Pro Rata
Share of the amount of outstanding Letters of Credit shall be deemed to be
advanced. Within the limits set forth herein, Borrower may borrow from time to
time under this Section 2.01 and prepay from time to time pursuant to Section
2.10 (subject, however, to the restrictions on prepayment set forth in such
Section) and thereafter re-borrow pursuant to this Section 2.01.
The Loans may be outstanding as (1) Base Rate Loans, (2) LIBOR Loans
or (3) a combination of the foregoing, as Borrower shall elect and notify
Administrative Agent in accordance with Section 2.15. The LIBOR Loan and Base
Rate Loan of each Bank shall be maintained at such Bank's Applicable Lending
Office for its LIBOR Loan and Base Rate Loan, respectively.
The obligations of the Banks under this Agreement are several, and
no Bank shall be responsible for the failure of any other Bank to make any
advance of a Loan to be made by such other Bank. However, the failure of any
Bank to make any advance of the Loan to be made by it hereunder on the date
specified therefor shall not relieve any other Bank of its obligation to make
any advance of its Loan specified hereby to be made on such date.
SECTION 2.02. Purpose. Borrower shall use the proceeds of the Loans
for general capital and working capital purposes of Borrower, Guarantor and the
subsidiaries of Borrower or Guarantor, including, without limitation,
redeveloping, refurbishing and/or expanding Properties, and acquiring other
shopping centers or malls in the United States and other uses directly related
to the operations of Guarantor, Borrower and their respective subsidiaries and
the ownership of their respective properties. All or part of the Initial Advance
shall be used to repay sums owing under the Prior Loan. In no event shall
proceeds of the Loans be used for any illegal purpose or for the purpose,
whether immediate, incidental or ultimate, of buying or carrying "margin stock"
within the meaning of Regulation U.
SECTION 2.03. Advances, Generally. The Initial Advance shall be made
upon satisfaction of the conditions set forth in Section 4.01. Subsequent
advances shall be made no more frequently than weekly upon satisfaction of the
conditions set forth in Section 4.02. The amount of each advance subsequent to
the Initial Advance shall be in the minimum amount of $1,000,000 (unless less
than $1,000,000 is available for disbursement pursuant to the terms hereof at
the time of any subsequent advance, in which case the amount of such subsequent
advance shall be equal to such remaining availability) and in integral multiples
of $100,000 above such amount.
SECTION 2.04. Procedures for Advances. Borrower shall submit to
Administrative Agent a request for each advance hereunder, stating the amount
requested and certifying the purpose for which such advance is to be used, no
later than Noon (New York time) on the date three (3) Banking Days prior to the
date the advance is to be made. Administrative Agent, upon its receipt and
approval of the requisite documents for the advance, will so notify the Banks
either by telephone or by facsimile. Not later than Noon (New York time) on the
date of each advance, each Bank shall, through its Applicable Lending Office and
subject to the
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conditions of this Agreement, make the amount to be advanced by it on such day
available to Administrative Agent, at Administrative Agent's Office and in
immediately available funds for the account of Borrower. The amount so received
by Administrative Agent shall, subject to the conditions of this Agreement, be
made available to Borrower, in immediately available funds, by Administrative
Agent's wiring such funds in accordance with Borrower's written instructions.
SECTION 2.05. Additional Conditions to Advances. Each advance of the
Loans shall be subject, in addition to the other limitations and conditions set
forth herein, to, at Administrative Agent's request, Administrative Agent's
receipt of a certificate, of the sort required by paragraph (3)(b) of Section
6.09, which shall demonstrate Borrower's compliance (on a pro-forma basis, as of
the date of the advance, taking into account the making of the advance) with all
covenants enumerated in said paragraph (3)(b).
SECTION 2.06. Interest Periods; Renewals. In the case of the LIBOR
Loans, Borrower shall select an Interest Period of any duration in accordance
with the definition of Interest Period in Section 1.01, subject to the following
limitations: (1) no Interest Period may extend beyond the Maturity Date, (2) if
an Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless such Banking Day would
fall in the next calendar month, in which event such Interest Period shall end
on the immediately preceding Banking Day and (3) only ten (10) discrete segments
of a Bank's Loan bearing interest at a LIBOR Interest Rate, for a designated
Interest Period, pursuant to a particular Election, Conversion or Continuation,
may be outstanding at any one time (each such segment of each Bank's Loan
corresponding to a proportionate segment of each of the other Banks' Loans);
provided, however, that the number of such segments may be increased at the
request of Borrower with the consent of Administrative Agent (such consent not
to be unreasonably withheld).
Upon notice to Administrative Agent as provided in Section 2.15,
Borrower may Continue any LIBOR Loan on the last day of the Interest Period for
an Interest Period of the same or different duration in accordance with the
limitations provided above. If Borrower shall fail to give notice to
Administrative Agent of such a Continuation, such LIBOR Loan shall automatically
become a Base Rate Loan on the last day of the current Interest Period.
SECTION 2.07. Interest. Borrower shall pay interest to
Administrative Agent for the account of the applicable Bank on the outstanding
and unpaid principal amount of the Notes, at a rate per annum as follows: (1)
for Base Rate Loans at a rate equal to the Base Rate and (2) for LIBOR Loans at
a rate equal to the applicable LIBOR Interest Rate plus the Applicable Margin.
Any principal amount not paid when due (when scheduled, at acceleration or
otherwise) shall bear interest thereafter, payable on demand, at the Default
Rate.
The interest rate on Base Rate Loans shall change when the Base Rate
changes. Interest on Base Rate Loans and LIBOR Loans shall not exceed the
maximum amount permitted under applicable law. Interest shall be calculated for
the actual number of days elapsed on the basis of, in the case of Base Rate
Loans and LIBOR Loans, three hundred sixty (360) days.
Accrued interest shall be due and payable in arrears upon and with
respect to any prepayment of principal and on the first Banking Day of each
calendar month; provided, however, that interest accruing at the Default Rate
shall be due and payable on demand.
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SECTION 2.08. Fees. (a) Borrower shall during the term of the Loans,
pay to Administrative Agent for the account of each Bank a commitment fee
computed on the daily unused Loan Commitment of such Bank (it being understood
that a Bank's Pro Rata Share of the amount of outstanding Letters of Credit
shall be considered "used" for this purpose), at a rate per annum equal to the
daily Applicable Commitment Fee Rate, calculated on the basis of a year of three
hundred sixty-five (365) days for the actual number of days elapsed. The accrued
commitment fees shall be due and payable in arrears quarterly on the first
Banking Day of each January, April, July and October hereafter, and upon the
Maturity Date or earlier termination of the Loan Commitments.
(b) Borrower shall, during the term of the Loans, pay to
Administrative Agent, for its own account, an administration fee of $60,000 per
annum, payable in advance in quarterly installments of $15,000 on the date
hereof and on the first Banking Day of each January, April, July and October
hereafter until the Loans are repaid in full and the Loan Commitments are fully
terminated (it being understood that each quarter's administration fee shall be
non-refundable once paid and pro-rated for a partial quarter).
(c) Borrower shall pay to Administrative Agent, for the accounts of
the parties specified therein, the fees provided for, on the dates specified, in
the Supplemental Fee Letters.
SECTION 2.09. Notes. The Loan made by each Bank under this Agreement
shall be evidenced by, and repaid with interest in accordance with, a promissory
note of Borrower in the form of EXHIBIT C duly completed and executed by
Borrower, in a principal amount equal to such Bank's Loan Commitment, payable to
such Bank for the account of its Applicable Lending Office (each such note, as
the same may hereafter be amended, modified, extended, severed, assigned,
substituted, renewed or restated from time to time, including any substitute
note pursuant to Section 3.07 or 12.05, a "Note"; all such notes, collectively,
the "Notes"). The Notes shall mature, and all outstanding principal and accrued
interest and other sums thereunder shall be paid in full, on the Maturity Date,
as the same may be accelerated.
Each Bank is hereby authorized by Borrower to endorse on the
schedule attached to the Notes held by it, the amount of each advance, and each
payment of principal received by such Bank for the account of its Applicable
Lending Office(s) on account of its Loan, which endorsement shall, in the
absence of manifest error, be conclusive as to the outstanding balance of the
Loan made by such Bank. The failure by any Bank to make such notations with
respect to its Loan or each advance or payment shall not limit or otherwise
affect the obligations of Borrower under this Agreement or the Notes.
SECTION 2.10. Prepayments. Borrower may, upon at least one (1)
Banking Day's notice to Administrative Agent in the case of the Base Rate Loans,
and at least three (3) Banking Days' notice to Administrative Agent in the case
of LIBOR Loans, prepay the Loans, provided that (1) any partial prepayment under
this Section shall be in integral multiples of $1,000,000, (2) any prepayment of
LIBOR Loan on other than the last day of the applicable Interest Period for such
LIBOR Loan shall be subject to the provisions of Section 3.05 and (3) each
prepayment under this Section shall include all interest accrued on the amount
of principal prepaid through the date of prepayment.
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SECTION 2.11. Termination of Commitments. (a) At any time, Borrower
shall have the right, without premium or penalty, to terminate the unused Loan
Commitments, in whole or in part, from time to time, provided that (1) Borrower
shall give notice of each such termination to Administrative Agent, specifying
the amount of the termination, no later then Noon (New York time) on the date
which is fifteen (15) days prior to the effectiveness of such termination, (2)
the Loan Commitments of each of the Banks must be terminated ratably and
simultaneously with those of the other Banks and (3) each partial termination of
the Loan Commitments as a whole (and corresponding reduction of the Total Loan
Commitment) shall be in an integral multiple of $1,000,000.
(b) The Loan Commitments, to the extent terminated, may not be
reinstated.
SECTION 2.12. Method of Payment. Borrower shall make each payment
under this Agreement and under the Notes not later than Noon (New York time) on
the date when due in Dollars to Administrative Agent at Administrative Agent's
Office in immediately available funds. Administrative Agent will thereafter, on
the day of its receipt of each such payment, cause to be distributed to each
Bank (1) such Bank's appropriate share (based upon the respective outstanding
principal amounts and rate(s) of interest under the Notes of the Banks) of the
payments of principal and interest in like funds for the account of such Bank's
Applicable Lending Office and (2) fees payable to such Bank in accordance with
the terms of this Agreement.
Except to the extent provided in this Agreement, whenever any
payment to be made under this Agreement or under the Notes is due on any day
other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of the payment of interest and other fees, as the case may be.
SECTION 2.13. Elections, Conversions or Continuation of Loans.
Subject to the provisions of Article III and Sections 2.06 and 2.14, Borrower
shall have the right to Elect to have all or a portion of any advance of the
Loans be LIBOR Loans, to Convert Base Rate Loans into LIBOR Loans, to Convert
LIBOR Loans into Base Rate Loans, or to Continue LIBOR Loans as LIBOR Loans, at
any time or from time to time, provided that (1) Borrower shall give
Administrative Agent notice of each such Election, Conversion or Continuation as
provided in Section 2.15 and (2) a LIBOR Loan may be Converted or Continued only
on the last day of the applicable Interest Period for such LIBOR Loan. Except as
otherwise provided in this Agreement, each Election, Continuation and Conversion
shall be applicable to each Bank's Loan in accordance with its Pro Rata Share.
SECTION 2.14. Minimum Amounts. With respect to the Loans as a whole,
each Election and each Conversion shall be in an amount at least equal to
$1,000,000 and in integral multiples of $100,000.
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SECTION 2.15. Certain Notices Regarding Elections, Conversions and
Continuations of Loans. Notices by Borrower to Administrative Agent of
Elections, Conversions and Continuations of LIBOR Loans shall be irrevocable and
shall be effective only if received by Administrative Agent not later than Noon
(New York time) on the number of Banking Days prior to the date of the relevant
Election, Conversion or Continuation specified below:
Number of
Notice Banking Days Prior
Conversions into Base Rate Loans two (2)
Election of, Conversions into or
Continuations as, LIBOR Loans three (3)
Promptly following its receipt of any such notice, Administrative Agent shall so
advise the Banks either by telephone or by facsimile. Each such notice of
Election shall specify the portion of the amount of the advance that is to be
LIBOR Loans (subject to Section 2.14) and the duration of the Interest Period
applicable thereto (subject to Section 2.06); each such notice of Conversion
shall specify the LIBOR Loans or Base Rate Loans to be Converted; and each such
notice of Conversion or Continuation shall specify the date of Conversion or
Continuation (which shall be a Banking Day), the amount thereof (subject to
Section 2.14) and the duration of the Interest Period applicable thereto
(subject to Section 2.06). In the event that Borrower fails to Elect to have any
portion of an advance be LIBOR Loans, the entire amount of such advance shall
constitute Base Rate Loans. In the event that Borrower fails to Continue LIBOR
Loans within the time period and as otherwise provided in this Section, such
LIBOR Loans will be automatically Converted into Base Rate Loans on the last day
of the then current applicable Interest Period for such LIBOR Loans.
SECTION 2.16. Late Payment Premium. Borrower shall, at
Administrative Agent's option, pay to Administrative Agent for the account of
the Banks a late payment premium in the amount of 2% of any payments of
principal (other than principal due on the Maturity Date, whether as scheduled
or by acceleration or otherwise) or interest under the Loans made more than
fifteen (15) days after the due date thereof, which shall be due with any such
late payment.
SECTION 2.17. Letters of Credit. (a) Borrower may request, in lieu
of advances of proceeds of the Loans, that Administrative Agent issue
unconditional, irrevocable standby letters of credit (each, a "Letter of
Credit") for the account of Borrower, payable by sight drafts, for such
beneficiaries and with such other terms as Borrower shall specify.
(b) The amount of any such Letter of Credit shall not exceed the
lesser of (1) $75,000,000 less the amount of all other Letters of Credit then
issued and outstanding or (2) the amount available for disbursement to Borrower
hereunder, it being understood that the amount of each Letter of Credit issued
and outstanding shall effect a reduction, by an equal amount, of the amount
available for disbursement hereunder as provided in Section 2.01.
(c) The amount of each Letter of Credit shall be further subject to
the limitations applicable to amounts of advances set forth in Section 2.03 and
the procedures for the
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issuance of each Letter of Credit shall be the same as the procedures applicable
to the making of advances as set forth in the first sentence of Section 2.04.
Upon Administrative Agent's receipt of a request for the issuance of, and upon
its issuance of, each Letter of Credit, it shall promptly notify each of the
Banks.
(d) Administrative Agent's issuance of each Letter of Credit shall
be subject to Borrower's satisfaction of all conditions precedent to its
entitlement to an advance of proceeds of the Loans.
(e) Each Letter of Credit shall expire no later than the earlier of
one (1) month prior to the Maturity Date or one (1) year after the date of its
issuance.
(f) In connection with, and as a further condition to the issuance
of, each Letter of Credit, Borrower shall execute and deliver to Administrative
Agent an application for the Letter of Credit on Administrative Agent's standard
form therefor, together with such other documents, opinions and assurances as
the Administrative Agent shall reasonably require.
(g) In connection with each Letter of Credit, Borrower hereby
covenants to pay to Administrative Agent the following fees, each payable
quarterly in arrears (on the first Banking Day of each calendar quarter
following the issuance of the Letter of Credit): (1) a fee, payable to
Administrative Agent for the account of the Banks, computed daily on the amount
of the Letter of Credit issued and outstanding at a rate per annum equal to the
"Banks' L/C Fee Rate" (as hereinafter defined) and (2) a fee, payable to
Administrative Agent for its own account, computed daily on the amount of the
Letter of Credit issued and outstanding at a rate per annum of 0.20%. For
purposes of this Agreement, the "Banks' L/C Fee Rate" shall mean, at any time, a
rate per annum equal to the Applicable Margin for LIBOR Loans less 0.20% per
annum. Each such fee shall be computed on the basis of a year of three hundred
sixty-five (365) days for the actual number of days elapsed. It is understood
and agreed that the last installment of the fees provided for in this paragraph
(g) with respect to any particular Letter of Credit shall be due and payable on
the first day of the calendar quarter following the return, undrawn, or
cancellation of such Letter of Credit. In addition, Borrower shall pay
Administrative Agent's customary administrative fees in connection with its
issuance, extension, amendment and drawing of all Letters of Credit.
(h) The parties hereto acknowledge and agree that, immediately upon
notice from Administrative Agent of any drawing under a Letter of Credit, each
Bank shall, notwithstanding the existence of a Default or Event of Default or
the non-satisfaction of any conditions precedent to the making of an advance of
the Loans, advance proceeds of its Loan, in an amount equal to its Pro Rata
Share of such drawing, which advance shall be made to Administrative Agent to
reimburse Administrative Agent, for its own account, for such drawing. Each of
the Banks further acknowledges that its obligation to fund its Pro Rata Share of
drawings under Letters of Credit as aforesaid shall survive the Banks'
termination of this Agreement or enforcement of remedies hereunder or under the
other Loan Documents.
(i) Borrower agrees, during the existence of an Event of Default and
at the request of the Required Banks, (1) to deposit with Administrative Agent
cash collateral in the amount of all the outstanding Letters of Credit, which
cash collateral shall be held by Administrative Agent as security for Borrower's
obligations in connection with the Letters of
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Credit, and (2) to execute and deliver to Administrative Agent such documents as
Administrative Agent requests to confirm and perfect the assignment of such cash
collateral to Administrative Agent.
(j) The parties hereto acknowledge that Administrative Agent has
issued the letters of credit identified on EXHIBIT G pursuant to the Credit
Agreement governing the Prior Loan, that said letters of credit shall remain in
effect notwithstanding the termination of the Prior Loan, and that said letters
of credit shall be treated as though issued pursuant to this Agreement and shall
constitute "Letters of Credit" for all purposes of this Agreement.
SECTION 2.18. Additions and Releases of Properties. (a) Subject to
the conditions set forth below in this Section, Borrower shall have the right
from time to time to (1) cause one or more shopping center properties reasonably
approved by the Required Banks (which, for purposes of such approval and the
approval required by clause (2) below, must include both NAB and UBS, so long
as, in either case, its Loan Commitment equals or exceeds $35,000,000) to be
encumbered by a Mortgage and thereby become a Property and (2) obtain the
satisfaction of the Mortgage encumbering a Property (which shall, in the case of
Connecticut Post, Palm Desert and Westland, but not otherwise, be conditioned on
the approval of the Required Banks), each such addition or release of a Property
to effect an immediate change in the computations of compliance with the
covenants set forth in Section 8.01.
(b) The addition of any Property shall be subject to the
satisfaction of the following conditions:
(i) There shall exist no Default or Event of Default;
(ii) Administrative Agent shall have received (x) a Mortgage of the
Property to be added, duly executed by the new Mortgagor and recorded (or
delivered for recording) in the appropriate land records, together with
executed financing statements filed (or delivered for filing) under the
Uniform Commercial Code of all jurisdictions necessary or, in the opinion
of Administrative Agent, desirable to perfect the lien created by said
Mortgage and (y) an Indemnity, duly executed by Borrower, Guarantor and
the new Mortgagor (each such Mortgage and Indemnity to be substantially in
the form of the Mortgages and Indemnities with respect to the Properties
initially given as security for the Loans but with such changes as
Administrative Agent reasonably deems necessary or advantageous under
local law or in connection with the particular Property);
(iii) Each of the Property-specific representations and warranties
set forth in this Agreement shall be true and correct in all material
respects with respect to the Property to be added;
(iv) The Property to be added shall not have suffered any material
casualty and no eminent domain proceedings material to the Property shall
have been commenced (or threatened) with respect to all or any part
thereof;
(v) Administrative Agent shall have received an appraisal of the
Property, which appraisal shall satisfy the conditions set forth in
clauses (1), (2) and (3) of Section 2.19;
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(vi) Administrative Agent shall have received and approved (x) each
of the items listed in paragraphs (6), (7) and (9) through (20) of Section
4.01 with respect to the Property to be added or the new Mortgagor, as the
case may be; (y) endorsements to the title insurance policies insuring the
Mortgages confirming the tie-in provisions thereof; and (z) an amendment
to the contribution agreement required by paragraph (21) of Section 4.01
to add the new Mortgagor as a party thereto;
(vii) Administrative Agent shall have received from Borrower, and
approved, a certificate of the sort required by paragraph (3)(b) of
Section 6.09, which shall demonstrate Borrower's compliance, as of the
date of the addition of the Property to be added, taking into account the
addition of such Property, with the covenants enumerated in said paragraph
(3)(b);
(viii) Administrative Agent shall have received such other documents
and assurances as it may reasonably request, all in form and substance
reasonably satisfactory to Administrative Agent; and
(ix) Administrative Agent shall have received payment of all its
reasonable out-of-pocket expenses in connection with the addition of the
Property, including reasonable fees and expenses of counsel.
(c) The release of any Property shall be subject to the satisfaction
of the following conditions:
(i) There shall exist no Default or Event of Default;
(ii) Administrative Agent shall have received from Borrower, and
approved, a certificate of the sort required by paragraph (3)(b) of
Section 6.09, which shall demonstrate Borrower's compliance, as of the
date of the proposed release of the Property, taking into account the
release of the Property; if necessary, Borrower shall make a payment in
reduction of the outstanding principal amount of the Notes in an amount
such that said covenants are complied with; and
(iii) Administrative Agent shall have received from Borrower payment
of Administrative Agent's reasonable out-of-pocket expenses in connection
with such release, including reasonable fees and expenses of counsel.
Upon any such release of a Property, such Property shall no longer constitute a
"Property" hereunder and the owner thereof shall no longer be a "Mortgagor"
hereunder and shall be deemed released from all liability and obligations under
the Loan Documents (other than any liability or obligations under its Indemnity
that survive pursuant to the terms of the Indemnity).
SECTION 2.19. Reappraisals of Properties. At the request of the
Required Banks or of Borrower, any Property shall be reappraised from time to
time for purposes of determining the contribution of such Property to the
Weighted Average Capitalization Rate; provided, however, that no Property shall
be reappraised at the request of the Required Banks more than once during the
term of the Loans nor reappraised at the request of Borrower more than once
during the term of the Loans. Each such reappraisal shall (1) conform to the
requirements of FIRREA, (2) be performed by an M.A.I. appraiser engaged by
Administrative
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Agent and approved by the Required Banks (it being understood that, in
connection such approval, the Banks agree to confer in good faith with Borrower
and act reasonably) and (3) be reasonably acceptable in form and substance
(including methods, procedures and scope of services) to the Required Banks. The
cost of each such reappraisal shall be paid by Borrower.
SECTION 2.20. Extension of Maturity Date. At Borrower's request at
any time prior to the first anniversary of the date of the Initial Advance, and
with the approval of all the Banks, the Maturity Date shall be extended for one
(1) period of one (1) year, subject to such conditions as the Banks may require.
ARTICLE III
YIELD PROTECTION; ILLEGALITY; ETC.
SECTION 3.01. Additional Costs. Borrower shall pay directly to each
Bank from time to time on demand such amounts as such Bank may determine to be
necessary to compensate it for any increased costs which such Bank determines
are attributable to its making or maintaining a LIBOR Loan, or its obligation to
make or maintain a LIBOR Loan, or its obligation to Convert a Base Rate Loan to
a LIBOR Loan hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of its LIBOR Loan or such obligations which increased costs
or reduction such Bank deems to be material (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"), in
each case resulting from any Regulatory Change which:
(1) changes the basis of taxation of any amounts payable to such
Bank under this Agreement or the Notes in respect of any such LIBOR Loan
(other than any changes with respect to Excluded Taxes or any changes in
the rate of general corporate, franchise, branch profit, net income or
other income tax imposed on such Bank or its Applicable Lending Office by
the United States or its political subdivisions or the jurisdiction in
which such Bank has its principal office or such Applicable Lending
Office); or
(2) (other than to the extent the LIBOR Reserve Requirement is taken
into account in determining the LIBOR Rate at the commencement of the
applicable Interest Period) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital ratio
or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Bank
(including any LIBOR Loan or any deposits referred to in the definition of
"LIBOR Interest Rate" in Section 1.01), or any commitment of such Bank
(including such Bank's Loan Commitment hereunder); or
(3) imposes any other condition affecting this Agreement or the
Notes (or any of such extensions of credit or liabilities).
Without limiting the effect of the provisions of the first paragraph
of this Section, in the event that, by reason of any Regulatory Change, any Bank
either (x) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits of other liabilities of
such Bank which includes deposits by reference to which the LIBOR Interest Rate
is determined as provided in this Agreement or a category of extensions of
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credit or other assets of such Bank which includes loans based on the LIBOR
Interest Rate or (y) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Bank so
elects by notice to Borrower (with a copy to Administrative Agent), the
obligation of such Bank to permit Elections of, to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended (in which case the provisions of
Section 3.04 shall be applicable) until such Regulatory Change ceases to be in
effect; provided, however, that (A) prior to suspending its obligation to make
or maintain LIBOR Loans pursuant to clause (x) of this paragraph, such Bank
shall notify Borrower (with a copy to Administrative Agent) of the Additional
Costs that would result from such Bank's continuing to make LIBOR Loans
available, and give Borrower the opportunity to pay such Additional Costs, and,
if Borrower pays to Administrative Agent, for the account of such Bank, such
Additional Costs within five (5) Banking Days after such notification by such
Bank, such Bank shall continue to make LIBOR Loans available to Borrower and (B)
each Bank will treat Borrower in a non-discriminatory fashion (i.e., will treat
Borrower in substantially the same manner as similarly situated customers) for
purposes of dealing with the restrictions referred to in clause (y) of this
paragraph.
Determinations and allocations by a Bank for purposes of this
Section of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section, on its costs or rate of return of making or
maintaining its Loan or portions thereof or on amounts receivable by it in
respect of its Loan or portions thereof, and the amounts required to compensate
such Bank under this Section, shall be conclusive absent manifest error.
To the extent that changing the jurisdiction of a Bank's Applicable
Lending Office would have the effect of minimizing Additional Costs, each such
Bank shall use reasonable efforts to make such a change, provided that same
would not otherwise be disadvantageous to each such Bank.
No Additional Costs shall be payable to a Bank under clause (1) of
the first paragraph of this Section to the extent such Bank has failed to comply
with the provisions of Section 10.13 and such Additional Costs could have been
avoided by compliance with Section 10.13.
SECTION 3.02. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of the LIBOR
Interest Rate for any Interest Period, Administrative Agent determines (which
determination shall be conclusive) that quotations of interest rates for the
relevant deposits referred to in the definition of "LIBOR Interest Rate" in
Section 1.01 are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for the LIBOR Loans as
provided in this Agreement, then Administrative Agent shall give Borrower prompt
notice thereof, and so long as such condition remains in effect, the Banks shall
be under no obligation to permit Elections of LIBOR Loans, to Convert Base Rate
Loans into LIBOR Loans or to Continue LIBOR Loans and Borrower shall, on the
last day(s) of the then current Interest Period(s) for the affected outstanding
LIBOR Loans, either (x) prepay the affected LIBOR Loans or (y) Convert the
affected LIBOR Loans into Base Rate Loans in accordance with Section 2.13.
SECTION 3.03. Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to honor its obligation to make or maintain a LIBOR
Loan hereunder, to allow Elections of a
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LIBOR Loan or to Convert a Base Rate Loan into a LIBOR Loan, then such Bank
shall promptly notify Administrative Agent and Borrower thereof and such Bank's
obligation to make or maintain a LIBOR Loan, or to permit Elections of, to
Continue, or to Convert its Base Rate Loan into, a LIBOR Loan shall be suspended
(in which case the provisions of Section 3.04 shall be applicable) until such
time as such Bank may again make and maintain a LIBOR Loan.
SECTION 3.04. Treatment of Affected Loans. If the obligations of any
Bank to permit an Election of a LIBOR Loan, to Continue its LIBOR Loan, or to
Convert its Base Rate Loan into a LIBOR Loan, are suspended pursuant to Sections
3.01 or 3.03 (each LIBOR Loan so affected being herein called an "Affected
Loan"), such Bank's Affected Loan shall be automatically Converted into a Base
Rate Loan on the last day of the then current Interest Period for the Affected
Loan (or, in the case of a Conversion required by Sections 3.01 or 3.03, on such
earlier date as such Bank may specify to Borrower).
To the extent that such Bank's Affected Loan has been so Converted,
all payments and prepayments of principal which would otherwise be applied to
such Bank's Affected Loan shall be applied instead to its Base Rate Loan and
such Bank shall have no obligation to Convert its Base Rate Loan into a LIBOR
Loan.
In the event that the conditions giving rise to the suspension of
any Bank's obligations to permit an Election of a LIBOR Loan, to Continue its
LIBOR Loan, or to Convert its Base Rate Loan into a LIBOR Loan shall cease to
exist, such Bank shall provide Borrower with prompt written notice of same (with
a copy to Administrative Agent), and such Bank shall again be obligated to
permit an Election of a LIBOR Loan, to Continue its LIBOR Loan, or to Convert
its Base Rate Loan into a LIBOR Loan in accordance with this Agreement.
SECTION 3.05. Certain Compensation. Borrower shall pay to
Administrative Agent for the account of the applicable Bank, upon the request of
such Bank through Administrative Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Bank) to compensate it for any
loss, cost or expense which such Bank determines is attributable to:
(1) any payment, prepayment, Conversion or Continuation of a LIBOR
Loan made by such Bank on a date other than the last day of an applicable
Interest Period, whether by reason of acceleration or otherwise; or
(2) any failure by Borrower for any reason to Convert or Continue a
LIBOR Loan to be Converted or Continued by such Bank on the date specified
therefor in the relevant notice under Section 2.15; or
(3) any failure by Borrower to borrow (or to qualify for a borrowing
of) a LIBOR Loan which would otherwise be made hereunder on the date
specified in the relevant Election notice under Section 2.15 given or
submitted by Borrower.
Without limiting the foregoing, such compensation shall include an
amount equal to the present value (using as the discount rate an interest rate
equal to the rate determined under (2) below) of the excess, if any, of (1) the
amount of interest which otherwise would have accrued on the principal amount so
paid, prepaid, Converted or Continued (or not Converted, Continued or borrowed)
for the period from the date of such payment, prepayment, Conversion
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or Continuation (or failure to Convert, Continue or borrow) to the last day of
the then current applicable Interest Period (or, in the case of a failure to
Convert, Continue or borrow, to the last day of the applicable Interest Period
which would have commenced on the date specified therefor in the relevant
notice) at the applicable rate of interest for the LIBOR Loan provided for
herein, less the Applicable Margin, over (2) the amount of interest (as
reasonably determined by such Bank) based upon the interest rate which such Bank
would have bid in the London interbank market for Dollar deposits, for amounts
comparable to such principal amount and maturities comparable to such period. A
determination of any Bank as to the amounts payable pursuant to this Section
shall be conclusive absent manifest error.
SECTION 3.06. Capital Adequacy. If any Bank shall have determined
that, after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within
fifteen (15) days after demand by such Bank (with a copy to Administrative
Agent), Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such reduction. A certificate of
any Bank claiming compensation under this Section, setting forth in reasonable
detail the basis therefor, shall be conclusive absent manifest error.
SECTION 3.07. Substitution of Banks. If any Bank (an "Affected
Bank") (i) makes demand upon Borrower for (or if Borrower is otherwise required
to pay) Additional Costs pursuant to Section 3.01 or (ii) is unable to make or
maintain a LIBOR Loan as a result of a condition described in Section 3.01 or
3.03, Borrower may, within ninety (90) days of receipt of such demand or notice
(or the occurrence of such other event causing Borrower to be required to pay
Additional Costs or causing said Section 3.01 or 3.03 to be applicable), as the
case may be, give notice (a "Replacement Notice") to Administrative Agent (which
will promptly forward a copy of such notice to each Bank) of Borrower's
intention either (x) to prepay in full the Affected Bank's Note and to terminate
the Affected Bank's entire Loan Commitment or (y) to replace the Affected Bank
with another financial institution (the "Replacement Bank") designated in such
Replacement Notice.
In the event Borrower opts to give the notice provided for in clause
(x) above, and if the Affected Bank shall not agree within thirty (30) days of
its receipt thereof to waive the payment of the Additional Costs in question or
the effect of the circumstances described in Section 3.01, then, so long as no
Default or Event of Default shall exist, Borrower may (notwithstanding the
provisions of clause (2) of Section 2.11(a)) terminate the Affected Bank's
entire Loan Commitment, provided that in connection therewith it pays to the
Affected Bank all outstanding principal and accrued and unpaid interest under
the Affected Bank's Note, together with all other amounts, if any, due from
Borrower to the Affected Bank, including all amounts properly demanded and
unreimbursed under this Article III.
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In the event Borrower opts to give the notice provided for in clause
(y) above, and if (i) Administrative Agent shall, within thirty (30) days of its
receipt of the Replacement Notice, notify Borrower and each Bank in writing that
the proposed Replacement Bank is reasonably satisfactory to Administrative Agent
and (ii) the Affected Bank shall not, prior to the end of such thirty (30)-day
period, agree to waive the payment of the Additional Costs in question or the
effect of the circumstances described in Section 3.01, then the Affected Bank
shall, so long as no Default or Event of Default shall exist, assign its Note
and all of its rights and obligations under this Agreement to the Replacement
Bank, and the Replacement Bank shall assume all of the Affected Bank's rights
and obligations, pursuant to an agreement, substantially in the form of an
Assignment and Assumption Agreement, executed by the Affected Bank and the
Replacement Bank. In connection with such assignment and assumption, the
Replacement Bank shall pay to the Affected Bank an amount equal to the
outstanding principal amount under the Affected Bank's Note plus all interest
accrued thereon, plus all other amounts, if any (other than the Additional Costs
in question), then due and payable to the Affected Bank; provided, however, that
prior to or simultaneously with any such assignment and assumption, Borrower
shall have paid to such Affected Bank all amounts properly demanded and
unreimbursed under this Article III. Upon the effective date of such assignment
and assumption, and the payment by the Replacement Bank to Administrative Agent,
for its own account, of a fee in the amount of $2,500, the Replacement Bank
shall become a party to this Agreement and shall have all the rights and
obligations of a Bank as set forth in such Assignment and Assumption Agreement,
and the Affected Bank shall be released from its obligations hereunder, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this Section, a substitute Note shall be issued to
the Replacement Bank by Borrower, in exchange for the return of the Affected
Bank's Note. The obligations evidenced by such substitute Notes shall constitute
"Obligations" for all purposes of this Agreement and the other Loan Documents
and shall be secured by the Mortgages. In connection with Borrower's execution
of substitute notes as aforesaid, Borrower shall deliver to Administrative Agent
such evidence of the due authorization, execution and delivery of the substitute
notes and any related documents as Administrative Agent may reasonably request.
If the Replacement Bank is not a United States person within the meaning of
Section 7701(a)(30) of the Code, it shall, prior to the first date on which
interest or fees are payable hereunder for its account, deliver to Borrower and
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 10.13. Each
Replacement Bank shall be deemed to have made the representations contained in,
and shall be bound by the provisions of, Section 10.13.
Borrower, Administrative Agent and the Banks shall execute such
modifications to the Loan Documents as shall be reasonably required in
connection with and to effectuate the foregoing.
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ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Conditions Precedent to the Initial Advance. The
obligations of the Banks hereunder and the obligation of each Bank to make
Initial Advance are subject to the condition precedent that Administrative Agent
shall have received on or before the Closing Date each of the following items
(it being understood that the documents set forth in paragraphs (3) and (5)
through (16) below are required for each Property), and each of the following
requirements shall have been fulfilled:
(1) Fees and Expenses. The payment of (i) all reasonable fees and
expenses incurred by Administrative Agent (including, without limitation,
the reasonable fees and expenses of legal counsel, the Engineering
Consultant, environmental and insurance consultants and appraisers), (ii)
the first installment of the administration fee required by Section
2.08(b) and (iii) the fees required to be paid on or before the Closing
Date pursuant to the Supplemental Fee Letters;
(2) Notes. The Notes for NAB and the other Banks signatory hereto,
duly executed by Borrower;
(3) Mortgage and UCCs. The Mortgage, duly executed by the applicable
Mortgagor and recorded (or delivered for recording) in the appropriate
land records, together with duly executed financing statements filed (or
delivered for filing) under the Uniform Commercial Code of all
jurisdictions necessary or, in the opinion of Administrative Agent,
desirable to perfect the lien created by the Mortgage;
(4) Guaranty. The Guaranty, duly executed by Guarantor;
(5) Indemnity. The Indemnity, duly executed by Borrower, Guarantor
and the applicable Mortgagor;
(6) Title Policy. A paid title insurance policy in the amount of the
Mortgage (through a tie-in endorsement with the other policies required
hereby), in form approved by Administrative Agent and issued by the Title
Insurer (it being understood that the creditors' rights exclusion shall be
deleted from the policy), which shall insure the Mortgage to be a valid
first lien on the Mortgagor's interests in the Property and Improvements,
free and clear of all liens, defects, encumbrances and exceptions other
than those previously approved by Administrative Agent, and shall contain
(i) a reference to the survey but no general survey exceptions and (ii)
such affirmative insurance and endorsements as Administrative Agent may
reasonably require; such policy shall be accompanied by such reinsurance
agreements between the Title Insurer and title companies reasonably
approved by Administrative Agent, in ALTA facultative form approved by
Administrative Agent and with direct access provisions, as Administrative
Agent may require;
(7) Survey. A current ALTA/ACSM survey, certified to Administrative
Agent and the Title Insurer, showing (i) the location of the perimeter of
the Property by
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courses and distances, (ii) all easements, rights-of-way, and utility
lines referred to in the title policy required by this Agreement or which
actually service or cross the Property (with instrument, book and page
number indicated), (iii) the lines of the streets abutting the Property
and the width thereof, and any established building lines (and that such
roads have been dedicated for public use and are completed and have been
accepted by all required Governmental Authorities), (iv) any encroachments
and the extent thereof upon the Property, (v) locations of all portions
(with the acreage thereof also identified) of the Property, if any, which
are located in an area designated as a "flood prone area" as defined by
U.S. Department of Housing and Urban Development pursuant to the Flood
Disaster Protection Act of 1973 and (vi) the Improvements, and the
relationship thereof by distances to the perimeter of the Property,
established building lines and street lines;
(8) Appraisal. A current independent M.A.I. appraisal, commissioned
by Administrative Agent, of the value of the Mortgagor's interest in the
Property, which appraisal shall comply in all respects with the standards
for real estate appraisals established pursuant to the FIRREA; the amount
of the Initial Advance shall be no greater than 65% of the aggregate value
of the Properties indicated in the appraisals required by this paragraph
(8); it is agreed that Landauer Associates, Inc. is an approved appraiser
for each of the initial Properties;
(9) Insurance Policies. Copies of the policies and the original
certificates of hazard and other insurance required by the Mortgage,
together with evidence of the payment of the premiums therefor;
(10) Hazardous Materials Report. A detailed report by a properly
qualified engineer with regard to Hazardous Materials affecting the
Property, which shall include, inter alia, a certification that such
engineer has examined a list of prior owners, tenants and other users of
the Property, and has made an on-site physical examination of the Property
and Improvements, and a visual observation of the surrounding areas, and
disclosing the extent of past or present Hazardous Materials activities or
of the presence of Hazardous Materials;
(11) Consultant's Report. A detailed report from the Engineering
Consultant to the effect that the Improvements are in satisfactory
condition and enumerating any maintenance or governmental compliance items
necessary or expected to be incurred over the term of the Loans and
stating the approximate cost thereof;
(12) Permits and Other Approvals. Copies of any and all certificates
of occupancy and similar authorizations required by all Governmental
Authorities for the use, occupancy and operation of the Property and/or
Improvements in accordance with all applicable building, environmental,
ecological, landmark, subdivision and zoning Laws, other than those
certificates and authorizations which, in the reasonable judgment of the
Engineering Consultant, are not material to the lawful operation of the
Property;
(13) Leases. Copies, certified to be true and complete, of all
executed leases of the Improvements, accompanied by notices of assignment
in the form of EXHIBIT F, and, in the case of such leases as are required
by Administrative Agent, (i) estoppel certificates from the tenants
thereunder and (ii) subordination, non-disturbance and
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attornment agreements; together with a certified copy of the standard form
of lease being used in connection with the leasing of space in the
Improvements and the first rent roll and leasing report required by
paragraph (12) of Section 6.09;
(14) Premises Documents, Anchor Leases and Ground Leases. A copy,
certified to be true and complete, of the Anchor Leases, the REA and the
other Premises Documents, together with estoppel certificates with respect
thereto from each of the Anchors and the other parties thereto; and, in
the case of South County and Palm Desert, copies, certified by Borrower to
be true and complete, of the ground lease(s) of portions of the Property,
together with, in the case of South County, an estoppel certificate with
respect thereto from the ground lessor;
(15) Management and Leasing Contracts. Copies, certified to be true
and complete, of all existing contracts providing for the management or
leasing of the Property and Improvements, together with, in each case,
such collateral assignments or "will-serve" letters as Administrative
Agent may reasonably require;
(16) UCC Searches. Uniform Commercial Code searches with respect to
Borrower and the applicable Mortgagor and advice from the Title Insurer to
the effect that searches of the proper public records disclose no leases
of personalty or financing statements filed or recorded against Borrower,
the applicable Mortgagor or the Mortgaged Property;
(17) Financial Statements. Audited Guarantor Consolidated Financial
Statements as of and for the year ended December 31, 1998; unaudited
Mortgagor Financial Statements for each Mortgagor as of and for the year
ended December 31, 1998; unaudited Guarantor Consolidated Financial
Statements as of and for the quarter ended September 30, 1999; and
unaudited Mortgagor Financial Statements for each Mortgagor as of and for
the twelve (12) - month period ended October 31, 1999 (each of the
foregoing acceptable to the Banks);
(18) Organizational Documents. If Borrower, Guarantor, any Mortgagor
or any general partner or member of any of them is a corporation, current
copies of the following documents with respect to each:
(i) a recent good-standing certificate from the jurisdiction
of its incorporation and, as to each Mortgagor, from the state where
the Property owned by such Mortgagor is located,
(ii) a resolution, certified by the corporate secretary, of
the shareholders or directors of the corporation authorizing the
consummation of the transactions contemplated hereby and the
execution, delivery and performance of the Loan Documents to be
executed, delivered or performed by said corporation (including any
substitute or replacement Notes executed and delivered pursuant to
Section 3.07 or 12.05), and
(iii) a certificate of the corporate secretary as to the
incumbency of the officers executing any of the documents required
hereby,
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and, if Borrower, Guarantor, any Mortgagor or any general partner or
member of any of them is a partnership, venture, limited liability company
or trust:
(iv) the entity's organizational agreement and all amendments
and attachments thereto, certified by a general partner, venturer,
member or trustee to be true and complete,
(v) any certificates filed or required to be filed by the
entity in the jurisdiction of its formation and, in the case of each
Mortgagor, the state where its Property is located, in each case
certified by the applicable jurisdiction as of a recent date, and
(vi) any consents by partners, venturers, members, trustees or
beneficiaries required for the consummation of the transactions
contemplated hereby;
(19) Solvency Certificates. A Solvency Certificate, duly executed,
from Borrower, Guarantor and each Mortgagor;
(20) Opinions of Counsel. A favorable opinion, dated the Closing
Date, of counsel and local counsel for Borrower, Guarantor and the
Mortgagors, as to such matters as Administrative Agent may reasonably
request;
(21) Contribution Agreement. A contribution agreement among all the
Mortgagors;
(22) Interest Rate Hedge. Evidence that Borrower has entered into
the Specified Hedging Contracts together with an executed assignment of
the Specified Hedging Contracts (acknowledged by the counterparty
thereunder) to Administrative Agent in the form of EXHIBIT D;
(23) Authorization Letter. The Authorization Letter, duly executed
by Borrower;
(24) Certificate. The following statements shall be true and
Administrative Agent shall have received a certificate dated the Closing
Date signed by a duly authorized signatory of Borrower stating, to the
best of the certifying party's knowledge, the following:
(a) All representations and warranties contained in this
Agreement and in each of the other Loan Documents are true and
correct in all material respects on and as of the Closing Date as
though made on and as of such date, and
(b) No Default or Event of Default has occurred and is
continuing; and
(c) None of the Improvements on any Property has been
materially injured or damaged by fire or other casualty;
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(25) Covenant Compliance Certificate. A certificate, of the sort
required by paragraph 3(b) of Section 6.09, containing calculations
demonstrating Borrower's compliance (as of the date of, and taking into
account, the Initial Advance) with the covenants set forth in Section
8.01;
(26) Collateral Assignment. The Collateral Assignment and the
related absolute assignment required thereby, together with the original
deed of trust and note being assigned;
(27) Request for Advance. A request for an advance in accordance
with Section 2.04;
(28) Repayment of Prior Loan. All sums owing under the Prior Loan
shall have been repaid in full (it being understood that all or a portion
of such sums shall be repaid from the proceeds of the Initial Advance);
and
(29) Additional Documentation. Such other approvals, opinions or
documents as Administrative Agent or any Bank may reasonably request.
SECTION 4.02. Conditions Precedent to Advances After the Initial
Advance. The obligation of each Bank to make advances of the Loans subsequent to
the Initial Advance shall be subject to satisfaction of the following conditions
precedent:
(1) No Default or Event of Default shall have occurred and be
continuing as of the date of the advance (after giving effect to the
advance);
(2) Each of the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
material respects as of the date of the Advance (after giving effect to
the advance);
(3) Administrative Agent shall have received a request for an
advance in accordance with Section 2.04; and
(4) The conditions of Section 2.05 shall have been satisfied.
From time to time, Administrative Agent may cause the Title Insurer to provide
an informational continuation report with respect to each Property, at
Borrower's expense; provided, however, that so long as no Event of Default
exists, Borrower shall not be responsible for the costs of such continuation
reports for Properties other than South County more often than semi-annually (it
being understood that Administrative Agent may require such reports for South
County as often as it reasonably requests).
SECTION 4.03. Deemed Representations. Each request by Borrower for,
and acceptance by Borrower of, an advance of proceeds of the Loans shall
constitute a representation and warranty by Borrower, Guarantor and each
Mortgagor that, as of both the date of such request and the date of the advance
(1) no Default or Event of Default has occurred and is continuing and (2) each
representation or warranty contained in this Agreement or the other Loan
Documents is true and correct in all material respects, as though remade on such
date (except to the extent the representation is made as of a particular date
certain).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each
Bank as follows:
SECTION 5.01. Existence. Borrower is a limited partnership duly
organized and existing under the laws of the State of Delaware, with its
principal place of business in the State of California, and is duly qualified as
a foreign partnership, properly licensed, in good standing and has all requisite
authority to conduct its business in each jurisdiction in which it owns
properties or conducts business. Guarantor is a corporation duly organized and
existing under the laws of the State of Missouri, with its principal place of
business in the State of California, is duly qualified as a foreign corporation
and properly licensed and in good standing in each jurisdiction where Guarantor
owns properties or conducts business. Each Mortgagor is a limited liability
company or limited partnership duly organized and existing under the laws of the
State of its formation and is duly qualified, properly licensed, in good
standing and has all requisite authority to conduct its business and own its
Property in the jurisdiction where such Property is located.
SECTION 5.02. Power and Authority; No Conflicts; Compliance With
Laws. Borrower, Guarantor and each Mortgagor have full power and authority to
execute, deliver and perform under the applicable Loan Documents required to be
delivered by Borrower, Guarantor or such Mortgagor hereunder and such Loan
Documents have been duly authorized by all requisite action, and are not in
conflict with the terms of any organizational instruments of such entity, or any
instrument or agreement to which Borrower, Guarantor or such Mortgagor is a
party or by which Borrower, Guarantor or such Mortgagor or any of their
respective assets may be bound or affected. The execution and delivery of, and
the performance of the obligations required to be performed by Borrower,
Guarantor and each Mortgagor under, the Loan Documents do not and will not, in
the case of Borrower, Guarantor or any Mortgagor, (1) violate any provision of,
or require any filing, registration, consent or approval under, any Law
(including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it, (2) result in a breach of or constitute a default under or
require any consent under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which it may be a party or by which it or its
properties may be bound or affected except for consents which have been
obtained, (3) result in, or require, the creation or imposition of any Lien,
upon or with respect to any of its properties now owned or hereafter acquired or
(4) cause it to be in default under any such Law, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument; to the best of Borrower's knowledge, Borrower, Guarantor
and each Mortgagor are in compliance with all Laws applicable to them and their
properties (including the Properties).
SECTION 5.03. Legally Enforceable Agreements. Each Loan Document is
a legal, valid and binding obligation of Borrower, Guarantor and/or the
applicable Mortgagor, enforceable in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally.
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SECTION 5.04. Litigation. There are no actions, suits or proceedings
pending against Borrower, Guarantor or any of their respective Affiliates
(including any Mortgagor), the Mortgagor's interest in any Property or the
Improvements thereon, or challenging the validity and enforceability of the
Mortgage or the priority of the Lien thereof, at law or in equity, before any
court or arbitrator or any Governmental Authority (such actions, suits or
proceedings, collectively, "Actions"), except Actions which (a) are fully
covered by insurance or (b) could not reasonably be expected to substantially
impair the ability of Borrower, Guarantor or any Mortgagor to pay when due any
amounts which may become payable under the Notes or other Loan Documents or to
otherwise pay and perform their respective obligations in connection with the
Loans; nor, to Borrower's knowledge, are any Actions threatened which could
reasonably be expected to result in a Material Adverse Change.
SECTION 5.05. Good Title to Properties. Borrower, Guarantor and each
of their respective Affiliates (including each Mortgagor) have good, marketable
and legal title to all of the properties and assets each of them purports to own
(including, without limitation, those reflected in the financial statements
referred to in Section 5.13) and only with exceptions which do not materially
detract from the value of such property or assets or the use thereof in
Borrower's and such Affiliate's business, and except to the extent that any such
properties and assets (other than the Properties) have been encumbered or
disposed of since the date of such financial statements without violating any of
the covenants contained in Article VII or elsewhere in this Agreement. Borrower
and its Affiliates enjoy peaceful and undisturbed possession of all leased
property necessary in any material respect in the conduct of their respective
businesses. All such leases are valid and subsisting and are in full force and
effect.
SECTION 5.06. Taxes. Borrower, Guarantor and each Mortgagor have
filed all material tax returns (federal, state and local) required to be filed
and have paid all material taxes, assessments and governmental charges and
levies shown as due and payable thereon without the imposition of a penalty,
including interest and penalties, except to the extent they are the subject of a
Good Faith Contest.
SECTION 5.07. ERISA. Borrower, Guarantor and each Mortgagor are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred with
respect to any Plan which could result in liability to Borrower, Guarantor or
any Mortgagor; no notice of intent to terminate a Plan has been filed nor has
any Plan been terminated within the past five (5) years; no circumstance exists
which constitutes grounds under Section 4042 of ERISA entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to administer, a Plan,
nor has the PBGC instituted any such proceedings; Borrower, Guarantor, each
Mortgagor and the ERISA Affiliates have not completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; Borrower,
Guarantor, each Mortgagor and the ERISA Affiliates have met the minimum funding
requirements of each under Section 412 of the Code and Section 302 of ERISA with
respect to the Plans of each and there is no material "Unfunded Current
Liability" (as such quoted term is defined in ERISA) with respect to any Plan
established or maintained by each; and Borrower, Guarantor, each Mortgagor and
the ERISA Affiliates have not incurred any liability to the PBGC under ERISA
(other than for the payment of premiums under Section 4007 of ERISA). No part of
the funds to be used by Borrower in satisfaction of its obligations under this
Agreement constitutes "plan assets" of any "employee benefit plan" within the
meaning of ERISA or of any "plan" within the meaning of Section 4975(e)(1) of
the Code, as interpreted by
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the Internal Revenue Service and the U.S. Department of Labor in rules,
regulations, releases, bulletins or as interpreted under applicable case law.
SECTION 5.08. No Default on Outstanding Judgments or Orders.
Borrower, Guarantor and each Mortgagor have satisfied all judgments which are
not being appealed, or which are not fully covered by insurance, and are not in
default with respect to any judgment, order, writ, injunction, decree, rule or
regulation of any court, arbitrator or federal, state, municipal or other
Governmental Authority, commission, board, bureau, agency or instrumentality,
domestic or foreign, which could reasonably be expected to result in a Material
Adverse Change.
SECTION 5.09. No Defaults on Other Agreements. Except as disclosed
to Administrative Agent and the Banks in writing, including anything disclosed
on financial statements, to the best of Borrower's knowledge, neither Borrower,
Guarantor nor any Mortgagor is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
partnership, trust or other restriction which could reasonably be expected to
result in a Material Adverse Change. To the best of Borrower's knowledge,
neither Borrower, Guarantor nor any Mortgagor is in default in any respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument which could reasonably be
expected to result in a Material Adverse Change.
SECTION 5.10. Government Regulation. Neither Borrower, Guarantor nor
any Mortgagor is subject to regulation under the Investment Company Act of 1940
or any other Law or regulation limiting any such Person's ability to incur
indebtedness for money borrowed as contemplated hereby.
SECTION 5.11. Environmental Protection. To the best of Borrower's
knowledge, except for the matters disclosed in the Hazardous Materials reports
delivered to Administrative Agent pursuant to Section 4.01(10) or Section 2.18,
none of Borrower's, Guarantor's or their respective Affiliates' properties
contains any Hazardous Materials that, under any Environmental Law currently in
effect, (1) would impose liability on Borrower, Guarantor or any Mortgagor that
is likely to result in a Material Adverse Change or (2) is likely to result in
the imposition of a Lien on any assets of Borrower, Guarantor or any of their
respective Affiliates, in each case if not properly handled in accordance with
applicable Law. To the best of Borrower's knowledge, except as disclosed in the
Hazardous Materials reports delivered to Administrative Agent pursuant to
Section 4.01(10) or Section 2.18, neither Borrower, Guarantor nor any of their
respective Affiliates nor any portion of any Property or the Improvements
thereon is in violation of, or subject to any existing, pending or threatened
investigation or proceeding by any Governmental Authority under, any
Environmental Law. Neither Borrower, Guarantor nor any Mortgagor is required by
any Environmental Law to obtain any permits or license to construct or use any
improvements, fixtures, or equipment with respect to any Property, or if such
permit or license is required, either it has been obtained or the lack of such
permit or license would not have a material adverse effect on the operation of
such Property; and, except as may be disclosed in the reports delivered pursuant
to paragraph (10) of Section 4.01, to the best of Borrower's knowledge, the
prior use of each Property has not resulted in the disposal or release of any
Hazardous Materials on or to any portion of such Property or any surrounding
areas in violation of applicable Law.
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SECTION 5.12. Solvency. Borrower, Guarantor and each Mortgagor are,
and upon consummation of the transactions contemplated by this Agreement, the
other Loan Documents and any other documents, instruments or agreements relating
thereto, will be, Solvent.
SECTION 5.13. Financial Statements. The Guarantor Consolidated
Financial Statements and Mortgagor Financial Statements most recently delivered
to the Banks pursuant to the terms of this Agreement are in all material
respects complete and correct and fairly present the financial condition of the
subjects thereof as of the dates of and for the periods covered by such
statements, all in accordance with GAAP, and there has been no Material Adverse
Change since the date of such most recently delivered Guarantor Consolidated
Financial Statements or Mortgagor Financial Statements, as the case may be, and
no borrowings which might give rise to a Lien or claim against all or any
portion of the Mortgaged Property under any Mortgage or against the proceeds of
the Loans have been made by Borrower or others since the dates of such most
recently delivered financial statements.
SECTION 5.14. Valid Existence of Affiliates. Each ofthe material
Affiliates of Borrower which own or lease operating shopping centers or shopping
centers under construction is a partnership, limited liability company or joint
venture duly organized and existing in good standing under the laws of the
jurisdiction of its formation. Borrower and each of such Affiliates have the
power to own their respective properties and to carry on their respective
businesses now being conducted. Each of Borrower and such Affiliates is duly
qualified as a foreign partnership, company or venture to do business and is in
good standing in every jurisdiction in which the nature of the respective
businesses conducted by it or its respective properties, owned or held under
lease, make such qualification necessary.
SECTION 5.15. Insurance. Each Mortgagor has in force paid insurance
as required by the respective Mortgages and, generally, Borrower, Guarantor and
each of their respective Affiliates has in force paid insurance with financially
sound and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the same or a
similar business and similarly situated.
SECTION 5.16. Separate Tax and Zoning Lot. To the best of Borrower's
knowledge, except as disclosed in the title reports delivered to Administrative
Agent prior to the Closing Date (or, in the case of any additional Property
pursuant to Section 2.18, the date it became a Property), each Property
constitutes a distinct parcel or parcels for purposes of taxes, assessments and
impositions (public or private) and is not otherwise considered as part of a
larger lot not included in the Property for purposes of taxes, assessments or
impositions (public or private).
SECTION 5.17. Zoning and other Laws; Covenants and Restrictions. As
to each Property, (1) the Improvements and the uses thereof comply in all
material respects with applicable zoning, environmental, ecological, landmark
and other applicable Laws, and all requirements for such uses have been
satisfied in all material respects and (2) the applicable Mortgagor and the
Property are in compliance in all material respects with all applicable
restrictions and covenants.
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SECTION 5.18. Utilities Available. As to each Property, all utility
services necessary for the operation of the Improvements for their intended
purposes are available and servicing the Property, including water supply, storm
and sanitary sewer, gas, electric power and telephone facilities.
SECTION 5.19. Creation of Liens. Neither Borrower, Guarantor nor any
Mortgagor has entered into any contract or arrangement of any kind the
performance of which by the other party thereto would give rise to a Lien on all
or part of the Mortgaged Property under any Mortgage prior to such Mortgage.
SECTION 5.20. Roads. Each Property has access to a publicly
dedicated road or roads sufficient for the full utilization of the Improvements
for their intended purposes.
SECTION 5.21. Premises Documents and Leases. As to each Property,
the Premises Documents and Anchor Leases are unmodified and in full force and
effect; Borrower has not received written notice of any default under any Major
Lease, Anchor Lease or Premises Document except as disclosed to Administrative
Agent in writing (estoppel certificates being deemed disclosure), and all
conditions to the effectiveness and continuing effectiveness of each lease and
Premises Document required to be satisfied as of the date hereof have been
satisfied. The copies of leases, Anchor Leases and Premises Documents delivered
to Administrative Agent, UBS and/or Administrative Agent's counsel by Borrower
prior to the date hereof are true, correct and complete copies.
SECTION 5.22. Accuracy of Information; Full Disclosure. To the best
of Borrower's knowledge, neither this Agreement nor any documents, financial
statements, reports, notices, schedules, certificates, statements or other
writings furnished by or on behalf of Borrower, Guarantor or any Mortgagor to
Administrative Agent or any Bank in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated hereby, or
required herein to be furnished by or on behalf of Borrower, Guarantor or any
Mortgagor, contains any untrue or misleading statement of a material fact or
omits a material fact necessary to make the statements herein or therein not
misleading. To the best of Borrower's knowledge, there is no fact which Borrower
has not disclosed to Administrative Agent and the Banks in writing which
materially affects adversely nor, so far as Borrower can now foresee, will
materially affect adversely the business, prospects, profits or financial
condition of Borrower, Guarantor or any Mortgagor or the ability of Borrower,
Guarantor or any Mortgagor to perform this Agreement and the other Loan
Documents.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or the Loan
Commitments remain in effect, or any other amount is owing by Borrower,
Guarantor or any Mortgagor to Administrative Agent or any Bank hereunder or
under any other Loan Document, Borrower shall (and shall cause Guarantor and
each Mortgagor to):
SECTION 6.01. Maintenance of Existence. Preserve and maintain its
legal existence and, if
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applicable, good standing in the jurisdiction of organization and, if
applicable, qualify and remain qualified as a foreign entity in each
jurisdiction in which such qualification is required.
SECTION 6.02. Maintenance of Records. Keep adequate records and
books of account, in which complete entries will be made in accordance with
GAAP, reflecting all of its financial transactions.
SECTION 6.03. Maintenance of Insurance. At all times, (1) in the
case of Borrower and Guarantor, maintain and keep in force, and cause each of
its Affiliates to maintain and keep in force, insurance with financially sound
and reputable insurance companies or associations in such amounts and covering
such risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof and (2) in the case of each Mortgagor,
maintain and keep in force the insurance required by the respective Mortgages.
SECTION 6.04. Compliance with Laws; Payment of Taxes. Comply in all
respects with all Laws applicable to it or to any of its properties or any part
thereof (except where non-compliance would not either materially affect the
operation of the property or expose Borrower, Guarantor, any Mortgagor,
Administrative Agent or any Bank to material civil or criminal penalties), such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property, except to the extent they are the subject of a Good Faith
Contest.
SECTION 6.05. Right of Inspection. At any reasonable time and from
time to time upon reasonable notice, permit Administrative Agent or any Bank or
any agent or representative thereof to examine and make copies and abstracts
from its records and books of account, visit and inspect the Properties (or,
during the existence of an Event of Default, any of its properties), and discuss
its affairs, finances and accounts with its independent accountants.
SECTION 6.06. Compliance With Environmental Laws. Comply with
respect to each Property in all material respects with all applicable
Environmental Laws and immediately pay or cause to be paid all costs and
expenses incurred in connection with such compliance, except to the extent there
is a Good Faith Contest; and at its sole cost and expense, promptly remove, or
cause the removal of, any and all Hazardous Materials or the effects thereof at
any time identified in writing by a third Person as being on, in, under or
affecting any Property or the Improvements thereon in violation of applicable
Environmental Law. With regard to Hazardous Materials placed in a Property by a
tenant, Borrower shall have satisfied its obligations under this Section if it
has taken all action permitted under the relevant lease to cause the tenant to
remove such Hazardous Materials.
SECTION 6.07. Payment of Costs. Pay all costs and expenses required
for the satisfaction of the conditions of this Agreement, including, without
limitation, (1) all document and stamp taxes, recording and filing expenses and
fees and commissions lawfully due to brokers in connection with the transactions
contemplated hereby and (2) any taxes, assessments, impositions (public or
private), insurance premiums, Liens, security interests or other claims or
charges against any Property, in each case that are due and payable (subject, in
the case of taxes, assessments, impositions, claims and charges, to the
Mortgagors' right to contest the same in accordance with Section 1.07 of each
Mortgage).
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SECTION 6.08. Maintenance of Properties. Do all things reasonably
necessary to maintain, preserve, protect and keep its (and, in the case of
Borrower and Guarantor, its Affiliates') Properties in good repair, working
order and condition.
SECTION 6.09. Reporting and Miscellaneous Document Requirements.
Furnish directly to each of the Banks:
(1) Annual Financial Statements. As soon as available and in any
event within one hundred five (105) days after the end of each Fiscal
Year, the Guarantor Consolidated Financial Statements and Mortgagor
Financial Statements for each Mortgagor, in each case as of the end of and
for such Fiscal Year, in reasonable detail, stating in comparative form
the respective figures for the corresponding date and period in the prior
Fiscal Year, certified by the entity's chief financial officer or
treasurer, and audited by Guarantor's Accountants;
(2) Quarterly Financial Statements. As soon as available and in any
event within sixty (60) days after the end of each calendar quarter (other
than, in the case of the Guarantor Consolidated Financial Statements, the
last quarter of the Fiscal Year), the unaudited Guarantor Consolidated
Financial Statements and Mortgagor Financial Statements for each
Mortgagor, in each case as of the end of and for such calendar quarter, in
reasonable detail, stating in comparative form the respective figures for
the corresponding date and period in the prior Fiscal Year and certified
by the entity's chief financial officer or treasurer;
(3) Certificate of No Default and Financial Compliance. Within sixty
(60) days after the end of each of the first three quarters of each Fiscal
Year and within one hundred five (105) days after the end of each Fiscal
Year, a certificate of Guarantor's chief financial officer or treasurer
(a) stating that, to the best of his or her knowledge, no Default or Event
of Default has occurred and is continuing, or if a Default or Event of
Default has occurred and is continuing, specifying the nature thereof and
the action which is proposed to be taken with respect thereto, (b) stating
that the covenants contained in Section 7.02 and in Article VIII have been
complied with as of the end of the most recent calendar quarter (or
specifying those that have not been complied with) and including
computations demonstrating such compliance (or non-compliance) and (c)
setting forth the details (including amount, maturity, interest rate and
amortization requirements) of all material Outstanding Indebtedness;
(4) Notice of Litigation. Promptly after the commencement and
knowledge thereof, notice of all actions, suits, and proceedings before
any court or arbitrator, affecting (i) Borrower or Guarantor which could
reasonably be expected to result in a Material Adverse Change; or (ii) any
Mortgagor or all or any portion of the Mortgaged Property under any
Mortgage which could reasonably be expected to result in a Material
Adverse Change;
(5) Notices of Defaults and Events of Default. As soon as possible
and in any event within ten (10) days after Borrower has knowledge of the
occurrence of a material Default or any Event of Default a written notice
setting forth the details of such Default or Event of Default and the
action which is proposed to be taken with respect thereto;
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(6) Material Adverse Change. As soon as is practicable and in any
event within ten (10) days after knowledge of the occurrence of any event
or circumstance which is likely to result in or has resulted in a Material
Adverse Change, written notice thereof;
(7) Bankruptcy of Anchors or Tenants. Promptly after Borrower
obtains knowledge of the same, written notice of the bankruptcy,
insolvency or cessation of operations of (i) any of the Anchors or (ii)
any tenant in the Improvements on any Property to which 3% or more of the
aggregate minimum rent from such Improvements is attributable;
(8) Proxy Statements, Etc. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports
which Borrower or Guarantor sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements
which Borrower or Guarantor files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted
therefor, or with any national securities exchange;
(9) Offices. Thirty (30) days' prior written notice of any change in
the chief executive office or principal place of business of Borrower or
Guarantor;
(10) Environmental and Other Notices. As soon as possible and in any
event within ten (10) days after receipt, copies of (i) all Environmental
Notices received by Borrower, Guarantor or any Mortgagor which are not
received in the ordinary course of business and which relate to any
Property or any situation which is likely to result in a Material Adverse
Change and (ii) all reports of any official searches made by any
Governmental Authority having jurisdiction over any Property or the
Improvements thereon, and of any claims of violations thereof;
(11) Insurance Coverage. Promptly, such information concerning
Borrower's or Guarantor's insurance coverage as Administrative Agent may
reasonably request;
(12) Leasing Reports and Other Property Information. As soon as
available and in any event within thirty (30) days after the end of each
calendar quarter, a rent roll, leasing report and tenant sales report for
each Property, in each case certified by Borrower to be true and complete;
(13) Capital Expenditures. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, a reasonably
detailed operating budget for the next Fiscal Year (including projections
of income and expense), a schedule of such Fiscal Year's capital
expenditures and a budget for the next Fiscal Year's planned capital
expenditures for each Property; and
(14) General Information. Promptly, such other information
respecting the business, financial condition or results of operations of
Borrower, Guarantor, any Mortgagor or any of their respective subsidiaries
as Administrative Agent may from time to time reasonably request.
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SECTION 6.10. Premises Documents; Leases. As to each Property, keep
the Premises Documents and all leases in full force and effect (except as may be
permitted by this Agreement or by the applicable Mortgage) and at all times use
commercially reasonable efforts to compel performance by the parties to the
Premises Documents or the tenants under such leases, as the case may be, of all
obligations, covenants and agreements by such parties or tenants, as the case
may be, to be performed thereunder; deliver to Administrative Agent, (1)
promptly following the execution thereof, certified copies of all amendments or
supplements to the Anchor Leases or Premises Documents and (2) promptly
following Administrative Agent's request therefor, certified copies of any or
all leases of portions of the Improvements, any or all amendments or supplements
to any such leases, estoppel certificates from any or all of the tenants
thereunder and notices of assignment in the form of EXHIBIT F to said tenants;
not enter into any lease (other than an Anchor Lease) or any modification or
termination of any such lease or any modification, release or termination of any
guaranty of any such lease (x) without Administrative Agent's prior written
consent during the existence of any Event of Default or (y) that is not
commercially reasonable; and not enter into any Anchor Lease or any material
modification of an Anchor Lease or of any Premises Document without the prior
written consent of Administrative Agent, such consent not to be unreasonably
withheld. In connection with the foregoing, in any case where Administrative
Agent's approval of an Anchor Lease or modification of an Anchor Lease or
Premises Document is required under this Section (or where Borrower requests
such approval), notification of such approval or disapproval, as the case may
be, shall be given by Administrative Agent not later than twenty (20) days after
its receipt of a written request from Borrower for such approval, provided the
written request for such approval shall make specific reference to these
provisions of this Section and shall expressly state, in solid capital letters
on the first page thereof: "YOU ARE HEREBY REMINDED THAT YOUR FAILURE TO PROVIDE
NOTIFICATION OF APPROVAL OR DISAPPROVAL NOT LATER THAN TWENTY (20) DAYS AFTER
YOUR RECEIPT OF THIS REQUEST SHALL BE DEEMED TO CONSTITUTE YOUR APPROVAL
THEREOF."
Subject to the conditions specified below, Administrative Agent
will, in the case of each Property, upon the applicable Mortgagor's request,
execute non-disturbance, attornment and subordination agreements, in form
reasonably satisfactory to Administrative Agent, with lessees of space in the
Improvements under leases demising 7,500 or more square feet of gross leaseable
area which shall provide, inter alia, that in the event Administrative Agent or
any purchaser at foreclosure shall succeed to the Mortgagor's interest in the
Property, the leases of such lessees will remain in full force and effect and be
binding upon Administrative Agent or such purchaser and such lessee as though
each were the original parties thereto.
Administrative Agent's obligation to execute such agreements shall
be subject to the following conditions: (i) Administrative Agent shall have
received and approved the standard form of lease to be used in connection with
the leasing of the Improvements or such other form as may be customary for
certain lessees and (ii) upon each request for such an agreement, Administrative
Agent shall receive a photocopy of the executed lease, together with a marked
draft thereof indicating all variations from the approved standard form, each
certified to be true and complete by a responsible officer of the Mortgagor or
by its counsel.
SECTION 6.11. Compliance with Covenants, Restrictions and Easements.
Comply with all restrictions, covenants and easements affecting any Property or
the
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Improvements thereon, except in cases where non-compliance would not have a
material adverse effect on such Property.
SECTION 6.12. Management, Leasing and Service Contracts. Deliver to
Administrative Agent, with respect to each Property, (1) as and when executed,
certified copies of all management and leasing contracts, each of which shall be
entered into with a party, and on terms and conditions, reasonably acceptable to
Administrative Agent, and (2) as and when requested by Administrative Agent,
copies of all material service contracts; contemporaneously with entering into
each such management or leasing contract, at Administrative Agent's option,
cause the same to be collaterally assigned to Administrative Agent for the
benefit of the Banks as additional security for the Loans and/or cause the
manager or leasing agent under each such management or leasing contract to
undertake, inter alia, to continue performance on the Banks' behalf without
additional cost in the event of a Default or Event of Default; cause each
service contract to contain a provision allowing for the as-of-right
cancellation thereof on thirty (30) days' notice from the applicable Mortgagor
or its successors as owners of the Property; and keep in full force and effect
and not materially modify in a manner adverse to Borrower/Mortgagor the
management and leasing agreement(s) approved pursuant to paragraph (15) of
Section 4.01 without Administrative Agent's prior written consent, such consent
not to be unreasonably withheld.
SECTION 6.13. Correction of Defects. Upon demand of Administrative
Agent, correct any material defects (including structural) in the Improvements
on any Property.
SECTION 6.14. Estoppel Certificates. Within three (3) days upon
request in person or within five (5) days upon request by mail, furnish to
Administration Agent or such other Persons as Administrative Agent may
designate, a statement, duly acknowledged, of the amount due, whether for
principal or interest, under the Notes, and whether any offsets, counterclaims
or defenses exist against the Obligations.
ARTICLE VII
NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower,
Guarantor or any Mortgagor to Administrative Agent or any Bank hereunder or
under any other Loan Document, Borrower and Guarantor shall not do any or all of
the following:
SECTION 7.01. Mergers Etc. Merge or consolidate with any Person
(except where Borrower or Guarantor or a Person wholly-owned by Borrower or
Guarantor is the surviving entity), or sell, assign, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) (or
enter into any agreement to do any of the foregoing).
SECTION 7.02. Interest Rate Hedging. At any time, permit or suffer
(1) more than 33-1/3% of the outstanding principal amount under the Loans not to
be "hedged"; for purposes of this Section, "hedged" shall mean bearing interest
at an effective fixed or capped rate through the operation of a "cap", "collar",
"swap" or comparable interest rate protection contract
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with a counterparty reasonably acceptable to the Required Banks, such instrument
creating the "cap", "collar", "swap" or comparable interest rate protection
contract, as the case may be, having a remaining term of at least twelve (12)
months; or (2) any such required interest rate protection contract not to be
assigned to Administrative Agent pursuant to an assignment in the form of
EXHIBIT D (in this connection Borrower agrees to deliver such financing
statements and documents of further assurance as Administrative Agent may
reasonably request).
SECTION 7.03. Control of Borrower and Mortgagors. At any time permit
or suffer the failure of Guarantor to be the managing general partner of
Borrower or the failure of any Mortgagor to be a direct or indirect wholly-owned
subsidiary of Borrower and/or Guarantor.
ARTICLE VIII
FINANCIAL COVENANTS
SECTION 8.01. Financial Covenants. So long as any of the Notes shall
remain unpaid, or the Loan Commitments shall remain in effect, or any other
amount is owing to Administrative Agent or any Bank under this Agreement or
under any other Loan Document, Borrower shall not permit or suffer:
(1) Loan to Value Ratio. At any time, the ratio of (i) the
outstanding principal amount under the Notes plus the total amount of
outstanding Letters of Credit to (ii) Property Capitalized Value to exceed
65%;
(2) Debt Yield. At any time, the ratio of (i) Property EBITDA for
the four (4) calendar quarters ending with the most recent quarter for
which Borrower, Guarantor and Mortgagors are required to report financial
results pursuant to this Agreement to (ii) the outstanding principal
amount of the Notes plus the total amount of outstanding Letters of Credit
to be less than 12%; or
(3) Debt Service Coverage Ratio. At any time, either the ratio of
(i) Property EBITDA for the four (4) calendar quarters ending with the
most recent quarter for which Borrower, Guarantor and Mortgagors are
required to report financial results pursuant to this Agreement to (ii)
Hypothetical Annualized Debt Service to be less than 1.40 to 1.00; or the
ratio of (i) Property EBITDA for said four (4) calendar quarters to (ii)
Actual Annual Debt Service to be less than 1.50 to 1.00.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.01. Events of Default. Any of the following events shall
be an "Event of Default":
(1) If Borrower shall: fail to pay the principal of any Notes as and
when due; or fail to pay interest accruing on any Notes as and when due
and such failure to pay shall continue unremedied for five (5) days after
the due date of such amount; or fail to pay any fee or interest or any
other amount due under this Agreement or any other Loan Document or the
Supplemental Fee Letters as and when due and such failure to pay shall
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continue unremedied for five (5) days after notice by Administrative Agent
of such failure to pay; or
(2) If any representation or warranty made by Borrower, Guarantor or
any Mortgagor in any Loan Document or which is contained in any
certificate, document, opinion, financial or other statement furnished at
any time under or in connection with a Loan Document shall prove to have
been incorrect in any material respect on or as of the date made or
remade; or
(3) If (a) Borrower shall fail to perform or observe any term,
covenant or agreement contained in Article VII or Article VIII or (b)
Borrower, Guarantor or any Mortgagor shall fail to perform or observe any
term, covenant or agreement contained in Article VI or otherwise contained
in this Agreement (other than obligations specifically referred to
elsewhere in this Section) or in any other Loan Document, or in the
Supplemental Fee Letters or in any other document executed by Borrower,
Guarantor or any Mortgagor and delivered to Administrative Agent and/or
the Banks in connection with the transactions contemplated hereby and such
failure described in this clause (b) shall remain unremedied for thirty
(30) consecutive calendar days after notice by Administrative Agent to
Borrower thereof (or such shorter cure period as may be expressly
prescribed in the applicable Loan Document); provided, however, that if
any such default under clause (b) above cannot by its nature be cured
within such thirty (30) day, or shorter, as the case may be, grace period
and so long as Borrower, Guarantor or the applicable Mortgagor, as the
case may be, shall have commenced cure within such thirty (30) day, or
shorter, as the case may be, grace period and shall, at all times
thereafter, diligently prosecute the same to completion, Borrower,
Guarantor or the applicable Mortgagor, as the case may be, shall have an
additional period, not to exceed ninety (90) days, to cure such default;
in no event, however, is the foregoing intended to effect an extension of
the Maturity Date; or
(4) If either Borrower or Guarantor or any subsidiary of either
(other than any Mortgagor) shall fail (a) to pay any Debt (other than the
payment obligations described in paragraph (1) of this Section) in an
amount equal to or greater than $20,000,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise), and
such failure shall continue beyond the applicable grace period, if any, or
(b) to perform or observe any term, covenant, or condition under any
agreement or instrument relating to any such Debt, when required to be
performed or observed, and such failure shall continue beyond the
applicable grace period, if the effect of such continuing failure to
perform or observe is to accelerate (or in the case of monetary default,
to permit the acceleration of) the maturity of, or required prepayment
date of, such Debt; or
(5) If any Mortgagor, Borrower or Guarantor shall, or any
Affiliate(s) (other than any Mortgagor) of Borrower or Guarantor to which
$100,000,000 or more in the aggregate of the assets of Borrower are
attributable, shall: (a) generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (b)
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it,
all or any portion of any Property or a substantial part of its other
assets; or (c) commence any proceeding under any
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bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (d) have had any such petition or application
filed or any such proceeding shall have been commenced, against it, in
which an adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains undismissed
or unstayed for a period of ninety (90) days or more; or (e) be the
subject of any proceeding under which all or any portion of any Property
or all or a substantial part of its other assets may be subject to
seizure, forfeiture or divestiture; or (f) by any act or omission indicate
its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for, all or any portion of any Property or
all or any substantial part of its other property; or (g) suffer any such
custodianship, receivership or trusteeship for, all or any portion of any
Property or all or any substantial part of its other property, to continue
undischarged for a period of ninety (90) days or more; or
(6) If one or more judgments, decrees or orders for the payment of
money (a) in excess of $10,000,000 in the aggregate shall be rendered
against Borrower or Guarantor or (b) in excess of $5,000,000 in the
aggregate shall be rendered against any Mortgagor, and any such judgments,
decrees or orders shall continue unsatisfied and in effect for a period of
forty-five (45) consecutive days without being vacated, discharged,
satisfied or stayed or bonded pending appeal (the $10,000,000 and
$5,000,000 amounts above shall be net of insurance coverage or
indemnification from an indemnitor that is, in the reasonable judgment of
the Required Banks, capable of performing its indemnification
obligations); or
(7) If any of the following events shall occur or exist with respect
to Borrower, Guarantor, any Mortgagor or any ERISA Affiliate: (a) any
Prohibited Transaction involving any Plan; (b) any Reportable Event with
respect to any Plan; (c) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of any Plan; (d)
any event or circumstance which would constitute grounds for the
termination of, or for the appointment of a trustee to administer, any
Plan under Section 4042 of ERISA, or the institution by the PBGC of
proceedings for any such termination or appointment under Section 4042 of
ERISA; or (e) complete or partial withdrawal under Section 4201 or 4204 of
ERISA from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, if such
event or conditions, if any, could in the opinion of any Bank subject
Borrower, Guarantor, any Mortgagor or any ERISA Affiliate to any tax,
penalty, or other liability to a Plan, Multiemployer Plan, the PBGC or
otherwise (or any combination thereof) which in the aggregate exceeds or
is likely to exceed $500,000; or if at any time any portion of Borrower's,
Guarantor's or any Mortgagor's assets constitute plan assets for ERISA
purposes (with the meaning of C.F.R. ss.2510.3-101); or
(8) If at any time Guarantor is not a qualified real estate
investment trust under Sections 856 through 860 of the Code or is not
listed on a recognized U.S. national stock exchange; or
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(9) If any Property shall be managed by a Person other than
Westfield Holdings Limited or a majority owned direct or indirect
subsidiary of Westfield Holdings Limited; or
(10) If any Mortgage shall at any time and for any reason cease to
create a valid and perfected first priority Lien on the Mortgaged Property
purported to be subject thereto or to be in full force and effect; or
shall be declared null and void; or any party thereto shall deny the
continuing validity of the Lien created thereunder; or
(11) If there shall occur an "Event of Default" under any Mortgage
(as such quoted term is defined in such Mortgage).
SECTION 9.02. Remedies. If any Event of Default shall occur and be
continuing, Administrative Agent shall, upon request of the Required Banks, by
notice to Borrower, (1) declare the outstanding Notes, all interest thereon, and
all other amounts payable under this Agreement, and any other Loan Documents to
be forthwith due and payable, whereupon the Notes, all such interest, and all
such amounts due under this Agreement and under any other Loan Document shall
become and be forthwith due and payable, without presentment, demand, protest,
or further notice of any kind, all of which are hereby expressly waived by
Borrower; and/or (2) exercise any remedies provided in any of the Loan Documents
or by Law.
ARTICLE X
ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS
SECTION 10.01. Appointment, Powers and Immunities of Administrative
Agent. Each Bank hereby irrevocably appoints and authorizes Administrative Agent
to act as its agent hereunder and under any other Loan Document with such powers
as are specifically delegated to Administrative Agent by the terms of this
Agreement and any other Loan Document, together with such other powers as are
reasonably incidental thereto. Administrative Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and any
other Loan Document or required by Law, and shall not by reason of this
Agreement be a fiduciary or trustee for any Bank except to the extent that
Administrative Agent acts as an agent with respect to the receipt or payment of
funds (nor shall Administrative Agent have any fiduciary duty to Borrower nor
shall any Bank have any fiduciary duty to Borrower or to any other Bank). No
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or otherwise exist against Administrative Agent.
Neither Administrative Agent nor any of its directors, officers, employees,
agents, attorneys-in-fact or Affiliates shall be responsible to any Bank for any
recitals, statements, representations or warranties made by Borrower or any
officer, partner or official of Borrower or any other Person contained in this
Agreement or any other Loan Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any of them under,
this Agreement or any other Loan Document, or for the value, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document or instrument referred to or
provided for herein or therein, for the perfection or priority of any Lien
securing the Obligations or for any failure by Borrower or any other obligor to
perform any of its obligations hereunder or thereunder. Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible, except as to
money or securities
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received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Neither
Administrative Agent nor any of its directors, officers, employees, agents,
attorneys-in-fact or Affiliates shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct.
SECTION 10.02. Reliance by Administrative Agent. Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by
Administrative Agent. Administrative Agent may deem and treat each Bank as the
holder of the Loan made by it for all purposes hereof and shall not be required
to deal with any Person who has acquired a Participation in any Loan or
Participation from a Bank. As to any matters not expressly provided for by this
Agreement or any other Loan Document, Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by the Required Banks, and such instructions of the
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks and any other holder of all or any portion of any
Loan or Participation.
SECTION 10.03. Defaults. Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default or Event of Default (other than a
monetary Default or Event of Default) unless Administrative Agent has received
notice from a Bank or Borrower specifying such Default or Event of Default and
stating that such notice is a "Notice of Default." In the event that
Administrative Agent receives such a notice of the occurrence of a Default or
Event of Default, Administrative Agent shall give prompt notice thereof to the
Banks. Administrative Agent, following consultation with the Banks, shall
(subject to Section 10.07) take such action with respect to such Default or
Event of Default which is continuing, or with respect to the exercise of
remedies, including with respect to realization on, or operation or disposition
of, any Collateral, as shall be directed by the Required Banks; provided that,
unless and until Administrative Agent shall have received such directions,
Administrative Agent may take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interest of the Banks. In no event shall Administrative Agent be
required to take any such action which it determines to be contrary to law. Each
Bank acknowledges that no individual Bank may separately enforce or exercise any
of the provisions of the Loan Documents (including, without limitation, the
Notes) other than through Administrative Agent. Notwithstanding anything to the
contrary contained in this Agreement, in the case of any decision not to
accelerate the Loans following the occurrence of a monetary Event of Default,
the "Required Banks" must consist of at least two (2) Banks.
SECTION 10.04. Rights of Administrative Agent as a Bank. With
respect to its Loan Commitment and the Loan provided by it, Administrative Agent
in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not
acting as Administrative Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include Administrative Agent in its capacity as a
Bank. Administrative Agent and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to (on a secured or
unsecured basis), and
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generally engage in any kind of banking, trust or other business with Borrower
(and any Affiliates of Borrower) as if it were not acting as Administrative
Agent.
SECTION 10.05. Sharing of Costs by Banks; Indemnification of
Administrative Agent. Each Bank agrees to pay its ratable share, based on the
respective outstanding principal balances under its Note and the other Notes, of
any expenses incurred (and not paid or reimbursed by Borrower after demand for
payment is made by Administrative Agent) by or on behalf of the Banks in
connection with any Default or Event of Default, including, without limitation,
costs of enforcement of the Loan Documents and any advances to pay taxes or
insurance premiums or otherwise to preserve the Lien of any Mortgage or to
preserve or protect any Mortgaged Property. In the event a Bank fails to pay its
share of expenses as aforesaid, and all or a portion of such unpaid amount is
paid by Administrative Agent and/or one or more of the other Banks, then the
defaulting Bank shall reimburse Administrative Agent and/or the other Bank(s)
for the portion of such unpaid amount paid by it or them, as the case may be,
together with interest thereon at the Base Rate from the date of payment by
Administrative Agent and/or the other Bank(s). In addition, each Bank agrees to
indemnify Administrative Agent (to the extent not reimbursed under Section 12.04
or under the other applicable provisions of any Loan Document, but without
limiting the obligations of Borrower under Section 12.04 or such other
provisions), for its ratable share, based on the respective outstanding
principal balances under its Note and the other Notes, of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against Administrative Agent in any way
relating to or arising out of this Agreement, any other Loan Document or any
other documents contemplated by or referred to herein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which Borrower is obligated to pay under Section 12.04 or under any
other applicable provisions of any Loan Document) or the enforcement of any of
the terms hereof or thereof or of any such other documents or instruments;
provided that no Bank shall be liable for (1) any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the party to be
indemnified, (2) any loss of principal or interest with respect to
Administrative Agent's Loan or (3) any loss suffered by Administrative Agent in
connection with a swap or other interest rate hedging arrangement entered into
with Borrower.
SECTION 10.06. Non-Reliance on Administrative Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own analysis of the
Collateral and of the credit of Borrower and Guarantor, and its own decision to
enter into this Agreement and that it will, independently and without reliance
upon Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any other Loan Document. Administrative Agent shall not be required to keep
itself informed as to the performance or observance by Borrower of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or to inspect the properties (including, without
limitation, any Property) or books of Borrower, Guarantor or any Mortgagor.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by Administrative Agent hereunder,
Administrative Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of Borrower, Guarantor,
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any Mortgagor or any other Affiliate of Borrower or Guarantor which may come
into the possession of Administrative Agent or any of its Affiliates.
Administrative Agent shall not be required to file this Agreement, any other
Loan Document or any document or instrument referred to herein or therein, for
record or give notice of this Agreement, any other Loan Document or any document
or instrument referred to herein or therein, to anyone; provided, however, that
Administrative Agent shall see to it that the Mortgages and related UCC-1
financing statements are delivered at closing to the Title Insurer or its
representative for recording and filing.
SECTION 10.07. Failure of Administrative Agent to Act. Except for
action expressly required of Administrative Agent hereunder, Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Banks under Section
10.05 in respect of any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
SECTION 10.08. Resignation or Removal of Administrative Agent.
Administrative Agent hereby agrees not to unilaterally resign except in the
event it becomes an Affected Bank and is removed or replaced as a Bank pursuant
to Section 3.07, in which event it shall have the right to resign.
Administrative Agent may be removed at any time with or without cause by the
Required Banks, provided that Borrower and the other Banks shall be promptly
notified thereof. Upon any such resignation or removal, the Required Banks shall
have the right to appoint a successor Administrative Agent, which successor
Administrative Agent shall be reasonably acceptable to Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within thirty (30) days after the
resignation of or the Required Banks' removal of the retiring Administrative
Agent, then the retiring Administrative Agent may, on behalf of the Banks,
appoint a successor Administrative Agent, which shall be one of the Banks. The
Required Banks or the retiring Administrative Agent, as the case may be, shall
upon the appointment of a successor Administrative Agent promptly so notify
Borrower and the other Banks. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent's removal
hereunder as Administrative Agent, the provisions of this Article X shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
SECTION 10.09. Amendments Concerning Agency Function.
Notwithstanding anything to the contrary contained in this Agreement,
Administrative Agent shall not be bound by any waiver, amendment, supplement or
modification of this Agreement or any other Loan Document which affects its
duties, rights, and/or function hereunder or thereunder unless it shall have
given its prior written consent thereto.
SECTION 10.10. Liability of Administrative Agent. Administrative
Agent shall not have any liabilities or responsibilities to Borrower on account
of the failure of any Bank to perform its obligations hereunder or to any Bank
on account of the failure of Borrower to perform its obligations hereunder or
under any other Loan Document.
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SECTION 10.11. Transfer of Agency Function. Without the consent of
Borrower or any Bank, Administrative Agent may at any time or from time to time
transfer its functions as Administrative Agent hereunder to any of its offices
wherever located in the United States, provided that Administrative Agent shall
promptly notify Borrower and the Banks thereof.
SECTION 10.12. Non-Receipt of Funds by Administrative Agent. Unless
Administrative Agent shall have received notice from a Bank or Borrower (either
one as appropriate being the "Payor") prior to the date on which such Bank is to
make payment hereunder to Administrative Agent of the proceeds of a Loan or
Borrower is to make payment to Administrative Agent, as the case may be (either
such payment being a "Required Payment"), which notice shall be effective upon
receipt, that the Payor will not make the Required Payment in full to
Administrative Agent, Administrative Agent may assume that the Required Payment
has been made in full to Administrative Agent on such date, and Administrative
Agent in its sole discretion may, but shall not be obligated to, in reliance
upon such assumption, make the amount thereof available to the intended
recipient on such date. If and to the extent the Payor shall not have in fact so
made the Required Payment in full to Administrative Agent, the recipient of such
payment shall repay to Administrative Agent forthwith on demand such amount made
available to it together with interest thereon, for each day from the date such
amount was so made available by Administrative Agent until the date
Administrative Agent recovers such amount, at the customary rate set by
Administrative Agent for the correction of errors among Banks for three (3)
Banking Days and thereafter at the Base Rate.
SECTION 10.13. Withholding Taxes. Each Bank represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to Administrative Agent or Borrower such
forms, certifications, statements and other documents as Administrative Agent or
Borrower may request from time to time to evidence such Bank's exemption from
the withholding of any tax imposed by any jurisdiction or to enable
Administrative Agent and Borrower to comply with any applicable Laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any Bank is not a United States person within the meaning of Section 7701(a)(30)
of the Code, such Bank will furnish to Administrative Agent and Borrower Form
W-8ECI or Form W-8BEN of the Internal Revenue Service, or such other forms,
certifications, statements or documents (Form W-8ECI, W-8BEN or such other
forms, certifications, statements or documents, the "Prescribed Forms"), duly
executed and completed by such Bank as evidence of such Bank's complete
exemption from the withholding of U.S. tax with respect thereto prior to the
date any payments become due to it hereunder. Each Bank that so delivers such
Prescribed Forms further undertakes to deliver to Borrower and Administrative
Agent applicable replacement Prescribed Forms on or before the date that such
Prescribed Forms previously delivered expire or become obsolete or after the
occurrence of any event requiring a change in the most recent such Prescribed
Forms so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by Borrower or Administrative Agent, in
each case certifying that such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any U.S. tax, unless
any change in treaty, law or regulation has occurred prior to the date on which
any such delivery would otherwise be required which renders all such Prescribed
Forms inapplicable; provided, however, that upon any such change in treaty, law
or regulation, such Bank shall deliver any forms, certifications, statements or
other documents which such Bank is entitled to provide in order to reduce any
deduction or withholding of any U.S. tax on any payment to such Bank under this
Agreement and the Notes. If any Bank that is not a United States person within
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the meaning of Section 7701(a)(30) of the Code fails to comply with the
provisions of this Section, then, notwithstanding the provisions of Section
12.17, Borrower and/or Administrative Agent, may, as required by law, deduct and
withhold federal income tax payments from payments to such Bank under this
Agreement or the Notes; provided that, if Borrower shall so deduct or withhold
any such taxes, Borrower shall provide a statement to Administrative Agent and
such Bank, setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such Bank may
reasonably request for assisting such Bank to obtain any allowable credits or
deductions for the taxes so deducted or withheld in the jurisdiction or
jurisdictions in which such Bank is subject to tax.
SECTION 10.14. Pro Rata Treatment. Except to the extent otherwise
provided, each advance of proceeds of the Loans shall be made by the Banks
ratably according to the amounts of their respective Loan Commitments.
SECTION 10.15. Sharing of Payments Among Banks. If a Bank shall
obtain payment of any principal of or interest on any Loan made by it through
the exercise of any right of setoff, banker's lien, counterclaim, or by any
other means (including direct payment), and such payment results in such Bank
receiving a greater payment than it would have been entitled to had such payment
been paid directly to Administrative Agent for disbursement to the Banks, then
such Bank shall promptly purchase for cash from the other Banks Participations
in the Loans made by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share ratably the benefit of such payment. To such end the Banks
shall make appropriate adjustments among themselves (by the resale of
Participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. Borrower agrees that any Bank so purchasing a Participation in the
Loans made by other Banks may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such Participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness of Borrower.
SECTION 10.16. Possession of Documents. Each Bank shall keep
possession of its own Notes. Administrative Agent shall hold all the other Loan
Documents and related documents in its possession and maintain separate records
and accounts with respect thereto, and shall permit the Banks and their
representatives access at all reasonable times to inspect such Loan Documents,
related documents, records and accounts.
ARTICLE XI
NATURE OF OBLIGATIONS
SECTION 11.01. Absolute and Unconditional Obligations. Borrower
acknowledges and agrees that its obligations and liabilities under this
Agreement and under the other Loan Documents shall be absolute and unconditional
irrespective of (1) any lack of validity or enforceability of any of the
Obligations, any Loan Documents, or any agreement or instrument relating
thereto, (2) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from any Loan Documents or any other
documents or instruments executed in connection with or related to the
Obligations, (3) any exchange or release of any Collateral, or
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any release of any other Person from all or any of the Obligations or (4) any
other circumstances which might otherwise constitute a defense available to, or
a discharge of, Borrower or any other Person in respect of the Obligations.
The obligations and liabilities of Borrower under this Agreement and
other Loan Documents shall not be conditioned or contingent upon the pursuit by
any Bank or any other Person at any time of any right or remedy against Borrower
or any other Person which may be or become liable in respect of all or any part
of the Obligations or against any Collateral or guarantee therefor or right of
setoff with respect thereto.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Binding Effect of Request for Advance. Borrower
agrees that, by its acceptance of any advance of proceeds of the Loans under
this Agreement, it shall be bound in all respects by the request for advance
submitted on its behalf in connection therewith with the same force and effect
as if Borrower had itself executed and submitted the request for advance and
whether or not the request for advance is executed and/or submitted by an
authorized person.
SECTION 12.02. Amendments and Waivers. No amendment or material
waiver of any provision of this Agreement or any other Loan Document nor consent
to any material departure by Borrower, Guarantor, any Mortgagor or any other
obligor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Banks and, solely for purposes of its
acknowledgment thereof, Administrative Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Banks do any of the following: (1)
reduce the principal of, or interest on, the Notes or any fees due hereunder or
any other amount due hereunder or under any Loan Document; (2) postpone any date
fixed for any payment of principal of, or interest on, the Notes or any fees due
hereunder or under any Loan Document, or waive any default in the payment of
principal, interest or any other amount due hereunder or under any Loan
Documents; (3) change the definition of Required Banks; (4) amend this Section
or any other provision requiring the consent of all the Banks; (5) waive any
default under paragraph (5) of Section 9.01; (6) release any material portion of
the Collateral, other than in accordance with the provisions of Loan Documents;
or (7) change the definition of the term "Weighted Average Capitalization Rate";
provided, further, however, that the foregoing is not intended to require the
unanimous consent of the Banks in the case of a waiver, consent or modification,
as between a particular Bank and Borrower, with respect to amounts (such as
amounts payable pursuant to Article III) that are payable to such Bank and not
to all the other Banks. Any advance of proceeds of the Loans made prior to or
without the fulfillment by Borrower of all of the conditions precedent thereto,
whether or not known to Administrative Agent and the Banks, shall not constitute
a waiver of the requirement that all conditions, including the non-performed
conditions, shall be required with respect to all future advances. No failure on
the part of Administrative Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
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SECTION 12.03. Usury. Anything herein to the contrary
notwithstanding, the obligations of Borrower under this Agreement and the Notes
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to a Bank limiting rates of interest which may be charged or
collected by such Bank.
SECTION 12.04. Expenses; Indemnification. Borrower agrees to
reimburse Administrative Agent on demand for all reasonable costs, expenses, and
charges including, without limitation, all reasonable fees and charges of
engineers, appraisers and other consultants (provided such other consultants
have been engaged with Borrower's consent, not to be unreasonably withheld or
delayed; it being understood, however, that Borrower shall have no such right of
consent during the existence of an Event of Default) and external legal counsel
incurred by Administrative Agent in connection with the Loans and to reimburse
each of the Banks for reasonable legal costs, expenses and charges incurred by
each of the Banks in connection with the performance or enforcement of this
Agreement, the Notes, or any other Loan Documents; provided, however, that
Borrower is not responsible for costs, expenses and charges incurred by
Administrative Agent or the Banks in connection with the day-to-day
administration or the syndication of the Loans (other than for the
administration fee required by ection 2.08(b)). Borrower agrees to indemnify
Administrative Agent and each Bank and their respective Affiliates, controlling
Persons, directors, officers, employees and agents (each, an "Indemnified Party)
from, and hold each of them harmless against, any and all losses, liabilities,
claims, damages or expenses, joint or several, incurred by any of them arising
out of or by reason of (x) any claims by brokers or (y) any third-party claims
relating to this Agreement, the Loans, the use of proceeds of the Loans, and the
performance by Administrative Agent or any of its Affiliates of the services
contemplated by this Agreement, and Borrower will reimburse any Indemnified
Party for any and all reasonable expenses (including reasonable counsel fees and
expenses) as they are incurred in connection with the investigation of or
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
and whether or not any of the transactions contemplated hereby are consummated
or this Agreement or the Loan Commitments are terminated. Borrower will not be
liable under the foregoing indemnification provision to an Indemnified Party to
the extent that any loss, claim, damage, liability or expense is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence, bad faith or breach of
this Agreement.
In any such action or proceeding Borrower shall have the right to
assume the defense thereof and select counsel reasonably acceptable to
Administrative Agent; however, in no event will such counsel be counsel to
Borrower or to any of its Affiliates if, in Administrative Agent's reasonable
judgment, such counsel's representation of any Indemnified Party would
constitute a conflict of interest.
Borrower agrees that, without Administrative Agent's prior written
consent, which shall not be unreasonably withheld, Borrower will not settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding in respect of which indemnification has been or
could be sought under the indemnification provisions of this Agreement, unless
such settlement, compromise or consent (i) includes an unconditional written
release, in form and substance reasonably satisfactory to the Indemnified
Parties, of each Indemnified Party from all liability arising out of such claim,
action or proceeding and (ii) does
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not include any statement as to an admission of fault, culpability or failure to
act by or on behalf of any Indemnified Party.
No Indemnified Party shall, without the prior consent of Borrower
(not to be unreasonably withheld or delayed) settle or compromise any action or
claim for which indemnity has been or could be sought hereunder.
If (a) an Indemnified Party is requested to appear as a witness in
any action brought by or on behalf of Borrower or any of its Affiliates or (b)
an Indemnified Party is required to appear as a witness in any action brought
against Borrower or any of Affiliates, in either case, in which such Indemnified
Party is not named as a defendant, Borrower agrees to reimburse such Indemnified
Party for all reasonable expenses incurred by it in connection with such
Indemnified Party's appearing and preparing to appear as such a witness,
including, without limitation, the reasonable fees and disbursements of its
legal counsel. Notwithstanding anything to the contrary contained in this
Section, Borrower shall not be required to indemnify any Indemnified Party or
other Person against, or hold such Indemnified Party or other Person harmless
from, any (i) Excluded Taxes or (ii) other amounts caused by or resulting from
such Indemnified Party's or Person's failure to comply with Section 10.13.
The obligations of Borrower under this Section, under Article III
and under Section 12.17 shall survive the repayment of all amounts due under or
in connection with any of the Loan Documents and the termination of the Loans.
SECTION 12.05. Assignment; Participation. This Agreement shall be
binding upon, and shall inure to the benefit of, Borrower, Administrative Agent,
the Banks and their respective successors and permitted assigns. Borrower may
not assign or transfer its rights or obligations hereunder.
Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Loan (the
"Participations") subject to Borrower's consent, provided there exists no Event
of Default, which consent shall not be unreasonably withheld or delayed. In the
event of any such grant by a Bank of a Participation to a Participant, whether
or not Borrower or Administrative Agent was given notice, such Bank shall remain
responsible for the performance of its obligations hereunder, and Borrower and
Administrative Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations hereunder. Any agreement
pursuant to which any Bank may grant such a Participation shall provide that
such Bank shall retain the sole right and responsibility to enforce the
obligations of Borrower hereunder and under any other Loan Document including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement or any other Loan Document; provided that
such participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clauses (1)
through (7) of Section 12.02 without the consent of the Participant.
Any Bank may at any time assign to any bank or other institution
with the acknowledgment of Administrative Agent and, provided there exists no
Event of Default, the consent of Borrower, which consent shall not be
unreasonably withheld or delayed (such assignee, a "Consented Assignee"), or to
one or more banks or other institutions which are majority owned subsidiaries of
a Bank or to the Parent of a Bank (each Consented Assignee or
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subsidiary bank or institution, an "Assignee") all, or a proportionate part of
all, of its rights and obligations under this Agreement and its Notes, and such
Assignee shall assume rights and obligations, pursuant to an Assignment and
Assumption Agreement executed by such Assignee and the assigning Bank, provided
that, in each case, after giving effect to such assignment, the Assignee's Loan
Commitment, and, in the case of a partial assignment, the assigning Bank's Loan
Commitment, each will be equal to or greater than $10,000,000. Upon (i)
execution and delivery of such instrument, (ii) payment by such Assignee to the
Bank of an amount equal to the purchase price agreed between the Bank and such
Assignee and (iii) at Administrative Agent's option, payment by such Assignee to
Administrative Agent of a fee, for Administrative Agent's own account, in the
amount of $2,500, on account of Administrative Agent's fees and expenses in
connection with such assignment, such Assignee shall be a party to this
Agreement and shall have all the rights and obligations of a Bank as set forth
in such Assignment and Assumption Agreement, and the assigning Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this paragraph, substitute Notes shall be issued
to the assigning Bank (in the case of a partial assignment) and Assignee by
Borrower, in exchange for the return of the original Notes. The obligations
evidenced by such substitute notes shall constitute "Obligations" for all
purposes of this Agreement and the other Loan Documents and shall be secured by
the Mortgages. In connection with Borrower's execution of substitute notes as
aforesaid, Borrower shall deliver to Administrative Agent, at its request, an
officer's certificate or other similar evidence confirming (x) that the
applicable resolutions or consents authorizing the execution and delivery of the
Loan Documents remain in effect and (y) the incumbency of the individual
executing such substitute notes and related documents. If the Assignee is not a
United States person within the meaning of Section 7701(a)(30) of the Code, it
shall, prior to the first date on which interest or fees are payable hereunder
for its account, deliver to Borrower and Administrative Agent certification as
to exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 10.13 and shall otherwise comply with the
provisions of Section 10.13.
Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
Borrower recognizes that in connection with a Bank's selling of
Participations or making of assignments, any or all documentation, financial
statements, appraisals and other data, or copies thereof, relevant to Borrower
or the Loans may, subject to the provisions of Section 12.18, be exhibited to
and retained by any such Participant or assignee or prospective Participant or
assignee. In addition, subject to the provisions of Section 12.18, such
documentation etc. may be exhibited to and retained by Affiliates of a Bank.
Borrower agrees to provide all assistance reasonably requested by a Bank to
enable such Bank to sell Participations or make assignments of its Loan as
permitted by this Section. Each Bank agrees to provide Borrower with notice of
all Participations sold by such Bank.
SECTION 12.06. Documentation Satisfactory. All documentation
required from or to be submitted on behalf of Borrower in connection with this
Agreement and the documents relating hereto shall be subject to the prior
approval of, and be satisfactory in form and substance to, Administrative Agent,
its counsel and, where specifically provided herein, the Banks. In addition, the
persons or parties responsible for the execution and delivery of, and
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signatories to, all of such documentation, shall be acceptable to, and subject
to the approval of, Administrative Agent and its counsel and the Banks.
SECTION 12.07. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to Administrative
Agent by telephone, confirmed by writing, and to the Banks and to Borrower by
ordinary mail or overnight courier addressed to such party at its address on the
signature page of this Agreement. Notices shall be effective (1) if by
telephone, at the time of such telephone conversation, (2) if given by mail,
three (3) days after mailing and (3) if given by overnight courier, upon
receipt.
SECTION 12.08. Setoff. Borrower agrees that, in addition to (and
without limitation of) any right of setoff, bankers' lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, but only with the prior consent
of the Required Banks, to offset balances (general or special, time or demand,
provisional or final) held by it for the account of Borrower at any of such
Bank's offices, in Dollars or in any other currency, against any amount payable
by Borrower to such Bank under this Agreement or such Bank's Notes, or any other
Loan Document which is not paid when due (regardless of whether such balances
are then due to Borrower), in which case it shall promptly notify Borrower and
Administrative Agent thereof; provided that such Bank's failure to give such
notice shall not affect the validity thereof. Payments by Borrower hereunder or
under the other Loan Documents shall be made without setoff or counterclaim.
SECTION 12.09. Year 2000. Borrower represents, warrants and
covenants that Borrower, Guarantor and each Mortgagor have taken and shall cause
to be taken all action reasonably necessary to assure that its data processing
and information technology and building systems are capable of effectively
processing data and information, including dates on and after January 1, 2000,
and shall not cease to perform, or provide, or cause any software and/or system
which is material to its operations or any interface therewith to provide,
invalid or incorrect results as a result of date functionality and/or data, or
otherwise experience any material degradation of performance or functionality
arising from, relating to or including date functionality and/or data which
represents or references different centuries or more than one century or leap
years, and to assure that all such systems shall be reasonably effective and
accurate in managing and manipulating data derived from, involving or relating
in any way to dates (including single century formulas and multi-century or leap
year formulas), and will not cause a material abnormally ending scenario within
such systems or in any software and/or system with which such systems interface,
or generate materially incorrect values or invalid results involving such dates.
At the request of Administrative Agent, Borrower shall provide, and cause
Guarantor and each Mortgagor to provide, Administrative Agent with reasonably
acceptable assurance of Borrower's, Guarantor's and each Mortgagor's year 2000
capability.
SECTION 12.10. Table of Contents; Headings. Any table of contents
and the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
SECTION 12.11. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such
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jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
SECTION 12.12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
SECTION 12.13. Integration. The Loan Documents and Supplemental Fee
Letters set forth the entire agreement among the parties hereto relating to the
transactions contemplated thereby and supersede any prior oral or written
statements or agreements with respect to such transactions.
SECTION 12.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 12.15. Waivers. In connection with the obligations and
liabilities as aforesaid, Borrower hereby waives: (1) promptness and diligence;
(2) notice of any actions taken by any Administrative Agent or any Bank under
this Agreement, any other Loan Document or any other agreement or instrument
relating thereto except to the extent otherwise provided herein; (3) all other
notices, demands and protests, and all other formalities of every kind in
connection with the enforcement of the Obligations, the omission of or delay in
which, but for the provisions of this Section, might constitute grounds for
relieving Borrower of its obligations hereunder; (4) any requirement that any
Administrative Agent or any Bank protect, secure, perfect or insure any Lien on
any Collateral or exhaust any right or take any action against Borrower,
Guarantor or any other Person or against any Collateral; (5) any right or claim
of right to cause a marshalling of the assets of Borrower or Guarantor; and (6)
all rights of subrogation or contribution, whether arising by contract or
operation of law (including, without limitation, any such right arising under
the Federal Bankruptcy Code) or otherwise by reason of payment by Borrower,
either jointly or severally, pursuant to this Agreement or other Loan Documents.
SECTION 12.16. JURISDICTION; IMMUNITIES. BORROWER, ADMINISTRATIVE
AGENT AND EACH BANK HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW
YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK CITY OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR
ANY OTHER LOAN DOCUMENT. BORROWER, ADMINISTRATIVE AGENT, AND EACH BANK
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH NEW YORK STATE OR UNITED STATES FEDERAL COURT.
BORROWER, ADMINISTRATIVE AGENT, AND EACH BANK IRREVOCABLY CONSENT TO THE SERVICE
OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
OF SUCH PROCESS TO BORROWER, ADMINISTRATIVE AGENT OR EACH BANK, AS THE CASE MAY
BE, AT THE ADDRESSES SPECIFIED HEREIN. BORROWER, ADMINISTRATIVE AGENT AND EACH
BANK AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE
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ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK FURTHER WAIVE ANY
OBJECTION TO VENUE IN THE STATE OF NEW YORK AND ANY OBJECTION TO AN ACTION OR
PROCEEDING IN THE STATE OF NEW YORK ON THE BASIS OF FORUM NON CONVENIENS.
Nothing in this Section shall affect the right of Borrower,
Administrative Agent or any Bank to serve legal process in any other manner
permitted by law.
To the extent that Borrower, Administrative Agent or any Bank have
or hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether from service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, Borrower, Administrative Agent and each Bank hereby irrevocably
waive such immunity in respect of its obligations under this Agreement, the
Notes and any other Loan Document.
BORROWER, ADMINISTRATIVE AGENT AND EACH BANK WAIVE ANY RIGHT EACH
SUCH PARTY MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE LOANS. IN
ADDITION, BORROWER HEREBY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS WITH RESPECT TO THE
NOTES, ANY RIGHT BORROWER MAY HAVE TO (1) INTERPOSE ANY COUNTERCLAIM THEREIN
(OTHER THAN A COMPULSORY COUNTERCLAIM) OR (2) HAVE THE SAME CONSOLIDATED WITH
ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING HEREIN CONTAINED SHALL
PREVENT OR PROHIBIT BORROWER FROM INSTITUTING OR MAINTAINING A SEPARATE ACTION
AGAINST ADMINISTRATIVE AGENT OR THE BANKS WITH RESPECT TO ANY ASSERTED CLAIM.
SECTION 12.17. Gross-Up For Taxes. To the extent not prohibited by
Law, all payments made by Borrower to or for the account of a Bank under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, deductions, withholdings, fees,
liabilities and similar charges, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, other than Excluded Taxes
(collectively, "Non-Excluded Taxes"). If any Non-Excluded Taxes are required to
be withheld from any amounts payable to such Bank hereunder or under its Note,
the amounts so payable to such Bank shall be increased to the extent necessary
to yield to such Bank (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable with respect to its Loan at the rates or in the
amounts specified in this Agreement and its Note; provided, however, that
Borrower shall not be required to increase any such amounts payable to such Bank
if such Bank is not a United States person within the meaning of Section
7701(a)(30) of the Code and such Bank fails to comply with the requirements of
Section 10.13. Whenever any Non-Excluded Taxes are payable by Borrower, as
promptly as possible thereafter Borrower shall send to Administrative Agent for
the account of such Bank a certified copy of an original official receipt
received by Borrower showing payment thereof. If Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to Administrative Agent the required receipts or other required
documentary evidence, Borrower shall indemnify such Bank for any
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incremental taxes, interest or penalties that may become payable by such Bank as
a result of any such failure, except to the extent such failure is caused by or
results from such Bank's failure to comply with Section 10.13.
SECTION 12.18. Confidentiality. Each Bank and Administrative Agent
agrees (on behalf of itself and each of its Affiliates, directors, officers,
employees, agents, advisors and representatives) to keep confidential any
Confidential Information, and in connection therewith comply with their
customary procedures for handling confidential information of this nature and
with safe and sound banking practices; provided that nothing herein shall limit
the disclosure of any such information (1) to the extent required by statute,
rule, regulation or juridical process, (2) to counsel for any of the Banks or
Administrative Agent, (3) to bank examiners, auditors or accountants, (4) to
Administrative Agent or any other Bank, (5) by Administrative Agent or any Bank
to an Affiliate thereof, (6) in connection with any litigation relating to
enforcement of the Loan Documents or (7) to any assignee or Participant (or
prospective assignee or Participant) so long as such assignee or Participant (or
prospective assignee or Participant) first executes and delivers to the
respective Bank a confidentiality agreement, which confidentiality agreement
imposes upon such assignee or Participant (or prospective assignee or
Participant) substantially the same obligations as are imposed upon each Bank
and Administrative Agent by this Section, a copy of which confidentiality
agreement shall be delivered to Borrower promptly after the execution thereof;
provided that in the case of the preceding clauses (1) and (3), such Bank or
Administrative Agent shall, to the extent legally permissible, use reasonable
efforts to notify Borrower of the proposed disclosure as far in advance as is
reasonably practicable under the circumstances.
SECTION 12.19. Termination of Prior Loan. By their execution of this
Agreement, Guarantor, NAB (including in its capacity as "Administrative Agent"
under the Prior Loan), UBS, CBA and ANZ acknowledge that the Credit Agreement
governing Prior Loan is terminated as of the date hereof (it being understood,
however, that the obligations in respect of any accrued fees or charges under
the Prior Loan not paid as of the date hereof, and any other obligations under
such Credit Agreement that, by the terms thereof, survive its termination, shall
survive).
SECTION 12.20. Environmental Remediation and Holdback. Borrower
acknowledges that the Phase I environmental report delivered to the Banks with
regard to Wheaton prepared by IVI Environmental, Inc. ("IVI") has recommended
that a Phase II environmental study with regard to two (2) underground storage
tanks on such Property be performed. Borrower acknowledges that Administrative
Agent shall retain IVI to perform such Phase II study and Borrower covenants to
pay the cost thereof and to cooperate reasonably with IVI to enable it to
perform such Phase II study. Such Phase II study shall be reasonably
satisfactory in all respects to the Required Banks and shall set forth an
estimate of the cost of any recommended corrective action. If such Phase II
study recommends further investigation, Administrative Agent may undertake such
further investigation at Borrower's expense. If such Phase II study (or any
report of further investigation) recommends any corrective action, Borrower
shall (to the extent such corrective action is required for such Property to
comply with applicable Environmental Laws) promptly undertake and diligently
pursue to completion such corrective action at its expense. Until such time as
such Phase II study is delivered to Administrative Agent and approved by the
Required Banks, the amount that Borrower would otherwise be permitted to borrow
under this Agreement shall be reduced by $375,000 (that is to
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say, for purposes of compliance with the covenants in Section 7.02 and Article
VIII, and for purposes of any other covenants or conditions contained in this
Agreement that limit the principal amount that may be outstanding at any time
under the Notes or the amount of outstanding Letters of Credit, an additional
$375,000 of principal shall be deemed to be outstanding). Upon the receipt and
approval of the Phase II study as aforesaid, the amount held back from
disbursement shall be adjusted to an amount equal to the lesser of $375,000 or
125% of the estimated cost of the recommended corrective work (necessary to
comply with Environmental Laws) as set forth in such study. As the corrective
work is performed, as verified to Administrative Agent's satisfaction, the
amount held back shall be reduced to the lesser of $375,000 or 125% of the
estimated cost of the remaining work, until the corrective work is fully
completed, at which time there shall be no further holdback of proceeds of the
Loans.
60
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this- Agreement
to be duly executed as of the day and year first above written.
WESTFIELD AMERICA LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Westfield America, Inc., a Missouri
corporation, its general partner
By /s/ Irv Hepner
--------------
Name: IRV HEPNER
Title: SECRETARY
Address for notices:
c/o Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Attention: General Counsel
with copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills, Esq.
For the purpose of Section 12.19:
WESTFIELD AMERICA, INC.,
a Missouri corporation
By /s/ Irv Hepner
--------------
Name: IRV HEPNER
Title: SECRETARY
61
<PAGE>
NATIONAL AUSTRALIA BANK LIMITED,
NEW YORK BRANCH
(as Bank and Administrative Agent)
By /s/ Jeff D. White
-----------------
Name: JEFF D. WHITE
Title: VICE PRESIDENT
Address for notices and Applicable Lending
Office:
National Australia Bank Limited,
New York Branch
200 Park Avenue, 34th Floor
New York, New York 10171
Attention: Jeff White
Telephone: (212) 916-9509
Facsimile: (212) 983-1969
with copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Attention: George C. Weiss, Esq.
COMMONWEALTH BANK OF AUSTRALIA
(as Bank)
By
------------------
Name:
Title:
Address for notices and Applicable Lending
Office:
Commonwealth Bank of Australia
599 Lexington Avenue
New York, New York 10022-6072
Attention: Ian Phillips
Telephone: (212) 848-9241
Facsimile: (212) 336-7772
62
<PAGE>
NATIONAL AUSTRALIA BANK LIMITED,
NEW YORK BRANCH
(as Bank and Administrative Agent)
By
-----------------
Name:
Title:
Address for notices and Applicable Lending
Office:
National Australia Bank Limited,
New York Branch
200 Park Avenue, 34th Floor
New York, New York 10171
Attention: Jeff White
Telephone: (212) 916-9509
Facsimile: (212) 983-1969
with copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Attention: George C. Weiss, Esq.
COMMONWEALTH BANK OF AUSTRALIA
(as Bank)
By /s/ Ian M. Phillips
------------------------
Name: IAN M. PHILLIPS
Title: EVP & GM AMERICAS
Address for notices and Applicable Lending
Office:
Commonwealth Bank of Australia
599 Lexington Avenue
New York, New York 10022-6072
Attention: Ian Phillips
Telephone: (212) 848-9241
Facsimile: (212) 336-7772
62
<PAGE>
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
(as Bank)
By /s/ Peter N. Gray
-----------------
Name: PETER N. GRAY
Title: VICE PRESIDENT
Address for notices and Applicable Lending
Office:
Australia and New Zealand Banking Group
Limited
1177 Avenue of the Americas
New York, New York 10036-2798
Attention: Peter Gray
Telephone: (212) 801-9739
Facsimile: (212) 801-9131
UBS AG, STAMFORD BRANCH
(as Bank)
By
----------------
Name:
Title:
By
------------------
Name:
Title:
Address for notices and Applicable Lending
Office:
299 Park Avenue
New York, New York 10171
Attention: Xiomara Martez
Telephone: (212) 821-3872
Facsimile: (212) 821-4138
63
<PAGE>
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
(as Bank)
By
----------------
Name:
Title:
Address for notices and Applicable Lending
Office:
Australia and New Zealand Banking Group
Limited
1177 Avenue of the Americas
New York, New York 10036-2798
Attention: Peter Gray
Telephone: (212) 801-9739
Facsimile: (212) 801-9131
UBS AG, STAMFORD BRANCH
(as Bank)
By /s/ David Goldman
-----------------
Name: David Goldman
Title: Director
By /s/ Jeffrey W. Wald
-------------------
Name: Jeffrey W. Wald
Title: Executive Director
Principal
Address for notices and Applicable Lending
Office:
299 Park Avenue
New York, New York 10171
Attention: Xiomara Martez
Telephone: (212) 821-3872
Facsimile: (212) 821-4138
63
<PAGE>
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of __________, 199_,
among [insert name of assigning Bank] ("Assignor"), [insert name of Assignee]
("Assignee"), Westfield America Limited Partnership, a Delaware limited
partnership ("Borrower") and National Australia Bank Limited, New York Branch,
as administrative agent for the Banks referred to below (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
Preliminary Statement
1. This Assignment and Assumption Agreement (this "Agreement")
relates to the Secured Revolving Credit Agreement (as the same may be amended
from time to time, the "Loan Agreement") dated as of _____________, 1999 among
Borrower, the banks party thereto (each a "Bank" and, collectively, the "Banks")
and the Administrative Agent. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Loan Agreement.
2. Subject to the terms and conditions set forth in the Loan
Agreement, Assignor has made a Loan Commitment to Borrower in an aggregate
principal amount of ___________ Dollars ($____________) ("Assignor's Loan
Commitment").
3. The aggregate outstanding principal amount of Assignor's Loan
made pursuant to Assignor's Loan Commitment at commencement of business on the
date hereof is __________ Dollars ($__________).
4. Assignor desires to assign to Assignee all of the rights of
Assignor under the Loan Agreement in respect of a portion of its Loan and Loan
Commitment in an amount equal to __________ ($__________) (collectively, the
"Assigned Loan and Commitment"); and Assignee desires to accept assignment of
such rights and assume the corresponding obligations from Assignor on such
terms.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Assignment. Assignor hereby assigns and sells to Assignee
all of the rights of Assignor under the Loan Agreement in and to the Assigned
Loan and Commitment, and Assignee hereby accepts such assignment from Assignor
and assumes all of the obligations of Assignor under the Loan Agreement with
respect to the Assigned Loan and Commitment. Upon the execution and delivery
hereof by Assignor, Assignee, Borrower and the Administrative Agent and the
payment of the amount specified in Section 2 hereof required to be paid on the
date hereof, (1) Assignee shall, as of the commencement of business on the date
hereof, succeed to the rights and obligations of a Bank under the Loan Agreement
with a Loan and a Loan Commitment in amounts equal to the Assigned Loan and
Commitment, and (2) the Loan and Loan Commitment of Assignor shall, as of the
commencement of business on the date hereof, be reduced correspondingly and
Assignor released from its obligations under the Loan Agreement to the extent
such obligations have been assumed by Assignee. Assignor represents and warrants
to Assignee that Assignor owns the Assigned Loan and commitment free and clear
of all liens and other encumbrances. Except as set forth in the immediately
preceding sentence, the assignment provided for herein shall be without
representation or warranty by, recourse to, Assignor.
SECTION 2. Payments. As consideration for the assignment and sale
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the date
hereof in immediately available funds an amount equal to __________
($___________) [insert the amount of that portion of Assignor's Loan being
assigned]. It is understood that any fees paid to Assignor under the Loan
Agreement are for the account of Assignor. Each of Assignor and Assignee hereby
agrees that if it receives any amount under the Loan Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
SECTION 3. [Consent of Borrower and Acknowledgment by the
Administrative Agent;] Execution and Delivery of Notes. [This Agreement is
conditioned upon the consent of Borrower (provided there exists no Event of
Default) and acknowledgment by the Administrative Agent pursuant to Section
12.05 of the Loan Agreement. The execution of this Agreement by Borrower and the
Administrative Agent is evidence of this consent and acknowledgment,
respectively. Only necessary if Assignee is not a majority owned subsidiary of a
Bank or of the Parent of a Bank] Pursuant to Section 12.05 of the Loan
Agreement, Borrower has agreed to execute and deliver Notes payable to the
respective orders of Assignee and Assignor to evidence the assignment and
assumption provided for herein.
A-2
<PAGE>
SECTION 4. Non-Reliance on Assignor. Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of Borrower or
any other party to any Loan Document, or the validity and enforceability of the
obligations of Borrower or any other party to a Loan Document in respect of the
Loan Agreement or any other Loan Document. Assignee acknowledges that it has,
independently and without reliance on Assignor, and based on such documents and
information as it has deemed appropriate, made its own analysis of the
Collateral, credit analysis of Borrower and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of Borrower and the
other parties to the Loan Documents.
SECTION 5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 7. Certain Representations and Agreements by Assignee.
Reference is made to Section 10.13 of the Loan Agreement. Assignee hereby
represents that it is entitled to receive any payments to be made to it under
the Loan Agreement or hereunder without the withholding of any tax and agrees to
furnish the evidence of such exemption as specified therein and otherwise to
comply with the provisions of said Section 10.13.
A-3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By:____________________________
Name:
Title:
[NAME OF ASSIGNEE]
By:____________________________
Name:
Title:
Applicable Lending Office:
Address for Notices:
[Assignee]
[Address]
Attention: _______________
Telephone: (___) ________
WESTFIELD AMERICA LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Westfield America, Inc., a Missouri
corporation, its general partner
By:____________________________
Name:
Title:
NATIONAL AUSTRALIA BANK LIMITED,
NEW YORK BRANCH
(as Administrative Agent)
By:____________________________
Name:
Title:
A-4
<PAGE>
EXHIBIT B
AUTHORIZATION LETTER
_____________, 1999
National Australia Bank Limited,
New York Branch
200 Park Avenue, 34th Floor
New York, New York 10166
Re: Secured Revolving Credit Agreement dated as of _____________,
1999 (the "Loan Agreement"; capitalized terms not otherwise
defined herein shall have the meanings ascribed to such terms
in the Loan Agreement) among us, as Borrower, the Banks named
therein, and you, as Administrative Agent for said Banks
Gentlemen:
In connection with the captioned Loan Agreement, we hereby designate
any of the following persons to give to you instructions, including notices
required pursuant to the Agreement, orally, by telephone or teleprocess, or in
writing:
_______________
_______________
_______________.
Instructions may be honored on the oral, telephonic, teleprocess or
written instructions of anyone purporting to be any one of the above designated
persons even if the instructions are for the benefit of the person delivering
them. We will furnish you with confirmation of each such instruction either by
telex (whether tested or untested) or in writing signed by any person designated
above (including any telecopy which appears to bear the signature of any person
designated above) on the same day that the instruction is provided to you but
your responsibility with respect to any instruction shall not be affected by
your failure to receive such confirmation or by its contents.
<PAGE>
Without limiting the foregoing, we hereby unconditionally authorize
any one of the above-designated persons to execute and submit requests for
advances of proceeds of the Loans, and notices of Elections, Conversions and
Continuations to you under the Loan Agreement with the identical force and
effect in all respects as if executed and submitted by us.
You shall be fully protected in, and shall incur no liability to us
for, acting upon any instructions which you in good faith believe to have been
given by any person designated above, and in no event shall you be liable for
special, consequential or punitive damages. In addition, we agree to hold you
and your agents harmless from any and all liability, loss and expense arising
directly or indirectly out of instructions that we provide to you in connection
with the Loan Agreement except for liability, loss or expense occasioned by the
gross negligence or willful misconduct of you or your agents.
Upon notice to us, you may, at your option, refuse to execute any
instruction, or part thereof, without incurring any responsibility for any loss,
liability or expense arising out of such refusal if you in good faith believe
that the person delivering the instruction is not one of the persons designated
above or if the instruction is not accompanied by an authentication method that
we have agreed to in writing.
We will promptly notify you in writing of any change in the persons
designated above and, until you have actually received such written notice and
have had a reasonable opportunity to act upon it, you are authorized to act upon
instructions, even though the person delivering them may no longer be
authorized.
Very truly yours,
WESTFIELD AMERICA LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Westfield America, Inc., a Missouri
corporation, its general partner
By:____________________________
Name:
Title:
B-2
<PAGE>
EXHIBIT C
NOTE
$___________ New York, New York
__________, 199_
For value received, WESTFIELD AMERICA LIMITED PARTNERSHIP, a
Delaware limited partnership ("Borrower"), hereby promises to pay to the order
of ___________ or its successors or assigns (collectively, the "Bank"), at the
office of National Australia Bank Limited, New York Branch, 200 Park Avenue,
34th Floor, New York, New York 10166 (the "Administrative Agent") for the
account of the Applicable Lending Office at the Bank, the principal sum of
________ Dollars ($____________), or if less, the amount loaned by the Bank to
Borrower pursuant to the Loan Agreement (as defined below) and actually
outstanding, in lawful money of the United States and in immediately available
funds, in accordance with the terms set forth in the Loan Agreement. Borrower
also promises to pay interest on the unpaid principal balance hereof, for the
period such balance is outstanding, in like money, at said office for the
account of said Applicable Lending Office, at the time and at a rate per annum
as provided in the Loan Agreement. Any amount of principal hereof which is not
paid when due, whether at stated maturity, by acceleration, or otherwise, shall
bear interest from the date when due until said principal amount is paid in
full, payable on demand, at the rate set forth in the Loan Agreement.
The date and amount of each advance of the Loan made by the Bank to
Borrower under the Loan Agreement referred to below, and each payment of said
Loan, shall be recorded by the Bank on its books and, prior to any transfer of
this Note (or, at the discretion of the Bank, at any other time), may be
endorsed by the Bank on the schedule attached hereto and any continuation
thereof.
This Note is one of the Notes referred to in the Secured Revolving
Credit Agreement dated as of ______________, 1999 (as the same may be amended
from time to time, the "Loan Agreement") among Borrower, the Banks named therein
(including the Bank) and the Administrative Agent, as administrative agent for
the Banks. All of the terms, conditions and provisions of the Loan Agreement are
hereby incorporated by reference. All capitalized terms used herein and not
defined herein shall have the meanings given to them in the Loan Agreement.
<PAGE>
This Note is secured by, among other things, the various Mortgages
which contain, among other things, provisions for the acceleration of this Note
upon the happening of certain stated events. Reference to each of the Mortgages
is hereby made for a description of the "Mortgaged Property" encumbered thereby
and the rights of Borrower, its Affiliates and the Banks (including the Bank)
with respect to such Mortgaged Property. In addition, the Loan Agreement
contains, among other things, provisions for the acceleration of this Note upon
the happening of certain stated events.
Borrower agrees that it shall be bound by any agreement extending
the time or modifying the terms of payment set forth above and in the Loan
Agreement, made by or on behalf of the Banks and the owner or owners of any of
the Mortgaged Property under any of the Mortgages, whether with or without
notice to Borrower, and Borrower shall continue liable to pay the amount due
hereunder in accordance with the terms set forth herein and in the Loan
Agreement, but with interest at a rate no greater than the rate of interest
provided therein, according to the terms of any such agreement of extension or
modification.
Should the indebtedness represented by this Note or any part thereof
be collected at law or in equity, or in bankruptcy, receivership or any other
court proceeding (whether at the trial or appellate level), or should this Note
be placed in the hands of attorneys for collection upon default, Borrower agrees
to pay, in addition to the principal, interest and other sums due and payable
hereon, all costs of collecting or attempting to collect this Note, including
reasonable attorneys' fees and expenses.
All parties to this Note, whether principal, surety, guarantor or
endorser, hereby waive presentment for payment, demand, protest, notice of
protest and notice of dishonor.
This Note shall be governed by the laws of the State of New York,
provided that, as to the maximum lawful rate of interest which may be charged or
collected, if the laws applicable to the Bank permit it to charge or collect a
higher rate than the laws of the State of New York, then such law applicable to
the Bank shall apply to the Bank under this Note.
WESTFIELD AMERICA LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Westfield America, Inc., a Missouri
corporation, its general partner
By:____________________________
Name:
Title:
C-2
<PAGE>
Amount Amount Balance
Date of Advance of Payment Outstanding Notation By
C-3
<PAGE>
EXHIBIT D
ASSIGNMENT AND AGREEMENT
(Re: Hedging Product)
ASSIGNMENT AND AGREEMENT dated as of ____________ by and between
WESTFIELD AMERICA, INC., a Delaware corporation, having an address at 11601
Wilshire Boulevard, Los Angeles, California 90025 ("Assignor"), and NATIONAL
AUSTRALIA BANK LIMITED, NEW YORK BRANCH, having an address at 200 Park Avenue,
34th Floor, New York, New York 10166, Attention: Mr. Jeff White, in its capacity
as administrative agent for the Banks (as defined below) pursuant to the Loan
Agreement (as defined below) (in such capacity, together with its successors in
such capacity, "Administrative Agent").
Pursuant to a Secured Revolving Credit Agreement (the "Loan
Agreement"), dated __________, among Westfield America Limited Partnership
("Borrower"), as Borrower, National Australia Bank Limited, New York Branch
("NAB") and the other lenders signatory thereto (NAB, such lenders, and such
other lenders as may become "Banks" pursuant to the Loan Agreement,
collectively, the "Banks"), as Banks, and Administrative Agent, the Banks have
agreed to make a loan to Borrower in the principal amount of up to $450,000,000
(the "Loan"). The Loan is evidenced by Borrower's note(s) to the Banks
aggregating said principal amount (as the same may be amended, supplemented,
modified, extended, restated and/or replaced from time to time, collectively,
the "Note"), and is secured by, inter alia, various Mortgages/Deeds of Trust,
Assignments of Leases and Rents and Security Agreements from affiliates of
Borrower to or for the benefit of Administrative Agent.
Assignor, the general partner of Borrower, has executed a Guaranty
of Payment to to the Banks, pursuant to which Assignor has guaranteed the
payment and performance of Borrower's obligations under the Loan.
To protect against interest rate fluctuations with respect to its
outstanding indebtedness, Assignor has entered into the agreement(s) listed on
Schedule A attached hereto (collectively, the "Hedging Agreement"), with the
counterparty referred to in said Schedule A ("Counterparty"), providing for the
interest rate protection transaction(s) described in said Schedule A
(collectively, the "Transaction").
As a condition to making, and as security for, the Loan, the Banks
require that Assignor enter into this Assignment and Agreement.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Assignor hereby gives, grants, bargains, conveys, confirms, sets
over, transfers and assigns to Administrative Agent, for the benefit of the
Banks, as security for the Note and all of Borrower's other obligations in
respect of the Loan (collectively, the "Obligations"), all of Assignor's right,
title and interest in, to and under the Hedging Agreement and the Transaction,
including, without limitation, Assignor's right to receive all payments and
<PAGE>
proceeds under the Hedging Agreement or otherwise in connection with the
Transaction. Assignor covenants and agrees not to enter into any modification of
the Hedging Agreement nor consent to the termination of the Hedging Agreement
without, in either case, the prior written consent of Administrative Agent.
2. Prior to the occurrence of an Event of Default (as defined in the
Loan Agreement), Assignor shall be entitled to receive and retain all payments
belonging to Assignor pursuant to the terms of the Hedging Agreement. However,
if, at any time following the occurrence of an Event of Default, Assignor shall
be entitled to any payments under the Hedging Agreement, such payments shall be
made to Administrative Agent for application to the Obligations, in such order
as Administrative Agent shall elect. Toward that end, Assignor hereby
irrevocably authorizes and directs Counterparty to make payments under the
Hedging Agreement and the Transaction directly to Administrative Agent as
provided in the immediately following sentence. By its execution below,
Counterparty hereby acknowledges the assignment provided for herein and agrees
that, upon notice from Administrative Agent that an Event of Default has
occurred, Counterparty shall make all payments that would otherwise be made to
Assignor under the Hedging Agreement or otherwise in connection with the
Transaction directly to Administrative Agent (in accordance with payment
instructions furnished by Administrative Agent) for application to the
Obligations as aforesaid. In the event Assignor receives any payment under the
Hedging Agreement or otherwise in connection with the Transaction following the
occurrence of an Event of Default, Assignor shall, immediately upon such
receipt, remit such payment to Administrative Agent for application to the
Obligations as aforesaid. Until so remitted, such sums shall be deemed held in
trust for Administrative Agent.
3. Notwithstanding anything to the contrary contained in the Loan
Agreement or other Loan documents, a default by Assignor in the performance of
any of its covenants or agreements contained in paragraph 1 or 2 above shall
constitute an immediate Event of Default.
4. Assignor agrees to execute such further instruments (including
UCC-1 financing statements) and do such further acts as Administrative Agent
shall reasonably request to confirm or perfect the assignment provided for
herein.
5. All notices hereunder shall be in writing and shall be deemed to
have been sufficiently given or served for all purposes when presented
personally, three days after mailing by registered or certified mail, postage
prepaid, or one day after delivery to a nationally recognized overnight courier
service providing evidence of the date of delivery, if to Assignor or
Administrative Agent at their respective addresses stated in the preamble, and
if to Counterparty at its address set forth beneath its signature below; or at
such other address of which a party shall have notified the party giving such
notice in writing in accordance with the foregoing requirements.
6. This Assignment and Agreement and the rights and obligations of
the parties hereunder shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of New York (without giving
effect to New York's principles of conflicts of law.)
D-2
<PAGE>
7. This Assignment and Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and together which shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Agreement as of the date first above written.
WESTFIELD AMERICA, INC.
By_________________________
Name:
Title:
NATIONAL AUSTRALIA BANK LIMITED, NEW
YORK BRANCH,
as Administrative Agent
By_________________________
Name:
Title:
Acknowledged and agreed to this
_____ day of __________, _____.
[COUNTERPARTY]
By_____________________________
Name:
Title:
Address for notices:
D-3
<PAGE>
SCHEDULE A
To Assignment and Agreement (Re: Hedging Product)
Description of Hedging Agreement, Counterparty and Transaction
D-4
<PAGE>
EXHIBIT E
SOLVENCY CERTIFICATE
This certificate is delivered pursuant to Section [4.01(19)] of the
Secured Revolving Credit Agreement dated as of _______________, 1999 (the "Loan
Agreement") among Westfield America Limited Partnership, a Delaware limited
partnership, the banks party thereto (each a "Bank" and collectively, the
"Banks") and National Australia Bank Limited, New York Branch, as agent for the
Banks (in such capacity, together with its successors in such capacity, the
"Agent"). The __________ executing this certificate is the _______________ of
_____________________, a ___________ ("__________"), and said ___________ is
familiar with its properties, assets and businesses, and is duly authorized to
execute this certificate on behalf of _____________________. In executing this
Certificate, such ________ is acting solely in [his] [her] capacity as the
_________ of ________, and not in [his] [her] individual capacity. Unless
otherwise defined herein, terms defined in the Loan Agreement are used herein as
therein defined.
The undersigned further certifies that [he] [she] has carefully
reviewed the Loan Agreement and the other Loan Documents and the contents of
this Certificate and, in connection herewith, has made such investigation and
inquiries as [he] [she] deems necessary and prudent therefor. The undersigned
further certifies that the financial information and assumptions which underlie
and form the basis for the representations made in this Certificate were
reasonable when made and were made in good faith and continue to be reasonable
as of the date hereof.
The undersigned understands that the Agent is relying on the truth
and accuracy of this Certificate in connection with the transactions
contemplated by the Loan Agreement.
The undersigned certifies that ___________ is Solvent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
_____________, 1999.
E-1
<PAGE>
EXHIBIT F
NOTICE-OF-ASSIGNMENT OF LEASE
(On Letterhead of Mortgagor)
_____________, 199_
Re: [Shoppingtown name]
Mortgagee: National Australia Bank Limited, New York Branch (as
administrative agent for itself and other lenders)
Address of Mortgagee: 200 Park Avenue, 34th Floor,
New York, New York 10166
Mortgage Dated: _____________, 1999
Dear Tenant:
[Name of Mortgagor] ("Landlord") has assigned by a mortgage or deed
of trust (the "Mortgage") dated as shown above to or for the benefit of the
Mortgagee identified above (hereinafter "Mortgagee") all its estate, right,
title and interest in, to and under the Lease between you and Landlord dated as
set forth above, as said Lease may have been heretofore modified or amended (the
"Lease"), together with all right, title and interest of Landlord as lessor
thereunder, including, without limitation, the right upon the occurrence of an
Event of Default (as defined in the Mortgage) to collect and receive all
earnings, revenues, rents, issues, profits and income of the property subject to
the Mortgage.
Said assignment does not impair or diminish any of Landlord's
obligations to you under the provisions of the Lease, nor are any such
obligations imposed upon Mortgagee or upon the lenders for whom Mortgagee is
acting as administrative agent, or their respective successors or assigns.
Pursuant to said assignment you are hereby notified that in the
event of a demand on you by Mortgagee or its successors and assigns for the
payment to it of the rents due under the Lease, you may, and are hereby
authorized and directed to, pay said rent to Mortgagee and Landlord hereby
agrees that the receipt by you of such a demand shall be conclusive evidence of
Mortgagee's right to the receipt thereof and that the payment of the rents by
you to Mortgagee pursuant to such demand shall constitute performance in full of
your obligation under the Lease for the payment of rent to Landlord.
Very truly yours,
[General Manager's name]
[Shoppingtown name]
F-1
<PAGE>
EXHIBIT G
EXISTING LETTERS OF CREDIT
LC Number Beneficiary Amount
SB - 0292 Suffolk County Sewer Agency $50,000.00
SB - 0297 Suffolk County Sewer Agency $120,000.00
SB - 0310 The Capital Company of America LLC $1,615,000.00
SB - 0309 St. Peters, Missouri $150,000.00
SB - 0327 St. Peters, Missouri $362,000.00
SB - 0345 UBS Principal Finance, LLC $5,655,000.00
SB - 0346 UBS Principal Finance, LLC $3,958,500.00
SB - 0347 UBS Principal Finance, LLC $3,958,500.00
SB - 0311 The Capital Company of America LLC $5,165,808.00
SB - 0312 The Capital Company of America LLC $497,000.00
SB - 0313 The Capital Company of America LLC $1,044,000.00
$22,575,808.00
G-1
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Exhibit 10.29
THIS DEED OF TRUST SECURES AN OBLIGATION WHICH PROVIDES FOR A REVOLVING LINE OF
CREDIT AT A VARIABLE INTEREST RATE.
RECORDING REQUESTED BY, AND
AFTER RECORDING PLEASE RETURN TO:
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6092
ATTENTION: RUSSEL T. HAMILTON, ESQ.
===============================================================================
Date: December 15, 1999
DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT WITH FIXTURE FILING
(hereinafter, "this Deed")
FROM
PROMENADE LLC,
a Delaware limited liability company, as grantor and debtor
(hereinafter, "Grantor")
Address of Grantor: c/o Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
TO
CHICAGO TITLE COMPANY,
a California corporation
(hereinafter, "Trustee")
Address of Trustee: 700 S. Flower Street, Suite 900
Los Angeles, California 90017
FOR THE BENEFIT OF
NATIONAL AUSTRALIA BANK LIMITED, NEW YORK BRANCH, as
administrative agent for the Banks (as hereinafter defined),
as beneficiary and secured party
(hereinafter, together with its successors in such capacity, "Beneficiary")
Address of Beneficiary: 200 Park Avenue, 34th Floor
New York, New York 10166
Note Amount: $450,000,000
================================================================================
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TABLE OF CONTENTS
Page
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Article I COVENANTS OF GRANTOR........................................6
Section 1.01. (a) Warranty of Title; Power and Authority.................6
(b) Flood Hazard Area......................................6
Section 1.02. (a) Further Assurances.....................................6
(b) Information Reporting and Back-up Withholding..........7
Section 1.03. (a) Filing and Recording of Documents......................7
(b) Filing and Recording Fees and Other Charges............7
Section 1.04. Intentionally Omitted........................................7
Section 1.05. Maintenance of Existence; Compliance with Laws...............7
Section 1.06. After-Acquired Property......................................8
Section 1.07. (a) Payment of Taxes and Other Charges.....................8
(b) Payment of Mechanics and Materialmen...................9
(c) Good Faith Contests....................................9
Section 1.08. Taxes on Trustee, Beneficiary or Banks.......................9
Section 1.09. Insurance....................................................9
Section 1.10. Protective Advances by Beneficiary..........................13
Section 1.11. (a) Visitation and Inspection.............................13
(b) Estoppel Certificates.................................14
Section 1.12. Maintenance of Premises and Improvements....................14
Section 1.13. Condemnation................................................14
Section 1.14. Leases......................................................16
Section 1.15. Premises Documents..........................................17
Section 1.16. Utilities...................................................17
Section 1.17. Collateral Security Instruments.............................17
Section 1.18. Suits to Protect Property...................................17
Section 1.19. Reliance on Premises to Fulfill Governmental Requirements. 17
Section 1.20. Lien Laws...................................................18
Section 1.21. Expenses of Trustee.........................................18
Article II EVENTS OF DEFAULT AND REMEDIES..............................18
Section 2.01. Events of Default and Certain Remedies......................18
Section 2.02. Discontinuance of Proceedings...............................24
Section 2.03. Other Matters Concerning Sales and Application of Proceeds..24
Section 2.04. Payment of Amounts Due......................................26
Section 2.05. Actions; Receivers..........................................27
Section 2.06. Beneficiary's Right to Possession...........................28
Section 2.07. Remedies Cumulative.........................................28
Section 2.08. Moratorium Laws; Right of Redemption........................28
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Section 2.09. Grantor's Use and Occupancy after Default...................28
Section 2.10. Regarding Defenses..........................................29
Section 2.11. Expenses as Indebtedness....................................29
Section 2.12. Beneficiary's Rights Concerning Application of Amounts
Collected...................................................29
Article III CONCERNING TRUSTEE..........................................29
Section 3.01. Trustee's Performance.......................................29
Section 3.02. Resignation by Trustee......................................30
Section 3.03. Removal of Trustee; Successors..............................30
Section 3.04. Recordation.................................................30
Article IV MISCELLANEOUS...............................................30
Section 4.01. Assignment of Rents.........................................30
Section 4.02. Security Agreement..........................................31
Section 4.03. Subrogation.................................................33
Section 4.04. Application of Certain Payments.............................33
Section 4.05. Severability................................................34
Section 4.06. Modifications and Waivers...................................34
Section 4.07. Notices.....................................................34
Section 4.08. Successors and Assigns......................................34
Section 4.09. Limitations on Interest.....................................34
Section 4.10. Late Charges................................................35
Section 4.11. Counterparts................................................35
Section 4.12. Substitute Deeds............................................35
Section 4.13. Banks' Sale of Interests in Loan............................35
Section 4.14. No Credit For Taxes.........................................35
Section 4.15. No Consent to Contracts.....................................36
Section 4.16. Irrevocable Trust...........................................36
Section 4.17. Reconveyance................................................36
Section 4.18. Business Loan...............................................36
Section 4.19. CERTAIN WAIVERS.............................................36
Section 4.20. ADDITIONAL ACKNOWLEDGEMENTS AND WAIVERS.....................36
Section 4.21. Additional Waivers..........................................37
Section 4.22. Single Purpose Entity.......................................39
Section 4.23. Distributions Following Event of Default....................41
Section 4.24. Future Advances.................................... ........41
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RECITAL
Grantor is the owner of the premises described in SCHEDULE A and of the
Improvements thereon. Borrower (as hereinafter defined), the sole member of
Grantor, will borrow up to the Note Amount from the Banks pursuant to the Loan
Agreement identified below. Borrower has executed and delivered its notes, each
dated the date hereof, to the various institutions that are Banks on the date
hereof, which notes obligate Borrower to pay, in the aggregate, the Note Amount
or so much thereof as may be advanced or readvanced from time to time under the
Loan Agreement. Said notes, as the same may hereafter be amended, modified,
extended, severed, assigned, renewed, replaced or restated, and including any
substitute or replacement notes executed pursuant to Sections 3.07 or 12.05 of
the Loan Agreement, are hereinafter referred to individually and collectively as
the "Note". In order to secure the payment of the Note and the payment and
performance of all of the other Obligations (as hereinafter defined), Grantor
has granted this Deed to Beneficiary.
CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION
Grantor, Trustee and Beneficiary agree that, unless the context otherwise
specifies or requires, the following terms shall have the meanings herein
specified.
"Banks" means, collectively, those institutions that are "Banks" under the
Loan Agreement as of the date hereof, and such other lending institutions who
become "Banks" pursuant to the Loan Agreement, together with their successors
and permitted assigns in accordance with the terms of the Loan Agreement.
"Borrower" means Westfield America Limited Partnership, a Delaware limited
partnership.
"Default Rate" has the meaning given to such term in the Loan Agreement.
"Engineering Consultant" has the meaning given to such term in the Loan
Agreement.
"Events of Default" means the events and circumstances described as such
in Section 2.01.
"Improvements" means all structures or buildings, and replacements
thereof, now or hereafter located upon the Premises, including all plant
equipment, apparatus, machinery and fixtures of every kind and nature whatsoever
forming part of said structures or buildings, including, without limitation, all
fixtures now or hereafter affixed to the Premises, including all buildings,
structures and improvements of every kind and description now or hereafter
erected or placed thereon and any and all machinery, motors, elevators, boilers,
equipment (including, without limitation, all equipment for the generation or
distribution of air, water, heat, electricity, light, fuel or refrigeration or
for ventilating or air conditioning purposes or for sanitary or drainage
purposes or for the removal of dust, refuse or garbage), partitions, appliances,
furniture, furnishings, building
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service equipment, telephones and telephone equipment, building materials,
supplies, ranges, refrigerators, cabinets, laundry equipment, hotel, kitchen and
restaurant equipment, computers and software, radios, televisions, awnings,
window shades, venetian blinds, drapes and drapery rods and brackets, screens,
carpeting and other floor coverings, lobby furnishings, games and recreational
and swimming pool equipment, incinerators and other property of every kind and
description now or hereafter placed, attached, affixed or installed in such
buildings, structures, or improvements and all replacements, repairs, additions,
accessions or substitutions or proceeds thereto or therefor (excluding, however,
all furnishings, fixtures, equipment and personal property owned or leased by
lessees of the Premises); all of such fixtures whether now or hereafter placed
thereon being hereby declared to be real property and a part of the
"Improvements".
"Indemnity" has the meaning given to such term in the Loan Agreement.
"Loan" means the loan made by the Banks to Borrower pursuant to the Loan
Agreement and secured hereby.
"Loan Agreement" means that certain Secured Revolving Credit Agreement,
dated as of the date hereof, among Borrower, the Banks and Beneficiary, as
Administrative Agent, as the same may hereafter be amended, modified or
supplemented from time to time.
"Loan Documents" means the Note, the Loan Agreement, this Deed and the
other "Mortgages" (as such quoted term is defined in the Loan Agreement), UCC-1
Financing Statements and any and all other documents (other than the Indemnity)
evidencing and/or securing the Loan from time to time.
"Maturity Date" has the meaning given to such term in the Loan Agreement.
"Obligations" means each and every obligation, promise, covenant and
agreement of Grantor, Borrower or any other obligor in respect of the Loan, now
or hereafter existing, contained in this Deed, the Loan Agreement, the Notes and
any of the other Loan Documents, whether for principal, reimbursement
obligations, interest, fees, expenses, late charges, indemnities or otherwise,
and any amendments, supplements, extensions, renewals or replacements of any of
said documents, including but not limited to, all or any other obligor in
respect of the Loan indebtedness, obligations and liabilities (and all increases
or additions thereto) of Grantor, Borrower or any other obligor in respect of
the Loan to Beneficiary or any Bank now existing or hereafter incurred under or
arising out of or in connection with this Deed, the Loan Agreement, the Notes,
the other Loan Documents, and any documents or instruments executed in
connection therewith; in each case whether direct or indirect, joint or several,
absolute or contingent, liquidated or unliquidated, now or hereafter existing,
renewed or restructured, whether or not from time to time decreased or
extinguished and later increased, created or incurred, and including all
indebtedness of Grantor, Borrower or any other obligor in respect of the Loan
under any instrument now or hereafter evidencing or securing any of the
foregoing.
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"Personal Property" means all tangible and intangible personal property of
every kind and description (excluding, however, all furnishings, fixtures,
equipment and personal property owned or leased by lessees of the Premises),
which are now or at any time hereafter attached to, installed or erected on or
placed or situated in or upon, forming a part of, appurtenant to, used or useful
in the construction or operation of or in connection with, or arising from the
use or operation of or in connection with, or arising from the use or enjoyment
of all or any portion of, or from any lease or agreement pertaining to, the
Premises, and whether located on or off the Premises, including, without
limitation: (i) all water rights appurtenant to the Premises together with all
pumping plants, pipes, flumes and ditches, all rights to the use of water as
well as all rights in ditches for irrigation of the Premises, all water stock
relating to the Premises, shares of stock or other evidence of ownership of any
part of the Premises that is owned by Grantor in common with others, and all
documents of membership in any owners' or members' association or similar group
having responsibility for managing or operating any part of the Premises; (ii)
all plans and specifications prepared for construction of the Improvements
(other than improvements made by lessees of individual tenant spaces) and all
studies, data and drawings related thereto; and also all contracts and
agreements of Grantor relating to the aforesaid plans and specifications or to
the aforesaid studies, data and drawings, or to the construction of the
Improvements; (iii) all equipment, machinery, fixtures, goods, accounts, general
intangibles, documents, instruments and chattel paper, and all other personal
property of every kind and description; (iv) all substitutions and replacements
of, and accessions and additions to, any of the foregoing; (v) all sales
agreements, deposit receipts, escrow agreements and other ancillary documents
and agreements entered into with respect to the sale to any purchasers of any
part of the Premises or any buildings or structures thereon, together with all
deposits and other proceeds of the sale thereof; (vi) any other Mortgaged
Property (as hereinafter defined) which may be construed to be personal
property; and (vii) all proceeds of any of the foregoing, including, without
limitation, proceeds of any voluntary or involuntary disposition or claim
respecting any part thereof (pursuant to judgment, condemnation award or
otherwise) and all goods, documents, general intangibles, chattel paper and
accounts, wherever located, acquired with cash proceeds of any of the foregoing
or proceeds thereof.
"Premises" means the premises described in SCHEDULE A, including all of
the present and future easements, rights, privileges and appurtenances
(including Grantor's interest in air, development or utility rights) thereunto
belonging or in anywise appertaining, and all of the estate, right, title,
interest, claim or demand whatsoever of Grantor therein and in the streets and
ways adjacent thereto, either in law or in equity, in possession or expectancy,
now or hereafter acquired, and as used herein shall, unless the context
otherwise requires, be deemed to include the Improvements.
"Premises Documents" means the REA and any similar agreements or
declarations now or hereafter affecting the Premises or any part thereof.
"REA" means the Construction, Operation and Reciprocal Easement Agreement
identified in SCHEDULE A, as such agreement has been amended, together with the
related ground lease with Bullock's, Inc. and together with all agreements
incidental or supplemental to the foregoing.
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"Required Banks" has the meaning given to such term in the Loan Agreement.
All terms of this Deed which are not defined above shall have the meaning
set forth elsewhere in this Deed.
Except as expressly indicated otherwise, when used in this Deed (i) "or"
is not exclusive, (ii) "hereunder", "herein", "hereof" and the like refer to
this Deed as a whole, (iii) "Article", "Section" and "Schedule" refer to
Articles, Sections and Schedules of this Deed, (iv) terms defined in the
singular have a correlative meaning when used in the plural and vice versa, (v)
a reference to a law or statute includes any amendment or modification to, or
replacement of, such law or statute and (vi) a reference to an agreement,
instrument or document means such agreement, instrument or document as the same
may be amended, modified or supplemented from time to time in accordance with
its terms or as permitted by the Loan Agreement and other documents executed or
delivered to Beneficiary or the Banks in connection with the Loan. The cover
page and all Schedules hereto are incorporated herein and made a part hereof.
Any table of contents and the headings and captions herein are for convenience
only and shall not affect the interpretation or construction hereof.
GRANTING CLAUSE
NOW, THEREFORE, GRANTOR, IN CONSIDERATION OF THE PREMISES AND IN ORDER TO
SECURE THE PAYMENT AND PERFORMANCE OF THE OBLIGATIONS, HEREBY GIVES, GRANTS,
BARGAINS, SELLS, WARRANTS, ALIENS, REMISES, RELEASES, CONVEYS, ASSIGNS,
TRANSFERS, MORTGAGES, HYPOTHECATES, DEPOSITS, PLEDGES, SETS OVER AND CONFIRMS
unto Trustee (and in the case of the Personal Property, to Beneficiary, as
secured party, a security interest in) all of its estate, right, title and
interest in, to and under any and all of the following described property (the
"Mortgaged Property") whether now owned, held or existing or hereafter acquired:
(i) the Premises;
(ii) the Improvements;
(iii) the Personal Property;
(iv) the Premises Documents;
(v) all rents, royalties, issues, profits, revenue, income,
recoveries, reimbursements and other benefits of the Mortgaged Property
(hereinafter, the "Rents") and all leases of the Mortgaged Property or
portions thereof now or hereafter entered into and all right, title and
interest of Grantor thereunder, including, without limitation, cash or
securities deposited thereunder to secure performance by the lessees of
their obligations thereunder, whether such cash or securities are to be
held until the expiration of the terms of such leases or applied to one or
more of the installments of rent coming due immediately prior to the
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expiration of such terms, and including any guaranties of such leases and
any lease cancellation, surrender or termination fees in respect thereof,
all subject, however, to the provisions of Section 4.01;
(vi) all deposits made with or other security given to utility
companies by Grantor with respect to the Premises and/or Improvements, and
all advance payments of insurance premiums made by Grantor with respect
thereto and all claims or demands relating to such deposits, other
security and/or such insurance;
(vii) all damages, royalties and revenue of every kind, nature and
description whatsoever that Grantor may be entitled to receive, either
before or after any default hereunder, from any person or entity owning or
having or hereafter acquiring a right to the oil, gas or mineral rights
and reservations of the Premises, with the right in Beneficiary to receive
and receipt therefor and apply the same to amounts secured hereby, and
Beneficiary may demand, sue for and recover any such payments but shall
not be required to do so;
(viii)all development work product prepared in connection with the
Premises, including, without limitation, all surveys, engineering,
drainage, traffic and soil tests; all water, sewer, gas, electrical and
telephone approvals and taps; all drawings, plans and specifications; and
all subdivision, zoning and platting materials;
(ix) all proceeds and claims arising on account of any damage to or
taking of the Premises or the Improvements or any part thereof, and all
causes of action and recoveries for any loss or diminution in the value of
the Premises or the Improvements;
(x) all contracts or agreements (including, without limitation,
contracts with architects or engineers, construction contracts and
contracts for the management, maintenance, leasing or sale of the Premises
or portions thereof), contract rights, logos, trademarks, tradenames,
copyrights and other general intangibles used or useful in connection with
the ownership, use, operation or occupancy of the Premises or any part
thereof;
(xi) all licenses (including, but not limited to, any operating
licenses or similar licenses), permits, governmental approvals,
authorities or certificates required or used in connection with the
ownership, operation or maintenance of the Improvements; all governmental
permits relating to construction, all names under or by which the Premises
or the Improvements may at any time be operated or known, and all rights
to carry on business under any such names or any variant thereof;
(xii) all (a) financing commitments (debt or equity) issued to
Grantor in respect of the Premises and all amounts payable to Grantor
thereunder; and (b) all bank accounts, and monies therein, of Grantor
relating to the Premises, including, without limitation, any accounts
relating to real estate taxes; and
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(xiii)all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing into cash or liquidated claims, including, without
limitation, proceeds of insurance and condemnation awards, and all rights
of Grantor to refunds of real estate taxes and assessments.
TO HAVE AND TO HOLD unto Trustee, its successors and assigns forever.
IN TRUST, ON THE TERMS SET FORTH IN THIS DEED, WITH POWER OF SALE AND
RIGHT OF ENTRY AND POSSESSION, TO SECURE THE PAYMENT AND PERFORMANCE OF THE
OBLIGATIONS, until the Obligations have been paid and performed in full,
whereupon this Deed shall cease and be void and the Mortgaged Property shall be
released at the cost of Grantor.
Article I
COVENANTS OF GRANTOR
Grantor covenants and agrees as follows:
Section 1.01. (a) Warranty of Title; Power and Authority. Grantor warrants
that it has a good and marketable title to an indefeasible fee estate in the
Premises, subject to no lien, charge or encumbrance of any kind, except such as
are listed as exceptions to title in the title policy insuring this Deed; and,
further, that it owns the Personal Property, the Rents and all leases in respect
of the Mortgaged Property and all other personal property encumbered hereby free
and clear of liens and claims; and that this Deed is and will remain a valid and
enforceable lien on the Mortgaged Property subject only to the exceptions
referred to above. Grantor has full power and lawful authority to subject the
Mortgaged Property to the lien hereof in the manner and form herein done or
intended hereafter to be done. Grantor will preserve such title, and will
forever warrant and defend the same to Trustee and Beneficiary and will forever
warrant and defend the validity and priority of the lien hereof against the
claims of all persons and parties whomsoever.
(b) Flood Hazard Area. Grantor represents that neither the Premises nor
any part thereof is located in an area identified by the Secretary of the United
States Department of Housing and Urban Development or by any applicable federal
agency as having special flood hazards or, if it is, Grantor has obtained the
insurance required by Section 1.09.
Section 1.02. (a) Further Assurances. Grantor will, at its sole cost and
expense, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, transfers and
assurances as Trustee or Beneficiary shall from time to time reasonably require,
for the better assuring, conveying, assigning, transferring and confirming unto
Trustee the property and rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Grantor may be or may hereafter become bound to
convey or assign to Trustee, or for carrying out the intention or facilitating
the performance of the terms hereof, or for filing, registering or
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recording this Deed and, on demand, will execute and deliver, and hereby
authorizes Trustee or Beneficiary to execute and file in Grantor's name, to the
extent they may lawfully do so, one or more financing statements, chattel
mortgages or comparable security instruments, to evidence or perfect more
effectively Beneficiary's security interest in and the lien hereof upon the
Personal Property and other personal property encumbered hereby.
(b) Information Reporting and Back-up Withholding. Grantor will, at its
sole cost and expense, do, execute, acknowledge and deliver all and every such
acts, information reports, returns and withholding of monies as shall be
necessary or appropriate to comply fully, or to cause full compliance, with all
applicable information reporting and back-up withholding requirements of the
Internal Revenue Code of 1986 (including all regulations now or hereafter
promulgated thereunder) in respect of the Premises and all transactions related
to the Premises, and will at all times, upon Beneficiary's request, provide
Beneficiary with satisfactory evidence of such compliance and notify Beneficiary
of the information reported in connection with such compliance.
Section 1.03. (a) Filing and Recording of Documents. Grantor forthwith upon the
execution and delivery hereof, and thereafter from time to time, will cause this
Deed, the Loan Agreement and any security instrument creating a lien or
evidencing the lien hereof upon the Personal Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien hereof upon, and the title and interests
of Beneficiary and Trustee to, the Mortgaged Property.
(b) Filing and Recording Fees and Other Charges. Grantor will pay all
filing, registration or recording fees, and all expenses incident to the
execution and acknowledgment hereof, any deed of trust supplemental hereto, any
security instrument with respect to the Personal Property, and any instrument of
further assurance, and any reasonable expenses (including attorneys' fees and
disbursements) incurred by Beneficiary in connection with the Loan, and will pay
all federal, state, county and municipal stamp taxes and other taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of the Note, this Deed, any deed of trust supplemental
hereto, any security instrument with respect to the Personal Property or any
instrument of further assurance.
Section 1.04. Intentionally Omitted.
Section 1.05. Maintenance of Existence; Compliance with Laws. Grantor, if
other than a natural person, will, so long as it is owner of all or part of the
Mortgaged Property, do all things necessary to preserve and keep in full force
and effect its existence, franchises, rights and privileges as a business or
stock corporation, partnership, limited liability company, trust or other entity
under the laws of the state of its formation. Grantor will duly and timely
comply with all laws, regulations, rules, statutes, orders and decrees of any
governmental authority or court applicable to it or to the Mortgaged Property or
any part thereof.
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Section 1.06. After-Acquired Property. All right, title and interest of
Grantor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and appurtenances to, the
Mortgaged Property, hereafter acquired by, or released to, Grantor or
constructed, assembled or placed by Grantor on the Premises, and all conversions
of the security constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case may be, and in
each such case, without any further deed of trust, conveyance, assignment or
other act by Grantor, shall become subject to the lien hereof as fully and
completely, and with the same effect, as though now owned by Grantor and
specifically described in the Granting Clause hereof, but at any and all times
Grantor will execute and deliver to Trustee or Beneficiary any and all such
further assurances, deeds of trust, conveyances or assignments thereof as
Trustee or Beneficiary may reasonably require for the purpose of expressly and
specifically subjecting the same to the lien and effect hereof.
Section 1.07. (a) Payment of Taxes and Other Charges. Grantor, from time
to time prior to delinquency, will pay and discharge all taxes of every kind and
nature (including real and personal property taxes and income, franchise,
withholding, profits and gross receipts taxes), all general and special
assessments (which may, to the extent allowed by law, be paid in installments),
levies, permits, inspection and license fees, all water and sewer rents and
charges, all charges for utilities and all other public charges whether of a
like or different nature, imposed upon or assessed against it or the Mortgaged
Property or any part thereof or upon the revenues, rents, issues, income and
profits of the Mortgaged Property or arising in respect of the occupancy, use or
possession thereof. Grantor will, upon Beneficiary's request, deliver to
Beneficiary receipts evidencing the payment of all such taxes, assessments,
levies, fees, rents and other public or private charges imposed upon or assessed
against it or the Mortgaged Property or any portion thereof.
Following the occurrence of two (2) or more Events of Default (it being
understood that an Event of Default that is waived or that is permitted to be
cured by the Required Banks shall count as an Event of Default for purposes of
this paragraph), Beneficiary may, at its option, to be exercised by three (3)
business days' notice to Grantor, require the deposit by Grantor, at the time of
each payment of an installment of interest or principal under the Note (but no
less often than monthly), of an additional amount sufficient to discharge the
obligations under this clause (a) when they become due. The determination of the
amount so payable and of the fractional part thereof to be deposited with
Beneficiary, so that the aggregate of such deposits shall be sufficient for this
purpose, shall be made by Beneficiary in its sole discretion. Such amounts shall
be held by Beneficiary in an interest-bearing account in Beneficiary's name and
sums in said account shall be applied to the payment of the obligations in
respect of which such amounts were deposited or, at Beneficiary's option, to the
payment of said obligations in such order or priority as Beneficiary shall
determine, on or before the respective dates on which the same or any of them
would become delinquent. If one (1) month prior to the due date of any of the
aforementioned obligations, the amounts then on deposit therefor shall be
insufficient for the payment of such obligation in full, Grantor within ten (10)
days after demand shall deposit the amount of the deficiency with Beneficiary.
Nothing herein contained shall be deemed to affect any right or remedy of
Beneficiary under any
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provisions hereof or of any statute or rule of law to pay any such amount and to
add the amount so paid, together with interest at the Default Rate, to the
indebtedness hereby secured.
(b) Payment of Mechanics and Materialmen. Grantor will pay, or cause to be
paid, from time to time when the same shall become due, all lawful claims and
demands of mechanics, materialmen, laborers, and others which, if unpaid, might
result in, or permit the creation of, a lien on the Mortgaged Property or any
part thereof, or on the revenues, rents, issues, income and profits arising
therefrom, and in general will do or cause to be done everything necessary so
that the lien hereof shall be fully preserved, at the cost of Grantor and
without expense to Trustee or Beneficiary.
(c) Good Faith Contests. Nothing in this Section 1.07 shall require the
payment or discharge of any obligation imposed upon Grantor by this Section so
long as such obligation is the subject of a "Good Faith Contest" (as such quoted
term is defined in the Loan Agreement); provided, however, that if at any time
payment of any obligation imposed upon Grantor by clause (a) above shall become
necessary to prevent the delivery of a tax deed or other instrument conveying
the Mortgaged Property or any portion thereof because of non-payment, then
Grantor shall pay the same in sufficient time to prevent the delivery of such
tax deed or other instrument.
Section 1.08. Taxes on Trustee, Beneficiary or Banks. Grantor will pay, or
cause Borrower to pay, any taxes (except income, profits, gross revenue or
similar taxes) imposed on Trustee, Beneficiary or any Bank by reason of their
interests in the Note or this Deed.
Section 1.09. Insurance. (a) Grantor will at all times provide, maintain
and keep in force:
(i) policies of insurance insuring the Premises, Improvements and
Personal Property against loss or damage by fire and lightning; against
loss or damage by other risks embraced by coverage of the type now known
as All Risk Replacement Cost Insurance with agreed amount endorsement,
including but not limited to riot and civil commotion, vandalism,
malicious mischief and theft; and against such other risks or hazards as
Beneficiary from time to time reasonably may designate in an amount
sufficient to prevent Beneficiary or Grantor from becoming a co-insurer
under the terms of the applicable policies, but in any event in an amount
not less than 100% of the then full replacement cost of the Improvements
(exclusive of the cost of excavations, foundations and footings below the
lowest basement floor) without deduction for physical depreciation;
(ii) policies of insurance insuring the Premises against the loss of
"rental value" of the buildings which constitute a part of the
Improvements on a "rented or vacant basis" arising out of the perils
insured against pursuant to clause (i) above in an amount equal to not
less than one (1) year's gross "rental value" of the Improvements. "Rental
value" as used herein is defined as the sum of (A) the total anticipated
gross rental income from tenant occupancy of such buildings as
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furnished and equipped, (B) the amount of all charges which are the legal
obligation of tenants and which would otherwise be the obligation of
Grantor and (C) the fair rental value of any portion of such buildings
which is occupied by Grantor. Grantor hereby assigns the proceeds of such
insurance to Beneficiary, subject to the terms hereof, to be applied by
Beneficiary in payment of the interest and principal due on the Note,
insurance premiums, taxes, assessments and private impositions until such
time as the Improvements shall have been restored and placed in full
operation, at which time, provided there shall exist no default hereunder
or under the Loan Agreement, the balance of such insurance proceeds, if
any, held by Beneficiary shall be paid over to Grantor;
(iii) if all or part of the Premises are located in an area
identified by the Secretary of the United States Department of Housing and
Urban Development or by any applicable federal agency as a flood hazard
area, flood insurance in an amount at least equal to the maximum limit of
coverage available under the National Flood Insurance Act of 1968,
provided, however, that Beneficiary reserves the right to require flood
insurance in excess of said limit, if such insurance is commercially
available, to the amount provided in clause (i) above;
(iv) during any period of restoration under this Section 1.09 or
Section 1.13, a policy or policies of builder's "all risk" insurance,
written on a Standard Builder's Risk Completed Value Form (100%
non-reporting), against such risks (including, without limitation, fire
and extended coverage, collapse and earthquake coverage to agreed limits)
as Beneficiary may reasonably request, in amount, form and substance
reasonably acceptable to Beneficiary;
(v) a policy or policies of workers' compensation insurance as
required by workers' compensation insurance laws (including employer's
liability insurance, if requested by Beneficiary) covering all employees
of Grantor;
(vi) comprehensive liability insurance on an "occurrence" basis
against claims for "personal injury" liability, including, without
limitation, bodily injury, death or property damage liability, with a
limit of not less than $15,000,000 in the event of "personal injury" to
any number of persons or of damage to property arising out of one
"occurrence". Such policies shall name Beneficiary as additional insured
by an endorsement, and shall contain cross-liability and severability of
interest clauses, all satisfactory to Beneficiary; and
(vii) such other insurance (including, but not limited to,
earthquake insurance), and in such amounts, as may from time to time be
reasonably required by Beneficiary against the same or other insurable
hazards which at the time are commonly insured against in the case of
premises similarly situated, due regard being given to the height and type
of buildings thereon and their construction, use and occupancy.
(b) All policies of insurance required under this Section 1.09 shall be
issued by companies having Best's ratings and being otherwise acceptable to
Beneficiary, shall
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be subject to the reasonable approval of Beneficiary as to amount, content, form
and expiration date and, except for the liability policies described in clauses
(a)(v) and (vi) above, shall contain a Non-Contributory Standard Mortgagee
Clause and Lender's Loss Payable Endorsement, or their equivalents, in favor of
Beneficiary, and shall provide that the proceeds thereof shall be payable to
Beneficiary. Beneficiary shall be furnished with the original of each policy
required hereunder (or a certificate of such insurance and, if required by
Beneficiary, a copy of such policy), which policies shall provide that they
shall not lapse, nor be modified or cancelled, without thirty (30) days' written
notice to Beneficiary. At least thirty (30) days prior to expiration of any
policy required hereunder, Grantor shall furnish Beneficiary appropriate proof
of issuance of a policy continuing in force the insurance covered by the policy
so expiring. Grantor shall furnish to Beneficiary, promptly upon request,
receipts or other satisfactory evidence of the payment of the premiums on such
insurance policies. In the event that Grantor does not deposit with Beneficiary
a new certificate or policy of insurance with evidence of payment of premiums
thereon at least thirty (30) days prior to the expiration of any expiring
policy, then Beneficiary may, but shall not be obligated to, procure such
insurance and pay the premiums therefor, and Grantor agrees to repay to
Beneficiary the premiums thereon promptly on demand, together with interest
thereon at the Default Rate.
(c) Grantor hereby assigns to Beneficiary all proceeds of any insurance
required to be maintained by this Section 1.09 which Grantor may be entitled to
receive for loss or damage to the Premises, Improvements or Personal Property.
All such insurance proceeds shall be payable to Beneficiary, and Grantor hereby
authorizes and directs any affected insurance company to make payment thereof
directly to Beneficiary. Grantor shall give prompt notice to Beneficiary of any
casualty in the amount of $1,000,000 or more, whether or not of a kind required
to be insured against under the policies to be provided by Grantor hereunder,
such notice to generally describe the nature and cause of such casualty and the
extent of the damage or destruction. Grantor may settle, adjust or compromise
any claims for loss, damage or destruction, regardless of whether or not there
are insurance proceeds available or whether any such insurance proceeds are
sufficient in amount to fully compensate for such loss or damage, subject, in
the case of claims in the amount of $1,000,000 or more, to Beneficiary's prior
consent, such consent not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, Beneficiary shall have the right to join Grantor
in settling, adjusting or compromising any loss of $1,000,000 or more. Grantor
hereby authorizes the application or release by Beneficiary of any insurance
proceeds under any policy of insurance, subject to the other provisions hereof.
The application or release by Beneficiary of any insurance proceeds shall not
cure or waive any default or notice of default hereunder or invalidate any act
done pursuant to such notice.
(d) In the event of the foreclosure hereof or other transfer of the title
to the Mortgaged Property in extinguishment, in whole or in part, of the
Obligations secured hereby, all right, title and interest of Grantor in and to
any insurance policy, or premiums or payments in satisfaction of claims or any
other rights thereunder then in force, shall pass to the purchaser or grantee
notwithstanding the amount of any bid at such foreclosure sale. Nothing
contained herein shall prevent the accrual of interest as
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provided in the Note on any portion of the principal balance due under the Note
until such time as insurance proceeds are actually received and applied to
reduce the principal balance outstanding.
(e) Grantor shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 1.09 unless Beneficiary is included thereon as a named insured with loss
payable to Beneficiary under standard mortgage endorsements of the character and
to the extent above described. Grantor shall promptly notify Beneficiary
whenever any such separate insurance is taken out and shall promptly deliver to
Beneficiary the policy or policies of such insurance.
(f) Any and all monies received as payment which Grantor may be entitled
to receive for loss or damage to the Premises, Improvements or Personal Property
under any insurance maintained pursuant to this Section 1.09 (other than
proceeds under the policies required by clause (a)(ii) above) shall be paid over
to Beneficiary and, provided no (x) monetary default or material non-monetary
default or (y) Event of Default shall exist hereunder or under the Loan
Agreement and subject to the conditions set forth below, said monies (less
Beneficiary's reasonable expenses for collecting and disbursing the insurance
proceeds, or otherwise incurred in connection therewith) shall be applied by
Beneficiary to the payment of, or the reimbursement of Grantor for, the costs
and expenses incurred by Grantor in the restoration of the Improvements on the
Premises. Advances of insurance proceeds shall be made to Grantor in accordance
with Beneficiary's standard construction lending practices, terms and
conditions. Notwithstanding the foregoing, in any case where the extent of the
damage or destruction is such that the insurance proceeds paid in respect
thereof are $1,000,000 or less, and provided no (x) monetary default or material
non-monetary default or (y) Event of Default shall exist hereunder or under the
Loan Agreement, so long as Grantor shall promptly undertake, and thereafter
diligently prosecute to completion, such restoration such proceeds shall be paid
directly to Grantor, to be applied by Grantor for expenses incurred in
connection with such restoration. Insurance proceeds not needed for restoration
shall be paid over to Grantor. It is understood that any insurance proceeds
(less Beneficiary's reasonable expenses in connection therewith as set forth
above) received by Beneficiary and not disbursed to Grantor due to the existence
of a default hereunder or under the Loan Agreement, and any such insurance
proceeds, or portions thereof, being held by Beneficiary for periodic
disbursement during the course of restoration as set forth above, shall be held
by Beneficiary as cash collateral for the Obligations and not applied to the
repayment of the Loan unless and until an Event of Default shall occur
hereunder, provided, however, that upon such an Event of Default any such
proceeds then held by Beneficiary, and interest, if any, earned thereon, shall,
at the option of the Required Banks, be applied by Beneficiary to the
outstanding principal of and accrued and unpaid interest on the Note in such
order and proportions as the Required Banks shall elect. It shall be a condition
to any restoration that Beneficiary and the Engineering Consultant shall have
determined, in their reasonable judgment, that the amount of available insurance
proceeds is sufficient to restore the Premises and Improvements, to the same
condition, character and at least equal value and general utility as nearly as
possible to that existing prior to the damage or destruction, no later
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than twelve (12) months prior to the Maturity Date. In the event such insurance
proceeds are inadequate for such restoration, Grantor shall deposit with
Beneficiary an amount (the "Casualty Excess Amount") equal to the excess of the
estimated cost of restoration, as determined by Beneficiary after consultation
with the Engineering Consultant, over the amount of such insurance proceeds.
Notwithstanding the foregoing, Beneficiary shall accept, in lieu of such
deposit, an unconditional, irrevocable letter of credit in the Casualty Excess
Amount issued to Beneficiary by a financial institution, and otherwise in form
and substance, acceptable to Beneficiary in all respects. If Grantor shall not
have deposited the Casualty Excess Amount with Beneficiary or if Beneficiary
shall not have received such letter of credit, as the case may be, within thirty
(30) days following Beneficiary's receipt of the insurance proceeds, or if
restoration work shall not have been commenced and the other conditions therefor
satisfied by Grantor within ninety (90) days following Beneficiary's receipt of
the insurance proceeds and, thereafter, not diligently pursued in accordance
with this Section and all legal requirements, Beneficiary may apply such
insurance proceeds to the prepayment of the Note and interest accrued and unpaid
thereon in such order and proportions as the Required Banks shall elect. If,
following restoration in accordance with this Section 1.09(f) there are any
excess insurance proceeds, such excess insurance proceeds shall, provided there
exists no default hereunder or under the Loan Agreement, be paid over to
Grantor. Notwithstanding the foregoing, the Banks, by their acceptance of this
Deed, agree to permit insurance proceeds to be used for restoration of the
Improvements (such proceeds to be advanced by Beneficiary in accordance with its
standard construction lending practices, terms and conditions) if such proceeds
are required to be so used pursuant to the terms of the REA or any "Anchor
Lease" (as such quoted term is defined in the Loan Agreement), irrespective of
whether the conditions set forth in this Section 2.09(f) are satisfied, provided
that the parties to the REA or the tenant under the applicable Anchor Lease, as
the case may be, shall reaffirm its or their obligations under the REA or the
Anchor Lease, as the case may be, if, in Beneficiary's reasonable judgment, such
reaffirmation is necessary.
Section 1.10. Protective Advances by Beneficiary. If Grantor shall fail to
perform any of the covenants contained herein, Beneficiary may, upon five (5)
business days' prior notice (unless, in the good faith judgment of Beneficiary,
such performance must take place sooner due to an emergency or the imminent loss
of, or impairment to, any of the security otherwise afforded to Beneficiary by
this Deed, including, without limitation, by virtue of the imminent sale or
forfeiture of the Mortgaged Property or any part thereof, in which events no
prior notice shall be required) make advances to perform the same on its behalf
and all sums so advanced until repaid shall be a lien upon the Mortgaged
Property and shall be secured hereby. Grantor will repay on demand all sums so
advanced on its behalf together with interest thereon at the Default Rate. The
provisions of this Section shall not prevent any default in the observance of
any covenant contained herein from constituting an Event of Default.
Section 1.11. (a) Visitation and Inspection. Section 6.05 of the Loan
Agreement grants certain visitation and inspection rights to Beneficiary and the
Banks. Grantor agrees to cooperate with Beneficiary and the Banks, and their
agents, representatives, attorneys and accountants, in the exercise of said
rights and to facilitate
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the visitations, inspections and examinations provided for in said Section. In
addition to the foregoing, Beneficiary, on behalf of the Banks, shall have all
of the rights under California Civil Code Section 2929.5. Grantor agrees to pay
to Beneficiary, on behalf of the Banks, promptly upon demand, with interest at
the Default Rate, all expenses, costs and other amounts incurred by Beneficiary
or the Banks, in performing any inspection and/or testing for the purposes set
forth in such Section 2929.5.
(b) Estoppel Certificates. Grantor, within three (3) days upon request in
person or within five (5) days upon request by mail, will furnish a statement,
duly acknowledged, whether any offsets, counterclaims or defenses exist against
the Obligations secured hereby.
Section 1.12. Maintenance of Premises and Improvements. Grantor will not
commit any waste on the Premises or make any change in the use of the Premises
which will in any way increase any ordinary fire or other hazard arising out of
construction or operation. Grantor will, at all times, maintain, or cause to be
maintained, the Improvements and Personal Property in good operating order and
condition and will promptly make, or cause to be made, from time to time, all
repairs, renewals, replacements, additions and improvements in connection
therewith which are reasonably needful or desirable to such end. The
Improvements shall not be demolished or substantially altered nor shall any
Personal Property be removed without the prior written consent of Beneficiary
except where appropriate replacements free of superior title, liens and claims
are promptly made of value at least equal to the value of the removed Personal
Property.
Section 1.13. Condemnation. Grantor, immediately upon obtaining knowledge
of the institution or pending institution of any proceedings for the
condemnation of the Premises or any portion thereof, will notify Trustee and
Beneficiary thereof. Trustee and Beneficiary may participate in any such
proceedings and may be represented therein by counsel of Beneficiary's
selection. Grantor from time to time will deliver to Beneficiary all instruments
requested by it to permit or facilitate such participation. In the event of such
condemnation proceedings, the award or compensation payable is hereby assigned
to and shall be paid to Beneficiary. Beneficiary shall be under no obligation to
question the amount of any such award or compensation and may accept the same in
the amount in which the same shall be paid. The proceeds of any award or
compensation so received shall, at the option of the Required Banks, either be
applied to the prepayment of the Note and all interest and other sums accrued
and unpaid in respect thereof at the rate of interest provided therein and in
the Loan Agreement regardless of the rate of interest payable on the award by
the condemning authority, or be disbursed to Grantor from time to time for
restoration of the Improvements. Notwithstanding the provisions of the
immediately preceding sentence, provided no (x) monetary default or material
non-monetary default or (y) Event of Default shall exist hereunder or under the
Loan Agreement and subject to the conditions set forth below, any such
condemnation award proceeds received by Beneficiary (less Beneficiary's
reasonable expenses for collecting and disbursing the same, or otherwise
incurred in connection therewith) shall be applied by Beneficiary to the payment
of, or the reimbursement of Grantor for, the costs and expenses incurred by
Grantor in the restoration of the Improvements on the Premises. Advances of
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condemnation award proceeds shall be made to Grantor in accordance with
Beneficiary's standard construction lending practices, terms and conditions.
Notwithstanding the foregoing, in any case where the extent of the condemnation
award proceeds paid in respect thereof are $1,000,000 or less, and provided no
(x) monetary default or material non-monetary default or (y) Event of Default
shall exist hereunder or under the Loan Agreement, so long as Grantor shall
promptly undertake, and thereafter diligently prosecute to completion, such
restoration, such proceeds shall be paid directly to Grantor, to be applied by
Grantor for expenses incurred in connection with such restoration. Condemnation
award proceeds not required for restoration, or not in fact so applied, shall,
at the option of the Required Banks, be applied either to the prepayment of the
Note and interest accrued and unpaid thereon (at the rate of interest provided
therein and in the Loan Agreement regardless of the rate of interest payable on
the award by the condemning authority) in such order and proportions as the
Required Banks shall elect, or shall be paid over to Grantor. It is understood
that any condemnation award proceeds (less Beneficiary's reasonable expenses in
connection therewith as set forth above) received by Beneficiary and not
disbursed to Grantor due to the existence of a default hereunder or under the
Loan Agreement, and any such condemnation award proceeds, or portions thereof,
being held by Beneficiary for periodic disbursement during the course of
restoration as set forth above, shall be held by Beneficiary as cash collateral
for the Obligations and not applied to the repayment of the Loan unless and
until an Event of Default shall occur hereunder, provided, however, that upon
such an Event of Default any such proceeds then held by Beneficiary, and
interest, if any, earned thereon, shall, at the option of the Required Banks, be
applied by Beneficiary to the outstanding principal of and accrued and unpaid
interest on the Note in such order and proportions as the Required Banks shall
elect. It shall be a condition to any restoration that Beneficiary and the
Engineering Consultant shall have determined, in their reasonable judgment, that
the amount of available condemnation award proceeds is sufficient to restore the
Premises and Improvements, to the same condition, character and at least equal
value and general utility as nearly as possible to that existing prior to the
condemnation, no later than twelve (12) months prior to the Maturity Date. In
the event such condemnation award proceeds are inadequate for such restoration,
Grantor shall deposit with Beneficiary an amount (the "Condemnation Excess
Amount") equal to the excess of the estimated cost of restoration, as determined
by Beneficiary, over the amount of such condemnation award proceeds.
Notwithstanding the foregoing, Beneficiary shall accept, in lieu of such
deposit, an unconditional, irrevocable letter of credit in the Condemnation
Excess Amount issued to Beneficiary by a financial institution, and otherwise in
form and substance, acceptable to Beneficiary in all respects. If Grantor shall
not have deposited the Condemnation Excess Amount with Beneficiary or if
Beneficiary shall not have received such letter of credit, as the case may be,
within thirty (30) days following Beneficiary's receipt of the condemnation
award proceeds, or if restoration work shall not have been commenced and the
other conditions therefor satisfied by Grantor within ninety (90) days following
Beneficiary's receipt of the condemnation award proceeds and, thereafter, not
diligently pursued in accordance with this Section and all legal requirements,
Beneficiary may apply such condemnation award proceeds to the prepayment of the
Note and interest accrued and unpaid thereon (at the rate of interest provided
therein and in the Loan Agreement regardless of the rate of interest payable on
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the award by the condemning authority) in such order and proportions as the
Required Banks shall elect. If, following restoration in accordance with this
Section 1.13, there are any excess condemnation award proceeds, such excess
proceeds shall, provided there exists no default hereunder or under the Loan
Agreement, be paid over to Grantor. Notwithstanding the foregoing, the Banks, by
their acceptance of this Deed, agree to permit condemnation awards to be used
for restoration of the Improvements (the proceeds of such awards to be advanced
by Beneficiary in accordance with its standard construction lending practices,
terms and conditions) if such awards are required to be so used pursuant to the
terms of the REA or any "Anchor Lease" (as such quoted term is defined in the
Loan Agreement), irrespective of whether the conditions set forth in this
Section 1.13 are satisfied, provided that the parties to the REA or the tenant
under the applicable Anchor Lease, as the case may be, shall reaffirm its or
their obligations under the REA or the Anchor Lease, as the case may be, if, in
Beneficiary's reasonable judgment, such reaffirmation is necessary.
Section 1.14. Leases. (a) Grantor will not (i) execute an assignment of
the rents or any part thereof from the Premises without Beneficiary's prior
consent or (ii) accept (more that one (1) month in advance) prepayments of any
installments of rents to become due under such leases, except prepayments in the
nature of security for the performance of the lessees thereunder.
(b) Grantor will not execute any lease of all or a substantial portion of
the Premises except for actual occupancy by the lessee thereunder, and will at
all times promptly and faithfully perform, or cause to be performed, in a
commercially reasonable manner, all of the covenants, conditions and agreements
contained in all leases of the Premises or portions thereof now or hereafter
existing, on the part of the lessor thereunder to be kept and performed and will
at all times use commercially reasonable efforts to compel performance by the
lessee under each lease of all obligations, covenants and agreements by such
lessee to be performed thereunder. If any of such leases provide for the giving
by the lessee of certificates with respect to the status of such leases, Grantor
shall exercise its right to request such certificates within five (5) days of
any demand therefor by Beneficiary and shall deliver copies thereof to
Beneficiary promptly upon receipt.
(c) Each lease of the Premises, or of any part thereof, entered into after
the date hereof shall provide that, in the event of the enforcement by Trustee
or Beneficiary of the remedies provided for hereby or by law, the lessee
thereunder will, upon request of any person succeeding to the interest of
Grantor as a result of such enforcement, automatically become the lessee of said
successor in interest, without change in the terms or other provisions of such
lease, provided, however, that said successor in interest shall not be bound by
(i) any payment of rent or additional rent for more than one (1) month in
advance, except prepayments in the nature of security for the performance by
said lessee of its obligations under said lease or (ii) any material amendment
or modification of the lease made without the consent of Beneficiary or such
successor in interest. Each lease shall also provide that (x) the lease is
subordinate to this Deed (but shall also provide that Beneficiary, at its
option, may subordinate this Deed to such lease) and (y) upon request
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by said successor in interest, such lessee shall execute and deliver an
instrument or instruments confirming such attornment.
(d) Grantor shall, promptly upon Beneficiary's request following an Event
of Default, deposit all tenant security deposits in respect of the Premises into
an account with Beneficiary or as designated by Beneficiary, which deposits
shall be held and disbursed to tenants as required under the terms of their
respective leases.
Section 1.15. Premises Documents. Grantor shall (a) use reasonable efforts
to cause the due compliance and faithful performance by the other parties to the
Premises Documents with and of all obligations and agreements by such other
parties to be complied with and performed thereunder, (b) comply with and
perform all of its material obligations under the Premises Documents and (c)
deliver promptly to Beneficiary copies of any notices which it gives or receives
under any of the Premises Documents.
Section 1.16. Utilities. Grantor covenants and agrees that it will take
any such action and execute, acknowledge deliver and record and/or file any and
all instruments as may be necessary, desirable or proper to keep the existing
utility capacity for the Mortgaged Property at or above its present level. As
used herein, the term "utilities" includes, without limitation, water, gas
electricity and storm and sanitary sewer.
Section 1.17. Collateral Security Instruments. If Beneficiary at any time
holds additional security for any of the Obligations secured hereby, it may
enforce the terms thereof or otherwise realize upon the same, at its option,
either before or concurrently herewith or after a sale is made hereunder, and
may apply the proceeds upon the Obligations secured hereby in such order as
Beneficiary may determine, without affecting the status of or waiving any right
to exhaust all or any other security, including the security hereunder, and
without waiving any breach or default or any right or power whether exercised
hereunder or contained herein or in any such other security.
Section 1.18. Suits to Protect Property. Grantor will appear in and defend
any action or proceeding purporting to affect the security of this Deed, and/or
any additional or other security for the Obligations secured hereby, the
interest of Beneficiary or the rights, powers and/or duties of Trustee
hereunder; and will pay all reasonable costs and expenses, including cost of
evidence of title and attorneys' fees in a reasonable sum, in any action or
proceeding in which Beneficiary and/or Trustee may appear or be made a party,
including, but not limited to, foreclosure or other proceeding commenced by
those claiming a right to any part of the Mortgaged Property under subordinate
liens, in any action to partition or condemn all or part of the Mortgaged
Property, whether or not pursued to final judgment, and in any exercise of the
power of sale contained herein, whether or not the sale is actually consummated.
Section 1.19. Reliance on Premises to Fulfill Governmental Requirements.
The Mortgaged Property includes all right, title and interest in any property
necessary to meet any governmental requirements for the operation of the
Improvements except where the failure to do so would not have a material adverse
effect on the Mortgaged Property. Grantor shall not by act or omission permit
any building or other improvement located on
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any property not subject to the lien of this Deed to rely on the Premises, or
any part thereof or interest therein, to fulfill any governmental requirement,
and Grantor hereby assigns to Beneficiary any and all rights to consent to all
or any portion of or interest in the Premises to be so used. Any act or omission
of Grantor which would result in a violation of this Section shall be void.
Section 1.20. Lien Laws. Grantor will indemnify and hold Trustee,
Beneficiary and the Banks harmless against any loss or liability, cost or
expense, including, without limitation, any judgments, attorney's fees, costs of
appeal bonds and printing costs, arising out of or relating to any proceeding
instituted by any claimant alleging a violation by Grantor of any applicable
lien law.
Section 1.21. Expenses of Trustee. Grantor shall pay all reasonable costs,
fees and expenses of Trustee, its agents and counsel in connection with the
performance of its duties hereunder.
Article II
EVENTS OF DEFAULT AND REMEDIES
Section 2.01. Events of Default and Certain Remedies. If one or more of
the following Events of Default shall happen, that is to say:
(a) if an "Event of Default" shall occur under the Loan Agreement
(as such quoted term is defined therein); or
(b) if default shall be made in the payment of any tax or other
charge required by Section 1.07 to be paid and said default shall have
continued for a period of twenty (20) days; or
(c) if it shall be illegal for Borrower or Grantor to pay any tax
referred to in Section 1.08 or if the payment of such tax by Borrower or
Grantor would result in the violation of applicable usury laws; or
(d) if there shall occur a default which is not cured within the
applicable grace period, if any, under any mortgage, deed of trust or
other security instrument covering all or part of the Mortgaged Property
regardless of whether any such mortgage, deed of trust or other security
instrument is prior or subordinate hereto; it being further agreed by
Grantor that an Event of Default hereunder shall constitute an Event of
Default under any such mortgage, deed of trust or other security
instrument held by or for the benefit of Beneficiary; or
(e) if there shall occur a material default by Grantor which is not
cured within the applicable grace period, if any, under any of the
Premises Documents; or if any of the Premises Documents is amended,
modified, supplemented or terminated in violation of Section 6.10 of the
Loan Agreement; or
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(f) if Grantor shall transfer, or agree to transfer (or suffer or
permit the transfer or agreement to transfer), in any manner, either
voluntarily or involuntarily, by operation of law or otherwise, all or any
portion of the Mortgaged Property, or any interest or rights therein
(including air or development rights) without, in any such case, the prior
written consent of the Required Banks. As used in this clause, "transfer"
shall include, without limitation, (i) any sale, assignment, lease or
conveyance except leases for occupancy subordinate hereto and to all
advances made and to be made hereunder or under the Loan Agreement and
(ii) any sale, conveyance, transfer or other disposition, directly or
indirectly, of any beneficial interest in Grantor. Notwithstanding the
foregoing, no consent shall be required for (x) transfers of interests in
Grantor so long as, following any such transfer, Grantor continues to be
wholly owned, directly or indirectly, by Borrower or Guarantor or (y)
transfers of interests in Borrower or Guarantor, provided that in the case
of transfers described in clause (x) above (but not those described in
clause (y) above), Grantor shall give prompt notice to Beneficiary of such
transfer; or
(g) if Grantor or Borrower shall encumber, or agree to encumber (or
suffer or permit the encumbrance or agreement to encumber), in any manner,
either voluntarily or involuntarily, by operation of law or otherwise, all
or any portion of the Mortgaged Property, or any interest or rights
therein, including air or development rights (other than the granting of
leases in accordance with the provisions hereof and of the Loan Agreement
and other than the lien of real estate taxes not yet due and payable or
inchoate (i.e., potential but unfiled) mechanics' liens) without, in any
such case, the prior written consent of the Required Banks. As used in
this clause, "encumber" shall include, without limitation, the placing or
permitting the placing of any mortgage, deed of trust, assignment of rents
or other security device. (The Required Banks may grant or deny their
consent under this clause and the immediately preceding clause in their
sole discretion and, if consent should be given, any such transfer or
encumbrance shall be subject hereto and to any other documents which
evidence or secure the Loan; and consent to one such transfer or
encumbrance shall not be deemed to be a waiver of the right to require
consent to future or successive transfers or encumbrances.);
then and in every such case:
1. During the continuance of any such Event of Default, Beneficiary,
without notice or demand, may declare the entire principal of the Note then
outstanding (if not then due and payable), and all accrued and unpaid interest
thereon and all other sums secured hereby, to be due and payable immediately
(and upon any such declaration the principal of the Note and said accrued and
unpaid interest and all other sums secured hereby shall become and be
immediately due and payable, anything in the Note, this Deed or any of the other
Loan Documents to the contrary notwithstanding) by commencing an action to
foreclose (complete or partial) this Deed as a mortgage, and/or by delivery to
Trustee of a written declaration of default and demand for sale and of written
notice of default and of election to cause to be sold the Mortgaged Property,
which notice Trustee shall cause to be duly filed for record in case of
foreclosure by exercise of the power of sale herein. Should Beneficiary elect to
foreclose by exercise of the power of sale herein, Beneficiary shall also
deposit with Trustee this Deed and the Note and such receipts and evidence of
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expenditures made and secured hereby as Trustee may require, and notice of sale
having been given as then required by law and after lapse of such time as may
then be required by law after recordation of such notice of default, Trustee,
without demand on Grantor, shall sell the Mortgaged Property at the time and
place of sale fixed by it in such notice of sale as Beneficiary may direct,
either as a whole or in separate parts or parcels, as Beneficiary may determine,
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Beneficiary shall have the right to direct the
order in which separate parts or parcels shall be sold and Grantor shall have no
right to direct the order in which separate parts or parcels are sold. Trustee
may postpone sale of all or any portion of the Mortgaged Property by public
announcement at such time and place of sale, and from time to time thereafter
may postpone such sale by public announcement at the time fixed by the preceding
postponement. Any person, including Grantor, Trustee or Beneficiary, may
purchase at such sale.
During the continuance of any such Event of Default, Beneficiary may
proceed as to the Personal Property in accordance with Beneficiary's rights and
remedies in respect to the Mortgaged Property or sell the Personal Property
separately and without regard to the remainder of the Mortgaged Property in
accordance with Beneficiary's rights and remedies provided by the California
Uniform Commercial Code, as well as such other rights and remedies available at
law or in equity.
Grantor waives all rights, legal and equitable, it may now or hereafter
have to require marshalling of assets or to require upon foreclosure sales of
assets in a particular order, including, without limitation, the rights provided
by California Civil Code Sections 2899 and 3433. Each successor and assign of
Grantor, including, without limitation, a holder of a lien subordinate to the
lien created hereby (without implying that Grantor has any right to grant an
interest in, or a subordinate lien on, the Mortgaged Property or any part
thereof), by acceptance of its interest or lien agrees that it shall be bound by
the above waiver as if it gave the waiver itself.
II. Trustee (upon written instructions from Beneficiary) or Beneficiary,
personally or by their agents or attorneys, or by a receiver appointed by a
court of competent jurisdiction, without notice to or demand upon Grantor,
without releasing Grantor or Borrower from any Obligation hereunder or under any
of the other Loan Documents and without waiving its right to declare a default
as herein provided or impairing any declaration of default or election to cause
the Mortgaged Property or any part thereof to be sold or any sale proceeding
predicated thereon, may:
(1) enter into and upon all or any part of the Mortgaged Property, and each
and every part thereof, and are each hereby given a right and irrevocable
license to do so, and may exclude Grantor, its agents and servants wholly
therefrom; and having and holding the same, may use, operate, lease,
manage and control the Mortgaged Property and conduct the business
thereof, either personally or by their superintendents, managers, agents,
servants, attorneys or receivers; and upon every such entry, at the
expense of the Mortgaged Property, from time to time, either by purchase,
repairs or construction, may protect, maintain and restore the Mortgaged
Property, whereof they shall become possessed as aforesaid;
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(2) likewise, from time to time, at the expense of the Mortgaged Property,
make all necessary, proper or reasonable repairs, renewals and
replacements and such useful alterations, additions, betterments and
improvements thereto and thereon as to Beneficiary may seem advisable; and
in every such case Trustee or Beneficiary shall have the right to manage
and operate the Mortgaged Property and to carry on the business thereof
and exercise all rights and powers of Grantor with respect thereto either
in the name of Grantor or otherwise as Beneficiary shall deem best;
(3) commence, appear in and/or defend any action or proceedings purporting to
affect the security hereof, and/or any additional or other security
therefor, the interests, rights, powers and/or duties of Trustee and/or
Beneficiary hereunder, whether brought by or against Grantor, Borrower,
Trustee, the Banks or Beneficiary;
(4) pay, purchase, contest or compromise any claim, debt, lien, charge or
encumbrance which in the judgment of either may affect or appear to affect
the security of this Deed, the interests of Beneficiary and/or the Banks
or the rights, powers and/or duties of Trustee and/or Beneficiary
hereunder, and any sums expended for such purposes shall become part of
the Obligations secured hereby;
(5) in accordance with California Code of Civil Procedure Section 726.5 waive
the security of this Deed and the other Loan Documents as to all or any
parcel of the Premises that is "environmentally impaired" or is an
"affected parcel" (as such terms are defined in such Section), and as to
any Personal Property attached thereto, and thereafter exercise against
Grantor, to the extent permitted by such Section 726.5, the rights and
remedies of an unsecured creditor, including reduction of Beneficiary's
and/or the Banks' claim against Grantor to judgment, and any other rights
and remedies permitted by law. Grantor shall pay all expenses, costs and
other amounts incurred by Beneficiary in connection with any proceeding
under California Code of Civil Procedure Section 726.5. Grantor and
Beneficiary acknowledge that pursuant to California Code of Civil
Procedure Section 726.5, Beneficiary's rights under this Section are
limited to instances in which Grantor or any affiliate, agent, partner or
joint venturer of Grantor either (i) knowingly or negligently caused or
contributed to, or knowingly or willfully permitted or acquiesced in, the
"release" (as defined in such Section 726.5) or threatened release of
toxic or hazardous waste or waste products or (ii) had actual knowledge or
notice of such release or threatened release prior to the execution and
delivery of this Deed and failed to disclose such release or threatened
release to Beneficiary in writing after Beneficiary's written request for
information concerning the environmental condition of the Premises, unless
Beneficiary otherwise obtained actual knowledge of such release or
threatened release prior to the execution and delivery of this Deed;
(6) in accordance with California Code of Civil Procedure Section 736 bring an
action for breach of contract against Grantor and/or Borrower for breach
of any "environmental provision" (as such term is defined in such Section)
made by Grantor herein, in the Indemnity or in any other Loan Document,
for the recovery of damages (including reasonable attorneys' fees and
costs) and/or for the enforcement of the environmental provision
(including, without limitation, to recover all costs and expenses incurred
by Beneficiary and/or the Banks in connection with any "remedial work")
without foreclosing this Deed judicially or nonjudicially or accepting a
deed or assignment in lieu of foreclosure. Grantor agrees to pay to
Beneficiary, promptly upon Beneficiary's demand, all expenses, costs and
other amounts incurred by Beneficiary and/or the Banks in connection with
any such action under California Code of Civil Procedure Section 736 with
interest thereon at the Default Rate from the date of expenditure; and/or
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(7) collect and receive the Rents and every part thereof, all of which shall
for all purposes constitute property of Grantor; and in furtherance of
such right may collect the rents payable under all leases of the Premises
directly from the lessees thereunder upon notice to each such lessee that
an Event of Default exists hereunder accompanied by a demand on such
lessee for the payment to Beneficiary of all rents due and to become due
under its lease, and Grantor FOR THE BENEFIT OF BENEFICIARY AND EACH SUCH
LESSEE hereby covenants and agrees that the lessee shall be under no duty
to question the accuracy of Beneficiary's statement of default and shall
unequivocally be authorized to pay said rents to Beneficiary without
regard to the truth of Beneficiary's statement of default and
notwithstanding notices from Grantor, Borrower or any other person or
entity disputing the existence of an Event of Default such that the
payment of rent by the lessee to Beneficiary pursuant to such a demand
shall constitute performance in full of the lessee's obligation under the
lease for the payment of rents by the lessee to Grantor; and after
deducting the expenses of conducting the business thereof and of all
maintenance, repairs, renewals, replacements, alterations, additions,
betterments and improvements and amounts necessary to pay for taxes,
assessments, insurance and prior or other proper charges upon the
Mortgaged Property or any part thereof, as well as the expenses of any
such receivership and the just and reasonable compensation for the
services of Trustee and Beneficiary and for all receivers, attorneys,
counsel, agents, clerks, servants and other employees by them engaged and
employed, Trustee or Beneficiary, or any such receiver, as the case may
be, shall apply the moneys arising as aforesaid, first, to the payment of
the principal of the Note and the interest thereon, when and as the same
shall become payable and second, to the payment of any other sums required
to be paid by Grantor or Borrower under this Deed or under any of the
other Loan Documents.
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The collection and/or receipt of the Rents by Beneficiary, its agent or
receiver, after declaration of default and election to cause all or part
of the Mortgaged Property to be sold under and pursuant to the terms of
this Deed shall not affect or impair such default or declaration of
default or election to cause all or part of the Mortgaged Property to be
sold or any sale proceedings predicated thereon, but such proceedings may
be conducted and sale effected notwithstanding the receipt and/or
collection of any such Rents. Any such Rents in the possession of
Beneficiary, its agent or receiver, at the time of sale and not
theretofore applied as provided above, shall be applied in the same manner
and for the same purposes as the proceeds of the sale. Beneficiary's
rights hereunder include its rights under California Code of Civil
Procedure Section 564. Grantor agrees to pay to Beneficiary, promptly upon
Beneficiary's demand, all expenses, costs and other amounts incurred by
Beneficiary and/or the Banks in connection with any appointment of a
receiver under California Code of Civil Procedure Section 564, with
interest thereon at the Default Rate from the date of expenditure.
III. Trustee or Beneficiary, as the case may be, with or without entry,
personally or by their agents or attorneys, insofar as applicable, may:
(1) sell the Mortgaged Property and all estate, right, title and
interest, claim and demand therein, at public auction at such time and
place, and upon such terms and conditions as are set forth above or as may
be required or permitted by applicable law. In the event of any sale of
all or part of the Mortgaged Property under the terms of this Deed,
Grantor shall pay (in addition to taxable costs) a reasonable fee to
Trustee which shall be in lieu of all other fees and commissions permitted
by statute or custom to be paid, reasonable attorneys' fees and all
expenses incurred in obtaining or continuing abstracts of title for the
purpose of any such sale; and/or
(2) take such steps to protect and enforce their rights and the
rights of the Banks whether by action, suit or proceeding in equity or at
law for the specific performance of any covenant, condition or agreement
in the Note, the Loan Agreement, this Deed or in any of the other Loan
Documents, or in aid of the execution of any power herein granted, or for
any foreclosure hereunder, or for the enforcement of any other appropriate
legal or equitable remedy or otherwise as Trustee or Beneficiary shall
elect.
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Section 2.02. Discontinuance of Proceedings. Beneficiary, from time to
time before the Trustee's sale pursuant to Section 2.01, may rescind any notice
of breach or default and of election to cause to be sold all or part of the
Mortgaged Property by executing and delivering to Trustee a written notice of
such rescission, which notice, when recorded, shall also constitute a
cancellation of any prior declaration of default and demand for sale. The
exercise by Beneficiary of such right of rescission shall not constitute a
waiver of any breach or default then existing or subsequently occurring or
impair the right of Beneficiary to execute and deliver to Trustee, as above
provided, other declarations of default and demand for sale, and notices of
breach of default, and of election to cause to be sold all or part of the
Mortgaged Property to satisfy the Obligations, nor otherwise affect any
provision, covenant or condition of the Note and/or of this Deed or other Loan
Documents or any of the rights, obligations or remedies of the parties
thereunder or hereunder.
Section 2.03. Other Matters Concerning Sales and Application of Proceeds.
(a) Upon the completion of any sale or sales made by Trustee or Beneficiary, as
the case may be, under or by virtue of this Article II, Trustee, or an officer
of any court empowered to do so, shall execute and deliver to the accepted
purchaser or purchasers a good and sufficient instrument or instruments
conveying, assigning and transferring all estate, right, title and interest in
and to the property and rights sold, but without any covenant or warranty,
express or implied. The recitals in any such instrument of any matters or facts
shall be conclusive proof of the truthfulness thereof. Trustee is hereby
appointed the true and lawful attorney irrevocable of Grantor, in its name and
stead, to make all necessary conveyances, assignments, transfers and deliveries
of the Mortgaged Property and rights so sold and for that purpose Trustee may
execute all necessary instruments of conveyance, assignment and transfer, and
may substitute one or more persons with like power, Grantor hereby ratifying and
confirming all that its said attorney or such substitute or substitutes shall
lawfully do by virtue hereof. Nevertheless, Grantor, if requested by Trustee or
Beneficiary, shall ratify and confirm any such sale or sales by executing and
delivering to Trustee or to such purchaser or purchasers all such instruments as
may be advisable, in the judgment of Trustee or Beneficiary, for the purpose,
and as may be designated in such request. Any such sale or sales made under or
by virtue of this Article II, whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale, shall operate to divest all the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Grantor
in and to the properties and rights so sold, and shall be a perpetual bar both
at law and in equity against Grantor and against any and all persons claiming or
who may claim the same, or any part thereof from, through or under Grantor.
(b) In the event of any sale or sales made under or by virtue of this
Article II (whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale), the entire principal of, and interest on, the Note, if not previously due
and payable, and all other sums required to be paid by Grantor or Borrower
pursuant to this Deed and the other Loan Documents may, at Beneficiary's option,
be accelerated, whereupon the same shall immediately, anything in the Note,
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this Deed or any of the other Loan Documents to the contrary notwithstanding,
become due and payable.
(c) The purchase money, proceeds or avails of any sale or sales made under
or by virtue of this Article II, together with any other sums which then may be
held by Trustee or Beneficiary under this Deed, whether under the provisions of
this Article II or otherwise, shall be applied as follows:
First: To the payment of the costs, fees and expenses of such sale,
including reasonable compensation to Trustee and Beneficiary, their agents
and counsel, and of any judicial proceedings wherein the same may be made,
and of all expenses, liabilities and advances made or incurred by Trustee
or Beneficiary under this Deed, and also including attorneys' fees,
expenses and costs of investigation, all as actually incurred and
including, without limitation, attorneys' fees, costs and expenses of
investigation incurred in appellate proceedings or in any action or
participation in, or in connection with, any case or proceeding under
Chapters 7, 11, or 13 of the United States Bankruptcy Code or any
successor thereto, together with interest at the Default Rate for Base
Rate Loans on all advances made by Trustee, and of all taxes, assessments
or other charges, except any taxes, assessments or other charges subject
to which the Mortgaged Property shall have been sold.
Second: To the payment of the whole amount then due, owing or unpaid
upon the Note for principal and interest, with interest on the unpaid
principal at the Default Rate from and after the happening of any Event of
Default described in Section 2.01 from the due date of any such payment of
principal until the same is paid.
Third: To the payment of any other sums required to be paid by
Grantor or Borrower pursuant to any provision of this Deed or of the other
Loan Documents, including all expenses, liabilities and advances made or
incurred by Beneficiary under any thereof or in connection with the
enforcement of any thereof, together with interest at the Default Rate on
all such advances from the date of expenditure.
Fourth: To the payment of the surplus, if any, to whomsoever may be
lawfully entitled to receive the same, including Grantor.
(d) Upon any sale or sales made under or by virtue of this Article II,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Beneficiary may bid for and acquire the Mortgaged Property or any part thereof
and in lieu of paying cash therefor may make settlement for the purchase price
by crediting upon the indebtedness secured by this Deed the net sales price
after deducting therefrom the expenses of the sale and the costs of the action
and any other sums which Trustee or Beneficiary are authorized to deduct under
this Deed.
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Section 2.04. Payment of Amounts Due. (a) In case an Event of Default
described in Section 2.01 shall have happened and be continuing, then, upon
demand of Beneficiary, Grantor will pay or cause to be paid, to Beneficiary the
whole amount which then shall have become due and payable on the Note, for
principal or interest or both, as the case may be, and after the happening of
said Event of Default will also pay or cause to be paid, to Beneficiary interest
at the Default Rate on the then unpaid principal of the Note, and the sums
required to be paid by Borrower or Grantor pursuant to any provision hereof or
of the Loan Agreement, and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to Trustee and Beneficiary, their agents and counsel and any
expenses incurred by Trustee or Beneficiary hereunder. In the event Borrower or
Grantor shall fail forthwith to pay all such amounts upon such demand,
Beneficiary shall be entitled and empowered to institute such action or
proceedings at law or in equity as may be advised by its counsel for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against Borrower and/or Grantor and collect, out of the property of
Grantor or Borrower wherever situated, as well as out of the Mortgaged Property,
in any manner provided by law, moneys adjudged or decreed to be payable.
(b) Beneficiary shall be entitled to recover judgment as aforesaid either
before, after or during the pendency of any proceedings for the enforcement of
the provisions hereof; and the right of Beneficiary to recover such judgment
shall not be affected by any entry or sale hereunder, or by the exercise of any
other right, power or remedy for the enforcement of the provisions hereof, or
the foreclosure of the lien hereof; and in the event of a sale of the Mortgaged
Property, and of the application of the proceeds of sale, as herein provided, to
the payment of the indebtedness hereby secured, Beneficiary shall be entitled to
enforce payment of, and to receive all amounts then remaining due and unpaid
upon, the Note, and to enforce payment of all other charges, payments and costs
due hereunder, under the Loan Agreement or otherwise in respect of the Loan, and
shall be entitled to recover judgment for any portion of the debt remaining
unpaid, with interest at the Default Rate. In case of proceedings against
Borrower or Grantor in insolvency or bankruptcy or any proceedings for its
reorganization or involving the liquidation of its assets, then Beneficiary
shall be entitled to prove the whole amount of principal, interest and other
sums due upon the Note to the full amount thereof, and all other payments,
charges and costs due hereunder, under the Loan Agreement or otherwise in
respect of the Loan, without deducting therefrom any proceeds obtained from the
sale of the whole or any part of the Mortgaged Property, provided, however, that
in no case shall Beneficiary receive a greater amount than such principal and
interest and such other payments, charges and costs from the aggregate amount of
the proceeds of the sale of the Mortgaged Property and the distribution from the
estates of Borrower and Grantor.
(c) No recovery of any judgment by Beneficiary and/or the Banks and no
levy of an execution under any judgment upon the Mortgaged Property or upon any
other property of Grantor or Borrower shall affect in any manner or to any
extent, the lien hereof upon the Mortgaged Property or any part thereof, or any
liens, rights, powers or
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remedies of Trustee or Beneficiary hereunder, but such liens, rights, powers and
remedies of Trustee or Beneficiary shall continue unimpaired as before.
(d) Any moneys thus collected by Beneficiary under this Section 2.04 shall
be applied by Beneficiary in accordance with the provisions of clause (c) of
Section 2.03.
Section 2.05. Actions; Receivers. After the happening of any Event of
Default and immediately upon the commencement of any action, suit or other legal
proceedings by Trustee or Beneficiary to obtain judgment for the principal of,
or interest on, the Note and other sums required to be paid by Borrower or
Grantor pursuant to any provision hereof or of the Loan Agreement, or of any
other nature in aid of the enforcement of the Note or hereof or of the Loan
Agreement, Grantor will (a) waive the issuance and service of process and enter
its voluntary appearance in such action, suit or proceeding and (b) if required
by Beneficiary, consent to the appointment of a receiver or receivers of all or
part of the Mortgaged Property and of any or all of the Rents in respect
thereof. During the existence of any Event of Default, or upon the commencement
of any proceedings to foreclose this Deed or to enforce the specific performance
hereof or in aid thereof or upon the commencement of any other judicial
proceeding to enforce any right of Trustee or Beneficiary, Trustee or
Beneficiary shall be entitled, as a matter of right, if they shall so elect,
without the giving of notice to any other party and without regard to the
adequacy or inadequacy of any security for the Obligations secured hereby,
forthwith either before or after declaring the unpaid principal of the Note to
be due and payable, to the appointment of such a receiver or receivers. Such
appointment may be made either before or after any foreclosure sale without
regard to the solvency or insolvency of Grantor at the time of application for
such receiver and without regard to the then value of the Premises or whether
the same shall be then occupied as a homestead or not and Beneficiary may be
appointed as such receiver. Such receiver shall have (i) power to collect the
Rents and, in case of a foreclosure sale and a deficiency, during the full
statutory period of redemption, whether there be redemption or not, as well as
during any further times when Grantor, except for the intervention of such
receiver, would be entitled to collect such Rents, (ii) power to extend or
modify any then existing leases and to make new leases, which extensions,
modifications and new lease may provide for terms to expire, or for options to
lessees to extend or renew terms to expire, beyond the Maturity Date of the
indebtedness secured hereby and beyond the date of the issuance of a deed or
deeds to a purchaser or purchasers at a foreclosure sale, it being understood
and agreed that any such leases, and the options or other such provisions to be
contained therein, shall be binding upon Grantor and all persons whose interest
in the Mortgaged Property are subject to the lien hereof and upon the purchaser
or purchasers at any foreclosure sale, notwithstanding any redemption from sale,
discharge of the indebtedness secured hereby, satisfaction of any foreclosure
decree, or issuance of any certificate of sale or deed to any purchaser and
(iii) all other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Mortgaged
Property during the whole of said period. The court from time to time may
authorize the receiver to apply the net income in his hands in payment in whole
or in part of (x) the indebtedness secured hereby, or by any decree foreclosing
this Deed, or any tax, special assessment or other lien which may be or become
superior to the
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lien hereof or of such decree, provided such application is made prior to
foreclosure sale and (y) the deficiency in case of a foreclosure sale and
deficiency.
Section 2.06. Beneficiary's Right to Possession. Notwithstanding the
appointment of any receiver, liquidator or trustee of Grantor, or of any of its
property, or of the Mortgaged Property or any part thereof, Trustee and
Beneficiary shall be entitled to retain possession and control of all property
now or hereafter held hereunder.
Section 2.07. Remedies Cumulative. No remedy herein conferred upon or
reserved to Trustee or Beneficiary is intended to be exclusive of any other
remedy or remedies, and each and every such remedy shall be cumulative, and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law, in equity or by statute. No delay or omission of Trustee or
Beneficiary to exercise any right or power accruing upon any Event of Default
shall impair any such right or power, or shall be construed to be a waiver of
any such Event of Default or any acquiescence therein; and every power and
remedy given hereby to Trustee or Beneficiary may be exercised from time to time
as often as may be deemed by them expedient. Nothing herein or in the Note or
the Loan Agreement shall affect the obligation of Borrower to pay the principal
of, and interest and other sums on, the Note and the Loan Agreement in the
manner and at the time and place therein respectively expressed.
Section 2.08. Moratorium Laws; Right of Redemption. Grantor will not at
any time insist upon, or plead, or in any manner whatever claim or take any
benefit or advantage of any stay or extension or moratorium law, any exemption
from execution or sale of the Mortgaged Property or any part thereof, wherever
enacted, now or at any time hereafter in force, which may affect the covenants
and terms of performance hereof, nor claim, take or insist upon any benefit or
advantage of any law now or hereafter in force providing for the valuation or
appraisal of the Mortgaged Property, or any part thereof, prior to any sale or
sales thereof which may be made pursuant to any provision herein, or pursuant to
the decree, judgment or order of any court of competent jurisdiction; nor, after
any such sale or sales, claim or exercise any right under any statute heretofore
or hereafter enacted to redeem the property so sold or any part thereof and
Grantor hereby expressly waives all benefit or advantage of any such law or
laws, and covenants not to hinder, delay or impede the execution of any power
herein granted or delegated to Trustee or Beneficiary, but to suffer and permit
the execution of every power as though no such law or laws had been made or
enacted. Grantor, for itself and all who may claim under it, waives, to the
extent that it lawfully may, all right to have the Mortgaged Property marshaled
upon any foreclosure hereof. Grantor hereby waives any and all rights of
redemption from sale under any order or decree of foreclosure of this Deed on
behalf of Grantor and all persons beneficially interested therein, and each and
every person except decree or judgment creditors of Grantor in its
representative capacity acquiring any interest in or title to the Premises
subsequent to the date of this Deed.
Section 2.09. Grantor's Use and Occupancy after Default. During the
continuance of any Event of Default and pending the exercise by Trustee or
Beneficiary of their right to exclude Grantor from all or any part of the
Premises, Grantor agrees to pay the fair and reasonable rental value for the use
and occupancy of the Premises or any
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portion thereof which are in its, Borrower's or any of their respective
affiliates' possession for such period and, upon default of any such payment,
will vacate and surrender possession of the Premises to Trustee or Beneficiary,
as the case may be, or to a receiver, if any, and in default thereof may be
evicted by any summary action or proceeding for the recovery of possession of
premises for non-payment of rent, however designated.
Section 2.10. Regarding Defenses. No action for the enforcement of this
Deed or any provision hereof shall be subject to any defense which would not be
good and available to the party interposing the same in an action at law upon
the Note.
Section 2.11. Expenses as Indebtedness. In any suit to foreclose the lien
hereof (including any partial foreclosure) or to enforce any other remedy of
Beneficiary or the Banks under this Deed or the Note or other Loan Documents or
otherwise in respect of the Loan, there shall be allowed and included as
additional indebtedness in the decree for sale or other judgment or decree all
expenditures and expenses which may be paid or incurred by or on behalf of
Beneficiary or the Banks for attorneys' fees, appraiser's fees, outlays for
documentary and expert evidence, stenographer's charges, publication costs, and
costs (which may be estimated as to items to be expended after entry of the
decree) of procuring all such abstracts of title, title searches and
examinations, title insurance policies, Torrens certificates, and similar data
and assurances with respect to title and value as Beneficiary or the Banks may
deem reasonably necessary either to prosecute such suit or to evidence to
bidders at any sale which may be had pursuant to such decree the true condition
of the title to or the value of the Premises.
Section 2.12. Beneficiary's Rights Concerning Application of Amounts
Collected. Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, upon the occurrence of an Event of Default,
Beneficiary may apply, to the extent permitted by law, any amount collected
hereunder to principal, interest or any other sum due under the Note or the Loan
Agreement or otherwise in respect of the Loan in such order and amounts, and to
such Obligations, as the Required Banks shall elect in their sole and absolute
discretion.
Article III
CONCERNING TRUSTEE
Section 3.01. Trustee's Performance. Trustee, by its acceptance hereof,
covenants faithfully to perform and fulfill the trusts herein created. Trustee
shall not incur any personal liability hereunder, except for its own willful
neglect, default or misconduct, and Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by it hereunder, believed by it in good faith to be
genuine. Without limiting the generality of the foregoing, Trustee, upon
presentation to it of an affidavit signed by or on behalf of Beneficiary,
setting forth any fact or facts showing a default under any of the terms or
conditions of this Deed or other Loan Documents, is authorized to accept as true
and conclusive all facts and statements in such affidavit and to act hereunder
in complete reliance thereon. Trustee shall be entitled to reimbursement for all
expenses incurred by
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it in the performance of its duties, and shall be entitled to reasonable
compensation for such of its services as shall be rendered. At any time, or from
time to time, without notice, upon written request of Beneficiary and without
affecting the personal liability of any person for payment and performance of
the Obligations secured hereby or the effect of this Deed upon the remainder of
the Mortgaged Property, Trustee may (i) reconvey any part of the Premises, (ii)
consent in writing to the making of any map or plat thereof, (iii) join in
granting any easement thereon or (iv) join in any extension agreement or any
agreement subordinating the lien or charge hereof.
Section 3.02. Resignation by Trustee. Trustee may resign at any time upon
giving thirty (30) days' notice to Grantor and Beneficiary.
Section 3.03. Removal of Trustee; Successors. Beneficiary may remove
Trustee at any time or from time to time and select a successor trustee. In the
event of the death, removal, resignation or refusal or inability to act of
Trustee, or in its sole discretion for any reason whatsoever, Beneficiary may,
without notice, and without specifying any reason therefor, without any
formality other than designation by Beneficiary in writing and without applying
to any court, select and appoint a successor Trustee, and all powers, rights,
duties and authority of Trustee, as aforesaid, shall thereupon become vested in
such successor. In such connection, Beneficiary may, on its and Grantor's
behalf, execute, acknowledge and record an instrument or agreement of such
substitution, and Grantor hereby irrevocably appoints Beneficiary as its
attorney-in-fact, with full power of substitution, to do so. Such substitute
trustee shall not be required to give bond for the faithful performance of his
duties unless required by Beneficiary.
Section 3.04. Recordation. Trustee accepts this Trust when this Deed, duly
executed and acknowledged, is made a public record as provided by law.
Article IV
MISCELLANEOUS
Section 4.01. Assignment of Rents. This Deed constitutes a present,
absolute, unconditional and irrevocable assignment of all of the Rents now or
hereafter accruing, and Grantor, without limiting the generality of the Granting
Clause hereof, specifically does hereby absolutely, unconditionally and
irrevocably assign, transfer and set over all of the Rents now or hereafter
accruing to Beneficiary, and hereby gives to and confers upon Beneficiary the
right, power and authority to collect such Rents. Grantor irrevocably appoints
Beneficiary its true and lawful attorney at the option of Beneficiary at any
time to demand, receive and enforce payment, to give receipts, releases and
satisfactions and to sue, either in the name of Grantor or in the name of
Beneficiary, for all such Rents and apply the same to the indebtedness secured
hereby. The aforesaid assignment shall be effective immediately upon the
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execution of this Deed and is not conditioned upon the occurrence of any Event
of Default hereunder or any other contingency or event, provided, however, that
Beneficiary hereby grants to Grantor the right and license to demand, collect
and receive the Rents as they become due, and not in advance, so long as no
Event of Default exists hereunder. Immediately upon the occurrence of any such
Event of Default and during the continuance thereof, Beneficiary shall have the
right and power (but not the obligation) to terminate, without regard to its
security hereunder and without notice to or demand upon Grantor, the foregoing
right and license. Nothing contained in this Section 4.01 or elsewhere in this
Deed, nor the exercise by Beneficiary of any of its rights or remedies under
this Section or elsewhere in this Deed, shall be construed to make Beneficiary a
mortgagee-in-possession, or otherwise responsible or liable in any manner with
respect to the Mortgaged Property or the use, occupancy, enjoyment or operation
of all or any portion thereof, unless and until Beneficiary actually takes
possession of the Mortgaged Property, nor to obligate Beneficiary to take any
action or incur any expense or discharge any duty or liability under or in
respect of any leases or other agreements relating to the Mortgaged Property or
any part thereof, nor shall appointment of a receiver for the Mortgaged Property
or any part thereof by any court at the request of Beneficiary or by agreement
with Grantor or the entering into possession of the Mortgaged Property or any
part thereof by such receiver be deemed to make Beneficiary a
mortgagee-in-possession or otherwise responsible or liable in any manner with
respect to the Mortgaged Property or the use, occupancy, enjoyment or operation
of all or any portion thereof.
Section 4.02. Security Agreement. This Deed creates a lien on the
Mortgaged Property and, to the extent any of the Mortgaged Property is not real
property under applicable law, this Deed constitutes a security agreement, with
Grantor as the "debtor" and Beneficiary as the "secured party", under the
Uniform Commercial Code as adopted and applicable in the State of California or
such other State(s) where any of the Personal Property may be located
(hereinafter, the "Code") with respect to the Personal Property and is filed as
a fixture filing. In addition to the rights and remedies granted to Beneficiary
by other applicable law or by this Deed, Beneficiary shall have all of the
rights and remedies with respect to the Personal Property as are granted to a
secured party under the Code. Grantor will execute and deliver to Beneficiary,
in form and substance satisfactory to Beneficiary, all additional security
agreements, financing statements and/or other instruments that may from time to
time be reasonably required by Beneficiary to establish and maintain the
validity and priority of the security interest of Beneficiary, or any
modification thereof, and will pay all costs and expenses of any searches
reasonably required by Beneficiary. Grantor hereby irrevocably constitutes and
appoints Beneficiary the attorney-in-fact of Grantor, to execute, deliver and
file with the appropriate filing officer or office such security agreements,
financing statements and/or other instruments as Beneficiary may request or
require in order to impose and perfect the lien and security interest hereof
more specifically on the Personal Property or any fixtures. Upon Beneficiary's
request, Grantor shall promptly and at its expense assemble the Personal
Property and make the same available to Beneficiary at a convenient place
acceptable to Beneficiary. Grantor shall pay to Beneficiary on demand, with
interest at the Default Rate from the date of expenditure, any and all
reasonable expenses, including reasonable attorneys' fees, incurred by
Beneficiary in protecting its interest in the Personal Property or any fixtures
and in enforcing its rights with respect thereto. Beneficiary may exercise any
or all of the remedies of a secured party available to it under the Code with
respect to such property, and it is expressly agreed that if upon an Event of
Default Beneficiary should proceed to sell or otherwise dispose of such property
in accordance with the provisions of the Code, then ten (10) days' notice by
Beneficiary
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to Grantor shall be deemed to be reasonable notice under any provision of the
Code requiring such notice; provided, however, that Beneficiary may at its
option dispose of such property in accordance with Beneficiary's rights and
remedies with respect to the real property pursuant to the provisions of this
Deed, in lieu of proceeding under the Code. The proceeds of any such sale or
disposition, or any part thereof, may be applied by Beneficiary to the payment
of the indebtedness secured hereby in such order and proportions as Beneficiary
in its discretion shall deem appropriate.
Grantor shall give advance notice in writing to Beneficiary of any
proposed change in Grantor's name, identity or corporate or partnership
structure and will execute and deliver to Beneficiary, prior to or concurrently
with the occurrence of any such change, all additional financing statements that
Beneficiary may require to establish and maintain the validity and priority of
Beneficiary's security interest with respect to any Mortgaged Property described
or referred to herein.
Some of the items of Mortgaged Property described herein are goods that
are or are to become fixtures related to the real estate described herein, and
it is intended that, as to those goods, this Deed shall be effective as a
financing statement filed as a fixture filing from the date of its filing for
record in the real estate records of the county in which the Premises is
situated. Information concerning the security interest created by this
instrument may be obtained from Beneficiary, as secured party, at the address of
Beneficiary stated above. The mailing address of Grantor, as debtor, is as
stated above.
The grant of a security interest to Beneficiary in the granting clauses of
this Deed shall not be construed to derogate from or impair the lien or
provisions of or the rights of Beneficiary under this Deed with respect to any
property described therein which is real property or which the parties have
agreed to treat as real property. The hereby stated intention of Grantor and
Beneficiary is that everything used in connection with the production of income
from such real property or adapted for use thereon is, and at all times and for
all purposes and in all proceedings, both legal and equitable, shall be regarded
as real property, irrespective of whether or not the same is physically attached
to the land or the improvements thereon.
If Grantor enters into a separate security agreement with Beneficiary
relating to any of the Personal Property or fixtures, the terms of such security
agreement shall govern the rights and remedies of Beneficiary in the event of
default thereunder. Any breach of or default under any such security agreement
shall constitute an Event of Default under this Deed.
It is understood and agreed that, in order to protect Beneficiary from the
effect of California Uniform Commercial Code Section 9313, in the event that (i)
Grantor intends to purchase any goods which may become fixtures attached to the
Premises or any part thereof and (ii) such goods will be subject to a purchase
money security interest held by a seller or any other party:
(a) Grantor shall, before executing any security agreement or other
document evidencing any purchase money security interest as aforesaid, obtain
the prior written
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approval of Beneficiary. The request for such approval shall be in writing and
shall contain the following information:
(1) a description of the fixtures to be replaced, added to,
installed or substituted;
(2) the address at which the fixtures will be replaced,
added to, installed or substituted; and
(3) the name and address of the proposed holder and proposed
amount of the security interest.
Grantor's execution of any such security agreement or other document evidencing
such security interests without Beneficiary's prior written approval shall be a
material breach of Grantor's covenants and agreements under this Deed, and
shall, at the option of Beneficiary, entitle Beneficiary to all rights and
remedies provided for herein upon default. No consent by Beneficiary pursuant to
this subparagraph shall be deemed to constitute an agreement to subordinate any
right of Beneficiary in fixtures or other property covered by this Deed.
(b) If at any time Grantor fails to make any payment on an obligation
secured by a purchase money security interest in the Personal Property or any
fixtures, Beneficiary, at its option, may at any time pay the amount secured by
such security interest and the amount so paid shall be (i) secured by this Deed
and shall be a lien on the Mortgaged Property having the same priorities as the
liens and security interests created by this Deed and (ii) payable on demand
with interest at the Default Rate from the time of such payment. If Grantor
shall fail to make such payment to Beneficiary within thirty (30) days after
demand, the entire principal sum secured hereby with all unpaid interest accrued
thereon and any other amounts due under any of the Loan Documents, shall, at the
option of Beneficiary, become due and payable immediately.
(c) Grantor agrees that Beneficiary may acquire by assignment from the
holder of such security interest any and all contract rights, accounts
receivable, negotiable or non-negotiable instruments, or other evidence of
Grantor's indebtedness for such Personal Property or fixtures, and, upon
acquiring such interest by assignment, shall have the right to enforce the
security interest as assignee thereof, in accordance with the terms and
provisions of the Code then if effect, and in accordance with any other
provisions of law.
(d) Whether or not Beneficiary has paid the indebtedness secured by or
taken an assignment of such security interest, Grantor covenants to pay all sums
and perform all obligations secured thereby.
Section 4.03. Subrogation. As additional security hereunder, Beneficiary
shall be subrogated to the lien, although released of record, of any and all
encumbrances paid out of the proceeds of the indebtedness secured by this Deed.
Section 4.04. Application of Certain Payments. In the event that all or
any part of the Mortgaged Property is encumbered by one or more deeds of trust
held by or for the
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benefit of Beneficiary, Grantor hereby irrevocably authorizes and directs
Beneficiary to apply any payment received by Beneficiary in respect of any
obligation secured hereby or by any other such deed of trust to the payment of
such of said obligations as Beneficiary shall elect in its sole and absolute
discretion, and Beneficiary shall have the right to apply any such payment in
reduction of principal and/or interest and in such order and amounts as
Beneficiary shall elect in its sole and absolute discretion without regard to
the priority of the deed of trust securing the obligation so repaid or to
contrary directions from Grantor or any other party.
Section 4.05. Severability. In the event any one or more of the provisions
contained herein or in the Note or the Loan Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof, but
this Deed shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein or therein, provided, however, that if
such provision held to be invalid, illegal or unenforceable relates to the
payment of any principal or interest under the Note or any other material
monetary sum under any of the Loan Documents, then Beneficiary may, at its
option, declare the indebtedness and any other sums secured hereby to be
immediately due and payable.
Section 4.06. Modifications and Waivers. No provision hereof may be
changed, waived, discharged or terminated orally or by any other means except as
provided in Section 12.02 of the Loan Agreement. Any agreement hereafter made by
Grantor and Beneficiary relating hereto shall be superior to the rights of the
holder of any intervening or subordinate lien or encumbrance.
Section 4.07. Notices. All notices, demands, consents, approvals and
statements required or permitted hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes when presented
personally, three (3) days after mailing by registered or certified mail,
postage prepaid, or one (1) day after delivery to a nationally recognized
overnight courier service providing evidence of the date of delivery, if to
Grantor or Borrower at Grantor's address stated above to the attention of Mr.
Jeff White, and if to Beneficiary to the attention of its General Counsel at its
address stated above, or at such other address of which a party shall have
notified the party giving such notice in accordance with the provisions of this
Section.
Section 4.08. Successors and Assigns. All of the grants, covenants, terms,
provisions and conditions herein shall run with the land and shall apply to,
bind and inure to the benefit of, the successors and assigns of Grantor, the
successors in trust of Trustee and the endorsees, transferees, successors and
assigns of Beneficiary.
Section 4.09. Limitations on Interest. Regardless of any provision
contained herein or in any of the other Loan Documents, the total liability for
payments in the nature of interest shall not exceed the applicable limits now
imposed by any applicable state or federal interest rate laws to which
Beneficiary and/or the Banks may be subject. If any payments in the nature of
interest, fees and other charges made hereunder or under the Note or other Loan
Documents are held to be in excess of the applicable limits
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imposed by any such applicable state or federal interest rate laws, it is agreed
that any such amount held to be in excess shall be considered payment of
principal under the Note and the indebtedness evidenced thereby shall be reduced
by such amount in the inverse order of maturity so that the total liability for
payments in the nature of interest, fees and other charges shall not exceed the
applicable limits imposed by any such applicable state or federal interest rate
laws in compliance with the desires of Grantor and Beneficiary.
Section 4.10. Late Charges. As provided in Section 2.16 of the Loan
Agreement, if Borrower defaults in payment of any principal (other than
principal due on the Maturity Date, whether as stated or by acceleration or
otherwise) or interest when due and payable under the Loan Documents, and such
default continues for a period of fifteen (15) days, a late charge of two cents
($0.02) for each dollar so overdue may be charged by Beneficiary for the purpose
of defraying the expense incident to handling such delinquent payment. Such late
charge represents the reasonable estimate of Beneficiary, Borrower and Grantor
of a fair average compensation for the loss that may be sustained by the Banks
due to the failure to make timely payments. Such late charge shall be paid
without prejudice to the right of the Banks to collect any other amounts
provided to be paid or to declare a default under the Note or this Deed.
Beneficiary agrees to comply with Section 2954.5 of the California Civil Code
with respect to the giving of notice prior to imposing a late charge, as such
Section or any successor Section may now or hereafter require.
Section 4.11. Counterparts. This Deed may be executed in any number of
counterparts ------------------------------ and each of such counterparts shall
for all purposes be deemed to be an original; and all such counterparts shall
together constitute but one and the same deed.
Section 4.12. Substitute Deeds. Grantor and Beneficiary shall, upon their
mutual agreement to do so, execute such documents as may be necessary in order
to effectuate the modification hereof, including the execution of substitute
deeds of trust, so as to create two (2) or more liens on or security titles in
respect of the Mortgaged Property in such amounts as may be mutually agreed upon
but in no event to exceed, in the aggregate, the Note Amount; in such event,
Grantor covenants and agrees to pay the reasonable fees and expenses of
Beneficiary and its counsel in connection with any such modification.
Section 4.13. Banks' Sale of Interests in Loan. Grantor recognizes that,
subject to Section 12.05 of the Loan Agreement, any Bank may sell and transfer
interests in the Loan to one or more participants or assignees and that all
documentation, financial statements, appraisals and other data, or copies
thereof, relevant to Grantor, Borrower or the Loan, may be exhibited to and
retained by any such participant or assignee or prospective participant or
assignee, subject, however, to the provisions of Sections 12.05 and 12.18 of the
Loan Agreement.
Section 4.14. No Credit For Taxes. Grantor shall not claim or demand or be
entitled to receive any credit or credits on the principal indebtedness to be
secured by this Deed, or on the interest payable thereon, for any part of the
taxes assessed against the
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Premises and no deduction shall be made or claimed from the taxable value of the
Premises by reason of this Deed.
Section 4.15. No Consent to Contracts. Neither Beneficiary nor the Banks
consents to any contract for labor or materials, and all contracts for labor or
materials that will be let by Grantor shall at all times be subordinate to this
Deed.
Section 4.16. Irrevocable Trust. The trust created hereby is irrevocable
by Grantor unless and until the Mortgaged Property is reconveyed to Grantor as
provided in Section 4.17.
Section 4.17. Reconveyance. Upon written request of Beneficiary stating
that all Obligations secured hereby have been paid or satisfied or otherwise
provided for, as the case may be, and upon payment of its fees, Trustee shall
reconvey, without warranty, the Mortgaged Property then held hereunder. The
recitals in such reconveyance of any matters of fact shall be conclusive proof
of the truthfulness thereof. The grantee in such reconveyance may be described
as "the person or persons legally entitled thereto."
Section 4.18. Business Loan. Grantor represents and agrees that the
Obligations secured hereby (a) constitute a business loan and (b) are exempted
transactions under the federal Truth-in-Lending Act (15 U.S.C. Section 1601, et
seq.). None of the forgoing is intended, however, to vitiate or in any way
detract from the intention of Grantor and Beneficiary to have the laws of the
State of New York apply in all respects to the construction and enforcement of
the Note and the Loan Agreement, as said intention is expressly set forth
therein.
Section 4.19. CERTAIN WAIVERS. GRANTOR HEREBY EXPRESSLY AND
UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY FORECLOSURE OR SIMILAR ACTION OR
PROCEDURE BROUGHT BY BENEFICIARY OR THE BANKS ASSERTING AN EVENT OF DEFAULT
HEREUNDER, ANY AND EVERY RIGHT IT MAY HAVE TO (I) A TRIAL BY JURY, (II)
INTERPOSE ANY COUNTERCLAIM THEREIN, OTHER THAN A COMPULSORY COUNTERCLAIM, AND
(III) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. NOTHING IN THIS SECTION SHALL PREVENT OR PROHIBIT GRANTOR FROM
INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST BENEFICIARY OR ANY BANK
WITH RESPECT TO ANY ASSERTED CLAIM.
Section 4.20. ADDITIONAL ACKNOWLEDGEMENTS AND WAIVERS. BY EXECUTION OF
THIS DEED AND BY INITIALING THIS SECTION, GRANTOR EXPRESSLY AND UNCONDITIONALLY
(A) ACKNOWLEDGES THE RIGHT OF BENEFICIARY TO ACCELERATE THE INDEBTEDNESS
EVIDENCED BY THE NOTE AND ANY OTHER INDEBTEDNESS IN ACCORDANCE WITH THE LOAN
DOCUMENTS AND THE POWER GIVEN HEREIN TO BENEFICIARY TO SELL THE MORTGAGED
PROPERTY BY NONJUDICIAL FORECLOSURE UPON DEFAULT BY GRANTOR WITHOUT ANY JUDICIAL
HEARING AND WITHOUT ANY NOTICE (INCLUDING, WITHOUT LIMITATION, ANY NOTICE
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OF BENEFICIARY'S INTENTION TO ACCELERATE OR NOTICE OF ACCELERATION) OTHER THAN
SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE
PROVISIONS OF THIS DEED OR THE OTHER LOAN DOCUMENTS; (B) WAIVES ANY NOTICE OF
BENEFICIARY'S INTENTION TO ACCELERATE; (C) WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO PLEAD ANY AND ALL STATUTES OF LIMITATION AS A
DEFENSE TO ANY DEMAND SECURED BY OR MADE PURSUANT TO THIS DEED; (D) ACKNOWLEDGES
THAT GRANTOR READ THIS DEED AND ANY AND ALL QUESTIONS OF GRANTOR REGARDING THE
LEGAL EFFECT OF THIS DEED AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO
GRANTOR, AND GRANTOR HAS CONSULTED WITH COUNSEL OF GRANTOR'S CHOICE PRIOR TO
EXECUTING THIS DEED AND INITIALING THIS SECTION; AND (E) ACKNOWLEDGES THAT ALL
WAIVERS OF THE AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE KNOWINGLY,
INTENTIONALLY AND WILLINGLY BY GRANTOR AS A PART OF A BARGAINED-FOR LOAN
TRANSACTION AND THAT THIS DEED IS VALID AND ENFORCEABLE BY BENEFICIARY AGAINST
GRANTOR IN ACCORDANCE WITH ALL THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
INITIALS OF GRANTOR WITH RESPECT TO SECTION 4.20: ______________________
Section 4.21. Additional Waivers. Grantor waives all rights and defenses
arising out of an election of remedies by Beneficiary or the Banks, even though
that election of remedies, such as a nonjudicial foreclosure with respect to an
obligation (x) which is guaranteed or (y) with respect to which a third party
has pledged its property as security for the payment thereof, has destroyed such
guarantor's or third party's rights of subrogation and reimbursement against the
principal, if any, by the operation of Section 580d of the Code of Civil
Procedure or otherwise.
Until the Obligations have been paid and performed in full, Grantor waives
the right of subrogation and waives the right to enforce any remedy which
Beneficiary now has or may hereafter have against Grantor and any benefit of and
any right to participate in, any security now or hereafter held by Beneficiary.
Grantor agrees that (i) its Obligations and liabilities hereunder are
independent of and in addition to the Obligations of Grantor and Borrower
pursuant to the other Loan Documents or any other collateral security given to
secure the same, (ii) a separate action may be brought to enforce the provisions
hereof or thereof whether Grantor is a party in any such action or not, (iii)
Beneficiary may at any time, or from time to time, in its sole discretion (a)
extend or change the time of payment and/or performance and/or the manner, place
or terms of payment and/or performance of all or any of the Obligations secured
by such Loan Documents; (b) exchange, release and/or surrender all or any of the
collateral security, or any part thereof, by whomsoever deposited, which is now
or may hereafter be held by Beneficiary in connection with all or any of such
Obligations; (c) sell and/or purchase all or any such collateral at public or
private sale, or at any broker's
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board, in the manner permitted by law and after giving any notice which may be
required, and after deducting all costs and expenses of every kind for
collection, sale or delivery, the net proceeds of any such sale may be applied
by Beneficiary upon all or any of such Obligations; and (d) settle or compromise
with Grantor or Borrower, and/or any other person liable thereon, any and all of
such Obligations, and/or subordinate the payment of same, or any part thereof,
to the payment of any other debts or claims, which may at any time be due or
owing to Beneficiary and/or any other person or entity and (iv) Beneficiary
shall be under no obligation to marshal any assets in favor of Grantor, or in
payment of any or all of such Obligations.
Grantor hereby waives (i) except for notices expressly required by the
Loan Documents, presentment, demand, protest, notice of acceptance, notice of
dishonor, notice of nonperformance and any other notice with respect to any of
the Obligations of Grantor or Borrower under the Loan Documents, and promptness
in commencing suit against any party thereto or liable thereon, and/or in giving
any notice to or making any claim or demand hereunder upon Grantor or Borrower;
(ii) any right to require Beneficiary and/or the Banks to (a) proceed against
Grantor and/or Borrower, (b) proceed against or exhaust any security held by
Beneficiary or the Banks for the Obligations secured hereby or (c) pursue any
remedy in Beneficiary's or the Banks' power whatsoever; (iii) any defense
arising by reason of any disability or other defense of Grantor or Borrower by
reason of the cessation from any cause whatsoever of the liability of Grantor or
Borrower other than full payment of such Obligations; (iv) to the fullest extent
permitted by applicable law, all rights and benefits purporting to reduce a
guarantor's obligations in proportion to the principal obligation (including,
without limitation, those set forth in Section 2809 of the California Civil
Code); (v) to the fullest extent permitted by law, all rights and benefits under
(a) Section 580a of the California Code of Civil Procedure, purporting to limit
the amount of any deficiency judgment which might be recoverable following the
occurrence of a trustee's sale under a deed of trust and any right to a fair
value hearing or any fair value limitation or other limitation on liability or a
deficiency based upon the fair value of any collateral after a nonjudicial
foreclosure of this Deed, (b) Section 580b of the California Code of Civil
Procedure stating that no deficiency may be recovered on a real property
purchase money obligation, (c) Section 580d of the California Code of Civil
Procedure stating that no deficiency may be recovered on a note secured by a
deed of trust on real property in case such real property is sold under the
power of sale contained in such deed of trust, and (d) Section 726 of the
California Code of Civil Procedure stating that there may be but one form of
action on an indebtedness secured by real property, if such sections, or any of
them, have any application hereto or any application to Grantor; (vi) to the
fullest extent permitted by law, (a) any defense arising as a result of
Beneficiary's or the Banks' election, in any proceeding instituted under the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (b) any defense based on any borrowing or grant of a security interest
under Section 364 of the Bankruptcy Code and (c) without limiting the generality
of the foregoing or any other provision hereof, all rights and benefits which
might otherwise be available to the undersigned under California Civil Code
Sections 2810, 2819, 2822, 2839, 2845, 2849, 2899, and 3433 and (vii) the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof,
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including, without limitation, any rights arising under applicable law
(including, without limitation, Section 359.5 of the California Code of Civil
Procedure).
Grantor, in any actual or potential capacity as a guarantor,
quasi-guarantor or other surety as described in Section 2856 of the California
Civil Code with respect to the Loan or the Mortgaged Property, hereby makes the
following waivers: Grantor hereby waives all rights and defenses that it may
have because the Obligations are secured by the Mortgaged Property. This means,
among other things, (i) Beneficiary and/or the Banks may collect from or realize
on any security pledged by Grantor without first foreclosing on any or all real
or personal property collateral pledged by Borrower and (ii) if Beneficiary
and/or the Banks foreclose on any real property collateral pledged by Grantor
and/or Borrower: (a) the amount of the debt may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price and/or (b) Beneficiary and/or the Banks may
collect from or realize on any security pledged by Grantor and/or Borrower even
if Beneficiary and/or the Banks, by foreclosing on the real property collateral,
have destroyed any right Beneficiary and/or the Banks may have to collect from
Grantor and/or Borrower. This is an unconditional and irrevocable waiver of any
rights and defenses that Grantor may have because the Obligations are secured by
real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure.
Grantor warrants that (i) this Deed was executed at the request of
Borrower, (ii) neither Beneficiary nor any Bank has made any representation to
Grantor as to the creditworthiness of Borrower and (iii) it has established
adequate means of obtaining from Borrower on a continuing basis financial and
other information pertaining to Borrower's financial condition. Grantor agrees
to keep adequately informed from such means as it deems appropriate any facts,
events or circumstances which might in any way affect its risks and liabilities
hereunder and further agrees that Beneficiary and the Banks shall have no
further obligation to disclose to it information or materials acquired in the
course of their respective dealings with Grantor and/or Borrower.
Section 4.22. Single Purpose Entity. (a) Grantor represents and warrants
that it has not done any of the following, and covenants and agrees that it
shall not do any of the following:
(i) engage in any business or activity other than the
ownership, operation and maintenance of the Mortgaged Property and
activities incidental thereto;
(ii) acquire or own any material assets other than (x) the
Mortgaged Property and (y) such incidental personal property as may
be necessary for the operation of the Premises;
(iii) merge into or consolidate with any entity or dissolve,
terminate or liquidate in whole or in part; transfer or otherwise
dispose of all or substantially all of its assets; or otherwise
change its legal structure;
39
<PAGE>
(iv) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable)
under the laws of its jurisdiction of organization or formation;
(v) own any subsidiary or make any investment in any entity
(it being understood that this clause (v) and clause (xiv) below
shall not prohibit Grantor from entering into the contribution
agreement required by Section 4.01(21) of the Loan Agreement);
(vi) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than (x)
the Loan, (y) indebtedness of Grantor to its constituent partners or
members that is expressly subordinated to the obligations secured
hereby in a manner satisfactory to Beneficiary and (z) in the
ordinary course of its business of owning and operating the
Premises, provided that such debt is not evidenced by a note;
(vii) become insolvent or fail to pay its debts and
liabilities from its assets as the same shall become due;
(viii)fail to maintain its records, books of account and bank
accounts (if any) separate and apart from those of its constituent
partners or members or their affiliates, or any other person or
entity;
(ix) enter into any contract or agreement with its constituent
partners, members or their affiliates, except upon terms and
conditions that are intrinsically fair and substantially similar to
those that would be available on an arm's-length basis with third
parties other than such partner, member or affiliate (it being
understood that the management and leasing agreement between Grantor
and an affiliate and the Master Development Framework Agreement
between Borrower and Westfield Corporation, Inc., dated as of July
1, 1996, as amended by First Amendment, dated as of May 21, 1997,
each delivered to the Banks in connection with the granting of this
Deed, do not violate the provisions of this clause (x));
(x) partition, or seek to partition, the Premises, or seek the
dissolution or winding up, in whole or in part, of itself;
(xi) fail to correct any known misunderstandings regarding its
separate identity;
(xii) hold itself out to be responsible for the debts of
another person or entity;
(xiii) make any loans or advances to any third party,
including any of its constituent partners or members or their
affiliates;
(xiv) fail to file its own tax returns, if required, unless
part of the consolidated returns of another person or entity;
40
<PAGE>
(xv) agree to, enter into or consummate any transaction which
would render Borrower unable to make the representation contained in
Section 5.07 of the Loan Agreement;
(xvi) fail to hold itself out to the public as a legal entity
separate and distinct from any other person or entity or to conduct
its business solely in its own name in order not (A) to mislead
others as to the identity with which such other party is transacting
business or (B) to suggest that it is responsible for the debts of
any third party (including any of its constituent partners or
members or their affiliates);
(xvii)file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute, or
make an assignment for the benefit of creditors;
(xviii) hold itself out as or be designated as a department or
division of any of its constituent partners or members or their
affiliates, or of any other entity; or
(xix) file, without the unanimous consent of all of the
partners, directors or members, as applicable, a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings
with respect to itself or to any other entity in which it has a
direct or indirect legal or beneficial ownership interest.
(b) Grantor covenants and agrees as follows: (i) its certificate of
organization, operating agreement, limited liability company agreement or other
organizational documents shall at all times provide that the limited liability
company will only dissolve upon the withdrawal, dissolution or bankruptcy of the
last remaining managing member, but the limited liability company will not be
dissolved if the remaining members, within ninety (90) days, by majority vote,
elect to continue the limited liability company and appoint a new managing
member and (ii) its certificate of organization, operating agreement, limited
liability company agreement or other organizational documents shall at all times
provide that the dissolution and winding up or insolvency filing of such limited
liability company requires the unanimous consent of all members.
Section 4.23. Distributions Following Event of Default. Without limiting
Beneficiary's rights regarding the collection of Rents as provided in Section
4.01, Grantor shall not, during the existence of any Event of Default, pay any
dividend or make any distribution, directly or indirectly, to any of its
constituent equity holders.
Section 4.24. Future Advances. This Deed secures indebtedness of Borrower
under a revolving credit facility. The revolving credit facility contemplates
Borrower and the Banks entering into a series of advances, or advances, payments
and readvances. This Deed secures not only the original indebtedness of Borrower
under the revolving credit facility, but also the indebtedness of Borrower
created by future advances thereunder, whether such advances are obligatory or
are to be made at the option of the Banks to the extent and with the same
priority of lien as if such future advances had been made at the time this Deed
was recorded, although there may have been no advances under the revolving
credit facility made at the time of the execution, acknowledgement and recording
of this Deed, and although there may be no indebtedness outstanding at the time
any advance is made.
41
<PAGE>
IN WITNESS WHEREOF, this Deed has been duly executed and delivered by
Grantor.
PROMENADE LLC, a Delaware limited liability
company
By: Westfield America Limited Partnership, a
Delaware limited partnership, its managing
member
By: Westfield America, Inc., a Missouri
corporation, its general partner
By /s/Irv Hepner
---------------------
Name: IRV HEPNER
Title: SECRETARY
Witnesses:
/s/Theodore Newcomb
- --------------------
Name:
/s/Annie M. Gary
- --------------------
Name:
<PAGE>
NOTARY PAGE
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
State of California
County of Los Angeles
On 12/6/99 Before Me, Leesa Ashley, Notary Public
Personally Appeared Irv Hepner
|X| personally known to me -OR-
|_| proved to me on the basis of satisfactory evidence to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on
the instrument the person or the entity upon behalf of which the person,
executed the instrument.
WITNESS my hand and official seal.
/s/ Leesa Ashley
- ---------------------------------
SIGNATURE OF NOTARY
============================== OPTIONAL SECTION ================================
CAPACITY CLAIMED BY SIGNER
Though statued does not require the Notary to fill in the space below, doing as
they prove invaluable to persons relying on the document.
|_| INDIVIDUAL
|_| CORPORATE OFFICER(S)
_____________________
TITLE(S)
|_| PARTNER(S) |_| LIMITED
|_| GENERAL
|_| ATTORNEY-IN-FACT
|_| TRUSTEE(S)
|_| GUARDIAN/CONSERVATOR
|_| OTHER: _______________
______________________
______________________
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
________________________________
________________________________
============================== OPTIONAL SECTION ================================
THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED AT RIGHT:
_________________________
Though the data requested here is not required by law, it could prevent
fraudulent reattachment of this form.
TITLE OR TYPE OF DOCUMENT ___________________________________________
NUMBER OF PAGES ___________ DATE OF DOCUMENT ________________________
SIGNER(S) OTHER THAN NAMED ABOVE ____________________________________
================================================================================
(C)1993 NATIONAL NOTARY ASSOCIATION - [Address illegible]
<PAGE>
PROMENADE
SCHEDULE A
<PAGE>
SCHEDULE A
PARCEL 1:
PARCEL A OF PARCEL MAP L.A. NO. 2519, IN THE CITY OF LOS ANGELES, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 39 PAGE 92 OF PARCEL
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 2:
LOT 2 OF TRACT NO. 23959. IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 811 PAGES 20 TO 30 INCLUSIVE OF
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 3:
NON-EXCLUSIVE EASEMENTS FOR AUTOMOBILE PARKING AND COMMON AREA USES, UTILITIES,
CONSTRUCTION PURPOSES, PEDESTRIAN WALKWAYS AND STAIRWAYS OVER THE "COMMON AREA"
OF LOT 4 OF TRACT NO. 23959, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 811 PAGES 28 TO 30 INCLUSIVE OF
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND OVER PARCEL B OF
PARCEL MAP L.A. NO. 2519, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 39 PAGE 92 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AS DEFINED AND CREATED IN THAT
CERTAIN DOCUMENT ENTITLED "CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT
AGREEMENT" DATED NOVEMBER 15, 1971, EXECUTED BY AND BETWEEN KAISER AETNA, A
CALIFORNIA PARTNERSHIP (HEREINAFTER CALLED "KAISER AETNA"), ADCOR REALTY
CORPORATION, A NEW YORK CORPORATION (HEREINAFTER CALLED "SAKS") AND RECORDED
FEBRUARY 16, 1972 AS INSTRUMENT NO. 3399, OFFICIAL RECORDS, AS SUPPLEMENTED BY
THAT CERTAIN AGREEMENT SUPPLEMENTAL TO CONSTRUCTION, OPERATION AND RECIPROCAL
EASEMENT AGREEMENT BY AND BETWEEN SAKS AND KAISER AETNA, DATED NOVEMBER 15, 1972
AND RECORDED FEBRUARY 16, 1972 AS INSTRUMENT NO. 3400, OFFICIAL RECORDS, AS
FURTHER SUPPLEMENTED BY THAT CERTAIN ADDITIONAL AGREEMENT SUPPLEMENTAL TO
CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT AGREEMENT BY AND BETWEEN SAKS
AND KAISER AETNA, DATED NOVEMBER 15, 1971 AND RECORDED SEPTEMBER 27, 1972 AS
INSTRUMENT NO. 3572, OFFICIAL RECORDS, AS AMENDED BY THAT CERTAIN FIRST
AMENDMENT THERETO, EXECUTED BY KAISER AETNA, ROBINSON, SAKS AND FEDERAL
DEPARTMENT STORES, INC., A DELAWARE CORPORATION (HEREINAFTER CALLED "FEDERAL"),
DATED SEPTEMBER 22, 1972. RECORDED SEPTEMBER 22, 1972 AS INSTRUMENT NO. 345,
OFFICIAL RECORDS, AND FURTHER AMENDED BY "SECOND AMENDMENT TO CONSTRUCTION,
OPERATION AND RECIPROCAL EASEMENT AGREEMENT" DATED JANUARY 31, 1995 EXECUTED BY
AND BETWEEN SHOPPING CENTER ASSOCIATES, A NEW YORK GENERAL PARTNERSHIP,
I.MAGNIN, INC., A DELAWARE CORPORATION, MACY'S PRIMARY REAL ESTATE, INC., A
DELAWARE CORPORATION AND AMERICAN MULTI-CINEMA, INC., A MISSOURI CORPORATION,
RECORDED FEBRUARY 23, 1995 AS INSTRUMENT NO. 95-296549, OFFICIAL RECORDS.
<PAGE>
Exhibit 10.30
PROMENADE
UNSECURED INDEMNITY AGREEMENT
INDEMNITY AGREEMENT (this "Agreement") made as of December 15, 1999
from WESTFIELD AMERICA LIMITED PARTNERSHIP, a Delaware limited partnership
("Borrower"), WESTFIELD AMERICA, INC., a Missouri corporation ("Guarantor"),
PROMENADE LLC, a Delaware limited liability company ("Owner"; Borrower,
Guarantor and Owner, jointly and severally, "Indemnitor"), each having an
address at 11601 Wilshire Boulevard, 12th Floor, Los Angeles, California 90025,
Attention: General Counsel, to NATIONAL AUSTRALIA BANK LIMITED, NEW YORK BRANCH
("NAB") and such other lenders as are or who may become "Banks" (as such quoted
term is defined in the Loan Agreement, as hereinafter defined; NAB and such
other lenders, each, a "Bank" and collectively, "the Banks").
Preliminary Statement
WHEREAS, Owner is the owner of the real property located in Woodland
Hills, California, as more particularly described in SCHEDULE A attached hereto
(said real property, together with any real property hereafter encumbered by the
lien of the Mortgage (as defined below), being herein collectively called the
"Land"; the Land, together with all improvements now or hereafter located on the
Land, being herein collectively called the "Property");
WHEREAS, the Banks are prepared to make and Borrower will accept a
revolving loan in the amount of up to $450,000,000 (the "Loan") pursuant to a
Secured Revolving Credit Agreement (as the same may hereafter be amended,
modified or supplemented, the "Loan Agreement") dated as of the date hereof
among Borrower, as Borrower, the lenders signatory thereto, as Banks, and NAB,
as Administrative Agent for the Banks (NAB, in such capacity, together with its
successors in such capacity, "Administrative Agent"). The Loan is evidenced by
note(s) of even date herewith from Borrower in an aggregate principal amount
equal to the principal amount of the Loan (as the same may hereafter be amended,
modified, extended, severed, assigned, renewed or restated, and including any
substitute or replacement notes executed pursuant to the Loan Agreement,
collectively, the "Note"), and secured by, among other things, a Deed of Trust,
Assignment of Leases and Rents and Security Agreement with Fixture Filing
(together with all amendments, modifications, consolidations, increases,
supplements and spreaders thereof, collectively, the "Mortgage") from Owner
encumbering the Property (the Loan Agreement, the Mortgage, the Note, and any
other documents or instruments evidencing or securing the Loan, as amended or
modified from time to time, being herein sometimes called the "Loan Documents");
WHEREAS, as a condition to making the Loan, the Banks require
Indemnitor to provide certain indemnities concerning existing and future
asbestos, polychlorinated biphenyls and petroleum products and any other
hazardous or toxic
<PAGE>
materials, wastes and substances which are defined, determined or identified as
such in any Laws (as hereinafter defined) (any such asbestos, polychlorinated
biphenyls and petroleum products and any such other materials, wastes and
substances being herein collectively called "Hazardous Materials"); as used in
this Agreement, the term "Laws" means any federal, state or local laws, rules,
regulations, ordinances, writs, injunctions, decrees, determinations or awards
(whether now existing or hereafter enacted or promulgated) and any judicial or
administrative interpretation thereof, including any judicial or administrative
orders or judgments; and
WHEREAS, to induce the Banks to consummate the above described
transaction and to lend the indicated amount to Borrower, Indemnitor has agreed
to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Indemnitor hereby represents, warrants and covenants to the Banks
and Administrative Agent (the undersigned being jointly and severally liable
hereunder) as follows:
1. Indemnitor covenants and agrees, at its sole cost and expense, to
indemnify, protect and save each Bank and Administrative Agent harmless against
and from any and all damages, losses, liabilities, obligations, penalties,
claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
reasonable disbursements or expenses (including, without limitation, attorneys'
and experts' reasonable fees and disbursements) of any kind or of any nature
whatsoever (collectively, the "Indemnified Matters") which may at any time be
imposed upon, incurred by or asserted or awarded against any Bank or
Administrative Agent and arising from or out of:
(A) any Hazardous Materials on, in, under or affecting all or any
portion of the Property or any surrounding areas, or
(B) the enforcement of this Agreement or the assertion by Indemnitor
of any defense to its obligations hereunder (except the successful defense
of actual performance not subject to further appeal),
whether any of such matters arise before or after foreclosure of the Mortgage or
other taking of title to all or any portion of the Property by or on behalf of
the Banks. Indemnified Matters shall include, without limitation, all of the
following: (i) the costs of removal of any and all Hazardous Materials from all
or any portion of the Property or any surrounding areas (except that the
indemnity provided for under this Agreement shall not cover the costs of such
removal unless either (a) such removal is required by any applicable Laws or (b)
any present or future use, operation, development, construction, alteration or
reconstruction of all or any portion of the Property is or would be conditioned
in any way upon, or is or would be limited in any way until the completion of,
such removal in accordance with any applicable Laws), (ii) additional costs
required to take necessary precautions to protect against the release of
Hazardous Materials on, in, under or affecting the Property into the air, any
body of water, any other public domain or any surrounding areas and (iii) costs
incurred to comply, in connection with all or any
2
<PAGE>
portion of the Property or any surrounding areas, with all applicable Laws with
respect to Hazardous Materials (all removal work referred to in clause (i)
above, all work and other actions to take precautions against release referred
to in clause (ii) above and all work and other actions performed in order to
comply with applicable Laws referred to in clause (iii) above being herein
collectively called "Corrective Work"). The Banks' and Administrative Agent's
rights under this Agreement shall be in addition to all their rights under the
Loan Agreement, Note, Mortgage and other Loan Documents, and payments by
Indemnitor under this Agreement shall not reduce Indemnitor's obligations and
liabilities under any of the Loan Documents. Notwithstanding anything to the
contrary contained herein, (a) the indemnity provided for under this Agreement
with respect to surrounding areas shall not extend to the costs of Corrective
Work on, in, under or affecting any surrounding areas if the applicable
Hazardous Materials did not originate from any portion of the Property, unless
the removal of any Hazardous Materials on, in, under or affecting any
surrounding areas is required by Law or by order or directive of any federal,
state or local governmental authority in connection with the Corrective Work on,
in, under or affecting any portion of the Property and (b) if Administrative
Agent, the Banks or their nominee takes title to the Property at a foreclosure
sale, at a sale pursuant to a power of sale under the Mortgage or by deed in
lieu of foreclosure or otherwise, then the indemnity provided for under this
Agreement shall not apply to Hazardous Materials which are initially placed on,
in or under all or any portion of the Property after the date of such taking of
title to the Property.
2. (a) The Banks hereby agree that, prior to the Banks' taking the
actions described in clauses (x) and (y) below, Indemnitor may, at its sole cost
and expense, (x) contest the assertion by any governmental authority or any
third party of any obligation or liability affecting Indemnitor, any Bank,
Administrative Agent or all or any portion of the Property for performances of
any Corrective Work and (y) perform any Corrective Work, provided that at all
times all of the following conditions are satisfied in full:
(A) no material default exists under any of the Loan Documents, and
the Banks have not commenced or completed foreclosure or a sale under
power of sale or accepted a deed in lieu of foreclosure or otherwise taken
title to all or any portion of the Property.
(B) the collateral for the Loan shall not be impaired in the
reasonable judgment of Administrative Agent, and the Banks and
Administrative Agent (and their respective agents, servants, employees and
contractors) shall not be subject to any criminal or other penalties,
costs or expenses, by reason of such contest or the performance of such
Corrective Work or any delays in connection therewith,
(C) Indemnitor shall notify Administrative Agent within ten (10)
days after commencement of any such contest or Corrective Work, and shall
give Administrative Agent a monthly report, during the period of such
contest or the performance of such Corrective Work, on Indemnitor's
progress with respect thereto, and shall promptly give Administrative
Agent such other information with respect thereto as Administrative Agent
shall reasonably request,
3
<PAGE>
(D) with respect to contests, any such contest shall be instituted
promptly after Indemnitor obtains actual knowledge of an action, suit,
proceeding or governmental order or directive which asserts any obligation
or liability affecting Indemnitor, any Bank, Administrative Agent or all
or any portion of the Property, and such contest shall at all times be
diligently prosecuted until a final judgment is obtained that negates such
assertion of obligation or liability,
(E) with respect to contests, the Banks and/or Administrative Agent,
at their expense, shall have the right (but not the obligation) to join in
any action or proceeding in which Indemnitor contests any such assertions
by any governmental authorities or third parties,
(F) with respect to Corrective Work, any such Corrective Work shall
be instituted promptly after the later to occur of: (i) a determination by
the applicable judicial or administrative authority that the contest is
unsuccessful, which determination is not, or ceases to be, subject to
further appeal or (ii) Indemnitor obtains actual knowledge of any
Hazardous Materials on, in, under or affecting the Property or (when
applicable) any surrounding areas, and such Corrective Work shall at all
times be diligently prosecuted until all such Hazardous Materials are
removed and properly and lawfully disposed of, and
(G) with respect to any Corrective Work, Indemnitor shall, not less
than fifteen (15) days prior to commencement of such Corrective Work,
submit to Administrative Agent for its review reasonably detailed plans
for such Corrective Work, and, if, within said fifteen (15)-day period,
Administrative Agent, in its reasonable judgment, rejects such plans (it
being understood that Administrative Agent shall be deemed to approve such
plans if they provide for Corrective Work that will result in compliance
with applicable Laws), Indemnitor shall promptly submit revised plans to
Administrative Agent and shall obtain Administrative Agent's acceptance of
such plans prior to commencement of such Corrective Work, and Indemnitor
shall comply with the plans submitted to Administrative Agent (and, if
applicable, accepted or deemed accepted by Administrative Agent) in
performing such Corrective Work.
So long as all of such conditions are satisfied in full at all times, the Banks
and Administrative Agent further agree that they will not enter into any
settlement agreement binding upon Indemnitor without its prior consent;
Indemnitor agrees that in any event, its consent to any such settlement
agreement shall not be unreasonably withheld or delayed.
(b) Promptly after the receipt by Administrative Agent of written
notice of any demand or claim or the commencement of any action, suit or
proceeding in respect of any of the Indemnified Matters, Administrative Agent
shall notify Indemnitor thereof in writing; but the failure by Administrative
Agent promptly to give such notice shall not relieve Indemnitor of any liability
which it may have to the Banks or Administrative Agent hereunder.
4
<PAGE>
(c) It is expressly understood and agreed that failure by the Banks
or Administrative Agent to object to any actions taken by Indemnitor shall not
be construed to be an approval by the Banks or Administrative Agent of such
actions. It is further expressly understood and agreed that this Agreement shall
not be construed as creating any obligation for the Banks or Administrative
Agent to initiate any contests of the nature described in Section 2(a), to
review any plans for Corrective Work or to perform, or review Indemnitor's or
any other party's performance of, any Corrective Work.
3. The liability of Indemnitor under this Agreement shall in no way be
limited or impaired by, and Indemnitor hereby consents to and agrees to be bound
by, any amendment or modification of the provisions of the Loan Documents by
Indemnitor or any person who succeeds Borrower as owner of the Property. In
addition, the liability of Indemnitor under this Agreement shall in no way be
limited or impaired by (i) any extensions of time for performance required by
any of the Loan Documents, (ii) any sale, assignment or foreclosure of the Note
or Mortgage or any sale or transfer of all or part of the mortgaged property,
(iii) any exculpatory provision in any of the Loan Documents limited the Banks'
recourse to property encumbered by the Mortgage or to any other security, or
limiting the Banks' rights to a deficiency judgment against Borrower, (iv) the
accuracy or inaccuracy of any representations or warranties made to the Banks or
Administrative Agent under any of the Loan Documents, (v) the release of
Borrower or any other person from performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of law, the Banks' voluntary act, or otherwise, (vi) the
release or substitution in whole or in part of any security for the Note, (vii)
the failure of the Mortgage to be recorded or any UCC financing statements to be
filed (or the improper recording of filing of any thereof) or any failure to
otherwise perfect, protect, secure or insure any security interest or lien given
as security for the Note, (viii) the invalidity, irregularity or
unenforceability, in whole or in part, of the Note, Mortgage or other Loan
Documents, or of any other instrument or agreement executed or delivered to
Administrative Agent and/or the Banks in connection with the Loan or (ix) any
other action or circumstance whatsoever which constitutes, or might be construed
to constitute, a legal or equitable discharge or defense of Borrower or others
for their obligations under any of the Loan Documents or of Indemnitor for its
obligations under this Agreement; and, in any such case, whether with or without
notice to Indemnitor and with or without consideration.
4. Indemnitor waives any right or claim of right to cause a
marshalling of Borrower's assets or to cause the Banks to proceed against any of
the security for the Loan before proceeding under this Agreement against
Indemnitor or to proceed against the undersigned in any particular order,
Indemnitor agrees that any payments required to be made hereunder shall become
due on demand; Indemnitor expressly waives and relinquishes all rights and
remedies accorded by applicable Law to indemnitors or guarantors, except any
rights of subrogation which Indemnitor may have; provided that the indemnity
provided for hereunder shall neither be contingent upon the existence of any
such rights of subrogation nor subject to any claims or defenses whatsoever
which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights, including, without limitation, any claim
that such subrogation rights were abrogated by any acts of any Bank or
Administrative Agent.
5
<PAGE>
Indemnitor hereby agrees to postpone the exercise of any and all rights of
subrogation to the rights of the Banks and Administrative Agent against
Indemnitor hereunder and any rights of subrogation to any collateral securing
the Loan until the Loan shall have been paid in full.
5. No delay on the Banks' or Administrative Agent's part in
exercising any right, power or privilege under any of the Loan Documents shall
operate as a waiver of any such privilege, power or right.
6. Any Indemnitor, or any other party liable upon or in respect of
this Agreement or the Loan, may be released without affecting the liability of
any party not so released.
7. (a) Except as herein provided, this Agreement shall be binding
upon and inure to the benefit of Indemnitor, the Banks, Administrative Agent and
their respective heirs, personal representatives, successors and assigns,
including, as to the Banks, without limitation, any holder of the Note and any
nominee of the Banks (other than a nominee unaffiliated with Administrative
Agent or the Banks) which acquires all or part of the Property by any sale,
assignment or foreclosure under the Mortgage, by deed or other assignment in
lieu of foreclosure, or otherwise. Notwithstanding the foregoing, Indemnitor,
without the prior written consent of the Banks in an instance, may not assign,
transfer or set over to another, in whole or in part, all or any part of its
benefits, rights, duties and obligations hereunder.
(b) The rights of the Banks under this Agreement shall not inure to
the benefit of (i) any purchaser of the Property at a foreclosure sale or sale
pursuant to a power of sale under the Mortgage, (ii) any person or entity taking
title to the Property by deed in lieu of foreclosure or (iii) any successor or
assign of any purchaser, person or entity described in clauses (i) and (ii)
above, except that the Banks' rights shall inure to the benefit of a party
described in clauses (i), (ii) and (iii) above if such party is Administrative
Agent, any or all of the Banks (including any of their respective successors or
assigns as holder of the Note) or any nominee of the Banks (other than a nominee
unaffiliated with Administrative Agent or the Banks). Notwithstanding any
ownership by Administrative Agent, any or all of the Banks (including any of
their respective successors or assigns as holder of the Note) or any nominee of
the Banks at any time of all or any portion of the Property, in no event shall
Administrative Agent, any or all of the Banks (including any of their respective
successors or assigns as holder of the Note) or any nominee of the Banks be
bound by any obligations or liabilities of Indemnitor.
6
<PAGE>
8. Notwithstanding anything to the contrary contained elsewhere in
this Agreement, the indemnity provided for hereunder shall, subject to the
immediately following sentence, terminate and be of no further force and effect
when all of the following conditions are satisfied in full:
(i) all principal, interest and other sums evidenced or secured by
the Loan Documents and any other costs and expenses in connection with the
Loan are paid in full by Borrower or by any guarantors of the Loan,
(ii) neither Administrative Agent, nor any Bank (including any of
the Banks' respective successors or assigns), nor any nominee of the Banks
has at any time taken possession of, or title to, the Property or any
portion thereof whether by foreclosure, deed in lieu of foreclosure, sale
under power of sale pursuant to the Mortgage, or otherwise (it being
understood that if liability under this Agreement survives by reason of
this clause (ii), such liability shall be limited by the provisions of
clause (b) of the last sentence of paragraph 1 hereof),
(iii) there has been no change, between the date hereof and prior to
the date the Loan is paid in full as provided in (i) above, in any Laws,
the effect of which change may be to make a lender or mortgagee liable in
respect of any Indemnified Matters notwithstanding the fact that no event,
circumstance or condition of the nature described in clause (ii) above
ever occurred, and
(iv) there exist no Indemnified Matters which are pending.
Notwithstanding the immediately preceding sentence, Indemnitor agrees that it
shall continue to be liable and shall pay for any and all litigation costs and
expenses (including, without limitation, attorneys' and experts' reasonable fees
and disbursements) incurred by any Bank or Administrative Agent in connection
with any claims, litigation, demands, defenses, judgments, suits and proceedings
which may thereafter be asserted against any Bank or Administrative Agent
arising from or out of any Hazardous Materials existing on, in, under or
affecting all or any portion of the Property or any surrounding areas at or
prior to the date of payment in full of the Loan as provided in clause (i)
above; provided, however, that the obligations of Indemnitor under this sentence
shall not extend to the payment of judicial awards (except for awards for costs
and expenses) which have been specifically rendered against any Bank or
Administrative Agent in such litigation. The Banks and Administrative Agent
agree to utilize counsel designated by Indemnitor, subject to Administrative
Agent's right of approval, not to be unreasonably withheld.
9. This Agreement shall continue to be effective, or be reinstated
automatically, as the case may be, if at any time payment, in whole or in part,
of any of the obligations indemnified against hereby is rescinded or otherwise
must be restored or returned by Administrative Agent or the Banks (whether as a
preference, fraudulent conveyance or otherwise) upon or in connection with the
insolvency, bankruptcy, dissolution, liquidation or reorganization of Indemnitor
or any other person, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, Indemnitor or
any other person or for a substantial part of Indemnitor's
7
<PAGE>
or any of such other person's property, as the case may be, or otherwise, all as
though such payment had not been made. Indemnitor further agrees that in the
event any such payment is rescinded or must be restored or returned, all costs
and expenses (including, without limitation, reasonable legal fees and expenses)
incurred by or on behalf of the Banks in defending or enforcing such continuance
or reinstatement, as the case may be, shall constitute costs of enforcement
which are covered by Indemnitor's indemnification obligations under this
Agreement.
10. Indemnitor represents and covenants to the Banks and
Administrative Agent that:
(i) if a corporation, partnership, venture, trust or limited
liability company, it is duly organized, validly existing and in good
standing under the laws of the state of its formation and has full power
and authority to execute, deliver and perform this Agreement; Indemnitor
will preserve and maintain such legal existence and good standing;
(ii) there are no actions, suits or proceedings pending or
threatened against or affecting Indemnitor, at law, in equity or before or
by any governmental authorities except actions, suits or proceedings which
are fully covered by insurance or would, if adversely determined, not be
likely to have a material adverse effect on Indemnitor's business or
financial condition; Indemnitor is not in material default with respect to
any order, writ, injunction, decree or demand of any court or governmental
authorities;
(iii) the consummation of the transactions contemplated hereby and
the performance of this Agreement have not resulted and will not result in
any breach of, or constitute a default under, any mortgage, deed of trust,
lease, bank loan or credit agreement, corporate charter, by-laws,
partnership agreement or other instrument to which Indemnitor is a party
or by which Indemnitor may be bound or affected; and
(iv) Indemnitor is in compliance with, and the transactions
contemplated by this Agreement do not and will not violate any provision
of, or require any filing, registration, consent or approval under, any
Laws presently in effect having applicability to Indemnitor; Indemnitor
will comply promptly with all Laws now or hereafter in effect having
applicability to it.
11. The Banks and/or Administrative Agent shall, at all times, be
free to independently establish to their reasonable satisfaction the existence
or nonexistence of any fact or facts the existence or nonexistence of which is a
condition of this Agreement.
12. This Agreement may be executed in one or more counterparts each
of which shall be deemed an original. Said counterparts shall constitute but one
and the same instrument and shall be binding upon, and shall inure to the
benefit of, each of the undersigned individually as fully and completely as if
all had signed but one
8
<PAGE>
instrument. The joint and several liability of the undersigned hereunder shall
be unaffected by the failure of any other person to execute any or all of said
counterparts.
13. All notices hereunder shall be in writing and shall be deemed to
have been sufficiently given or served for all purposes when sent by registered
or certified mail, if to Indemnitor at its address stated on the first page
hereof, and if to the Banks or Administrative Agent, to NAB at 200 Park Avenue,
New York, New York 10016, Attention: Mr. Jeff White, or at such other address of
which a party shall have notified the party giving such notice in writing in
accordance with the foregoing requirements.
14. No provision of this Agreement may be changed, waived,
discharged or terminated except in accordance with Section 12.02 of the Loan
Agreement.
15. INDEMNITOR HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES, IN
CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT
OR THE BANKS ON THIS INDEMNITY AGREEMENT, ANY AND EVERY RIGHT IT MAY HAVE TO (I)
INJUNCTIVE RELIEF, (II) A TRIAL BY JURY, (III) INTERPOSE ANY COUNTERCLAIM
THEREIN, OTHER THAN A COMPULSORY COUNTERCLAIM, AND (IV) HAVE THE SAME
CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING
HEREIN CONTAINED SHALL PREVENT OR PROHIBIT INDEMNITOR FROM INSTITUTING OR
MAINTAINING A SEPARATE ACTION AGAINST ADMINISTRATIVE AGENT OR THE BANKS WITH
RESPECT TO ANY ASSERTED CLAIM.
16. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO NEW
YORK'S PRINCIPLES OF CONFLICTS OF LAW). INDEMNITOR HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE CITY OF
NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND INDEMNITOR HEREBY AGREES AND CONSENTS THAT, IN ADDITION TO ANY
METHODS OF SERVICE OF PROCESS PROVIDED UNDER APPLICABLE LAW, ALL SERVICE OF
PROCESS IN ANY SUCH SUIT OR PROCEEDING IN ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN THE CITY OF NEW YORK MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO INDEMNITOR AT ITS ADDRESS INDICATED ON THE
COVER PAGE HEREOF, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE
SAME SHALL HAVE BEEN MAILED.
17. The obligations of Indemnitor under this Agreement are not
secured by the Mortgage.
9
<PAGE>
IN WITNESS WHEREOF, Indemnitor has caused this Agreement to be
executed and delivered as of the date first written above.
WESTFIELD AMERICA LIMITED PARTNERSHIP
By: Westfield America, Inc., its general partner
By /s/ Irv Hepner
-------------------------------------
Name: IRV HEPNER
Title: SECRETARY
WESTFIELD AMERICA, INC.
By /s/ Irv Hepner
-------------------------------------
Name: IRV HEPNER
Title: SECRETARY
PROMENADE LLC, a Delaware limited liability company
By: Westfield America Limited Partnership, a
Delaware limited partnership, its managing
member
By: Westfield America, Inc., its general
partner
By /s/ Irv Hepner
------------------------------------
Name: IRV HEPNER
Title: SECRETARY
10
<PAGE>
SCHEDULE A
PARCEL 1:
PARCEL A OF PARCEL MAP L.A. NO. 2519, IN THE CITY OF LOS ANGELES, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 39 PAGE 92 OF PARCEL
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 2:
LOT 2 OF TRACT NO. 23959, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 811 PAGES 28 TO 30 INCLUSIVE OF
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 3:
NON-EXCLUSIVE EASEMENTS FOR AUTOMOBILE PARKING AND COMMON AREA USES, UTILITIES,
CONSTRUCTION PURPOSES, PEDESTRIAN WALKWAYS AND STAIRWAYS OVER THE "COMMON AREA"
OF LOT 4 OF TRACT NO. 23959, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 811 PAGES 28 TO 30 INCLUSIVE OF
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND OVER PARCEL B OF
PARCEL MAP L.A. NO. 2519, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 39 PAGE 92 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AS DEFINED AND CREATED IN THAT
CERTAIN DOCUMENT ENTITLED "CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT
AGREEMENT" DATED NOVEMBER 15, 1971, EXECUTED BY AND BETWEEN KAISER AETNA, A
CALIFORNIA PARTNERSHIP (HEREINAFTER CALLED "KAISER AETNA"), ADCOR REALTY
CORPORATION, A NEW YORK CORPORATION (HEREINAFTER CALLED "ROBINSON") AND SAKS &
COMPANY, A NEW YORK CORPORATION (HEREINAFTER CALLED "SAKS") AND RECORDED
FEBRUARY 16, 1972 AS INSTRUMENT NO. 3399, OFFICIAL RECORDS, AS SUPPLEMENTED BY
THAT CERTAIN AGREEMENT SUPPLEMENTAL TO CONSTRUCTION, OPERATION AND RECIPROCAL
EASEMENT AGREEMENT BY AND BETWEEN SAKS AND KAISER AETNA, DATED NOVEMBER 15, 1971
AND RECORDED FEBRUARY 16, 1972 AS INSTRUMENT NO. 3400, OFFICIAL RECORDS, AS
FURTHER SUPPLEMENTED BY THAT CERTAIN ADDITIONAL AGREEMENT SUPPLEMENTAL TO
CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT AGREEMENT BY AND BETWEEN SAKS
AND KAISER AETNA, DATED NOVEMBER 15, 1971 AND RECORDED SEPTEMBER 27, 1972 AS
INSTRUMENT NO. 3572, OFFICIAL RECORDS, AS AMENDED BY THAT CERTAIN FIRST
AMENDMENT THERETO, EXECUTED BY KAISER AETNA, ROBINSON, SAKS AND FEDERAL
DEPARTMENT STORES, INC., A DELAWARE CORPORATION (HEREINAFTER CALLED "FEDERAL"),
DATED SEPTEMBER 22, 1972, RECORDED SEPTEMBER 22, 1972 AS INSTRUMENT NO. 345,
OFFICIAL RECORDS, AND FURTHER AMENDED BY "SECOND AMENDMENT TO CONSTRUCTION,
OPERATION AND RECIPROCAL EASEMENT AGREEMENT" DATED JANUARY 31, 1995 EXECUTED BY
AND BETWEEN SHOPPING CENTER ASSOCIATES, A NEW YORK GENERAL PARTNERSHIP, I.
MAGNIN, INC., A DELAWARE CORPORATION, MACY'S PRIMARY REAL ESTATE, INC., A
DELAWARE CORPORATION AND AMERICAN MULTI-CINEMA, INC., A MISSOURI CORPORATION,
RECORDED FEBRUARY 23, 1995 AS INSTRUMENT NO. 95-296549, OFFICIAL RECORDS.
1
<PAGE>
Exhibit 10.31
- --------------------------------------------------------------------------------
LOAN AGREEMENT
Dated as of December 9, 1999
Between
Borrower (as defined herein)
And
UBS PRINCIPAL FINANCE LLC,
as Lender
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
I DEFINITIONS: PRINCIPLES OF CONSTRUCTION...................................1
1.1 Specific Definitions.............................................1
1.2 Index of Other Definitions......................................20
1.3 Principles of Construction......................................22
II THE LOAN.................................................................23
2.1 The Loan........................................................23
2.1.1 Commitment...............................................23
2.1.2 Note.....................................................23
2.1.3 Use of Loan Proceeds.....................................23
2.2 Conditions Precedent to Closing.................................23
2.2.1 Representations and Warranties; Compliance
with Conditions..........................................23
2.2.2 First Mortgage and Loan Documents........................23
2.2.3 Title Insurance..........................................23
2.2.4 Environmental Audit......................................24
2.2.5 Insurance................................................24
2.2.6 Financial Statements.....................................24
2.2.7 Searches.................................................24
2.2.8 Survey...................................................25
2.2.9 Management...............................................25
2.2.10 Leases and Material Contracts............................25
2.2.11 Intentionally Deleted....................................25
2.2.12 Tenant Estoppels.........................................25
2.2.13 Property Condition Report................................25
2.2.14 Appraisal................................................25
2.2.15 Zoning Compliance, Etc...................................25
2.2.16 Recording Taxes..........................................26
2.2.17 Perfection of Security Interests.........................26
2.2.18 Opinions of Borrower's Counsel...........................26
2.2.19 Ground Lease.............................................26
2.2.20 REA......................................................26
2.2.21 Reserves and Escrows.....................................26
2.2.22 Rent Roll................................................26
2.2.23 Further Documents........................................26
2.2.24 Completion of Proceedings................................26
2.2.25 Delivery of Organizational Documents.....................27
2.2.26 Expenses.................................................27
2.2.27 Tax Lot..................................................27
2.2.28 Encumbrances.............................................27
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2.3 Substitution of Collateral Properties...........................27
2.4 Defeasance......................................................32
2.4.1 Total Defeasance.........................................32
2.4.2 Partial Defeasance.......................................34
2.4.3 Defeasance Collateral Account. ..........................36
2.4.4 Successor Borrower. .....................................36
III INTEREST; PAYMENTS.......................................................37
3.1 Interest; Monthly Loan Payments.................................37
3.1.1 Interest Generally.......................................37
3.1.2 Payment Before Anticipated Repayment Date................37
3.1.3 Payment After Anticipated Repayment Date.................37
3.1.4 Payment on Maturity Date.................................37
3.1.5 Property Cash Flow Allocation............................37
3.1.6 Payments after Default; Default Rate.....................38
3.2 Loan Repayment; Voluntary Prepayment; Prepayment
After Default...................................................38
3.2.1 Repayment................................................38
3.2.2 Mandatory Prepayments....................................39
3.3 Release of Property.............................................39
3.3.1 Release of Collateral Properties.........................39
3.3.2 Release on Payment in Full...............................40
3.3.3 Release Documents........................................40
3.3.4 Release of Funds.........................................40
3.4 Payments and Computations.......................................40
3.4.1 Making of Payments.......................................40
3.4.2 Interest Calculation.....................................40
3.4.3 Late Payment Charge......................................41
3.5 Taxes...........................................................41
IV CASH MANAGEMENT; ESCROWS AND RESERVES....................................42
4.1 Cash Management Arrangements....................................42
4.1.1 Lockbox Account..........................................42
4.1.2 Deposits into Lockbox Account............................42
4.1.3 The Accounts.............................................42
4.2 Intentionally Deleted...........................................43
4.3 Tax and Insurance Escrow Fund...................................43
4.4 Replacements and Replacement Reserves...........................44
4.4.1 Replacement Reserve Fund.................................44
4.4.2 Payment of Replacement Expenses..........................44
4.5 Rollover Reserves...............................................44
4.5.1 Rollover Reserve Fund....................................44
4.5.2 Payment of Leasing Expenses..............................45
4.6 Ground Rent Escrow..............................................46
4.6.1 Ground Rent Escrow Fund..................................46
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4.7 Operating Expense Reserves......................................46
4.7.1 Operating Expense Reserve Fund...........................46
4.7.2 Payment of Approved Operating Expenses...................46
4.8 Casualty/Condemnation Fund......................................47
4.9 Security Deposits...............................................47
4.10 Funds, Generally................................................47
4.10.1 Grant of Security Interest; Application of Funds.........48
4.10.2 Investments of Funds.....................................48
4.11 Cash Collateral Fund............................................48
4.12 Intentionally Deleted...........................................49
V REPRESENTATIONS AND WARRANTIES...........................................49
5.1 Borrower Representations........................................49
5.1.1 Organization; Special Purpose............................49
5.1.2 Proceedings; Enforceability..............................49
5.1.3 No Conflicts.............................................50
5.1.4 Litigation...............................................50
5.1.5 Agreements...............................................50
5.1.6 Title....................................................50
5.1.7 Survey...................................................51
5.1.8 No Bankruptcy Filing.....................................51
5.1.9 Full and Accurate Disclosure.............................51
5.1.10 No Plan Assets...........................................51
5.1.11 Compliance...............................................51
5.1.12 Contracts................................................51
5.1.13 Financial Information....................................52
5.1.14 Condemnation.............................................52
5.1.15 Federal Reserve Regulations..............................52
5.1.16 Utilities and Public Access..............................52
5.1.17 Not a Foreign Person.....................................52
5.1.18 Separate Lots............................................53
5.1.19 Assessments..............................................53
5.1.20 Enforceability...........................................53
5.1.21 Insurance................................................53
5.1.22 Use of Property; Licenses................................53
5.1.23 Flood Zone...............................................53
5.1.24 Physical Condition.......................................53
5.1.25 Boundaries and Encroachments.............................54
5.1.26 Leases and Rent Roll.....................................54
5.1.27 Filing and Recording Taxes...............................54
5.1.28 Investment Company Act...................................55
5.1.29 Fraudulent Transfer......................................55
5.1.30 Ownership of Borrower....................................55
5.1.31 Management Agreement.....................................56
5.1.32 Hazardous Substances.....................................56
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5.1.33 Name; Principal of Business...............................56
5.1.34 Subordinated Debt.........................................57
5.1.35 Ground Lease..............................................57
5.1.36 REA.......................................................59
5.1.37 Tenant Estoppels..........................................59
5.1.38 No Prior Assignment.......................................59
5.1.39 Special Purpose Entity/Separateness.......................60
5.1.40 Illegal Activity..........................................60
5.2 Survival of Representations and Covenants........................60
VI AFFIRMATIVE COVENANTS.....................................................60
6.1 Existence........................................................60
6.2 Taxes and Other Charges..........................................61
6.3 Repairs; Maintenance and Compliance; Alterations;
Required Repairs.................................................61
6.3.1 Repairs and Maintenance...................................61
6.3.2 Legal Compliance..........................................61
6.3.3 Alterations...............................................62
6.3.4 Required Repairs..........................................63
6.4 Litigation.......................................................63
6.5 Performance of Other Agreements..................................63
6.6 Notices..........................................................63
6.7 Cooperate in Legal Proceedings...................................63
6.8 Further Assurances...............................................63
6.9 Financial Reporting..............................................64
6.9.1 Bookkeeping...............................................64
6.9.2 Annual Reports............................................64
6.9.3 Monthly and Quarterly Reports.............................64
6.9.4 Other Reports.............................................65
6.9.5 Annual Budget.............................................65
6.9.6 Delivery of Financial Information.........................65
6.10 Environmental Matters............................................66
6.10.1 Hazardous Substances......................................66
6.10.2 Environmental Monitoring..................................66
6.10.3 Title to the Property.....................................68
6.10.4 Easements; Dedications. Without the consent
of Lender, Borrower shall have the right from time to
time to release property, grant easements, or dedicate
property in connection with lot line adjustments,
utility or road requirements or other similar items,
provided that any such release, easement or dedication
will not have a material adverse effect on the value
or utility of the applicable Collateral Property and
such Collateral Property will remain in compliance
with all Requirements of Law..............................68
6.11 Leases...........................................................68
6.11.1 Form of Lease.............................................68
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6.11.2 New and Renewal Leases....................................69
6.11.3 Leasing Covenants.........................................69
6.11.4 Non-disturbance Agreements................................69
6.11.5 Reciprocal Easement Agreements............................69
6.11.6 Notice to Tenants.........................................70
6.12 Estoppel Statement...............................................70
6.13 Property Management..............................................70
6.13.1 Management Agreement......................................70
6.13.2 Termination of Manager....................................70
6.13.3 Manager's Subordination...................................71
6.14 Special Purpose Entity...........................................71
6.15 Expenses.........................................................71
6.16 Indemnity........................................................72
6.17 Third Party Reports..............................................73
6.18 Year 2000 Compliance.............................................73
6.19 [Intentionally Deleted.].........................................73
6.20 Performance by Borrower..........................................73
6.21 Secondary Market Transaction Master Estoppel.....................73
6.22 Exercise of Option to Purchase...................................74
VII NEGATIVE COVENANTS........................................................74
7.1 Management Agreement.............................................74
7.2 Liens............................................................75
7.3 Dissolution......................................................75
7.4 Change In Business or Operation of Property......................75
7.5 Debt Cancellation................................................75
7.6 Assets...........................................................75
7.7 Transfers........................................................75
7.8 Debt.............................................................78
7.9 Assignment of Rights.............................................78
7.10 Principal Place of Business......................................78
7.11 Corporate Organization...........................................78
7.12 ERISA............................................................78
7.13 No Joint Assessment..............................................79
7.14 Affiliate Transactions...........................................79
VIII INSURANCE...............................................................79
8.1.1 Coverage..................................................79
8.1.2 Policies..................................................80
8.2 Casualty.........................................................81
8.2.1 Notice; Restoration.......................................81
8.2.2 Settlement of Proceeds....................................81
8.3 Condemnation.....................................................81
8.3.1 Notice; Restoration.......................................81
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8.3.2 Collection of Award.......................................81
8.4 Application of Proceeds or Award.................................82
8.4.1 Application to Restoration................................82
8.4.2 Application to Debt.......................................82
8.4.3 Procedure for Application to Restoration..................83
8.4.4 Ground Lease; Anchor Lease; REA...........................83
IX DEFAULTS..................................................................83
9.1 Events of Default................................................83
9.2 Remedies.........................................................86
9.2.1 Acceleration..............................................86
9.2.2 Remedies Cumulative.......................................86
9.2.3 Severance.................................................86
9.2.4 Delay.....................................................87
9.2.5 Lender's Right to Perform.................................87
X SPECIAL PROVISIONS........................................................87
10.1 Sale of Note and Secondary Market Transaction....................87
10.1.1 Cooperation...............................................87
10.1.2 Use of Information........................................89
10.1.3 Borrower's Obligations Regarding Disclosure Documents.....89
10.1.4 Borrowers Indemnity Regarding Filings.....................90
10.1.5 Indemnification Procedure.................................90
10.1.6 Contribution..............................................91
XI MISCELLANEOUS.............................................................91
11.1 Exculpation......................................................91
11.2 Notices..........................................................93
11.2.1 Borrower's Representative.................................93
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11.3 Brokers and Financial Advisors...................................94
11.4 Retention of Servicer............................................94
11.5 Survival.........................................................94
11.6 Lender's Discretion..............................................95
11.7 Governing Law; Venue.............................................95
11.8 Modification; Waiver in Writing..................................95
11.9 Delay Not a Waiver...............................................96
11.10 TRIAL BY JURY....................................................96
11.11 Heading..........................................................96
11.12 Severability.....................................................96
11.13 Preferences......................................................96
11.14 Waiver of Notice.................................................97
11.15 Remedies of Borrower.............................................97
11.16 Prior Agreements.................................................97
11.17 Offsets, Counterclaims and Defenses..............................97
11.18 Publicity........................................................97
11.19 No Usury.........................................................97
11.20 Conflict; Construction of Documents..............................98
11.21 No Joint Venture or Partnership; No Third Party Beneficiaries....98
11.22 Yield Maintenance Premium........................................98
11.23 Assignment.......................................................99
11.24 Cross-Default; Waiver of Marshalling of Assets...................99
11.25 Joint and Several Liability.....................................100
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<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT dated as of December 9, 1999 between the Borrower (as
hereinafter defined) and UBS PRINCIPAL FINANCE LLC, a Delaware limited
liability company (together with its successors and assigns, "Lender").
I DEFINITIONS: PRINCIPLES OF CONSTRUCTION
1.1 Specific Definitions. The following terms have the meanings set
forth below:
"Acceptable Appraisal": an appraisal of a Collateral Property (or
proposed Substitute Property) or the Collateral Pool (i) dated not more
than 180 days prior to the Closing Date or the date of the proposed
Substitution, as applicable, (ii) signed by a qualified MAI/FIRREA
appraiser with no interest, direct or indirect, in the Loan, any
Collateral Property or the proposed Substitute Property, and whose
compensation is not affected by the Appraised Value (and Lender agrees
that as of the date hereof Landauer Associates, Inc. satisfies the
foregoing criteria), (iii) addressed to Lender and its successors and
assigns, (iv) made in compliance with the Uniform Standards of Appraisal
Practice, and (v) otherwise reasonably satisfactory to Lender in all
respects.
"ADA": shall mean The Americans with Disabilities Act of 1990.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control
with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"Agent": shall mean LaSalle National Bank.
"Agreement": this Loan Agreement.
"Allocated Loan Amount": shall mean the portion of the Loan amount
allocated to each Collateral Property by the Lender, as such Allocated
Loan Amounts are set forth on Schedule 1 attached hereto and incorporated
herein by reference.
"Anchor Tenant": shall mean any Tenant from time to time leasing
more than 75,000 square feet of gross leasable area in any particular
Collateral Property.
"Anticipated Repayment Date": shall mean December 11, 2009.
"Applicable Interest Rate": shall mean (a) from the date hereof
through but not including the Anticipated Repayment Date, the Regular
Interest Rate and (b) from and after the Anticipated Repayment Date
through and including the date the Loan is paid in full, the Matured
Performing Rate.
"Applicable Rating Agencies": means the Rating Agencies that have
rated any Securities issued in connection with a Secondary Market
Transaction.
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"Appraised Value": the fair market value of a Collateral Property or
the Collateral Pool reflected in an Acceptable Appraisal.
"Approved Leasing Expenses": expenses incurred by a Borrower in
leasing space at the Collateral Property pursuant to Leases entered into
in accordance with the Loan Documents, including brokerage commissions,
tenant improvements and other inducements, which expenses (i) are (A)
specifically approved by Lender in connection with approving the
applicable Lease, (B) incurred in the ordinary course of business and on
market terms and conditions in connection with Leases which do not require
Lender's approval under the Loan Documents, or (C) otherwise approved by
Lender, which approval shall not be unreasonably withheld or delayed, and
(ii) are substantiated by executed Lease documents and brokerage
agreements.
"Approved Manager": Westfield Management Company, a Delaware general
partnership, or Westfield Management Acquisition, Inc., a Delaware
corporation, or any other wholly owned subsidiary of Westfield Holdings
Limited, or any successor or assignee of any of the foregoing, provided
that each successor or assignee shall be (i) approved by Lender in
Lender's reasonable discretion (unless such successor or assign is wholly
owned, directly or indirectly, by Westfield Holdings Limited and evidence
thereof reasonably satisfactory to Lender has been delivered to Lender
prior to the change in Manager, in which case Lender's approval shall not
be required) and (ii) after any Secondary Market Transaction, approved by
each Rating Agency (provided that such Rating Agency approval shall not be
necessary as to any Manager wholly owned, directly or indirectly, by
Westfield Holdings Limited if each Rating Agency has received a
nonconsolidation opinion as to such Manager from Debevoise & Plimpton or
another law firm acceptable to the Rating Agencies in form and substance
satisfactory to the Rating Agencies).
"Approved Operating Expenses": Operating Expenses incurred by a
Borrower following the occurrence of a Cash Management Event or the
Anticipated Repayment Date which (i) are included in the Operating Budget
for the Current Month for the Collateral Property owned by such Borrower,
(ii) are for electric, gas, oil, water, sewer or other utility service to,
or Management Fees for, the Collateral Property, or (iii) have been
approved by Lender, which approval shall not be unreasonably withheld or
delayed.
"Approved Replacement Expenses": Replacement Expenses incurred by
the Borrower which (i) are included in the approved Replacement Budget for
the Current Month for the Collateral Property or (ii) have been approved
by Lender, which approval shall not be unreasonably withheld or delayed.
"Assignment of Leases": shall mean, with respect to each Collateral
Property, that certain first priority Assignment of Leases and Rents,
dated as of the date hereof, from the applicable Borrower, as assignor, to
Lender, as assignee, assigning to Lender all of the Borrower's interest in
and to the Leases and Rents of such Collateral Property as security for
the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Borrower": collectively, Downtown Plaza LLC, a Delaware limited
liability company, Eastland Shopping Center LLC, a Delaware limited
liability company, and Westland South
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Shore Mall L.P., a California limited partnership, together with their
respective permitted successors and assigns.
"Business Day": means any day other than (i) a Saturday or a Sunday,
and (ii) a day on which federally insured depository institutions in New
York, New York or San Francisco, California are authorized or obligated by
law, regulation, governmental decree or executive order to be closed.
"Cash Management Agreement": shall mean that certain Cash Management
Agreement dated as of the date hereof by and between the Borrower, Lender,
Manager and Agent.
"Cash Management Event": either (A) an Event of Default occurs or
(B) the Debt Service Coverage Ratio at any time is less than 1.25, subject
to a One Time Cash Management Event Cure by the Borrower.
"Cash Management Fee": the fees charged from time to time by the
Agent in accordance with the Cash Management Agreement.
"Cash Management Termination": the giving by Lender to the Agent of
notice that the sweeping of funds into the Rollover Reserve Account,
Replacement Reserve Account, Operating Expense Account and the Cash
Collateral Account may cease (a "Cash Management Termination Notice"),
which notice Lender shall only be required to give if (x) no other Cash
Management Event has subsequently occurred, and (y) and the Debt Service
Coverage Ratio has been 1.25x or higher for two consecutive fiscal
quarters (such Debt Service Coverage Ratio being tested on a quarterly
basis) since the occurrence of the Cash Management Event.
"Closing Date": shall mean the date of the funding of the Loan or,
in the case of a Substitution, the Substitution Date.
"Code": the Internal Revenue Code of 1986, as amended, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations
issued pursuant thereto in temporary or final form.
"Collateral Pool": collectively, each and every Collateral Property
which is subject to the terms of this Agreement, including any Substitute
Property.
"Collateral Property": shall mean each parcel of real property, the
Improvements thereon, the Equipment and all personal property owned by the
applicable Borrower and encumbered by a Mortgage, together with all rights
pertaining to such property and Improvements, as more particularly
described in the granting clauses of each Mortgage.
"Control": with respect to any Person, either (i) ownership directly
or through other entities of more than fifty percent (50%) of all
beneficial equity interest in such Person, or (ii) the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, through the ownership of
voting securities, by contract or otherwise.
"Current Month": as of any date of determination following the
occurrence of a Cash Management Event or the Anticipated Repayment Date,
the then current calendar month.
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"Debt": the unpaid principal, all interest accrued and unpaid
thereon, any Yield Maintenance Premium and all other sums due to Lender in
respect of the Loan under the Note, this Agreement, the Mortgages, or
under any Loan Document.
"Debt Service": with respect to any particular period of time, the
scheduled amount of Principal and interest payments due under the Note in
such period.
"Debt Service Coverage Ratio": as of any date, the ratio calculated
by Lender of (i) the Net Operating Income for the twelve (12) month period
ending with the most recently completed calendar quarter to (ii) the Debt
Service for the same period.
"Default": the occurrence of any event under any Loan Document
which, but for the giving of notice or passage of time, or both, would be
an Event of Default.
"Default Rate": prior to the Stated Maturity Date: a rate per annum
equal to the lesser of (i) the Maximum Rate and (ii) three percent (3%)
above the Applicable Interest Rate, compounded monthly.
"Defeasance Collateral": shall mean obligations or securities not
subject to prepayment, call or early redemption which are direct
obligations of, or obligations fully guaranteed as to timely payment by,
the United States of America or any agency or instrumentality of the
United States of America, or the obligations of which are backed by the
full faith and credit of the United States of America, the ownership of
which will not cause Lender to be an "investment company" under the
Investment Company Act of 1940, as amended, as evidenced by an opinion of
counsel reasonably acceptable to Lender, and which qualify under ss.
1.860G-2(a)(8) of the Treasury regulations. All such obligations or
securities shall mature or be redeemable, or provide for payments of
interest thereon, on or prior to the Business Day preceding the date such
amounts are required to be applied under this Agreement and shall provide
payments (i) on or prior to, but as close as possible to, all Payment
Dates and other scheduled payment dates if any, under the Note after the
Defeasance Date and up to and including the Anticipated Repayment Date,
and (ii) in amounts equal to or greater than the Schedule Defeasance
Payments.
"Eligible Account": shall mean a separate and identifiable account
from all other funds held by the holding institution that is either (a) an
account or accounts maintained with a federal or state-chartered
depository institution or trust company which complies with the definition
of Eligible Institution or (b) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or
trust company acting in its fiduciary capacity which, in the case of a
state chartered depository institution or trust company, is subject to
regulations substantially similar to 12 C.F.R. ss.9.10(b), having in
either case a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal and state authority. An
Eligible Account will not be evidenced by a certificate of deposit,
passbook or other instrument.
"Eligible Institution" shall mean a federal or state chartered
depository institution or trust company, the long-term unsecured debt
obligations of which are rated at least (A) "A+" by S&P and (B) "A+" by
Fitch IBCA, Inc. ("Fitch") or, if not rated by Fitch, at least "A" or its
equivalent by another nationally recognized statistical rating agency
(other than S&P) if the
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deposits are to be held in such account 30 days or more or the short-term
debt obligations of which have a short-term rating of not less than "A-1"
from S&P and "F-1+" from Fitch or if not rated by Fitch, at least "F-1+"
or its equivalent by another nationally recognized statistical rating
agency (other than S&P) if the deposits are to be held in such account for
less than thirty (30) days, or such other account or accounts with respect
to which the Applicable Rating Agencies shall have confirmed in writing
that the then current ratings assigned in any Secondary Market Transaction
will not be qualified, downgraded or withdrawn by reason thereof.
"Environmental Event": means, with respect to any Collateral
Property, (a) a violation of any Environmental Law with respect to such
Collateral Property of which Borrower has received written notice from a
governmental authority, or (b) the presence of any Hazardous Substance on,
about, or under such Collateral Property that, under or pursuant to any
Environmental Law, would require remediation, if in the case of either (a)
or (b), such event or circumstance could result in a material adverse
effect on the value or operations of such Collateral Property.
"ERISA": the Employment Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated
thereunder.
"ERISA Affiliate": all members of a controlled group of corporations
and all trades and business (whether or not incorporated) under common
control and all other entities which, together with Borrower, are treated
as a single employer under any or all of Section 414(b), (c), (m) or (o)
of the Code.
"FASIT": Financial Asset Securitization Investment Trust within the
meaning of Section 860L(a)(1) of the Code.
"Fiscal Year": each twelve month period commencing on January 1 and
ending on December 31 during each year of the Term.
"GAAP": generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"Governmental Authority": any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental unit
(federal, state, county, district, municipal, city or otherwise) now or
hereafter in existence.
"Ground Lease": any lease defined as a "Ground Lease" in any
Mortgage.
"Ground Lessor": a lessor under a Qualified Ground Lease.
"Ground Rent": with respect to any Ground Lease, all ground rents,
square footage rents, percentage rents or any other payments or rents
owing by a Borrower under such Ground Lease.
"Improvements": shall have the meaning set forth in the granting
clause of the related Mortgage with respect to each Collateral Property.
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"Independent Director": shall mean a director or manager of the SPE
Member who is not at the time of initial appointment, or at any time while
serving as a director of the SPE Member, and has not been at any time
during the preceding five (5) years: (a) a stockbroker, director (with the
exception of serving as the Independent Director of the SPE Member),
officer, employee, partner, attorney or counsel of the SPE Member, the
Borrower or any Affiliate of either of them; (b) a customer, supplier or
other person who derives any of its purchases or revenues from its
activities with the SPE Member, the Borrower or any Affiliate of either of
them; (c) a Person controlling or under common control with any such
stockholder, partner, customer, supplier or other Person; or (d) a member
of the immediate family of any such stockholder, director, officer,
employee, partner, customer, supplier or other person. As used in this
definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or activities of a Person, whether through ownership of voting
securities, by contract or otherwise. An individual that otherwise
satisfies the foregoing shall not be disqualified from serving as an
Independent Director of the SPE Member if such individual is at the time
of initial appointment, or at any time while serving as an Independent
Director of the SPE Member, an Independent Director of a Special Purpose
Entity Affiliated with the Borrower or the SPE Member.
"Insolvency Opinion": shall mean one or more substantive
non-consolidation opinion letters, dated the date hereof, delivered by
Debevoise & Plimpton on behalf of each Borrower in connection with the
Loan.
"Interest Period": (i) the period from the Closing Date through the
first day thereafter that is an Interest Period Termination Date and (ii)
each period thereafter from an Interest Period Commencement Date through
an Interest Period Termination Date; except that the Interest Period, if
any, that would otherwise commence before and end after the Maturity Date
shall end on the Maturity Date.
"Interest Period Commencement Date": the eleventh (11th) day of each
calendar month; provided, however, that if the Payment Date is changed by
Lender pursuant to the definition thereof, Lender may adjust this
definition accordingly.
"Interest Period Termination Date": the tenth (10th) day of each
calendar month (notwithstanding that the succeeding Payment Date may not
be an Interest Period Commencement Date because the day after such
Interest Period Termination Date is not a Business Day); provided,
however, that if the Payment Date is changed by Lender pursuant to the
definition thereof, Lender may adjust this definition accordingly.
"Lease Rollover Number": as to any calendar year, the aggregate
number of square feet of gross leasable area in the Improvements in the
Collateral Pool that are covered by Leases the expiration dates of which
(after taking into account all renewals and extensions that have been
unconditionally exercised as of the date in question) are scheduled to
occur in such calendar year.
"Lease Rollover Percentage": as to any calendar year, a fraction,
expressed as a percentage, the numerator of which is the Lease Rollover
Number for such calendar year and the
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denominator of which is the aggregate number of square feet of gross
leasable area of all Improvements in the Collateral Pool.
"Leasehold Estate": the leasehold interest and estate of any
Borrower created pursuant to a Ground Lease.
"Leases": all leases and other agreements existing on the date
hereof or hereafter entered into affecting the use, or occupancy of, or
the conduct of any activity upon or in, any Collateral Property or any
Improvements thereon, including any extensions, renewals, modifications or
amendments thereof, but excluding (i) reciprocal easement and operating
agreements and (ii) subleases where the sublessee is not in privity with a
Borrower.
"Legal Requirements": statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of, or agreements with,
Governmental Authorities affecting all or part of any Collateral Property,
any Ground Lease or the construction, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instrument, either of record or known to any Borrower, at any time in
force affecting all or part of any Collateral Property, including any that
may (i) require repairs, modifications or alterations in or to all or part
of any Collateral Property, or (ii) in any way limit the use and enjoyment
thereof.
"Letter of Credit": shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit in favor of Lender and
entitling Lender to draw thereon in New York, New York, issued by a
domestic Eligible Institution or the U.S. agency or branch of a foreign
Eligible Institution, or if there are no domestic banks or financial
institutions which qualify as an Eligible Institution or U.S. agencies or
branches of a foreign bank or financial institution which qualifies as an
Eligible Institution then issuing letters of credit, then such letter of
credit may be issued by any domestic bank with a long term unsecured debt
rating that is the highest such rating then given by each Rating Agency to
a domestic commercial bank.
"Lien": any mortgage, deed of trust, indemnity deed of trust, lien,
pledge, hypothecation, assignment, security interest or any other
encumbrance, charge or transfer of, on or affecting all or part of any
Collateral Property or any interest therein, or in any Borrower or in any
Borrower Representative, including any conditional sale or other title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances.
"Loan": shall mean the loan made by Lender to Borrower pursuant to
this Agreement.
"Loan Documents": this Agreement and all other documents, agreements
and instruments evidencing, securing or delivered to Lender in connection
with the Loan, whether now existing or hereafter executed, including the
following: (i) the Note, (ii) the mortgage on each Collateral Property
(individually a "Mortgage" and collectively, the "Mortgages"), (iii) the
Assignments of Leases with respect to each Collateral Property, (iv) the
Assignments of Agreements with respect to each Collateral Property, (v)
the Manager's Consent and
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Subordination of Management Agreement with respect to each Collateral
Property, (vi) the Contribution Agreement, (vii) the Cash Management
Agreement, and (x) the Environmental Indemnity, and all other documents
executed and/or delivered in connection with the Loan, as each of the
foregoing may be (and each of the foregoing defined terms shall refer to
such documents as they may be) amended, restated, replaced, supplemented
or otherwise modified from time to time.
"Maintenance and Repairs": items of maintenance and repair to the
Improvements or Equipment similar to the items of work (but not limited to
such specific items) described in the physical inspection reports
delivered to Lender in connection with the closing of the Loan.
"Management Agreement": as to each Collateral Property, the
management agreement in effect on the date hereof between the applicable
Borrower and an Approved Manager for such Collateral Property, pursuant to
which such Approved Manager is to manage such Property, as same may be
amended, restated, replaced, supplemented or otherwise modified from time
to time with the prior approval of Lender (which consent shall not be
reasonably withheld or delayed), and after any Secondary Market
Transaction, the approval of each Rating Agency (provided, however, that
any modification which does not modify the term or economics of the
Management Agreement or otherwise materially modify the Management
Agreement, shall require prior notice to, but not the consent of, Lender,
and shall not require the consent of any Rating Agency).
"Management Fee(s)": as to any Management Agreement, all fees in the
nature of management fees payable to Manager under such Management
Agreement.
"Manager": as to each Collateral Property, the Approved Manager
under the Management Agreement for such Collateral Property.
"Material Alteration": as to the Collateral Properties known as
Downtown Plaza and South Shore Mall, any alteration affecting structural
elements of such Collateral Property the cost of which exceeds five
percent (5%) of such Collateral Property's original Allocated Loan Amount
per calendar year; provided, however, that in no event shall tenant
improvement work, or alterations performed as part of a Restoration,
constitute a Material Alteration.
"Material Lease": as to any Collateral Property, any Lease (i) which
demises more than five percent (5%) of such Collateral Property's gross
leasable area or (ii) the fixed annual rent under which exceeds five
percent (5%) of the aggregate fixed annual rent payable under all Leases
of such Collateral Property.
"Matured Performing Rate": shall mean a rate per annum equal to the
Regular Interest Rate plus four hundred (400) basis points.
"Maturity Date": the date on which the final payment of Principal of
the Note becomes due and payable as therein or herein provided, whether at
the Stated Maturity Date, by declaration of acceleration, or otherwise.
"Maximum Rate": the maximum interest rate allowed by applicable law
in effect with respect to the Loan on the date for which a determination
of interest accrued hereunder is made,
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after taking into account all fees, payments and other charges that are,
under applicable law, characterized as interest.
"Monthly Debt Service Payment Amount": shall mean a constant monthly
payment of $1,610,022.66.
"Monthly Replacement Deposit": for any Collateral Property, the
amount reasonably determined by Lender, based on the property condition
report for such Collateral Property reviewed by Lender, in connection with
Lender's making of the Loan. On each anniversary of the date of this
Agreement (or, if any such anniversary is not a Payment Date, on the first
Payment Date following such anniversary) the Monthly Replacement Deposit
shall automatically increase by 2.5% of the then current Monthly
Replacement Deposit amount. The initial Monthly Replacement Deposit for
each of the Collateral Properties owned by the Borrower is set forth in
Schedule 2 hereto.
"Monthly Rollover Deposit": for any Collateral Property, an amount
equal to one-twelfth (1/12th) of the average annual cost (as determined by
Lender) to the applicable Borrower for tenant improvements and leasing
commissions in respect of such Collateral Property during the sixty (60)
month period prior to the Closing Date, as set forth on Schedule 3 hereto.
"Net Operating Income": for any period, the excess, if any, of
Operating Income for such period over Operating Expenses for such period.
"Net Operating Income After Debt Service": for any period shall mean
the amount obtained by subtracting Debt Service for such period from Net
Operating Income for such period.
"Obligations": all obligations, liabilities and Debt of Borrower to
Lender, whether now existing or hereafter arising, under this Agreement or
any of the other Loan Documents.
"Officer's Certificate": as to any Borrower, a certificate delivered
to Lender by such Borrower which is signed by a senior executive officer
of such Borrower's Borrower Representative.
"One Time Cash Management Event Cure": In the event that a Cash
Management Event is due to the Debt Service Coverage Ratio being below
1.25, the Borrower shall have the opportunity one (1) time during the Loan
term to deposit cash or a Letter of Credit with the Lender in an amount
sufficient to raise the Debt Service Coverage Ratio to 1.30; provided,
however, that the Debt Service Coverage Ratio must be 1.25 or greater at
the end of the immediately following quarter.
"Operating Expenses": shall mean the total of all expenditures,
computed in accordance with GAAP, of whatever kind relating to the
operation, maintenance and management of the Collateral Property that are
incurred on a regular monthly or other periodic basis, including without
limitation, utilities, ordinary repairs and maintenance, insurance,
license fees, property taxes and assessments, advertising expenses,
management fees, payroll and related taxes, computer processing charges,
operational equipment or other lease payments, and other similar costs,
but excluding depreciation, Debt Service, Replacement Expenses, non-cash
items
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such as depreciation and amortization or any extraordinary one time
expenditures not considered operating expenses under GAAP.
"Operating Income": as to any Collateral Property or proposed
Substitute Property, for any period, all regular on-going revenues
actually received by Borrower from the operation of such Collateral
Property or proposed Substitute Property during such period, including (i)
Rents, (ii) amounts withdrawn from any Funds pursuant to this Agreement,
and (iii) all other amounts actually received which in accordance with
GAAP are required to be or are included in the applicable Borrower's
annual financial statements as operating income of such Collateral
Property or proposed Substitute Property; provided, that Operating Income
will not include (1) income from non-recurring income sources; (2) advance
Rents or other payments; (3) deposits or escrows other than the Funds,
without duplication; (4) any income otherwise includable in Operating
Income but paid to a Person other than the applicable Borrower; (5)
proceeds of Casualty insurance or Condemnation Awards; or (6) income from
a sale, financing or other capital transaction.
"Other Charges": with respect to any Collateral Property, all Ground
Rents, maintenance charges, impositions other than Taxes, and any other
charges, including vault charges and license fees for the use of vaults,
chutes and similar areas adjoining such Collateral Property, now or
hereafter levied or assessed or imposed against such Collateral Property
or any part thereof, including all interest and penalties on any of the
foregoing.
"Partial Defeasance Collateral": shall mean Defeasance Collateral
which provides payments (i) on or prior to, but as close as possible to,
all Payments Dates and other scheduled payment dates, if any, under the
Defeased Note after the Partial Defeasance Date and up to and including
the Anticipated Repayment Date, and (ii) in amounts equal to or greater
than the Scheduled Defeasance Payments.
"Payment Date": the eleventh (11th) day of each calendar month (or
such other day of a calendar month selected by Lender to collect debt
service payments under loans which it makes and securitizes) or, if such
day is not a Business Day, the first Business Day thereafter.
"Permitted Encumbrances": as to any Collateral Property: (a) the
Liens created by the Loan Documents, (b) all Liens and other matters
disclosed in the Title Insurance Policies insuring the Mortgage on such
Collateral Property, (c) Liens, if any, for Taxes or Other Charges not yet
payable or delinquent, (d) easements for utilities and rights of way which
do not have a material adverse affect on the use, operation or value of
such Collateral Property and (e) such other title and survey exceptions as
Lender approves in writing in Lender's reasonable discretion.
"Permitted Investments": shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than
par, including those issued by Servicer, the trustee under any Secondary
Market Transaction or any of their respective Affiliates, payable on
demand or having a maturity date not later than the Business Day
immediately prior to the first Payment Date following the date of
acquiring such investment and meeting one of the appropriate standards set
forth below:
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(1) obligations of, or obligations fully guaranteed as to
payment of principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full faith
and credit of the United States of America including, without limitation,
obligations of: the U.S. Treasury (all direct or fully guaranteed obligations),
the Farmers Home Administration (certificates of beneficial ownership), the
General Services Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed pool
certificates), the U.S. Department of Housing and Urban Development (local
authority bonds) and the Washington Metropolitan Area Transit Authority
(guaranteed transit bonds); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(2) Federal Housing Administration debentures;
(3) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations), the
Farm Credit System (consolidated systemwide bonds and notes), the Federal Home
Loan Banks (consolidated debt obligations), the Federal National Mortgage
Association (debt obligations), the Student Loan Marketing Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(4) federal funds, unsecured certificates of deposit, time
deposits, the short term obligations of which at all times are rated in the
highest short term rating category by each Applicable Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest
short term rating category and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(5) fully Federal Deposit Insurance Corporation-insured demand
and time deposits in, or certificates of deposit of any bank or trust company,
savings and loan association or savings bank, the short term obligations of
which at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating
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Agencies, rated by at least one Rating Agency in the highest short term rating
category and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(6) debt obligations with maturities of not more than 365 days
and at all times rated by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to each
other Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities) in its
highest long-term unsecured rating category; provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(7) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof) with
maturities of not more than 365 days and that at all times is rated by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed
in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest short-term unsecured
debt rating; provided, however, that the investments described in this clause
must (A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their maturity;
(8) units of taxable money market funds or mutual funds, which
funds are regulated investment companies, seek to maintain a constant net asset
value per share and invest solely in obligations backed by the full faith and
credit of the United States, which funds have the highest rating available from
each Rating Agency (or, if not rated by all Rating Agencies, rated by at least
one Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds or mutual
funds; and
(9) any other security, obligation or investment which has
been approved as a Permitted Investment in writing by (a) Lender and (b) each
Rating Agency, as
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evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Person": any individual, corporation, partnership, joint venture, estate,
trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.
"Plan": (i) an employee benefit or other plan established or maintained by
Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate
makes or is obligated to make contributions and (ii) which is covered by Title
IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
"Pooling and Servicing Agreement": the Servicing Agreement entered into
with the Servicer in connection with any Secondary Market Transaction, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Prepayment Lockout Expiration Date": shall mean the date that is the
later of (a) three (3) years from the Closing Date or (b) two (2) years from the
"startup day" within the meaning of Section 860G(a)(9) of the Code of the REMIC
Trust.
"Qualified Ground Lease": a ground lease of a Collateral Property under
which a Borrower is the lessee, all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion (or, in the case of a
ground lease which covers only portions of a Collateral Property not material to
the use, operation or legal compliance of such Collateral Property, in Lender's
reasonable discretion) and as to which the Ground Lessor has executed and
delivered to Lender an estoppel certificate in form, scope and substance
satisfactory to Lender in its sole and absolute discretion.
"Qualified REA": an REA all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion and as to which each of
the parties to the REA (other than the applicable Borrower) has executed and
delivered to Lender an estoppel certificate in form, scope and substance
satisfactory to Lender in its sole and absolute discretion.
"Rating Agency": any of Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. ("S&P"), Moody's Investors Service, Inc., Duff & Phelps Credit
Rating Co., Fitch IBCA, Inc. or any other nationally-recognized statistical
rating agency which has issued a rating of any Securities.
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"Rating Comfort Letter": a letter issued by each of the Applicable Rating
Agencies which confirms that the taking of the action referenced to therein will
not result in any qualification, withdrawal or downgrading of any existing
ratings of Securities created in a Secondary Market Transaction.
"REA": any "construction, operation and reciprocal easement agreement" or
similar agreement (including any "separate agreement" or other agreement between
a Borrower and one or more other parties to an REA with respect to an REA)
affecting any Collateral Property or portion thereof.
"Real Property": as to any Collateral Property, the portions thereof
constituting land, Improvements thereon and all rights pertaining to such land
and Improvements.
"Regular Interest Rate": shall mean (8.177%) per annum.
"REMIC": a "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code that holds the Note.
"Rents": with respect to any Collateral Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, all oil and gas or other mineral royalties and bonuses),
income, fees, receivables, receipts, revenues, deposits (including security,
utility and other deposits), accounts, cash, issues, profits, charges for
services rendered, and other payment and consideration of whatever form or
nature received by or paid to or for the account of or benefit of a Borrower,
Manager (in its capacity as manager of such Collateral Property, and excluding
sums payable by Borrower to Manager pursuant to the Management Agreement) or any
of their agents or employees from any and all sources arising from or
attributable to such Collateral Property and the Improvements therein, including
all receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of such Collateral Property or rendering of services by the applicable
Borrower or Manager (in its capacity as manager of such Collateral Property, and
excluding sums payable by a Borrower to a Manager pursuant to Management
Agreement), and proceeds, if any, from business interruption or other loss of
income insurance.
"Replacement Expenses": expenses incurred to pay for replacements,
improvements and/or Maintenance and Repairs of the Improvements or Equipment or
portions of either.
"Required Record": any financial statement, certificate, report or
information required to be delivered under Section 6.9.
"Routine Hazardous Substances": Hazardous Substances typically used in the
ordinary course of business at retail properties, which are generated, used,
stored and disposed of in compliance with all applicable Environmental Laws.
"Scheduled Defeasance Payments": shall mean scheduled payments of interest
and principal under the Note in the case of a Total Defeasance and under the
Defeased Note in the case of a Partial Defeasance for all Payment Dates
occurring after the Defeasance Date or Partial Defeasance Date, as applicable,
and up to and including the Anticipated Repayment Date
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(including, in the case of a Total Defeasance, the outstanding Principal balance
on the Note as of the Anticipated Repayment Date and, in the case of a Partial
Defeasance, the outstanding Principal balance on the Defeased Note as of the
Anticipated Repayment Date), and all payments required after the Defeasance Date
or Partial Defeasance Date, as applicable, if any, under the Loan Documents for
servicing fees, fees to Agent and other similar charges.
"Security Agreement": shall mean a security agreement in form and
substance satisfactory to Lender pursuant to which Borrower grants Lender a
perfected, first priority security interest in the Defeasance Collateral Account
and the Total Defeasance Collateral or Partial Defeasance Collateral, as
applicable.
"Servicer": Bank of New York, or its successor in interest, or if any
successor servicer is appointed pursuant to the Pooling and Servicing Agreement,
such successor servicer.
"SPE Member": shall have the meaning set forth in subparagraph (5) of the
definition of "Special Purpose Entity" contained in this Section 1.1.
"Special Purpose Entity": shall mean a corporation, limited partnership or
limited liability company which at all times on and after the date hereof:
(1) is organized solely for the purpose of (A) acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging,
managing and operating a Collateral Property, entering into this Agreement with
the Lender, refinancing a Collateral Property in connection with a permitted
repayment of the Loan, and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing; (B) acting as a general
partner of the limited partnership that owns a Collateral Property or member of
the limited liability company that owns a Collateral Property; (C) acting as a
Borrower under this Agreement; (D) guaranteeing the obligations under this
Agreement and securing its obligations under such guarantee with a Collateral
Property and/or; (E) acting as the sole managing member or sole managing partner
of a Borrower or any entity which owns a partnership interest or a membership
interest in (i) a Borrower or (ii) any parent of a Borrower.
(2) is not engaged and will not engage in any business
unrelated to the purposes described in paragraph (1) above;
(3) does not have and will not have any assets other than
those related to a Collateral Property and other than for the purposes described
in paragraph (1) above;
(4) has not engaged, sought or consented to and will not
engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets, transfer
of partnership or membership interests (if such entity is a general partner in a
limited partnership or a member in a limited liability company) or amendment of
its limited partnership agreement, articles of incorporation, articles of
organization, certificate of formation or operating agreement (as applicable)
with respect to the matters set forth in this definition;
(5) if such entity is a limited partnership, has, as its only
general partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability
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companies (with more than one member) (together with the members required
pursuant to subparagraph (7) below (if applicable), the "SPE Member");
(6) if such entity is a corporation, has at least two (2)
Independent Directors, and has not caused or allowed and will not cause or allow
the board of directors or managers of such entity to take any action requiring
the unanimous affirmative vote of 100% of the members of its board of directors
or managers unless all Independent Directors shall have participated in such
vote;
(7) (a) if such entity is a limited liability company, has at
least one member that is a Special Purpose Entity that has at least two (2)
Independent Directors and that owns at least one percent (1%) of the equity of
the limited liability company or (b) is wholly-owned by WALP;
(8) if such entity is (a) a limited liability company, has
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, (b) a limited partnership, has a limited partnership
agreement, or (c) a corporation, has a certificate of incorporation or articles
that, in each case, provide that such entity will not: (1) dissolve, merge,
liquidate, consolidate; (2) sell all or substantially all of its assets or the
assets of the Borrower (as applicable); (3) engage in any other business
activity, or amend its organizational documents with respect to the matters set
forth in this definition without the consent of the Lender; or (4) without the
affirmative vote of all Independent Directors and of all other directors or
managers of the corporation or entity (that is such entity or the general
partner or managing or co-managing member of such entity), file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with respect
to itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest;
(9) if such entity is a limited partnership or a limited
liability company that is the general partner of a limited partnership or the
member of a limited liability company that is the Borrower, has an entity that
owns at least one percent (1%) of the equity of such entity as its general
partner or managing member, as applicable, that is a Special Purpose Entity;
(10) is and will remain solvent and pay its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same shall become due, and is maintaining and will
maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations;
(11) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity; (12) maintains
and will maintain its accounts, books and records separate from any other Person
and will file its own tax returns, except to the extent that it is required to
file consolidated tax returns by law;
(13) maintains and will maintain its own records, books,
resolutions and agreements;
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(14) other than as provided in the Cash Management Agreement,
(a) does not and will not commingle its funds or assets with those of any other
Person and (b) does not participate and will not participate in any cash
management system with any other Person;
(15) has held and will hold its assets in its own name;
(16) has conducted and will conduct its business in its name
or in a name franchised or licensed to it by an entity, except for services
rendered under a business management services agreement with an Affiliate that
complies with the terms contained in Section 7.14 of this Agreement, so long as
the manager, or equivalent thereof, under such business management services
agreement holds itself out as an agent of the Borrower; (17) maintains and will
maintain its financial statements, accounting records and other entity documents
separate from any other Person and has not permitted and will not permit its
assets to be listed as assets on the financial statement of any other entity
except as required by GAAP;
(18) pays and will pay its own liabilities and expenses,
including the salaries of its own employees, out of its own funds and assets,
and has maintained and will maintain a sufficient number of employees in light
of its contemplated business operations;
(19) has observed and will observe all partnership, corporate
or limited liability company formalities, as applicable;
(20) will not create, incur or assume any indebtedness other
than (i) the Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses
and Approved Leasing Expenses and (iii) other trade debt incurred in the
ordinary course of business relating to the ownership and operation of its
Collateral Property which other trade debt does not exceed, at any time, a
maximum aggregate amount of $1,000,000.00 for each Collateral Property being
operated as a retail shopping center or a mixed use retail/office project and
$500,000.00 for each Collateral Property being operated as a power center, and
such trade debt is paid within sixty (60) days of the date incurred (other than
amounts being disputed in good faith);
(21) does not and will not assume or guarantee or become
obligated for the debts of any other Person or hold out its credit as being
available to satisfy the obligations of any other Person except as permitted
pursuant to this Agreement;
(22) does not and will not acquire obligations or securities
of its partners, members or shareholders or any other Affiliate except as
permitted pursuant to this Agreement;
(23) allocates and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including, but not limited
to, paying for shared office space and services performed by any employee of an
affiliate;
(24) the stationary, invoices, and checks utilized by the
Special Purpose Entity or utilized to collect its funds or pay its expenses
shall bear its own name and shall not
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bear the name of any other entity unless such entity is clearly designated as
being the Special Purpose Entity's Manager.
(25) will not pledge its assets for the benefit of any other
Person except as permitted in this Agreement;
(26) will hold itself out and identify itself as a separate
and distinct entity under its own name or in a name franchised or licensed to it
by an entity and not as a division or part of any other Person, except for
services rendered under a business management services agreement with an
Affiliate that complies with the terms contained in Section 7.14 herein, so long
as the manager, or equivalent thereof, under such business management services
agreement holds itself out as an agent of the Borrower;
(27) will maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person;
(28) will not make loans to any Person or hold evidence of
indebtedness issued by any other person or entity (other than cash and
investment-grade securities issued by an entity that is not an Affiliate of or
subject to common ownership with such entity) except as permitted pursuant to
this Agreement;
(29) will not identify its partners, members or shareholders,
or any Affiliate of any of them, as a division or part of it, and has not
identified itself and shall not identify itself as a division of any other
Person;
(30) has not entered into or been a party to, and will not
enter into or be a party to, any transaction with its partners, members,
shareholders or Affiliates except (A) those referred to in Section 7.14 of this
Agreement, (B) in the ordinary course of its business and on terms which are
intrinsically fair, commercially reasonable and are no less favorable to it than
would be obtained in a comparable arm's-length transaction with an unrelated
third party and (C) in connection with this Agreement;
(31) will not have any obligation to, and will not, indemnify
its partners, officers, directors or members, as the case may be, or has such an
obligation that is fully subordinated to the Debt and will not constitute a
claim against it in the event that cash flow in excess of the amount required to
pay the Debt is insufficient to pay such obligation;
(32) if such entity is a corporation, it shall consider the
interests of its creditors in connection with all corporate actions referred to
in clause 8(c)(4) of this definition;
(33) will not have any of its obligations guaranteed by any
Affiliate other than those obligations guaranteed in connection with the Loan
except as otherwise permitted pursuant to this Agreement or in connection with
obligations relating to alterations or additions to any Collateral Property;
(34) has complied and will comply with all of the terms and
provisions contained in its organizational documents.
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"State": as to any Collateral Property, the state or commonwealth in which
such Collateral Property or any part thereof is located.
"Stated Maturity Date": December 11, 2029.
"Survey": a current as-built survey of a Collateral Property prepared by a
surveyor licensed by the State in which such Collateral Property is located and
certified to Lender and the Title Company and prepared in accordance with the
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys meeting
the Accuracy Standards of an Urban Survey, with accuracy and precision
requirements modified to meet current angular and linear tolerance requirements
of such State, showing the legal description and street address of the
Collateral Property; all visible or recorded easements, building lines, curb
cuts, and party walls; all parking, sewage, water, electricity, gas and other
utility facilities, together with recording information concerning the documents
creating any such easements and building lines; stating the net, after deduction
of land dedicated or used or subject to easements for roads, highways, fire
lanes, utilities, storm drains or any other public purpose, and gross area of
the land; and including the following Table A items: 1, 2, 3, 4, 6, 7(a),
7(b)(1), 8, 10, 11 and 13.
"Taxes": as to any Collateral Property, all real estate and personal
property taxes, assessments, water rates or sewer rents, now or hereafter levied
or assessed or imposed against all or any part of such Collateral Property.
"Tenant": shall mean any Person leasing, subleasing or otherwise occupying
any portion of any Collateral Property under a Lease or other occupancy
agreement with Borrower.
"Term": the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrower pursuant to the Loan Documents.
"Title Company": collectively, Chicago Title Insurance Company and First
American Title Insurance Company of New York together with any other title
company providing re-insurance in connection with Lender's Title Insurance
Policy, and their respective successors.
"Title Insurance Policy": as to any Collateral Property, a policy of title
insurance, in form and amount acceptable to Lender, issued by the Title Company
for the benefit of Lender, its successors and assigns, insuring the Lien of the
Mortgage on such Collateral Property subject to no Liens other than Liens
acceptable to Lender, and containing such endorsements and affirmative coverages
(including affirmative coverage as to "creditors' rights" and "tie-in" or
"aggregation" coverage) as Lender may require.
"Total Defeasance Collateral": shall mean Defeasance Collateral which
provides payments (i) on or prior to, but as close as possible to, all Payment
Dates and other scheduled payment dates, if any, under the Note after the
Defeasance Date and up to and including the Anticipated Repayment Date, and (ii)
in amounts equal to or greater than the Scheduled Defeasance Payments.
"Transfer": any sale, conveyance, transfer, lease (including any
amendment, extension, modification, waiver or renewal thereof), assignment,
mortgage, pledge, grant of a security
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interest or hypothecation, whether by law or otherwise, of or in (i) all or part
of any Collateral Property (including any legal or beneficial direct or indirect
interest therein), (ii) any direct or indirect interest in any Borrower, or
(iii) any direct or indirect interest in the Borrower Representative of any
Borrower.
"UCC": as to any Collateral Property, the Uniform Commercial Code as in
effect in the State in which such Collateral Property is located.
"Yield Maintenance Premium": shall mean an amount equal to the present
value as of the Prepayment Date of the Calculated Payments from the Prepayment
Date through the Anticipated Repayment Date determined by discounting such
payments at the Discount Rate. As used in this definition, the term "Prepayment
Date" shall mean the date on which a prepayment is made. As used in this
definition, the term "Calculated Payments" shall mean the monthly payments of
interest only which would be due based on the principal amount of the Loan being
prepaid on the Prepayment Date and assuming an interest rate per annum equal to
the difference (if such difference is greater than zero) between (y) the Regular
Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in this
definition, the term "Discount Rate" shall mean the rate which, when compounded
monthly is equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term "Yield Maintenance Treasury
Rate" shall mean the yield calculated by the linear interpolation of the yields,
as reported in the Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. Government Securities/Treasury Constant Maturities
for the week ending prior to the Prepayment Date, of U.S. Treasury Constant
Maturities with maturity dates (one longer or one shorter) most nearly
approximating the Anticipated Repayment Maturity Date. In the event Release H.15
is no longer published, Lender shall select a comparable publication to
determine the Yield Maintenance Treasury Rate. In no event, however, shall
Lender be required to reinvest any prepayment proceeds in U.S. Treasury
obligations or otherwise.
1.2 Index of Other Definitions. The following terms are defined in the
sections or Loan Documents indicated below:
"Account(s)" - 4.1.3
"Accrued Interest" - 3.1.3
"Additional Insolvency Opinion" - 5.1.39
"Air Rights Lease" - 6.22
"Annual Budget" - 6.9.5
"Applicable Taxes" - 3.5
"Approved Insurer" - 8.1.2
"Award" - 8.3.2
"Bankruptcy Proceeding" - 5.1.8
"Borrower Representative" - 5.1.30
"Cash Collateral Account" - 4.1.3
"Cash Collateral Fund" - 4.11
"Cash Management Account" - 4.1.2
"Cash Management Accounts" - 4.10.1
"Casualty" - 8.2.1
"Casualty/Condemnation Prepayment" - 3.2.2
"Casualty/Condemnation Fund" - 4.8
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"Closing Estoppels" - 6.21
"Condemnation" - 8.3.1
"Debt Service Reserve Account" - 4.1.3
"Defeasance Collateral Account" - 2.4.3
"Defeasance Date"-2.4.1
"Defeased Note" - 2.4.2
"Disclosure Document" - 10.1.2
"Environmental Laws" - 5.1.32
"Equipment" - Mortgage
"Event of Default" - 9.1
"Exchange Act" - 10. 1.2
"Funds" - 4.10.1
"Ground Lease" - Mortgage
"Ground Rent Account" - 4.1.3
"Ground Rent Escrow Fund" - 4.6
"Hazardous Substances" - 5.1.32
"Improvements" - Mortgage
"Indemnified Liabilities" - 6.16
"Indemnified Party" - 6.16
"Insurance Premiums" - 8.1.2
"Insured Casualty" - 8.2.2
"Issuer" - 10.1.3
"Late Payment Charge" - 3.4.3
"Lease Termination Payments" - 4.5.1
"Lender's Consultant" - 6.10.2
"Liabilities" - 10.1.3
"Licenses" - 5.1.22
"Lockbox Account" - 4.1.1
"LTV Ratio" - 2.3
"Management Consultant" - 6.13.2
"Manager Consent and Subordination Agreement" - 6.13.3
"Master Estoppel" - 6.21
"Monthly Ground Rent" - 4.6.1
"Monthly Operating Expense Deposit" - 4.7.1
"Monthly Replacement Deposit" - 4.4.1
"Monthly Rollover Deposit" - 4.5.1
"Monthly Insurance Amount" - 4.3
"Monthly Tax Amount" - 4.3
"Mortgage" - Definition of "Loan Documents"
"Note" - 2.1.2
"Operating Budget" - 6.9.5
"Operating Expense Account" - 4.1.3
"Operating Expense Reserve Fund" - 4.7.1
"Other Taxes" - 3.5
"Partial Defeasance"-2.4.2
"Partial Defeasance Date"-2.4.2
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"Policies" - 8.1.2
"Principal" - 2.1.1
"Proceeds" - 8.2.2
"Provided Information" - 10.1.1
"Registration Statement" - 10.1.3
"Release Property" - 2.4.2
"Remedial Work" - 6.10.2
"Rent Roll" - 5.1.26
"Replacement Budget" - 6.9.5
"Replacement Reserve Account" - 4.1.3
"Replacement Reserve Fund" - 4.4.1
"Responsible Officer" - 11.2.1
"Restoration" - 8.4.1
"Rollover Reserve Account" - 4.1.3
"Rollover Reserve Fund" - 4.5.1
"Securities" - 10.1.1
"Securities Act" - 10.1.2
"Secondary Market Transaction" - 10.1.1
"Substitute Borrower" - 2.3
"Substitute Mortgage" - 2.3
"Substitute Property" - 2.3
"Substitution" - 2.3
"Substitution Date" - 2.3
"Successor Borrower" - 2.4.4
"Tax and Insurance Escrow Fund": - 4.3
"Tax and Insurance Account" - 4.1.3
"Total Defeasance"-2.4.1
"Transfer" - 7.7
"UBS Group" - 10.1.3
"Undefeased Note" - 2.4.2
"Underwriter Group" - 10.1.3
"Underwriters" - 10.1.3
"Voluntary Prepayment" - 3.2.1
"WALP" - 7.7
"WEA" - 7.7
"Westfield" - 7.7
"Year 2000" - 6.18
1.3 Principles of Construction. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the word "including" means "including but not limited to," and (v)
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
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II THE LOAN
2.1 The Loan.
2.1.1 Commitment. Subject to and upon the terms and conditions of
this Agreement, Lender agrees to make a loan to the Borrower on the Closing Date
in an aggregate maximum principal sum of $215,780,000.00 (the "Principal").
Borrower may request and receive only one borrowing hereunder in respect of the
Loan. The Loan shall mature on the Stated Maturity Date. No amount borrowed and
repaid hereunder in respect of the Loan may be reborrowed.
2.1.2 Note. The Loan shall be evidenced by a promissory note in the
maximum principal sum of $215,780,000.00 (the "Note") executed by each Borrower
and secured by the Mortgages, the Assignments of Leases and the other Loan
Documents.
2.1.3 Use of Loan Proceeds. The proceeds of the Loan shall be used
by the Borrower to (i) repay and discharge existing loans relating to such
Borrower's Collateral Property; (ii) fund certain of the Funds required to be
funded by Borrower; (iii) pay approved costs and expenses in connection with the
foregoing and the Loan; and (iv) make distributions to the members or partners
of such Borrower to the extent any Loan proceeds remain upon payment of the
aforementioned items.
2.2 Conditions Precedent to Closing. The obligation of Lender to make the
Loan hereunder is subject to the fulfillment by Borrower of the following
conditions precedent no later than the Closing Date.
2.2.1 Representations and Warranties; Compliance with Conditions.
The representations and warranties of each Borrower, individual and
collectively, contained in this Agreement and the other Loan Documents shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on and as of such date, and no Default or an Event of
Default shall have occurred and be continuing; and Borrower shall be in
compliance in all material respects with all terms and conditions set forth in
this Agreement and in each other Loan Document on its part to be observed or
performed.
2.2.2 First Mortgage and Loan Documents. A Mortgage which shall
constitute a valid first mortgage lien on the fee simple title to (or on
Borrower's Leasehold Estate interest in a valid and subsisting Qualified Ground
Lease of) each Collateral Property, which shall secure the Debt, subject only to
such Liens as are acceptable to Lender, and such Borrower shall have delivered
UCC-1 financing statements covering fixtures owned or to be owned by such
Borrower and affixed to, or used in connection with, such Collateral Property,
in each case appropriately completed and duly executed and delivered to Lender,
or at Lender's discretion, the Title Company, for filing in the appropriate
county and state offices. Lender shall have also received from Borrower fully
executed and duly delivered counterparts of this Agreement, the Note and each of
the other Loan Documents.
2.2.3 Title Insurance. Lender shall have received a Title Insurance
Policy for each Collateral Property and the Borrower shall have paid to the
Title Company (and shall have delivered to Lender evidence of such payment) all
premiums, and expenses of the Title Company
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in connection with the issuance of such Title Insurance Policy and an amount
equal to the recording and the applicable stamp taxes (including mortgage
recording taxes), if any, payable in connection with recording the insured
Mortgages in the appropriate county land offices. Such Title Insurance Policies
shall (i) provide coverage in amounts satisfactory to Lender, (ii) insure Lender
that the relevant Mortgage creates a valid first priority lien on the Collateral
Property, or the Borrower's Leasehold Estate therein, as applicable, encumbered
thereby, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (iii) contain such endorsements and
affirmative coverages as Lender may request, and (iv) name Lender and its
successors and assigns as the insured. The Title Insurance Policies shall be
assignable.
2.2.4 Environmental Audit. Lender shall be satisfied that (A) there
are no pending or threatened claims, suits, actions or proceedings arising out
of or relating to the existence of any Hazardous Substances at, in, on or under
the Collateral Property, (B) the Collateral Property is in compliance in all
material respects with all applicable Environmental Laws, and (C) no Hazardous
Substances exist at, in, on or under the Collateral Property except in
compliance in all material respects with applicable Environmental Laws. Lender
shall have received, without limitation, (1) a comprehensive environmental audit
of each Collateral Property (which shall include a visual survey, a record
review, an area reconnaissance and a Phase I environmental study and, if the
Phase I study shall so require, a Phase II environmental study), reasonably
satisfactory in form and substance to Lender, conducted and certified by a
qualified, independent environmental consultant within six (6) months of the
Closing Date, (2) evidence that all required approvals have been obtained from
all governmental and quasi-governmental authorities having jurisdiction with
respect to the Collateral Property, and (3) such other environmental reports,
inspections and investigations pertaining to the Collateral Property as Lender
shall require, prepared, in each instance, by engineers or other consultants
reasonably satisfactory to Lender.
2.2.5 Insurance. Lender shall have received evidence of the
existence of all insurance required to be maintained by each Borrower pursuant
to the Loan Documents and the designation of Lender as the mortgagee and loss
payee or additional insured, as applicable, thereunder to the extent required by
the Loan Documents, in form and substance specified in the Loan Documents, and
evidence of the payment of all premiums payable for the existing policy period.
2.2.6 Financial Statements. Lender shall have received, with respect
to each Collateral Property, (i) an unaudited operating statement for the
trailing twelve (12) month period, certified by the Chief Financial Officer or
Treasurer of Borrower and a statement of current operations certified by the
applicable Borrower Representative and (ii) audited combined financial
statements for all Borrowers for calendar year 1998. If Lender determines, in
its sole discretion, that there have been significant changes at any Collateral
Property since the most recent audited financial statement delivered to Lender,
Borrower shall deliver to Lender a letter from an accounting firm acceptable to
Lender in its sole discretion verifying current expenses and revenue of the
applicable Collateral Property.
2.2.7 Searches. Lender shall have received copies of UCC filing
searches, tax lien searches, judgment searches and real estate tax searches and
municipal department searches
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setting forth any and all building violations (if available) in each county
where any Collateral Property is located (and in the case of UCC filing
searches, in the office of the Secretary of State or other applicable state
office of the State where any Collateral Property is located), demonstrating as
of a recent date the existence of no other financing statements, tax liens,
judgments, building violations or delinquent real estate taxes, together with
evidence that all fees payable in connection with any such searches have been
paid.
2.2.8 Survey. Lender shall have received a Survey of each Collateral
Property that is satisfactory to Lender and certified to Lender and its
successors and assigns, the Title Company and any other parties requested by
Lender as of a certification date satisfactory to the Title Company and
reasonably satisfactory to Lender.
2.2.9 Management. The Manager of each Collateral Property shall have
executed and delivered a manager consent and subordination in accordance with
Section 6.13.3.
2.2.10 Leases and Material Contracts. Lender shall have received
certified copies of all Leases, reciprocal easement agreements and material
contracts relating to each Collateral Property, including all amendments and
modifications thereto, and such Leases, reciprocal easement agreements and
contracts shall be in form and substance reasonably satisfactory to Lender.
2.2.11 Intentionally Deleted.
2.2.12 Tenant Estoppels. Lender shall have received an executed
tenant estoppel letter, which shall be in form and substance satisfactory to
Lender, from (a) each Anchor Tenant, (b) each Tenant paying base rent in an
amount equal to or exceeding five percent (5%) of the Operating Income from the
applicable Collateral Property occupied by such Tenant and (c) disregarding the
area leased by those described in clauses (a) and (b), lessees of not less than
seventy-five percent (75%) of the remaining gross leasable area of each
Collateral Property.
2.2.13 Property Condition Report. Lender shall have received reports
covering the physical and structural condition of each Collateral Property in
form and substance, and prepared by a qualified independent engineer, reasonably
satisfactory to Lender and dated no more than six (6) months prior to the
Closing Date, which shall (i) identify code and ADA compliance, (ii) include a
schedule of deferred maintenance and the cost thereof, (iii) include a schedule
of all capital expenditures projected to be required in the twelve (12) year
period following the Closing Date, and (iv) for any Collateral Property in
States in which Lender reasonably determines that there has been a history of
earthquakes, assess the probable maximum loss in the event of the occurrence of
an earthquake.
2.2.14 Appraisal. Lender shall have received an Acceptable Appraisal
of each Collateral Property.
2.2.15 Zoning Compliance, Etc. Lender shall have received, with
respect to each Collateral Property, evidence, in the form of (i) letters or
other evidence from the appropriate municipal authorities, (ii) an ALTA 3.1
zoning endorsement (including parking coverage) for the applicable Title
Insurance Policy, or (iii) a zoning opinion, in each case in substance
reasonably satisfactory to Lender, that all improvements constituting part of
the
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Collateral Property have been constructed and are being used and operated in
compliance in all material respects with (A) 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 each Collateral Property, (B) all building permits issued in respect of each
Collateral Property and (C) the certificates of occupancy for each Collateral
Property (copies of which certificates of occupancy shall have been delivered to
Lender).
2.2.16 Recording Taxes. Borrower shall have paid all mortgage
recording taxes payable (if any) in each jurisdiction in which the Collateral
Property is located in connection with the recordation of any Mortgage required
under this Agreement.
2.2.17 Perfection of Security Interests. Lender shall have received
evidence that all actions necessary or, in the opinion of Lender, desirable to
perfect and protect the Liens and security interests created by the Loan
Documents have been or will be taken, including evidence that each Mortgage on
the Collateral Property has been or will be duly filed and recorded in the
appropriate governmental offices and that the related UCC financing statements
have been or will be duly filed in the appropriate governmental offices.
2.2.18 Opinions of Borrower's Counsel. Lender shall have received an
opinion of counsel as to the applicable Borrower and an opinion of local counsel
to Lender in the State in which the proposed Collateral Property is located, in
each case with respect to such matters as Lender may request (including as to
enforceability of the Loan Documents against such Borrower) and an Insolvency
Opinion with respect to such Borrower, its partners, the Manager of the
Collateral Property and such other persons as Lender shall designate, which
Insolvency Opinion must be in form and substance reasonably satisfactory to
Lender.
2.2.19 Ground Lease. If any Collateral Property is subject to a
Ground Lease, such Ground Lease is a Qualified Ground Lease.
2.2.20 REA. If any Collateral Property is subject to an REA, such
REA is a Qualified REA.
2.2.21 Reserves and Escrows. Each Borrower shall have made such
initial deposits into the Funds as Lender may require in accordance with this
Agreement and the other Loan Documents.
2.2.22 Rent Roll. A Rent Roll (in spread sheet format, containing
such information as Lender may reasonably require) for each Collateral Property,
certified by the Borrower Representative on behalf of the Borrower, shall have
been delivered to Lender.
2.2.23 Further Documents. Each Borrower shall have executed and
delivered to Lender such documents, opinions and agreements and taken such
action including executing such amendments or supplements to, and assumptions
of, the Loan Documents, which Lender may reasonably require.
2.2.24 Completion of Proceedings. All corporate and other
proceedings taken or to be taken by each Borrower in connection with the
transactions contemplated by this Agreement and other Loan Documents and all
documents incidental thereto shall be satisfactory
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in form and substance to Lender, and Lender shall have received all such
counterpart originals or certified copies of such documents as Lender may
reasonably request.
2.2.25 Delivery of Organizational Documents. Each Borrower shall
have delivered or caused to be delivered to Lender copies certified by the
Borrower of all organizational documentation related to that Borrower and/or the
formation, structure, existence, good standing and/or qualification to do
business, as Lender may request, including, without limitation, good standing
certificates, qualifications to do business in the appropriate jurisdictions,
resolutions authorizing the entering into of the Loan and incumbency
certificates as may be reasonably requested by Lender.
2.2.26 Expenses. Borrower shall have paid all amounts required to be
paid by Borrower under Section 6.15.
2.2.27 Tax Lot. Lender shall have received evidence that each
Collateral Property constitutes one (1) or more separate tax lots, which
evidence shall be reasonably satisfactory in form and substance to Lender.
2.2.28 Encumbrances. Each Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender has a valid and perfected
first Lien as of the Closing Date with respect to each Mortgage on the
applicable Collateral Property, or the Borrower's Leasehold Estate therein, as
applicable, subject only to applicable Permitted Encumbrances and such other
Liens as are permitted pursuant to the Loan Documents, and Lender shall have
received satisfactory evidence thereof.
2.3 Substitution of Collateral Properties.
(a) Subject to the terms and conditions set forth in this Section
2.3, Borrower may, at any time and from time to time during the period from the
date hereof until thirty (30) days prior to the Anticipated Repayment Date
obtain a release of Lender's Lien against one or more Collateral Properties by
substituting (a "Substitution") one or more other comparable real estate assets
(a "Substitute Property") for the Collateral Property or Collateral Properties
so released. From and after the Substitution of a Substitute Property in
accordance herewith, such Substitute Property shall thereafter be deemed a
Collateral Property under this Agreement and the Allocated Loan Amount of such
Substitute Property shall be the same as the Allocated Loan Amount of the
Collateral Property it is replacing. In the event of a Substitution, the Note
shall remain in full force and effect, and a new Mortgage encumbering the
Substitute Property (the "Substitute Mortgage") shall be executed and delivered
by Borrower to Lender to encumber the Substitute Property, which Substitute
Mortgage shall secure the Borrower's Obligations under the Note and the other
Loan Documents and which shall be cross-defaulted with the other Mortgages.
Concurrently with the completion of all steps necessary to substitute a
Substitute Property as provided herein, Lender shall execute or cause to be
executed all such documents requested by Borrower as are necessary or
appropriate (i) to release all Liens granted to Lender and affecting the
replaced Property (or to assign the Security Instrument relating thereto).
Borrower shall prepare at its expense all such documents. The Note shall be
executed by the entity owning the Substitute Property (the "Substitute
Borrower") and the Substitute Borrower shall execute and become party to the
Contribution Agreement and each of the other Loan
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Documents. The Borrower that owns the Property being replaced in the
Substitution shall be released automatically from all of its obligations under
the Loan Documents.
(b) To qualify as a Substitute Property, the property must at the
time of substitution:
(i) be a property as to which the applicable Borrower will
hold indefeasible fee or ground leasehold title free and clear of any Lien
or other encumbrance except for Permitted Encumbrances and easements,
restrictive covenants and other title exceptions and Leases which do not
have a material adverse effect on the utility or value of such property
for its current use;
(ii) be the subject of an environmental report issued and
certified by a recognized environmental consultant at Borrower's expense
and in form and substance acceptable to the Applicable Rating Agencies,
which shall demonstrate that the Substitute Property materially complies
with all Environmental Laws and that an assessment of the Substitute
Property does not contain any material amounts of Hazardous Substances
(except for Routine Hazardous Substances) and there is no further action
required with regard to such Substitute Property, unless the Borrower has
agreed to deposit with the Lender such sums reasonably required to
remediate any environmental problems set forth in the applicable
environmental report;
(iii) be the subject of an engineering report which shall
demonstrate that the property is in good repair and condition, provided
that Borrower shall deposit into the Required Repair Fund an amount equal
to one hundred twenty-five percent (125%) of the deferred maintenance
costs as estimated by Lender based on third-party engineering reports; and
(iv) be in compliance, in all material respects, with Legal
Requirements, as shall be certified in an Officer's Certificate in form
and substance reasonably acceptable to Lender.
(c) In addition to the conditions in Section 2.3(b) above,
Substitution of any Collateral Property pursuant to this Section 2.3 shall be
subject to the satisfaction of the following, all of which shall be prepared or
obtained at Borrower's expense:
(i) Borrower shall have delivered to Lender a legal
opinion from counsel to Borrower opining that any REMIC Trust formed
pursuant to a Secondary Market Transaction will not fail to maintain its
status as a "real estate mortgage investment conduit" within the meaning
of Internal Revenue Code Section 860D, as amended from time to time, or
any successor statute, as a result of the Substitution; provided, however,
that in connection with the consents required pursuant to subsection (xii)
below only, the Borrower shall have delivered to Lender a legal opinion
from counsel to Borrower opining that any REMIC Trust formed pursuant to a
Secondary Market Transaction should not fail to maintain its status as a
"real estate mortgage investment conduit" within the meaning of Internal
Revenue Code Section 860D, as amended from time to time, or any successor
statute, as a result of the Substitution;
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(ii) Borrower shall have delivered to Lender a Rating Comfort
Letter;
(iii) Receipt by Lender and the Applicable Rating Agencies of
written notice thereof from Borrower at least thirty (30) days before the
date of the proposed Substitution (the "Substitution Date"), together with
(1) written evidence that the property proposed to be a Substitute
Property complies with Sections 2.3(a) and (b) above and (2) such other
information, including financial information, as Lender or the Applicable
Rating Agencies may reasonably request;
(iv) Lender shall have received any due diligence materials
requested by Lender with respect to each Substitute Property at least
sixty (60) days before the Substitution Date (other than items such as
title reports and estoppels which are typically not delivered sixty (60)
days before a closing, provided such items are delivered within a
reasonable period of time before the Substitution Date); provided that the
Borrower shall only be required to provide to Lender the due diligence
required pursuant to Section 2.2 of this Agreement and as otherwise
required by the Rating Agencies in connection with the Substitute Property
and the Substitution;
(v) The value of the Substitute Property shall be equal to at
least 125% of the Allocated Loan Amount of the Collateral Property being
released as such value is determined by the Lender based on a current
Acceptable Appraisal for the Substitute Property;
(vi) After giving effect to such Substitution, the Debt
Service Coverage Ratio of the Collateral Pool shall be equal to or greater
than each of (x) the Debt Service Coverage Ratio of the Collateral Pool as
of the Closing Date and (y) the Debt Service Coverage Ratio of the
Collateral Pool immediately before such Substitution;
(vii) The Net Operating Income of the proposed Substitute
Property shall be equal to or greater than the Net Operating Income of the
Collateral Property it is replacing (calculated on the trailing twelve
(12) month period);
(viii)After giving effect to such Substitution, the ratio of
unpaid Principal to the Appraised Value of the Collateral Pool (the "LTV
Ratio") shall not exceed either of (x) the LTV Ratio as of the day after
the Closing Date, or (y) the LTV Ratio immediately prior to such
Substitution;
(ix) After giving effect to such Substitution, the Lease
Rollover Percentage will not exceed twenty percent (20%) for any calendar
year all or any portion of which occurs prior to the Anticipated Repayment
Date;
(x) Either (i) the Lease Rollover Percentage as of immediately
after the Substitution will not, for any calendar year all or any portion
of which occurs prior to the Anticipated Repayment Date, be more than two
percent (2%) in excess of the Lease Rollover Percentage for such calendar
year (or portion thereof) as of immediately prior to the Substitution or
(ii) the Borrower shall deposit into the Rollover Reserve Fund for such
Substitute Property an amount equal to (1) $1.00 multiplied by (2) the
increase in
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the Lease Rollover Number which resulted in the condition set forth in the
foregoing clause (i) not being satisfied;
(xi) Borrower shall have demonstrated that there is no
Environmental Event affecting any Collateral Property that has a material
adverse effect on the value of the Collateral Pool as a whole;
(xii) On any date of a Substitution, no more than twenty-five
percent (25%) in the aggregate of the Collateral Properties (calculated by
share of Net Operating Income) may be released from the Liens of the Loan
Documents pursuant to Section 2.3(a); provided, however, that such
twenty-five percent (25%) limitation shall not apply (i) in the event all
or a portion of the Loan is included in a Secondary Market Transaction, if
unanimous consent is obtained of all the holders of the most junior class
(or classes, if aggregated pursuant to the pooling and servicing agreement
or similar document), which, as of the time of the requested Substitution,
is designated as the "controlling" or "directing" class or similar class
having authority to appoint a special servicer and/or to consent or
approve proposed actions of the special servicer; and (ii) if the Loan is
participated or severed into one or more note(s) or component(s) such that
one note or component is junior to another note or component, then,
regardless of whether any note or component is included in a Secondary
Market Transaction, the unanimous consent is obtained of all the holders
of such junior note or component.
(xiii) With respect to each Substitute Property, Borrower
shall have complied with all of the conditions precedent set forth in
Section 2.2, except that all references in Section 2.2 to Closing Date
shall be deemed to refer to the Substitution Date;
(xiv) No Event of Default shall be continuing;
(xv) Borrower shall have executed and/or delivered such other
consents, enforceability and tax opinions, certificates, documents,
agreements or instruments as Lender may reasonably request (including any
modifications to this Agreement or the other Loan Documents amending,
e.g., the schedules hereto);
(xvi) Borrower shall have paid all amounts required to be paid
by Borrower under Section 6.15;
(xvii) Borrower shall have delivered to Lender an Officer's
Certificate certifying that all information delivered to Lender by or on
behalf of Borrower in connection with the Substitution is true, accurate
and complete in all material respects and that all of the requirements of
this Section 2.3 have been satisfied;
(xviii) Borrower shall have paid to, or deposited with, Lender
all amounts required under Article IV in connection with the Substitute
Property;
(xix) Each Substitute Property shall be located in the United
States and its territories;
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(xx) Borrower shall have delivered to Lender, in form and
substance satisfactory to Lender, originals of the following:
(A) a Substitute Mortgage duly executed and
acknowledged by the applicable Borrower; a
substitute Assignment of Leases or an amendment to
the Assignment of Leases; and an amendment to the
Deposit Agreement with respect to the Substitute
Property; each duly executed and acknowledged by
the applicable Borrower, assigning and
transferring to Lender a first priority security
interest in all Rents, revenues, issues, profits
and proceeds arising under the Leases relating to
the Substitute Property, subject to the Permitted
Encumbrances;
(B) Uniform Commercial Code financing statements (Form
UCC-1) (or other forms required in any
jurisdiction), duly executed by the applicable
Borrower, covering all fixtures, equipment and
other personal property collateral and all
proceeds thereof, naming the applicable Borrower
as debtor and Lender as secured party;
(C) insurance certificates issued by an Approved
Insurer evidencing the insurance coverage required
under Section 8.1.1 hereof; and
(D) payment of all costs and expenses anticipated to
be incurred in connection with such Substitution
(including, without limitation, reimbursement of
Lender's reasonable costs, title premiums,
mortgage recording taxes, transfer taxes,
recording fees, appraisal fees and reasonable
attorneys' fees and disbursements actually
incurred).
(xxi) Borrower shall have provided Lender with a Title
Insurance Policy reasonably acceptable to Lender insuring the Lien of the
Substitute Mortgage and Borrower shall have paid all title insurance
premiums associated with the issuance of such Title Insurance Policy;
(xxii) Borrower shall have represented to Lender the
representation in Section 5.1.32 of this Agreement with respect to the
Substitute Property; and
(xxiii) Borrower shall have represented to Lender the
representation in Section 5.1.24 of this Agreement with respect to the
Substitute Property.
(d) For purposes of calculating Net Operating Income and Debt
Service Coverage Ratio under Section 2.3(c), if any Collateral Property being
substituted for has suffered a Casualty or Condemnation or an Environmental
Event, then, at Lender's option, the Net Operating Income of such Collateral
Property shall be calculated as of the end of the last full calendar month
preceding such Casualty, Condemnation or Environmental Event, as the case may
be.
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(e) For purposes of determining whether any of the conditions set
forth in this Section 2.3 have been satisfied, Borrower will not be required to
pay for the cost of any reports or updates of reports by third parties (e.g.,
engineers or environmental consultants) with respect to any Collateral Property
(as distinguished from a proposed Substitute Property) unless the Net Operating
Income of such Collateral Property has declined by ten percent (10%) or more
since the date of this Agreement.
(f) Upon completion of a Substitution and Borrower's fulfillment of
the requirements of Section 2.3, the applicable Collateral Property shall be
released from the Lien of its Mortgage and the Substitution Property, pledged to
the Lender pursuant to a Substitute Mortgage, shall become part of the
collateral securing the Note. In connection with the release of the applicable
Lien, Borrower shall submit to Lender, not less than thirty (30) days prior to
the Substitution Date, a release of Lien (and related Loan Documents) for
execution by Lender. Such release shall be in a form appropriate in the
jurisdiction in which the respective Collateral Property is located and
satisfactory to Lender in its reasonable discretion. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such releases. Borrower shall pay all costs, taxes
and expenses associated with the releases of the Lien of the Mortgage on the
Collateral Property which has been replaced pursuant to a Substitution,
including Lender's reasonable attorneys' fees. Except as set forth in Section
2.3 or otherwise in this Agreement, no repayment, prepayment, substitution or
defeasance of all or any portion of the Note shall cause, give rise to a right
to require, or otherwise result in, the release of the Lien of any Mortgage on
the Collateral Properties. Upon the completion of the Substitution, the Borrower
shall have no liability to Lender relating to such released Collateral Property
for any actions (or inaction) occurring thereon, or pertaining thereto, after
the date of the Substitution.
2.4 Defeasance.
2.4.1 Total Defeasance.
(a) Provided no Event of Default shall have occurred and remain
uncured, Borrower shall have the right at any time after the Prepayment Lockout
Expiration Date and prior to the Anticipated Repayment Date to obtain a release
of the Liens of the Mortgages encumbering all of the Collateral Properties (a
"Total Defeasance") upon satisfaction of the following conditions:
(i) Borrower shall provide Lender thirty (30) days prior
written notice specifying a Payment Date (the "Defeasance Date") on which
Borrower shall have satisfied the conditions in this Section 2.4.1 and on
which it shall effect the defeasance;
(ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the Principal balance of the Note to and including the
Defeasance Date and (B) all other sums, then due under the Note, this
Agreement, the Mortgages and the other Loan Documents;
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(iii) Borrower shall deposit the Total Defeasance Collateral
into the Defeasance Collateral Account and otherwise comply with the
provisions of Sections 2.4.3 and 2.4.4 hereof;
(iv) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Total
Defeasance Collateral;
(v) Borrower shall deliver to Lender (1) an opinion of counsel
for Borrower satisfactory to a prudent lender opining, among other things,
that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Total Defeasance
Collateral, (B) if a Secondary Market Transaction has occurred, the REMIC
Trust formed pursuant to such Secondary Market Transaction will not fail
to maintain its status as a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code as a result of the
defeasance pursuant to this Section 2.4.1, and (C) delivery of the
Defeasance Collateral and the grant of a security interest therein to
Lender shall not constitute an avoidable preference under Section 547 of
the U.S. Bankruptcy Code or applicable state law, and (2) an Insolvency
Opinion with respect to the Successor Borrower;
(vi) Borrower shall deliver to Lender a Rating Comfort Letter
with respect to the defeasance;
(vii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.4.1(a) have
been satisfied;
(viii) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the Total
Defeasance Collateral will generate monthly amounts equal to or greater
than the Scheduled Defeasance Payments;
(ix) Borrower shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request; and
(x) Borrower shall pay all reasonable costs and expenses of
Lender incurred in connection with the defeasance, including Lender's
reasonable attorneys' fees and expenses and Rating Agency fees and
expenses.
(b) If Borrower has elected to defease the entire Note and the
requirements of this Section 2.4.1 have been satisfied, the Collateral
Properties shall be released from the Liens of the Mortgages and the Total
Defeasance Collateral, pledged pursuant to the Security Agreement, shall be the
sole source of collateral securing the Note. In connection with the release of
the Liens, Borrower shall submit to Lender, not less than thirty (30) days prior
to the Defeasance Date, releases of Liens (and related Loan Documents) for
execution by Lender. Such releases shall be in a form appropriate in the
jurisdiction in which the respective Collateral Properties are located and
satisfactory to Lender in its reasonable discretion. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such releases, together with an Officer's
Certificate certifying that such documentation (i) is in compliance with all
Legal Requirements, and (ii) will effect such
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releases in accordance with the terms of this Agreement. Borrower shall pay all
costs, taxes and expenses associated with the releases of the Liens of the
Mortgages, including Lender's reasonable attorneys' fees. Except as set forth in
this Section 2.4.1, in Section 2.4.2 or otherwise in this Agreement, no
repayment, prepayment or defeasance of all or any portion of the Note shall
cause, give rise to a right to require, or otherwise result in, the releases of
the Liens of the Mortgages on the Collateral Properties.
2.4.2 Partial Defeasance.
(a) Provided no Event of Default shall have occurred and remain
uncured, Borrower shall have the right at any time after the Prepayment Lockout
Expiration Date and prior to the Anticipated Repayment Date to obtain a release
of the Lien of a Mortgage or Mortgages encumbering one or more Collateral
Properties (a "Partial Defeasance") upon satisfaction of the following
conditions:
(i) Borrower shall provide Lender thirty (30) days prior
written notice specifying (A) a Payment Date (the "Partial Defeasance
Date") on which Borrower shall have satisfied the conditions in this
Section 2.4.2 and on which it shall effect the defeasance, and (B) the
Collateral Property proposed to be released from the Lien of its Mortgage
(the "Release Property");
(ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the Principal balance of the Note to and including the Partial
Defeasance Date and (B) all other sums, then due under the Note, this
Agreement, the Mortgages and the other Loan Documents;
(iii) Borrower shall deposit the Partial Defeasance Collateral
into the Defeasance Collateral Account and otherwise comply with the
provisions of Sections 2.4.3 and 2.4.4 hereof;
(iv) Borrower shall prepare all necessary documents to modify
this Agreement and to amend and restate the Note and issue two substitute
notes, one note having a principal balance equal to 125% of the Allocated
Loan Amount for the Release Property (the "Defeased Note"), and the other
note having a principal balance equal to the excess of (A) the original
Principal amount of the Loan, over (B) the amount of Defeased Note (the
"Undefeased Note"). The Defeased Note and Undefeased Note shall have
identical terms as the Note except for the Principal balance. The Defeased
Note and the Undefeased Note shall be cross defaulted and cross
collateralized. A Defeased Note may not be the subject of any further
defeasance;
(v) After giving effect to the release of the Lien of the
Mortgage encumbering the Release Property proposed by Borrower to be
released, the Debt Service Coverage Ratio for the trailing twelve (12)
month period with respect to the remaining Collateral Properties is not
less than the greater of (A) the Debt Service Coverage Ratio of all
Collateral Properties encumbered by the Mortgages immediately prior to the
release and (B) the Debt Service Coverage Ratio of all of the Collateral
Properties as of the date hereof.
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(vi) Borrower shall have delivered to Lender and the
Applicable Rating Agencies shall have received from Borrower with respect
to the matters referred to in clause (v), (A) statements of the Net
Operating Income and Debt Service (both on a consolidated basis and
separately for the applicable Collateral Property to be released) for the
applicable measuring period and (B) based on the foregoing statements of
Net Operating Income and Debt Service, calculations of the Debt Service
Coverage Ratio both with and without giving effect to the proposed
release, and (C) calculations of the ratios referred to in such clause
(v), accompanied by an Officer's Certificate stating that such statements,
calculations and information are true, correct and complete in all
material respects;
(vii) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Partial
Defeasance Collateral;
(viii) Borrower shall deliver to Lender an opinion of counsel
for Borrower satisfactory to a reasonably prudent lender opining, among
other things, that (A) Lender has a legal and valid perfected first
priority security interest in the Defeasance Collateral Account and the
Partial Defeasance Collateral, (B) if a Secondary Market Transaction has
occurred, the REMIC Trust formed pursuant to such Secondary Market
Transaction will not fail to maintain its status as a "real estate
mortgage investment conduit" within the meaning of Section 860D of the
Code as a result of the defeasance pursuant to this Section 2.4.2, (C)
delivery of the Defeasance Collateral and the grant of a security interest
therein to Lender shall not constitute an avoidable preference under
Section 547 of the U.S. Bankruptcy Code or applicable state law and (D) an
Insolvency Opinion with respect to the Successor Borrower;
(ix) Borrower shall deliver to Lender a Rating Comfort Letter
with respect to the defeasance;
(x) Borrower shall deliver an Officer's Certificate certifying
that the requirements set forth in this Section 2.4.2(a) have been
satisfied;
(xi) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the Partial
Defeasance Collateral will generate monthly amounts equal to or greater
than the Scheduled Defeasance Payments;
(xii) Borrower shall deliver such other certificates,
opinions, documents and instruments as Lender may reasonably request; and
(xiii) Borrower shall pay all reasonable costs and expenses of
Lender incurred in connection with the defeasance, including Lender's
reasonable attorneys' fees and expenses and Rating Agency fees and
expenses.
(b) If Borrower has elected to partially defease the Note and the
requirements of this Section 2.4.2 have been satisfied, the Release Property
shall be released from the Lien of its Mortgage. In connection with the release
of the Lien, Borrower shall submit to Lender, not less than thirty (30) days
prior to the Partial Defeasance Date, a release of Lien (and related Loan
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Documents) for execution by Lender. Such release shall be in a form appropriate
in the jurisdiction in which the Release Property is located and satisfactory to
Lender in its reasonable discretion. In addition, Borrower shall provide all
other documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer's Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements, and
(ii) will effect such release in accordance with the terms of this Agreement.
Borrower shall pay all costs, taxes and expenses associated with the release of
the Lien of the Mortgage, including Lender's reasonable attorneys' fees.
Borrower shall cause title to the Collateral Property so released from the Lien
of its Mortgage to be transferred to and held by a Person other than Borrower.
Except as set forth in this Section 2.4.2, in Section 2.4.1 or otherwise in this
Agreement, no repayment, prepayment or defeasance of all or any portion of the
Note shall cause, give rise to a right to require, or otherwise result in, the
release of any Lien of any Mortgage on any of the Collateral Properties.
2.4.3 Defeasance Collateral Account. On or before the date on which
Borrower delivers the Total Defeasance Collateral or Partial Defeasance
Collateral, Borrower shall open at any Eligible Institution the defeasance
collateral account (the "Defeasance Collateral Account") which shall at all
times be an Eligible Account. The Defeasance Collateral Account shall contain
only (i) the Total Defeasance Collateral or Partial Defeasance Collateral, and
(ii) cash from interest and principal paid on the Total Defeasance Collateral or
Partial Defeasance Collateral. All cash from interest and principal payments
paid on the Total Defeasance Collateral or Partial Defeasance Collateral shall
be paid over to Lender on each Payment Date and applied first to accrued and
unpaid interest and then to principal. Any cash from interest and principal paid
on the Total Defeasance Collateral or Partial Defeasance Collateral not needed
to pay accrued and unpaid interest or Principal shall be retained in the
Defeasance Collateral Account as additional collateral for the Loan. Borrower
shall cause the Eligible Institution at which the Total Defeasance Collateral or
Partial Defeasance Collateral are deposited to enter an agreement with Borrower
and Lender, satisfactory to Lender in its reasonable discretion, pursuant to
which such Eligible Institution shall agree to hold and distribute the Total
Defeasance Collateral and Partial Defeasance Collateral in accordance with this
Agreement. Successor Borrower shall be the owner of the Defeasance Collateral
Account and shall report all income accrued on the Total Defeasance Collateral
and Partial Defeasance Collateral for federal, state and local income tax
purposes in its income tax return. Borrower shall prepay all costs and expenses
associated with opening and maintaining the Defeasance Collateral Account.
Lender shall not in any way be liable by reason of any insufficiency in the
Defeasance Collateral Account.
2.4.4 Successor Borrower. In connection with a Total Defeasance or
Partial Defeasance under this Section 2.4, Borrower shall establish or designate
a successor entity unaffiliated with the Borrower (the "Successor Borrower")
which shall be a Special Purpose Entity approved by Lender. Lender hereby
specifically reserves the right to require that the Successor Borrower be an
Affiliate of Lender or Servicer. Borrower shall transfer and assign all
obligations, rights and duties under and to the Note or the Defeased Note, as
applicable, together with the Total Defeasance Collateral or Partial Defeasance
Collateral, as applicable, to such Successor Borrower. Such Successor Borrower
shall assume the obligations under the Note or the Defeased Note, as applicable,
and the Security Agreement and Borrower shall be relieved of its obligations
under such documents. Borrower shall pay $1,000 to any such Successor
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Borrower as consideration for assuming the obligations under the Note or the
Defeased Note, as applicable, and the Security Agreement. Borrower shall pay all
costs and expenses incurred by Lender, including Lender's attorney's fees and
expenses, incurred in connection therewith.
III INTEREST; PAYMENTS
3.1 Interest; Monthly Loan Payments.
3.1.1 Interest Generally. Interest on the outstanding Principal
balance of the Loan shall accrue from the Closing Date to but excluding the
Maturity Date at the Applicable Interest Rate.
3.1.2 Payment Before Anticipated Repayment Date. Borrower shall pay
to Lender (a) on the first Payment Date following the Closing Date, an amount
equal to interest only on the outstanding principal balance of the Loan from the
Closing Date up to but not including such Payment Date and (b) on each Payment
Date thereafter up to but not including the Anticipated Repayment Date, an
amount equal to the Monthly Debt Service Payment Amount, which payments shall be
applied first to accrued and unpaid interest and the balance to principal.
3.1.3 Payment After Anticipated Repayment Date. Borrower shall pay
to Lender on each Payment Date on and after the Anticipated Repayment Date (a)
an amount equal to the Monthly Debt Service Payment Amount, such payment to be
applied to interest in an amount equal to interest that would have accrued on
the outstanding principal balance of the Loan (without adjustment for Accrued
Interest) at the Regular Interest Rate and the balance applied to principal and
(b) an amount equal to the Net Operating Income After Debt Service for the
preceding month, such payment to be applied to principal. Interest accrued at
the Matured Performing Rate and not paid pursuant to the preceding sentence
("Accrued Interest"), shall be added to the outstanding principal balance and
shall earn interest at the Applicable Interest Rate, to the extent permitted by
law.
3.1.4 Payment on Maturity Date. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance, all accrued and unpaid interest
(including without limitation the Accrued Interest) and all other amounts due
hereunder and under the Note, the Mortgages and other the Loan Documents.
3.1.5 Property Cash Flow Allocation.
(a) Commencing on the January, 2000 Payment Date and continuing on
each Payment Date occurring prior to the Maturity Date, except following the
acceleration of all or any part of the Debt, all Rents with respect to the
Collateral Property shall be applied as follows in the following order of
priority: (i) First, to make the monthly required payments of Ground Rent, if
any, pertaining to any Borrower's Collateral Property (including, the payment to
Lender of any sums required to be deposited into the Ground Rent Escrow Fund);
(ii) Second, to make payments to the Tax and Insurance Escrow Fund required to
be made by Borrower, (iii) Third, to pay the monthly portion of the Cash
Management Fee due and payable by Borrower; (iv) Fourth, to Lender to pay the
interest payment and principal payment required under Section 3.1.2 or 3.1.3, as
applicable, (plus, if applicable, interest at the Default Rate and any
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other charges then due to Lender under the Loan Documents); (v) Fifth, during
the continuance of a Cash Management Event, to make payments to the Rollover
Reserve Fund required to be made by Borrower; (vi) Sixth, and only during the
continuance of a Cash Management Event or the Anticipated Repayment Date, to
make payments for Approved Operating Expenses pertaining to the Collateral
Property; (vii) Seventh, during the continuance of a Cash Management Event, to
make payments to the Replacement Reserve Fund required to be made by Borrower;
(viii) Lastly, payments to Borrower of any excess amounts unless the Debt
Service Coverage Ratio falls below 1.25 (subject to a One Time Cash Management
Event Cure) (the Debt Service Coverage Ratio shall be tested on a quarterly
basis at the end of each calendar quarter (or portion thereof, if applicable)
from and after the Closing Date), in which case all Rents remaining after
application thereof pursuant to subsection (vii) hereof shall be applied by
Lender in accordance with Section 4.11 until such time as a Cash Management
Termination occurs.
(b) Subject to the provisions of the Cash Management Agreement and
as otherwise set forth herein in Section 4.11, the failure of any Borrower to
make all of the payments required under clauses (i) through (vii) of Section
3.1.5(a) in full on each Payment Date shall constitute an Event of Default under
this Agreement.
(c) At any time after the Maturity Date or after the acceleration of
all or any portion of the Debt, Lender may, in its sole discretion, permit the
application of Rents in any order, and to any portion or portions of the Debt,
as Lender shall determine.
3.1.6 Payments after Default; Default Rate. After the occurrence and
during the continuance of an Event of Default, the entire unpaid Debt shall bear
interest at the Default Rate, and shall be payable upon demand from time to time
to the extent permitted by applicable law. Payment or acceptance of interest at
the Default Rate is not a permitted alternative to timely payment and shall not
constitute a waiver of any Default or Event of Default or an amendment to this
Agreement or any other Loan Document and shall not otherwise prejudice or limit
any rights or remedies of Lender.
3.2 Loan Repayment; Voluntary Prepayment; Prepayment After Default.
3.2.1 Repayment. Subject to the provisions of Section 8.4 of this
Agreement, Borrower shall repay the Loan in full on the Maturity Date, together
with interest thereon to (but excluding) the date of repayment and any other
amounts due and owing under the Note, this Agreement and the other Loan
Documents. Borrower shall not have the right to prepay all or any portion of the
Principal before the Stated Maturity Date; provided, however, if no Default or
Event of Default shall then exist, and Borrower provides not less than thirty
(30) days prior written notice to Lender, (x) Borrower may prepay the Loan in
full (but not in part) without penalty or premium at any time within three (3)
months of the Anticipated Repayment Date and (y) Borrower may prepay the Loan in
full (but not in part) on any Payment Date occurring on or after the Prepayment
Lockout Expiration Date provided that such prepayment is accompanied by the
Yield Maintenance Premium applicable thereto and any other sums including all
accrued and unpaid interest on the Principal due under the Note, this Agreement
and the other Loan Documents (such repayments in (x) and (y) above being
referred to as a "Voluntary Prepayment"). In the event any such Voluntary
Prepayment is not made on a Payment Date,
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Borrower shall also pay interest that would have accrued on such prepaid
Principal to but not including the next Payment Date. Except during the
continuance of an Event of Default, all proceeds of a Voluntary Prepayment of
the Loan shall be applied by Lender as follows in the following order of
priority: (i) First, to accrued and unpaid interest on the Loan at the
Applicable Interest Rate; (ii) Second, to Principal of the Loan; and (iii)
Third, to any other amounts then due and owing under the Loan Documents. If at
any time prior to the Anticipated Repayment Date the Debt is accelerated by
reason of an Event of Default, any principal payment received by Lender (whether
as a result of a foreclosure of any Mortgage, the exercise of any of Lender's
other rights or remedies under the Loan Documents or otherwise), then Lender
shall be entitled to receive, in addition to all other sums due under the Loan
Documents, an amount equal to the Yield Maintenance Premium applicable to such
prepayment. During the continuance of an Event of Default, all proceeds of
repayment, including any payment or recovery on any Collateral Property (whether
as a result of foreclosure, of any Mortgage, the exercise of any of Lender's
other rights or remedies or otherwise) shall, unless otherwise provided in the
Loan Documents, be applied in such order and in such manner as Lender shall
elect in Lender's discretion.
3.2.2 Mandatory Prepayments. Each Loan is subject to mandatory
prepayment, without premium or penalty, in certain instances of Insured Casualty
or Condemnation (each a "Casualty/Condemnation Prepayment"), in the manner and
to the extent set forth in Section 8.4.2. Each Casualty/Condemnation Prepayment
shall be made on a Payment Date and shall be applied as follows in the following
order of priority: (i) First, to costs and expenses of Lender (if any),
including reasonable attorney's fees and disbursements, in connection with such
prepayment or reasonably expended by Lender to protect the collateral value of
the Collateral Property; (ii) Second, accrued and unpaid interest at the
Applicable Interest Rate; (iii) Third, to Principal (with each
Casualty/Condemnation Prepayment being applied first to reduce the Allocated
Loan Amount of the Borrower whose Collateral Property was the subject of the
Casualty/Condemnation); and (iv) Fourth, to any other amounts then due and owing
under the Loan Documents. If such Casualty/Condemnation Prepayment is not paid
on a Payment Date, the payment amount will include interest that would have
accrued on the Principal prepaid to but not including the next Payment Date.
3.3 Release of Property. Except as set forth in this Section 3.3 and
otherwise set forth in this Agreement, no repayment or prepayment shall cause,
give rise to a right to require, or otherwise result in, the release of the Lien
of any Mortgage.
3.3.1 Release of Collateral Properties. A Borrower on one or more
occasions may obtain (i) the release of the Collateral Property owned by it from
the Lien of the Mortgage thereon (and related Loan Documents) and (ii) the
release of such Borrower's obligations under the Loan Documents with respect to
such Collateral Property (other than those expressly stated to survive), upon
satisfaction of each of the following conditions:
(a) Either (i) the conditions for Voluntary Prepayment of the entire
Loan pursuant to Section 3.2.1 hereof are satisfied, (ii) Lender is required to
release such Collateral Property pursuant to Section 2.3 in connection with a
Substitution (it being understood that a release pursuant to Section 2.3 need
not satisfy any Release Conditions not expressly set forth in Section 2.3); or
(iii) Lender is required to release such Collateral Property pursuant to
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Section 2.4 in connection with a Defeasance (it being understood that a release
pursuant to Section 2.4 need not satisfy any Release Conditions not expressly
set forth in Section 2.4)
(b) Such Borrower shall submit to Lender, the Release Documents set
forth in Section 3.3.3 below, together with all other documentation Lender
reasonably requires to be delivered by such Borrower in connection with such
release, together with an Officer's Certificate of such Borrower.
3.3.2 Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of the Debt in
accordance herewith, release the Liens of the Mortgages if not theretofore
released.
3.3.3 Release Documents. When the terms of Section 3.3 are satisfied
with respect to a Collateral Property or when Lender has consented to a
Substitution pursuant to Section 2.3, Lender shall execute and deliver to the
Borrower such documents as may be necessary or appropriate to release such
Borrower from its obligations under the Loan Documents and to release all liens
held by Lender on such Collateral Property. All such documents shall be prepared
by Borrower's counsel, shall be in a form appropriate in the jurisdiction in
which such Collateral Property is located, shall be reasonably acceptable to
Lender in form and substance and shall be delivered to Lender at least thirty
(30) days before the proposed release date.
3.3.4 Release of Funds. Upon the completion of the release of a
Collateral Property pursuant to Section 3.3.1 or the completion of a
Substitution pursuant to Section 2.3, the Lender shall refund to the Borrower
all amounts on deposit in the Funds with respect to the released Collateral
Property or if such release is pursuant to a Substitution, at Lender's option,
Lender shall offset such amounts against the sums required to be deposited into
the Funds for the Substitute Collateral Property.
3.4 Payments and Computations.
3.4.1 Making of Payments. Each payment by a Borrower hereunder or
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 1:00 p.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the first Business
Day preceding such scheduled Payment Date. All payments made by any Borrower
hereunder or under the other Loan Documents, shall be without any deduction,
set-off or counterclaim, whatsoever and are payable without relief from
valuation and appraisement laws and with all costs and charges incurred in the
collection or enforcement thereof, including attorneys' fees and court costs.
Payments to Lender made from the Accounts shall be deemed to have been made
before 1:00 p.m., New York City time, on the date such payment is made.
3.4.2 Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for
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which the calculation is being made by (b) a daily rate based on a three hundred
sixty (360) day year by (c) the outstanding Principal balance.
3.4.3 Late Payment Charge. If any Principal, interest or other sum
due under any Loan Document is not paid on the date on which it is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of five percent
(5%) of such unpaid sum or the maximum amount permitted by applicable law (the
"Late Payment Charge"), in order to defray the expense incurred by Lender in
handling and processing such delinquent payment and to compensate Lender for the
loss of the use of such delinquent payment; provided that if no such late
payment has occurred within the prior twelve (12) month period, Borrower shall
only be required to pay the late payment charge provided for in this Section
3.4.3 if such failure to pay continues for two (2) Business Days after notice
from Lender. Such amount shall be secured by the Loan Documents. Any action by
Lender regarding the collection of a Late Payment Charge will be without
prejudice to any other rights, nor act as a waiver of any other rights, that
Lender may have as provided herein, at law or in equity. No Late Payment Charge
shall be due in connection with any payment to be made from the Accounts,
provided that on the date such payment is due there are sufficient funds in such
Accounts to make the payment in question.
3.5 Taxes. Any and all payments by Borrower hereunder and under the other
Loan Documents shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on Lender's income, and franchise taxes imposed on Lender by the law or
regulation of any Governmental Authority (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to in this Section 3.5 as "Applicable Taxes"). If Borrower shall be
required by law to deduct any Applicable Taxes from or in respect of any sum
payable hereunder to Lender, the following shall apply provided the Applicable
Taxes do not result because the Lender (due to permitted succession or
assignment) is not a United States person as defined at section 7701(a)(30) of
the Code or the Lender has failed to provide information necessary to avoid
back-up withholding pursuant to section 3406 of the Code: (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.5), Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions and (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
Borrower also agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or recordation of, or
otherwise with respect to, this Agreement or any other Loan Document ("Other
Taxes"). Borrower shall indemnify Lender for the full amount of Applicable Taxes
or Other Taxes (including any Applicable Taxes or Other Taxes imposed by any
jurisdiction on amounts paid or payable under this Section 3.5) paid by Lender
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Applicable Taxes or Other Taxes
were correctly or legally asserted. Payments pursuant to this Section 3.5 shall
be made within fifteen (15) days after the date Lender makes written demand
therefor. Borrower shall have the right to contest such Applicable Taxes and
Other Taxes referred to in this Section 3.5 in accordance with the terms of
Section 6.2 of this Agreement.
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IV CASH MANAGEMENT; ESCROWS AND RESERVES
4.1 Cash Management Arrangements.
4.1.1 Lockbox Account. On or before the Closing Date, Borrower shall
open an account for each Collateral Property (the "Lockbox Account") with Agent
which shall be the depository account for the applicable Borrower into which all
sums due to such Borrower will be deposited. The Lockbox Account shall be in
Lender's name, or at Lender's option, in the Servicer's name. The Lockbox
Account shall be under the sole dominion and control of Lender. The Lockbox
Account will be opened and maintained as an Eligible Account.
4.1.2 Deposits into Lockbox Account. Borrower shall cause all
Tenants at each Collateral Property to pay Rent directly into the Lockbox
Account on or before the date such Rent is due under the terms of the applicable
Lease. When bills to Tenants are delivered pursuant to Section 6.11.6 of this
Agreement, Borrower shall send a notice, substantially in the form of Exhibit A
attached hereto, to all Tenants at each Collateral Property directing them to
pay all Rent into the Lockbox Account. In the event that Borrower, it Affiliates
or the Manager receives any Rents directly, Borrower agrees to deposit, or cause
to be deposited, all such Rents into the Lockbox Account within one (1) Business
Day. All sums deposited into the Lockbox Account shall be swept daily into one
cash management account established by Borrower with Agent on or before the
Closing Date (the "Cash Management Account") (the Cash Management Account shall
be held and administered in accordance with the Cash Management Agreement). The
Cash Management Account shall be in Lender's name, or at Lender's option, in the
Servicer's name. The Cash Management Account shall be under the sole dominion
and control of Lender. The Cash Management Account will be opened and maintained
as an Eligible Account. Neither the Lockbox Account, the Cash Management Account
nor the Cash Management Agreement shall alter or diminish in any way Borrower's
obligation to make timely payment and deposits to all sums required to be paid
or deposited under any Loan Document.
4.1.3 The Accounts. On or before the Closing Date, Borrower shall
open with Agent separate accounts for each of the following Funds (hereinafter
defined): Tax and Insurance Escrow Fund (the "Tax and Insurance Account"),
Replacement Reserve Fund (the "Replacement Reserve Account"), Rollover Reserve
Fund (the "Rollover Reserve Account"), Ground Rent Escrow Fund (the "Ground Rent
Account"), Operating Expense Reserve Fund (the "Operating Expense Account"), the
Cash Collateral Fund (the "Cash Collateral Account") and the Debt Service
Reserve Fund (the "Debt Service Reserve Account")]. Tax and Insurance Escrow
Funds shall be held in the Tax and Insurance Account. Replacement Reserve Funds
shall be held in the Replacement Reserve Account. Rollover Reserve Funds shall
be held in the Rollover Reserve Account. Ground Rent Escrow Funds shall be held
in the Ground Rent Account. Operating Expense Reserve Funds shall be held in the
Operating Expense Account. The Debt Service Reserve Fund shall be held in the
Debt Service Reserve Account All Funds remaining in the Accounts after
application pursuant to Sections 3.1.5 and 4.11 shall be held in the Cash
Collateral Account. The accounts defined in this Section may be hereinafter
referred to from to time as an "Account" or collectively as the "Accounts." At
Lender's option, each of the Accounts shall be opened in Lender's name or in
Servicer's name. Each of the Accounts shall be under the sole dominion and
control of Lender. Each of the Accounts shall be opened and maintained as an
Eligible Account.
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4.2 Intentionally Deleted.
4.3 Tax and Insurance Escrow Fund. Borrower shall pay to Lender on each
Payment Date (i) one-twelfth (1/12th) of the Taxes for the Collateral Property
that Lender estimates will be payable during the next twelve (12) months in
order to accumulate with Lender sufficient funds to pay all such Taxes at least
thirty (30) days prior to their respective due dates ("Monthly Tax Amount"), and
(ii) one-twelfth (1/12th) of the Insurance Premiums that Lender estimates will
be payable for the renewal of the coverage afforded by the Policies relating to
the Collateral Property upon the expiration thereof in order to accumulate with
Lender sufficient funds to pay all such Insurance Premiums at least thirty (30)
days prior to the expiration of such Policies ("Monthly Insurance Amount") (the
amounts paid under the foregoing clauses (i) and (ii) with respect to the
Collateral Property, less disbursements thereof pursuant hereto, being called
the "Tax and Insurance Escrow Fund"). Lender will (a) apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be
made by the respective Borrower pursuant to Sections 6.2 and 8.1 prior to the
date upon which interest or penalties would be imposed, provided that the
Borrower has promptly supplied Lender with notices of all Taxes and Insurance
Premiums due for each Collateral Property, or (b) reimburse the applicable
Borrower for such amounts upon presentation of evidence of payment and an
Officer's Certificate in form and substance satisfactory to Lender; subject,
however, to the Borrower's right to contest Taxes in accordance with Section
6.2. Following the payment by Lender of any Taxes pursuant to this Section 4.3,
Lender shall send a "paid" receipt to the Borrower. Provided the Borrower has
deposited funds into the Tax and Insurance Escrow Fund as required under this
Section and given Lender timely notice of the amount and due date of such taxes,
Borrower shall not be liable for interest or penalties resulting from late
payment of such Taxes by Lender, and, so long as no portion of the Debt has been
accelerated, Lender or Servicer shall be responsible for such interest and
penalties. In making any payment relating to the Tax and Insurance Escrow Fund,
Lender may do so according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Escrow Fund shall exceed the amounts next coming due for Taxes and
Insurance Premiums pursuant to Sections 6.2 and 8.1, Lender shall, in its sole
discretion, return any excess to the applicable Borrower or credit such excess
against future payments to be made to the Tax and Insurance Escrow Fund. If at
any time Lender determines that the Tax and Insurance Escrow Fund is not or will
not be sufficient to pay the Taxes or Insurance Premiums next coming due, Lender
shall notify the Borrower of such determination and the Borrower shall increase
the monthly payments to Lender by the amount that Lender estimates is sufficient
to make up the deficiency at least thirty (30) days prior to delinquency of the
Taxes and/or expiration of the Policies, as the case may be. Lender acknowledges
that Borrower currently causes its Premiums to be paid by Afco Acceptance Corp.
("Afco") through an agreement with Westfield America, Inc., and Lender agrees
that amounts for the Borrower's Premiums held in the Tax and Insurance Escrow
Fund shall be released to reimburse the Borrower for payments made by it to
reimburse Westfield America, Inc. for the amounts paid to Afco with respect to
the Borrower's Premiums (subject to compliance by Borrower with clause (b) of
this Section 4.3 or any other similar arrangements reasonably acceptable to
Lender.
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4.4 Replacements and Replacement Reserves.
4.4.1 Replacement Reserve Fund. Upon the occurrence of a Cash
Management Event, Borrower shall pay to Lender on each Payment Date thereafter
(in addition to other payments required hereunder) an amount equal to the
Monthly Replacement Deposit for each Collateral Property (such payments with
respect to the entire Collateral Pool, less disbursements thereof pursuant
hereto, being called the "Replacement Reserve Fund"). If the amount of the
Replacement Reserve Fund shall exceed the amounts due for Approved Replacement
Expenses pursuant to the terms hereof, Lender shall, in its discretion, return
any excess to the Borrower or, if future Replacement Reserve Fund payments are
then required, credit such excess against such future payments.
4.4.2 Payment of Replacement Expenses. From time to time (but not
more often than monthly), Lender shall disburse funds held in the Replacement
Reserve Fund to the applicable Borrower, within thirty (30) days after the
delivery by the applicable Borrower to Lender of a request therefor, in
increments of at least $5,000; provided, that (i) on the day of the request and
on the day of payment no Event of Default shall have occurred and be continuing;
(ii) such disbursement is for a Replacement Expense that has been incurred by
such Borrower (provided that, during the continuance of a Cash Management Event,
such Replacement Expense must be an Approved Replacement Expense); (iii) Lender
shall have (if it desires) verified (by an inspection conducted at the
Borrower's expense) performance of the work associated with such Approved
Replacement Expense (or Replacement Expense, as the case may be); and (iv) the
request for disbursement is accompanied by (A) an Officer's Certificate
certifying (v) the amount of funds to be disbursed, (w) that such funds will be
used to pay or reimburse the applicable Borrower for Approved Replacement
Expenses (or Replacement Expenses, as the case may be) and a description
thereof, (x) that all outstanding trade payables (other than those to be paid
from the requested disbursement or those otherwise permitted to be outstanding
under Section 7.8) have been paid in full, (y) that the same has not been the
subject of a previous disbursement, and (z) that all previous disbursements have
been used to pay the previously identified Approved Replacement Expenses (or
Replacement Expenses, as the case may be), and (B) reasonably detailed
documentation as to the amount, necessity and purpose therefor.
4.5 Rollover Reserves.
4.5.1 Rollover Reserve Fund. Upon the occurrence of a Cash
Management Event, Borrower shall pay to Lender on each Payment Date thereafter
monthly deposits for the payment of Approved Leasing Expenses (the "Monthly
Rollover Deposit") for each Collateral Property (in addition to other payments
required hereunder) (such payments with respect to the entire Collateral Pool,
less disbursements thereof pursuant hereto, being called the "Rollover Reserve
Fund") or, at Borrower's option, shall post a Letter of Credit in such amount
determined by Lender based on $.75 a square foot of gross leasable area
excluding Anchor Tenant space for each Collateral Property. Lender will apply
such payments to payment of Approved Leasing Expenses pursuant to the terms
hereof. Borrower shall also deposit into the Rollover Reserve Fund all payments
("Lease Termination Payments") received from Tenants in connection with the
termination or cancellation of any Lease more than one year prior to its
expiration date, including fees, penalties and commissions (provided that, upon
the releasing of all or any portion of the space demised under such cancelled or
terminated Lease, Lender shall,
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upon the applicable Borrower's request and provided no Event of Default then
exists, release to such Borrower the portion, if any, of the Lease Termination
Payment which exceeds the actual Leasing Expenses incurred or to be incurred in
connection with such releasing). If the amount of the Rollover Reserve Fund
shall exceed the amounts due for Approved Leasing Expenses pursuant to the terms
hereof, Lender shall retain excess Rollover Reserve Funds in accordance with
Section 4.11 of this Agreement. If Lender determines in its reasonable judgment
that the amount of the Rollover Reserve Fund will be insufficient to pay the
amounts due or to become due for Approved Leasing Expenses (after taking into
account any Lease Termination Payments theretofore deposited into the Rollover
Reserve), Lender may adjust the monthly amounts required to be deposited into
the Rollover Reserve Fund upon thirty (30) days' notice to Borrower.
Alternatively, Lender may in its discretion determine that the amount of the
Rollover Reserve Fund will exceed the amounts due or to become due for Approved
Leasing Expenses, in which case Lender may reduce the monthly amounts to be
deposited therein. Lender shall release funds on deposit in the Rollover Reserve
Fund to the Borrower for each Collateral Property, in an amount calculated based
on the amounts per square foot leased as set forth on Schedule 6 attached
hereto, upon Lender's receipt from Borrower of evidence that (i) a new Lease has
been executed, (ii) the Tenant under such new Lease has taken possession of the
premises leased thereunder and has provided the Borrower and Lender with an
estoppel letter stating that the Tenant has commenced paying rent pursuant to
the terms of its Lease, (iii) all tenant improvement costs or other Approved
Leasing Expenses have been paid pursuant to the terms of the new Lease, and (iv)
any leasing commissions have been paid and there are no outstanding monetary
obligations of the Borrower to the Tenant or any third party due under such new
Lease.
4.5.2 Payment of Leasing Expenses. From time to time (but not more
than once per month) Lender shall disburse funds held in the Rollover Reserve
Fund to the applicable Borrower(s), within fifteen (15) days after the delivery
by the applicable Borrower(s) to Lender of a request therefor, in increments of
at least $5,000; provided, (i) on the day of the request and on the day of
payment no Event of Default shall have occurred and be continuing; (ii) such
disbursement is for an Approved Leasing Expense; (iii) Lender shall have (if it
desires) verified (by an inspection conducted at Borrower's expense) performance
of any construction work associated with such Approved Leasing Expense; and (iv)
the request for disbursement is accompanied by (A) an Officer's Certificate
certifying (v) the amount of funds to be disbursed, (w) that such funds will be
used only to pay (or reimburse the applicable Borrower(s) for) Approved Leasing
Expenses and a description thereof, (x) that all outstanding trade payables
(other than those to be paid from the requested disbursement or those otherwise
permitted to be outstanding under Section 7.8) have been paid in full, (y) that
the same has not been the subject of a previous disbursement, and (z) that all
previous disbursements have been used only to pay (or reimburse the applicable
Borrower(s) for) the previously identified Approved Leasing Expenses, and (B)
reasonably detailed supporting documentation as to the amount, necessity and
purpose therefor. During the continuance of a Cash Management Event, any such
disbursement to pay (rather than reimburse) Approved Leasing Expenses may, at
Lender's option, be made by joint check payable to the applicable Borrower(s)
and the payee of such Approved Leasing Expenses.
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4.6 Ground Rent Escrow.
4.6.1 Ground Rent Escrow Fund. Each Borrower whose Collateral
Property is subject to a Ground Lease that requires payment of net annual rent
on other than a monthly basis, shall pay to Lender on each Payment Date
one-twelfth (1/12th) of the annual net rent that Lender estimates will be
payable under such Ground Lease during the next twelve (12) months in order to
accumulate with Lender sufficient funds to pay the then next installment of
annual net rent due under such Ground Lease at least thirty (30) days prior to
the due date thereof (the "Monthly Ground Rent") (such payments with respect to
all Ground Leases, less disbursements thereof pursuant hereto, the "Ground Rent
Escrow Fund"). Lender will apply the Ground Rent Escrow Fund to payments of
annual net rent required to be made by the applicable Borrower under its Ground
Lease, or to reimburse such Borrower for such amounts upon presentation of
evidence of payment and an Officer's Certificate of such Borrower in form and
substance satisfactory to Lender. In making any payment relating to the Ground
Rent Escrow Fund, Lender may do so according to any bill, statement or estimate
procured from the landlord under the applicable Ground Lease, without inquiry
into the accuracy of such bill, statement or estimate or into the validity of
any claim by such landlord. If at any time Lender determines that the portion of
the Ground Rent Escrow Fund allocable to any Ground Lease is not or will not be
sufficient to pay the annual net Rent pursuant to such Ground Lease next coming
due, Lender shall notify the applicable Borrower(s) of such determination and
the applicable Borrower(s) shall increase its (their) monthly payments to Lender
by the amount that Lender reasonably estimates is sufficient to make up the
deficiency at least thirty (30) days prior to delinquency of the annual net rent
under the applicable Ground Lease(s).
4.7 Operating Expense Reserves.
4.7.1 Operating Expense Reserve Fund. After the occurrence of a Cash
Management Event or the Anticipated Repayment Date, Borrower shall pay to Lender
an amount equal to the Approved Operating Expenses for each Collateral Property
for the next Current Month (the "Monthly Operating Expense Deposit") (such
payments with respect to the entire Collateral Pool, less disbursements thereof
pursuant hereto, being called the "Operating Expense Reserve Fund"). If the
amount of the Operating Expense Reserve Fund shall exceed the amounts due for
Approved Operating Expenses pursuant to the terms hereof, Lender shall retain
excess Operating Expense Reserve Funds in accordance with Section 4.11 of this
Agreement.
4.7.2 Payment of Approved Operating Expenses. From time to time (but
not more than once per month) following the occurrence of a Cash Management
Event or the Anticipated Repayment Date, Lender shall disburse funds held in the
Operating Expense Reserve Fund to Borrower, provided (i) on the day of the
request and on the date of payment no portion of the Debt shall have been
accelerated; (ii) such disbursement is for an Approved Operating Expense; and
(iii) such disbursement is requested by Borrower in writing, accompanied by (A)
an Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such funds will be used to pay Approved Operating Expenses and a
description thereof, (x) that all outstanding trade payables (other than those
to be paid from the requested disbursement or those otherwise permitted to be
outstanding under Section 7.8) have been paid in full, (y) that the same has not
been the subject of a previous disbursement, and (z) that all previous
disbursements have
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been or will be used to pay the previously identified Approved Operating
Expenses, and (B) reasonably detailed documentation as to the amount, necessity
and purpose therefor. Subject to satisfaction of the preceding conditions, if
Lender receives from a Borrower a valid request for a disbursement for payment
of Approved Operating Expenses for the then Current Month at least five (5)
Business Days prior to the Payment Date occurring in such Current Month, then
the disbursement in respect of such Approved Operating Expenses shall be made to
such Borrower on such Payment Date. Notwithstanding anything to the contrary in
the foregoing, during the continuance of an Event of Default Lender shall have
the right, in lieu of disbursing to Borrower funds from the Operating Expense
Reserve Fund, to pay such funds directly to the obligees or to pay such funds to
the applicable Borrower and the obligee in question jointly.
4.8 Casualty/Condemnation Fund. The Borrower shall pay, or cause to be
paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation (such
amounts, less disbursements thereof pursuant hereto, the "Casualty/Condemnation
Fund"), in accordance with the provisions of Sections 8.2.2 and 8.3.2. All
amounts in the Casualty/Condemnation Fund shall be disbursed in accordance with
the provisions of Article VIII.
4.9 Security Deposits.
(a) Security deposits under Leases shall not be commingled with any
other funds of any Borrower (unless permitted by applicable Legal Requirements)
and all security deposits paid in cash under Leases, shall, unless permitted to
be commingled with any Borrower's funds under applicable Legal Requirements, be
deposited by the applicable Borrower into an account with the Agent. After the
occurrence of a Cash Management Event, each Borrower shall, upon Lender's
request, if permitted by applicable Legal Requirements, turn over to Lender the
security deposits (and any interest theretofore earned thereon) under Leases, to
be held by Lender subject to the terms of the Leases. If applicable Legal
Requirements prohibit any Borrower from turning over to Lender security deposits
under Leases, such Borrower shall keep such security deposits at a separately
designated account at the Agent so that the security deposits shall not be
commingled with any other funds of such Borrower. Security deposits held by the
Lender will be released by Lender upon notice from the Borrower together with
such evidence as Lender may reasonably request that such security deposit is
required to be returned to a Tenant pursuant to the terms of a Lease or may be
applied as Rent pursuant to the rights of such Borrower under the applicable
Lease.
(b) Any letter of credit or other instrument that a Borrower
receives in lieu of a cash security deposit shall (i) be maintained in full
force and effect in the full amount unless replaced by a cash deposit as
hereinabove described, (ii) if pertaining to a Material Lease, be issued by an
institution reasonably satisfactory to Lender, (iii) if permitted pursuant to
any Legal Requirements, name Lender as payee or mortgagee thereunder (or be
fully assignable to Lender) and (iv) in all respects, comply with any applicable
Legal Requirements and, if pertaining to a Material Lease, otherwise be
reasonably satisfactory to Lender. Each Borrower shall, upon request, provide
Lender with evidence reasonably satisfactory to Lender of such Borrower's
compliance with the foregoing.
4.10 Funds, Generally.
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4.10.1 Grant of Security Interest; Application of Funds. As
additional security for Borrower's payment of the Debt and the performance by
Borrower of all other terms, conditions and provisions of the Loan Documents,
each Borrower hereby pledges and assigns to Lender, and grants to Lender a
security interest in, all right, title and interest of such Borrower in and to
all Rents and in and to all payments to or monies held in the Lockbox Account,
the Cash Management Account, the Accounts (collectively, the "Cash Management
Accounts") and in the Casualty/Condemnation Fund (all amounts held in the
Accounts, the Casualty/Condemnation Fund, together with all other funds
designated as or deemed to be "Funds" under this Agreement, are referred to
herein as the "Funds"). Each Borrower for itself and on behalf of each of its
Affiliates and the Manager hereby grants to Lender a continuing security
interest in, and agrees to hold in trust for the benefit of Lender, all Rents in
its possession prior to the (i) payment of such Rents to Lender or (ii) deposit
of such Rents into the Lockbox Account in accordance with this Agreement and the
Cash Management Agreement. No Borrower shall, without obtaining the prior
written consent of Lender, further pledge, assign or grant any security interest
in any Cash Management Account or Fund, or permit any Lien to attach thereto, or
any levy to be made thereon, or any UCC-1 Financing Statements, except those
naming Lender as the secured party, to be filed with respect thereto. This
Agreement is, among other things, intended by the parties to be a security
agreement for purposes of the UCC. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in the Cash
Management Accounts as provided under Section 3.1.5(c).
4.10.2 Investments of Funds. Lender shall direct the Agent to invest
any balances in the Accounts in Permitted Investments as instructed by Borrower,
provided that (i) if Borrower fails to so instruct Lender, or upon the
occurrence and continuation of a Cash Management Event, Lender may direct the
Agent to invest and reinvest such balances of the Funds in Permitted Investments
as Lender shall determine in its sole discretion, (ii) the maturities of the
Permitted Investments on deposit in the Accounts shall be selected and
coordinated to become due not later than one day before any disbursements from
the Accounts must be made, (iii) all such Permitted Investments shall be held in
the name of and be under the sole dominion and control of Lender and subject at
all times to the terms hereof, and (iv) no Permitted Investment shall be made
unless Lender shall have and continue to have a perfected first priority Lien in
such Permitted Investment securing the obligations of Borrower hereunder and
under the other Loan Documents and all filings and other actions necessary to
ensure the validity, perfection, and first priority of such Lien shall have been
taken. Lender shall have no liability for any loss investments of Funds in the
Accounts that are invested in Permitted Investments and no such loss shall
affect Borrower's obligations to make the deposits into the Funds pursuant to
this Agreement. Borrower shall report on its federal, state and local income tax
reports at interest or income accrued on Funds in the Accounts.
4.11 Cash Collateral Fund.
(a) After the occurrence of a Cash Management Event, all Rents
remaining in the Accounts after application thereof pursuant to items (i)
through (vii) of Section 3.1.5(a), shall be transferred to the Cash Collateral
Account (all funds at any time in the Cash Collateral Account being called the
"Cash Collateral Fund").
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(b) Funds in the Cash Collateral Account which originally
constituted a part of the Replacement Reserve Fund or the Rollover Reserve Fund
shall be held in the Cash Collateral Account for future disbursement by Lender,
provided no Event of Default then exists, for Approved Replacement Expenses and
Approved Leasing Expenses, respectively, to the extent, but only to the extent,
that Borrower's required Monthly Reserve Deposits and/or required Monthly
Rollover Deposits, respectively, are insufficient to pay for same. Funds in the
Cash Collateral Account which originally constituted a part of some other Fund
shall be held in the Cash Collateral Account for future application, provided no
Event of Default then exists, to such Funds, in such order and manner as Lender
may elect in its sole and absolute discretion.
(c) Any funds deposited with the Lender in connection with a One
Time Cash Management Event Cure shall be secured by the Mortgages and be
otherwise applied in accordance with the terms of this Section 4.11 if the One
Time Cash Management Event Cure does not prevent a Cash Management Event from
occurring at the end of the following quarter upon the Lender's test of the Debt
Service Coverage Ratio. If there is no Cash Management Event upon such
subsequent test of the Debt Service Coverage Ratio, or a Cash Management
Termination has occurred, the funds deposited with the Lender in connection with
a One Time Cash Management Event Cure shall be returned to the Borrower pursuant
to subsection (d) below.
(d) Upon a Cash Management Termination, Lender shall deliver to
Borrower, on the next Business Day, all Funds then on deposit in the Cash
Collateral Account.
4.12 Intentionally Deleted.
V REPRESENTATIONS AND WARRANTIES
5.1 Borrower Representations. Each Borrower represents and warrants as to
itself, as of the date hereof that, except to the extent (if any) disclosed on
Schedule 4 with reference to a specific subsection of this Section 5.1:
5.1.1 Organization; Special Purpose. Each Borrower has been duly
organized and is validly existing and in good standing under the laws of the
State of formation, with requisite power and authority, and all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
own its properties and to transact the business in which it is now engaged. Each
Borrower is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, business and operations. Each Borrower is a Special Purpose Entity,
and the sole business of each Borrower is the ownership, management and
operation of the Collateral Property owned by it.
5.1.2 Proceedings; Enforceability. Each Borrower has taken all
necessary action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party. The Loan Documents to which any Borrower
is a party have been duly executed and delivered by such Borrower and constitute
legal, valid and binding obligations of such Borrower enforceable against such
Borrower in accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and
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general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
5.1.3 No Conflicts. The execution, delivery and performance by each
Borrower of the Loan Documents to which it is a party will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any Lien (other than pursuant
to the Loan Documents) upon any of the property of such Borrower pursuant to the
terms of, any agreement or instrument to which such Borrower is a party or by
which its property is subject (including any Ground Lease), nor will such action
result in any violation of the provisions of any statute or any order, rule or
regulation of any Governmental Authority having jurisdiction over such Borrower
or any of its properties. Each Borrower's rights under the Licenses and the
Management Agreement pertaining to the Collateral Property owned by such
Borrower will not be adversely affected by the execution and delivery of the
Loan Documents, such Borrower's performance thereunder, the recordation of any
Mortgage executed by such Borrower, or the exercise of any remedies by Lender.
Any consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution and delivery by any
Borrower of the Loan Documents has been obtained and is in full force and
effect.
5.1.4 Litigation. There are no actions, suits or other proceedings
at law or in equity by or before any Governmental Authority now pending or
threatened against or affecting any Borrower, any Borrower Representative, the
Manager or any Collateral Property, which, if adversely determined, might
materially adversely affect the condition (financial or otherwise) or business
of any Borrower, any Borrower Representative, Manager or the condition or
ownership of any Collateral Property.
5.1.5 Agreements. No Borrower is a party to any agreement or
instrument or subject to any restriction which might adversely affect such
Borrower or its Collateral Property, or such Borrower's business, properties,
operations or condition, financial or otherwise. No Borrower is in default in
any material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
any other agreement or instrument to which it is a party or by which it or any
Collateral Property is bound.
5.1.6 Title. Each Borrower has good fee title (or, if the Mortgages
granted by such Borrower are leasehold mortgages, leasehold title) to the
portion of its Collateral Property constituting Real Property, and good title to
the balance of the Collateral Property, free and clear of all Liens except the
Permitted Encumbrances. The Mortgage executed by each Borrower, when properly
recorded in the appropriate records, together with any UCC financing statements
required to be filed in connection therewith, will create (i) valid, perfected
first and second priority lien on the fee interest in the Collateral Property
(or, if the Mortgage granted by such Borrower are leasehold mortgages, the
Leasehold Estate), and (ii) perfected security interests in and to, and
perfected collateral assignments of, all personalty purported to be covered by
such Mortgages (including the Leases affecting such Collateral Property), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances. The Permitted Encumbrances do not materially adversely
affect the value or use of any Collateral Property, or the ability of Borrower
to repay the Loan. There are no claims for payment for
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work, labor or materials affecting any Collateral Property which are or may
become a Lien prior to, or of equal priority with, any Liens created by the Loan
Documents.
5.1.7 Survey. To the best of each Borrower's knowledge, the survey
for each Collateral Property delivered to Lender does not fail to reflect any
material matter affecting such Collateral Property or the title thereto which is
required to be reflected thereon in accordance with the standards for a Survey
described in the definition thereof.
5.1.8 No Bankruptcy Filing. None of the Borrowers is contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency law or the liquidation of all or a major portion of its property (a
"Bankruptcy Proceeding"), and none of the Borrowers has any knowledge of any
Person contemplating the filing of any such petition against any Borrower. In
addition, no Borrower or Borrower Representative or any principal or Affiliate
of any Borrower or Borrower Representative has been a party to, or the subject,
of a Bankruptcy Proceeding for the past ten (10) years.
5.1.9 Full and Accurate Disclosure. No statement of fact made by
Borrower in any Loan Document contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
therein not misleading. There is no material fact presently known to any
Borrower that has not been disclosed to Lender which adversely affects, or, as
far as any Borrower can foresee, might adversely affect, the Collateral Property
or the business, operations or condition (financial or otherwise) of any
Borrower.
5.1.10 No Plan Assets. Borrower is not an "employee benefit plan,"
as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of
the assets of Borrower constitutes or will constitute "plan assets" of one or
more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition,
(a) Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to state statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Loan Agreement.
5.1.11 Compliance. Each Borrower and its Collateral Property and the
use thereof comply in all material respects with all applicable Legal
Requirements. No Borrower is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of such Borrower. There has not been and shall never be committed by
any Borrower or any other Person in occupancy of or involved with the operation
or use of any Collateral Property any act or omission affording any Governmental
Authority the right of forfeiture as against any Collateral Property or any part
thereof or any monies paid in performance of any Borrower's obligations under
any Loan Document.
5.1.12 Contracts. As of the date hereof, there are no material
service, maintenance or repair contracts affecting any Collateral Property other
than those identified on Schedule 5. All information set forth in Schedule 5 is
true, accurate and complete in all material respects as of the date hereof.
Except as disclosed on Schedule 5, there are no material service,
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maintenance or repair contracts that are not terminable on one month's notice or
less without cause and without penalty or premium. All service, maintenance or
repair contracts affecting any Collateral Property have been entered into at
arms-length in the ordinary course of a Borrower's business and provide for the
payment of fees in amounts and upon terms comparable to existing market rates.
5.1.13 Financial Information. All financial data, including the
information required pursuant to Section 2.2.6 hereof and any statements of cash
flow and income and operating expense, that have been delivered to Lender in
respect of any Collateral Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of such
Collateral Property as of the date of such reports, and (iii) to the extent
prepared by an independent certified public accounting firm, have been prepared
in accordance with GAAP consistently applied throughout the periods covered,
except as disclosed therein. No Borrower has any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that would have a material
adverse affect on the financial condition of such Borrower or on any Collateral
Property or the operation thereof as retail shopping centers, except as referred
to or reflected in said financial statements. Since the date of such financial
statements, there has been no materially adverse change in the financial
condition, operations or business of any Borrower from that set forth in said
financial statements.
5.1.14 Condemnation. No Condemnation or other proceeding has been
commenced or, to any Borrower's best knowledge, is contemplated with respect to
all or part of any Collateral Property or for the relocation of roadways
providing access to any Collateral Property.
5.1.15 Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose that would be inconsistent with such
Regulation U or any other regulation of such Board of Governors, or for any
purpose prohibited by Legal Requirements or any Loan Document.
5.1.16 Utilities and Public Access. Each Collateral Property has
rights of access to public ways and is served by water, sewer, sanitary sewer
and storm drain facilities adequate to service such Collateral Property for its
respective intended uses. All public utilities necessary or convenient to the
full use and enjoyment of each Collateral Property are located either in the
public right-of-way abutting such Collateral Property (which are connected so as
to serve such Collateral Property without passing over other property) or in
recorded easements serving such Collateral Property and such easements are set
forth in and insured by the Title Insurance Policies. All roads necessary for
the use of each Collateral Property for their current respective purposes have
been completed and dedicated to public use and accepted by all Governmental
Authorities.
5.1.17 Not a Foreign Person. No Borrower is a "foreign person"
within the meaning of ss. 1445(f)(3) of the Code.
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5.1.18 Separate Lots. Each Collateral Property is comprised of one
(1) or more parcels which constitute a separate tax lot or lots and does not
constitute a portion of any other tax lot not a part of such Collateral
Property.
5.1.19 Assessments. There are no pending or proposed material
special or other assessments for public improvements or otherwise affecting any
Collateral Property, or any contemplated improvements to any Collateral Property
that may result in such special or other assessments.
5.1.20 Enforceability. The Loan Documents are not subject to, and no
Borrower has asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury. No exercise of any of the terms of the
Loan Documents, or any right thereunder, will render any Loan Document
unenforceable.
5.1.21 Insurance. Borrower has obtained and has delivered to Lender
certified copies of all insurance policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. No Person, including
Borrower, has done, by act or omission, anything which would impair the coverage
of any such policy.
5.1.22 Use of Property; Licenses. Each Collateral Property is used
exclusively for retail and other appurtenant and related uses. Except as
heretofore discussed in writing to Lender, all material certifications, permits,
licenses and approvals, including certificates of completion and occupancy
permits required for the legal use, occupancy and operation of the Collateral
Property (collectively, the "Licenses"), have been obtained and are in full
force and effect. Borrower shall keep and maintain all licenses necessary for
the operation of each Collateral Property as a retail shopping center. The uses
being made of each Collateral Property are in conformity in all material
respects with, and are permitted under, the certificate of occupancy issued for
such Collateral Property.
5.1.23 Flood Zone. Except as disclosed on a Survey delivered to
Lender, none of the Improvements on any Collateral Property is located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards.
5.1.24 Physical Condition. Except as otherwise disclosed in the
written physical inspection reports heretofore delivered to Lender, each
Collateral Property, including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defects or damages in any
Collateral Property, whether latent or otherwise, and Borrower has not received
notice from any insurance company or bonding company of any defects or
inadequacies in any Collateral Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
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5.1.25 Boundaries and Encroachments. All of the Improvements on any
Collateral Property included in determining the appraised value of such
Collateral Property lie wholly within the boundaries and building restriction
lines of such Collateral Property, and no improvement on an adjoining property
encroaches upon such Collateral Property, and no easement or other encumbrance
upon such Collateral Property encroaches upon any of the Improvements, so as to
affect the value or marketability of such Collateral Property, except those
insured against by the Title Insurance Policy.
5.1.26 Leases and Rent Roll. Borrowers have delivered to Lender a
true, correct and complete rent roll for each Collateral Property (each a, "Rent
Roll"), which includes all Leases affecting each Collateral Property (including
schedules for all executed Leases for Tenants not yet in occupancy or under
which the rent commencement date has not occurred). Except as set forth in the
Rent Rolls and estoppel certificates delivered to Lender on or prior to the
Closing Date for the applicable Collateral Property: (i) to the best of each
Borrower's knowledge, each Lease is in full force and effect; (ii) the Tenants
under the Leases have accepted possession of and are in occupancy of all of
their respective demised premises, have commenced the payment of rent under the
Leases, and, to the best of each Borrower's knowledge, there are no offsets,
claims or defenses to the enforcement thereof; (iii) to the best of each
Borrower's knowledge, all rents due and payable under the Leases have been paid
and no portion thereof has been paid for any period more than thirty (30) days
in advance; (iv) the rent payable under each Lease is the amount of fixed rent
set forth in the Rent Roll, and, to the best of each Borrower's knowledge, there
is no claim or basis for a claim by the Tenant thereunder for an adjustment to
the rent; (v) to the best of each Borrower's knowledge, no Tenant has made any
written claim of a material default against the landlord under any Lease which
remains outstanding nor, to the best of each Borrower's knowledge, has Borrower
or Manager received, by telephonic, in-person, e-mail or other communication,
received any notice of a material default under any Lease; (vi) to the best of
each Borrower's knowledge, there is no present material default by the Tenant
under any Lease; (vii) no Borrower holds any security deposits under the Leases;
(viii) a Borrower is the sole owner of the entire lessor's or sublessor's
interest in each Lease; (ix) to the best of each Borrower's knowledge, each
Lease is the valid, binding and enforceable obligation of a Borrower and the
applicable Tenant thereunder; (x) to the best of each Borrower's knowledge, no
Person has any possessory interest in, or right to occupy, any Collateral
Property except under the terms of a Lease; and (xi) Borrower has not received
any written notice of default on the part of Landlord under any Lease.
Notwithstanding the foregoing, the breach of any of the representations
contained in the preceding sentence shall not constitute an Event of Default
provided that (i) the relevant Lease is not a Material Lease and (ii) the facts
resulting in such breach do not, after taking into account all other facts
resulting in other breaches of the representations contained in the preceding
sentence, do not have a material adverse affect on the value, Net Operating
Income, use or operation of any Collateral Property. None of the Leases contains
any option to purchase or right of first refusal to purchase any Collateral
Property or any part thereof. Neither the Leases nor the Rents have been
assigned or pledged except to Lender, and no other Person has any interest
therein except the Tenants thereunder.
5.1.27 Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of any Collateral Property to any Borrower have
been paid. All mortgage, mortgage recording, stamp,
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intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgages, have been paid, and, under current Legal Requirements, each of the
Mortgages is enforceable in accordance with their respective terms by Lender (or
any subsequent holder thereof).
5.1.28 Investment Company Act. No Borrower is (i) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (ii) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
5.1.29 Fraudulent Transfer. No Borrower has entered into the Loan or
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and each Borrower has received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of each Borrower's
assets exceeds and will, immediately following the execution and delivery of the
Loan Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of
each Borrower's assets is and will, immediately following the execution and
delivery of the Loan Documents, be greater than such Borrower's probable
liabilities, including the maximum amount of its contingent liabilities or its
debts as such debts become absolute and matured. Each Borrower's assets do not
and, immediately following the execution and delivery of the Loan Documents will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. No Borrower intends to, or believes
that it will, incur debts and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such debts as they mature (taking
into account the timing and amounts to be payable on or in respect of
obligations of such Borrower).
5.1.30 Ownership of Borrower. As to each Borrower that is a limited
partnership, the sole managing member of the sole general partner of such
Borrower is its Borrower Representative. As to each Borrower that is a limited
liability company, the sole managing member of such Borrower is its Borrower
Representative. Westfield America Limited Partnership is the owner of all of the
issued and outstanding capital stock of, in the case of Downtown Plaza LLC,
Borrower, and in the case of each of the other Borrowers, the Borrower
Representative, all of which capital stock has been validly issued and fully
paid and is nonassessable. The only limited partners or other members of each
Borrower are identified on Schedule 6 hereto. The stock of, in the case of the
Downtown Plaza LLC, Borrower, and in the case of each of the other Borrowers,
the Borrower Representative, and all limited partnership or membership interests
in each Borrower are owned free and clear of all Liens, warrants, options and
rights to purchase. No Borrower has an obligation to any Person to purchase,
repurchase or issue any ownership interest in it. Attached hereto as Schedule 6
is an organizational chart for each Borrower indicating the ownership interests
in each Borrower and its Borrower Representative.
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5.1.31 Management Agreement. The Management Agreement for each
Collateral Property is in full force and effect. There is no default, breach or
violation existing thereunder, and no event has occurred (other than payments
due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation thereunder, by
either party thereto. The Management Fee and the terms and provisions of the
Management Agreement are subordinate to the Loan Documents in accordance with
the term set forth in the applicable Manager Consent and Subordination of
Management Agreement, Lender approves the terms of the Management Agreements
heretofore delivered to Lender.
5.1.32 Hazardous Substances. To the best of each Borrower's
knowledge after due inquiry, except as disclosed in the written environmental
reports delivered to Lender prior to the date hereof: (i) no Collateral Property
is in violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or
clean-up, including the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Hazardous Substances
Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean
Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act, any state super-lien and environmental
clean-up statutes, any local law requiring related permits and licenses and all
amendments to and regulations in respect of the foregoing laws (collectively,
"Environmental Laws"); (ii) no Collateral Property is subject to any private or
governmental Lien or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous, toxic, dangerous and/or regulated
substances, wastes, materials, raw materials which include hazardous
constituents, pollutants or contaminants, including asbestos, asbestos
containing materials, petroleum, tremolite, anthlophylite, actinolite,
polychlorinated biphenyls and any other substances or materials which are
included under or regulated by Environmental Laws or which are considered by
scientific opinion to be otherwise dangerous in terms of the health, safety and
welfare of humans (collectively, "Hazardous Substances"); (iii) no Hazardous
Substances are or have been (including the period prior to the acquisition of
any Collateral Property by the Borrower that owns it), discharged, generated,
treated, stored on, incorporated in, or removed from any Collateral Property
other than in compliance with all Environmental Laws; (iv) except for Routine
Hazardous Substances, no Hazardous Substances are or have been (including the
period prior to the acquisition of any Collateral Property by the Borrower that
owns it), disposed of or transported from any Collateral Property other than in
compliance with all Environmental Laws; (v) no Hazardous Substances are present
in, on or under any nearby real property which could migrate to or otherwise
affect any Collateral Property; and (vi) no underground storage tanks exist on
any Collateral Property. There have been no environmental investigations,
studies, audits, reviews or other analyses conducted by or on behalf of any
Borrower which have not been provided to Lender.
5.1.33 Name; Principal of Business. No Borrower uses or will use any
trade name and has done or will do business under any name other than its actual
name set forth herein or the name of its Collateral Property. The principal
place of business of each Borrower is its primary address for notices as set
forth in Section 11.2, and no Borrower has any other place of business (other
than its Collateral Property).
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5.1.34 Subordinated Debt. No Borrower has any indebtedness with
respect to its Collateral Property or any excess cash flow or any residual
interest therein, whether secured or unsecured, other than Permitted
Encumbrances and the permitted indebtedness described in Section 7.8.
5.1.35 Ground Lease. (A) Borrower hereby represents and warrants to
Lender the following with respect to Lease and Option to Purchase between the
Redevelopment Agency of the City of Sacramento and Tishman Sacramento, Inc.,
dated as of August 11, 1967, as amended and assigned:
(1) Recording; Modification. The Ground Lease (or a
memorandum thereof) has been duly recorded. The Ground Lease
permits the interest of Borrower to be encumbered by a
mortgage or the ground lessor has approved and consented to
the encumbrance of the applicable Collateral Property by the
respective Mortgage. There have not been amendments or
modifications to the terms of the Ground Lease since its
recordation, with the exception of written instruments which
have been recorded. Borrower will not cancel, terminate,
surrender or amend the Ground Lease without the prior written
consent of Lender.
(2) No Liens. Except for the Permitted Encumbrances,
Borrower's interest in the Ground Lease is not subject to any
Liens or encumbrances superior to, or of equal priority with,
the related Mortgage other than the ground lessor's related
fee interest.
(3) Ground Lease Assignable. Borrower's interest in the
Ground Lease is assignable to Lender upon notice to, but
without the consent of, the ground lessor (or, if any such
consent is required, it has been obtained prior to the Closing
Date). The Ground Lease is further assignable by Lender, its
successors and assigns without the consent of the ground
lessor.
(4) Default. As of the date hereof, the Ground Lease is
in full force and effect and no default has occurred under the
Ground Lease and there is no existing condition which, but for
the passage of time or the giving of notice, could result in a
default under the terms of the Ground Lease.
(5) Notice. The Ground Lease requires the ground lessor
to give notice of any default by Borrower to Lender. The
Ground Lease, or estoppel letters received by Lender from the
ground lessor, further provides that notice of termination
given under the Ground Lease is not effective against Lender
unless a copy of the notice has been delivered to Lender in
the manner described in the Ground Lease.
(6) Cure. Lender is permitted the opportunity
(including, where necessary, sufficient time to gain
possession of the interest of
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Borrower under the Ground Lease) to cure any default under the
Ground Lease, which is curable after the receipt of notice of
any of the default before the ground lessor thereunder may
terminate the Ground Lease.
(7) Term. The Ground Lease has a term (including all
available renewals) which extends through July 31, 2027.
(8) New Lease. The Ground Lease requires the ground
lessor to enter into a new lease upon termination of the
Ground Lease if the Ground Lease was terminated and Lender was
not given an opportunity to cure the default prior to
termination.
(9) Insurance Proceeds. Under the terms of the Ground
Lease and the respective Mortgage, taken together, any related
insurance and condemnation proceeds will be applied either to
the repair or restoration of all or part of the applicable
Collateral Property, with Lender having the right to hold and
disburse the proceeds in excess of $1,000,000 as the repair or
restoration progresses, or to the payment of the outstanding
principal balance of the Loan together with any accrued
interest thereon.
(10) Subleasing. The Ground Lease does not impose any
restrictions on subleasing other than obtaining Landlord's
prior consent.
(B) Borrower hereby represents and warrants to Lender the
following with respect to the Amended and Restated Sublease by and between
Carter Hawley Hale Stores, Inc. and DPA, L.P., dated as of March 1, 1993 as
assigned from DPA, L.P. to Downtown Plaza LLC pursuant to that certain
Assignment of Ground Sublease, dated October 29, 1998:
(1) Recording; Modification. A memorandum of the Ground
Lease has been duly recorded. The Ground Lease permits the
interest of Borrower to be encumbered by a mortgage or the
ground lessor has approved and consented to the encumbrance of
the applicable Collateral Property by the respective Mortgage
in an amount not to exceed One Million Eight Hundred Nineteen
Thousand Eight Hundred Sixty Eight and NO/100 Dollars
($1,819,868.00). There have not been amendments or
modifications to the terms of the Ground Lease since its
recordation, with the exception of written instruments which
have been recorded. Borrower will not cancel, terminate,
surrender or amend the Ground Lease without the prior written
consent of Lender.
(2) No Liens. Except for the Permitted Encumbrances,
Borrower's interest in the Ground Lease is not subject to any
Liens or encumbrances superior to, or of equal priority with,
the related Mortgage other than the ground lessor's related
fee interest.
(3) Ground Lease Assignable. Borrower's interest in the
Ground Lease is assignable to Lender at a foreclosure sale
upon notice to,
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but without the consent of, the ground lessor (or, if any such
consent is required, it has been obtained prior to the Closing
Date).
(4) Default. As of the date hereof, the Ground Lease is
in full force and effect and no default has occurred under the
Ground Lease and there is no existing condition which, but for
the passage of time or the giving of notice, could result in a
default under the terms of the Ground Lease.
(5) Notice. The Ground Lease requires the ground lessor
to give notice of any default by Borrower to Lender. The
Ground Lease, or estoppel letters received by Lender from the
ground lessor, further provides that notice of termination
given under the Ground Lease is not effective against Lender
unless a copy of the notice has been delivered to Lender in
the manner described in the Ground Lease.
(6) Cure. Lender is permitted the opportunity
(including, where necessary, sufficient time to gain
possession of the interest of Borrower under the Ground Lease)
to cure any default under the Ground Lease, which is curable
after the receipt of notice of any of the default before the
ground lessor thereunder may terminate the Ground Lease.
(7) Term. The Ground Lease has a term (including all
available renewals) which extends through October 31, 2039.
(8) Subleasing. The Ground Lease does not impose any
restrictions on subleasing.
5.1.36 REA. With respect to each REA: (i) the applicable Borrower
has delivered to Lender a true and correct copy of such REA,
together with all amendments and modifications thereto. Such
REA is in full force and effect and has not otherwise been
modified or amended; (ii) except as disclosed in estoppels
delivered to Lender prior to the Closing Date, Borrower has
received no written claim of a default (other than a
technical, non-material default which would not entitle a
party to terminate or exercise any remedies with respect to an
REA) under such REA; (iii) all sums due and payable under such
REA have been paid in full; (iv) no party thereto has
commenced any action or given or received any notice for the
purpose of terminating such REA; and (v) the applicable
Borrower's interest in such REA may be encumbered by the
Mortgage granted in connection with the Loan and is assignable
without the consent of any other party to the REA.
5.1.37 Tenant Estoppels. No modifications have been made to any of
the terms and conditions of any of the Leases that would cause any of the
statements made by each of the Tenants in the Tenant estoppel certificates
delivered to Lender prior to the date hereof to be false or misleading in any
material respect.
5.1.38 No Prior Assignment. There are no prior assignments of the
Leases or any portion of the Rents due and payable or to become due and payable
which are presently outstanding.
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5.1.39 Special Purpose Entity/Separateness
(a) Until the Debt has been paid in full, each Borrower hereby
represents, warrants and covenants that each Borrower is, shall be and shall
continue to be a Special Purpose Entity.
(b) The representations, warranties and covenants set forth in
Section 5.1.39(a) shall survive for so long as any portion of the Debt remains
payable to Lender under this Agreement, the Note or any other Loan Document.
(c) All of the assumptions made in the Insolvency Opinion,
including, but not limited to, any exhibits attached thereto, are true and
correct in all respects and any assumptions made in any subsequent
non-consolidation opinion delivered in connection with the Loan Documents or a
Substitution or Transfer of any Collateral Property (an "Additional Insolvency
Opinion"), including, but not limited to, any exhibits attached thereto, will
have been and shall at all times be true and correct in all respects. Each
Borrower has complied and will comply with all of the assumptions made with
respect to it in the Insolvency Opinion. Each Borrower will have complied and
will comply with all of the assumptions made with respect to it in any
Additional Insolvency Opinion. Each entity other than a Borrower with respect to
which an assumption shall be made in any Additional Insolvency Opinion will have
complied and will comply with all of the assumptions made with respect to it in
any Additional Insolvency Opinion.
5.1.40 Illegal Activity. No portion of any Collateral Property has
been or will be purchased with proceeds of any illegal activity.
5.2 Survival of Representations and Covenants. All of the representations
and warranties in Section 5.1 and elsewhere in the Loan Documents (i) shall
survive for so long as any portion of the Debt remains owing to Lender and (ii)
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf. The
representations, warranties and covenants set forth in Section 5.1.39 and 6.10
shall not be subject to the exculpation provisions of Section 11.1.
VI AFFIRMATIVE COVENANTS
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Mortgages encumbering the Collateral Properties (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:
6.1 Existence. Each Borrower shall (i) do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently
conducted by it, (iii) obtain and maintain all Licenses applicable to it or its
Collateral Property, and (iv) qualify to do business and remain in good standing
under the laws of each jurisdiction, in each case as and to the extent required
for the ownership, maintenance, management and operation of the Collateral
Property owned by it.
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6.2 Taxes and Other Charges. Each Borrower shall pay all Taxes and Other
Charges applicable to such Borrower and the Collateral Property owned by it as
the same become due and payable, and deliver to Lender receipts for payment or
other evidence satisfactory to Lender that such Taxes and Other Charges have
been so paid no later than thirty (30) days before they would be delinquent if
not paid (provided, however, that a Borrower need not furnish such receipts for
payment of Taxes paid by Lender pursuant to Section 4.3). No Borrower shall
suffer and shall promptly cause to be paid and discharged any Lien against its
Collateral Property other than Permitted Encumbrances, and shall promptly pay
for all utility services provided to such Collateral Property. After prior
notice to Lender, a Borrower, at its own expense, may contest by appropriate
legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application of any Taxes or Other Charges,
provided that (i) no Event of Default has occurred and remains uncured, (ii)
such proceeding shall suspend the collection of such Taxes or Other Charges or
the Taxes shall have been paid, (iii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of any other instrument to
which such Borrower is subject and shall not constitute a default thereunder,
(iv) no part of or interest in any Collateral Property will be in danger of
being sold, forfeited, terminated, canceled or lost, (v) such Borrower shall
have furnished such security as may be required in the proceeding, or as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon, which shall not be less than
125% of the unpaid Taxes and Other Charges being contested (and in the case of
any Taxes being contested, any sums in the Tax and Insurance Escrow fund
dedicated to payment of such contested Taxes shall count toward such 125%), and
(vi) such Borrower shall promptly upon final determination thereof pay the
amount of such Taxes or Other Charges, together with all costs, interest and
penalties. Lender may pay over any such security or part thereof held by Lender
to the claimant entitled thereto at any time when, in the judgment of Lender,
the entitlement of such claimant is established.
6.3 Repairs; Maintenance and Compliance; Alterations; Required Repairs.
6.3.1 Repairs and Maintenance. Each Borrower shall at all times
maintain, preserve and protect all franchises and trade names, and each Borrower
shall cause its Collateral Property (including any Substitute Property) to be
maintained in a good and safe condition and repair and shall not, without
Lender's prior written consent, remove or demolish the Improvements or Equipment
(except for removal of Equipment being replaced with Equipment of the same or
greater value and utility, and demolition necessary to perform alterations
permitted under Section 6.3.3).
6.3.2 Legal Compliance. Each Borrower shall promptly comply in all
material respects with all Legal Requirements applicable to itself or its
Collateral Property and cure properly any violation of a Legal Requirement
within thirty (30) days after such Borrower receives notice of such violation.
Each Borrower shall promptly repair, replace or rebuild any part of its
Collateral Property that becomes damaged, worn or dilapidated and shall complete
and pay for any Improvements constituting part of its Collateral Property at any
time in the process of construction or repair. Notwithstanding the foregoing, a
Borrower may defer compliance with a Legal Requirement pending such Borrower's
contest thereof; provided that (1) such Borrower is permitted by the applicable
Legal Requirement to delay compliance therewith pending such proceedings, (2)
neither the affected Collateral Property nor any part thereof or interest
therein
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will be sold, forfeited or lost if such Borrower fails to promptly comply with
the Legal Requirement being contested, and if Borrower fails to prevail in
contest, such Borrower would thereafter have the opportunity to comply with such
Legal Requirement, (3) Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which such Borrower has not
furnished additional security as provided in clause (4) below, or to any risk of
criminal liability, and neither the Collateral Property nor any interest therein
would be subject to the imposition of any Lien for which such Borrower has not
furnished additional security as provided in clause (4) below, as a result of
the failure to comply with such Legal Requirement and (4) if requested by Lender
at any time, such Borrower shall have furnished to Lender additional security in
respect of the Legal Requirement being contested and the loss or damage that may
result from such Borrower's failure to prevail in such contest in such amount as
may be reasonably requested by Lender but in no event less than one hundred
twenty-five percent (125%) of the cost of complying such Legal Requirement and
any loss or damage that may result from such Borrower's failure to prevail in
such contest.
6.3.3 Alterations. Borrower may, without Lender's consent, perform
alterations to the Improvements and Equipment at a Collateral Property which do
not constitute a Material Alteration and which do not adversely affect such
Borrower's financial condition or the value or net operating income of such
Collateral Property. No Borrower shall perform any Material Alteration the cost
of which is reasonably estimated to exceed five percent (5%) of the Allocated
Loan Amount per calendar year for the applicable Collateral Property or which is
likely to result in a decrease of Net Operating Income of the applicable
Collateral Property by 2.5% or more for a period of thirty (30) days or longer,
without Lender's prior written consent, which consent shall not be unreasonably
withheld or delayed. Lender may, as a condition to giving its consent to a
Material Alteration, require that the Borrower deliver to Lender as security for
payment of the cost of such Material Alteration and as additional security for
Borrower's payment of the Debt any of the following: (1) cash, (2) U.S. Treasury
securities, (3) other securities having a rating acceptable to Lender, (4) a
Rating Comfort Letter, or (5) an irrevocable Letter of Credit (payable on sight
draft only) issued by an Eligible Institution. Such security shall be in an
amount equal to the cost of the Material Alteration as reasonably estimated by
Lender. Upon the occurrence of an Event of Default, Lender may apply such
security to payment of the Debt. If the security posted is other than cash, upon
substantial completion of the Material Alteration and submission to Lender of
evidence satisfactory to Lender that (i) the Material Alteration was constructed
in accordance with applicable Legal Requirements and substantially in accordance
with plans and specifications approved by Lender (which approval shall not be
unreasonably withheld or delayed), (ii) all contractors, subcontractors,
materialmen and professionals who provided work, materials or services in
connection with the Material Alteration have been paid in full and have
delivered unconditional releases of lien and (iii) all material Licenses
necessary for the use, operation and occupancy of the Material Alteration (other
than those which depend on the performance of tenant improvement work) have been
issued, Lender shall, provided no Event of Default then exists, return the
security (or the unapplied portion thereof) to the Borrower. At the Borrower's
request, Lender shall, provided no Event of Default then exists, return one-half
of the security to Borrower when Lender has determined, in its sole discretion,
that seventy-five percent (75%) of the Material Alteration has been completed
and paid for and that the remaining security is sufficient to ensure payment in
full for all work, services and materials necessary to complete the Material
Alteration as contemplated in clauses (i), (ii) and (iii) of the preceding
sentence. If the security posted is cash,
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Lender shall disburse such cash in accordance with the same procedures as are
applicable to disbursement of Proceeds or an Award under Section 8.4.3. The
Borrower shall reimburse Lender upon demand for all out-of-pocket costs and
expenses (including the reasonable fees of all professionals) incurred by Lender
in reviewing plans and specifications or in making any determinations necessary
to implement the provisions of this Section 6.3.3.
6.3.4 Required Repairs. In the event that a Substitute Property
becomes subject to the terms of this Loan Agreement pursuant to Section 2.3
hereof, the Borrower hereby agrees that all repairs recommended in the
engineering report for the Substitute Property which was obtained in connection
with the Substitution and reasonably required by Lender shall be performed in
accordance with the schedule set forth in the reports and otherwise in material
compliance with such engineering report. All required repairs shall be done in a
good and workmanlike manner, shall be completed free of liens, shall comply in
all material respects with all applicable Legal Requirements and shall otherwise
be reasonably approved by the Lender.
6.4 Litigation. Each Borrower shall give prompt written notice to Lender
of any litigation, governmental proceedings or claims or investigations
regarding an alleged actual violation of a Legal Requirement pending or
threatened against such Borrower which would, if adversely determined,
materially adversely affect such Borrower's condition (financial or otherwise)
or business or its Collateral Property.
6.5 Performance of Other Agreements. Each Borrower shall observe and
perform in all material respects each and every term to be observed or performed
by it pursuant to the terms of any agreement or instrument affecting or
pertaining to its Collateral Property, including any Ground Lease affecting such
Collateral Property.
6.6 Notices. Each Borrower shall promptly advise Lender of any material
adverse change in such Borrower's condition, financial or otherwise, or of the
occurrence of any Default or Event of Default of which such Borrower has
knowledge, including any notice sent by any Ground Lessor concerning any Ground
Lease under which such Borrower is the lessee. Each Borrower shall cause to be
delivered to Lender any Securities and Exchange Commission or other public
filings, if any, of such Borrower, its Borrower Representative, Manager, or any
Affiliate of any of the foregoing within ten (10) Business Days of such filing.
6.7 Cooperate in Legal Proceedings. Each Borrower shall cooperate fully
with Lender with respect to, and permit Lender, at its option, to participate
in, any proceedings before any Governmental Authority which may in any way
affect the rights of Lender under any Loan Document.
6.8 Further Assurances. Each Borrower shall, at Borrower's sole cost and
expense, (i) furnish to Lender all then existing instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and agreements,
reasonably requested by Lender; (ii) execute and deliver to Lender such
documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the Debt, as Lender may
reasonably require from time to time; (iii) do and execute all and such further
lawful and reasonable acts, conveyances and assurances for the
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better and more effective carrying out of the intents and purposes of the Loan
Documents, as Lender shall reasonably require from time to time and (iv) upon
Lender's request therefor given from time to time after the occurrence of any
Default or Event of Default pay for (a) reports of UCC, federal tax lien, state
tax lien judgment and pending litigation searches with respect to such Borrower
and (b) searches of title to any Collateral Property, each such search to be
conducted by search firms reasonably designated by Lender in each of the
locations reasonably designated by Lender.
6.9 Financial Reporting.
6.9.1 Bookkeeping. Each Borrower shall keep on a Fiscal Year basis,
in accordance with GAAP, proper and accurate books, records and accounts
reflecting all of the financial affairs of such Borrower and all items of income
and expense and any services, Equipment or furnishings provided in connection
with the operation of such Borrower's Collateral Property, whether such income
or expense is realized by such Borrower, Manager or any Affiliate of such
Borrower or Manager. Lender shall have the right from time to time during normal
business hours upon reasonable notice to examine such books, records and
accounts at the office of such Borrower or other Person maintaining them, and to
make such copies or extracts thereof as Lender shall desire. After an Event of
Default, Borrower shall pay any costs incurred by Lender to examine such books,
records and accounts, as Lender shall determine to be necessary or appropriate
in the protection of Lender's interest.
6.9.2 Annual Reports. Each Borrower shall furnish to Lender
annually, (i) within forty (40) days after each Fiscal Year, unaudited financial
statements of such Borrower, and (ii) within one-hundred twenty (120) days after
each Fiscal Year, a complete copy of such Borrower's annual financial statements
audited by a "Big Five" accounting firm or another independent certified public
accountant (accompanied by an unqualified opinion from such accounting firm or
other independent certified public accountant) reasonably acceptable to Lender,
each in accordance with GAAP and containing balance sheets and statements of
profit and loss for such Borrower and its Collateral Property in such detail as
Lender may request. Each such statement (x) shall set forth the financial
condition and the income and expenses for its Collateral Property for the
immediately preceding calendar year, including statements of annual Net
Operating Income, and (y) shall be accompanied by an Officer's Certificate
certifying (1) that such statement presents fairly the financial condition of
such Collateral Property and has been prepared in accordance with GAAP, (2)
whether there exists a Default or Event of Default, and if so, the nature
thereof, the period of time it has existed and the action then being taken to
remedy it, (3) a list of Tenants, if any, occupying more than twenty percent
(20%) of the rentable space of such Collateral Property, and (4) a breakdown
showing (a) the year in which each Lease then in effect expires, (b) the
percentage of rentable space covered by such Lease, (c) the percentage of base
rent with respect to which Leases shall expire in each such year, expressed both
on a per year and a cumulative basis. At Borrower's option, Borrower may submit
a combined annual statement with individual Collateral Property schedules
setting forth all information required under this Section 6.9.2.
6.9.3 Monthly and Quarterly Reports. Each Borrower shall furnish to
Lender (x) within thirty (30) days after the end of each calendar month the
following items: (i) monthly and year-to-date operating statements, noting Net
Operating Income and other information
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necessary and sufficient under GAAP to fairly represent the financial position
and results of operation of its Collateral Property during such calendar month,
all in form reasonably satisfactory to Lender; (ii) a statement that such
Borrower has not incurred any indebtedness other than indebtedness permitted
hereunder; and (iii) 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, material special provisions, concessions or
inducements granted to Tenants, and a year-by-year schedule showing by
percentage the rentable area of the Improvements and the total base rent
attributable to Leases expiring each year) and a delinquency report for such
Collateral Property; and (y) within forty (40) days after the end of each
calendar quarter the following items: (i) a balance sheet for such calendar
month; (ii) a comparison of the budgeted income and expenses and the actual
income and expenses for each month and year-to-date for such Collateral
Property, together with a detailed explanation of any variances of ten percent
(10%) or more between budgeted and actual amounts for such period and
year-to-date; (iii) a statement of the actual Replacement Expenses made by such
Borrower during each calendar quarter as of the last day of such calendar
quarter; and (iv) an aged receivables report. Each such statement shall be
accompanied by an Officer's Certificate certifying (1) that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of such Borrower and its Collateral Property in
accordance with GAAP (subject to normal year-end adjustments) and (2) whether
there exists a Default or Event of Default, and if so, the nature thereof, the
period of time it has existed and the action then being taken to remedy it.
6.9.4 Other Reports. Each Borrower shall furnish to Lender, within
ten (10) Business Days after request, such further detailed information with
respect to the operation of its Collateral Property and the financial affairs of
such Borrower or Manager as may be reasonably requested by Lender or any
Applicable Rating Agency, all such information to conform to any related
requirements of the Securities and Exchange Commission.
6.9.5 Annual Budget. Upon the occurrence of a Cash Management Event
or the Anticipated Repayment Date, each Borrower shall prepare and submit (or
shall cause its Manager to prepare and submit) to Lender within thirty (30) days
after a Cash Management Event and by November 15 of each year during the Term
until the occurrence of a Cash Management Termination, for approval by Lender,
which approval shall not be unreasonably withheld or delayed, a proposed pro
forma budget for its Collateral Property for the succeeding Fiscal Year (an
"Annual Budget"), and, promptly after preparation thereof, any revisions to such
Annual Budget. Lender's failure to approve or disapprove any Annual Budget or
revision within thirty (30) days after Lender's receipt thereof shall be deemed
to constitute Lender's approval thereof. The Annual Budget shall consist of (i)
an operating expense budget (the "Operating Budget") showing, on a
month-by-month basis, in reasonable detail, each line item of such Borrower's
anticipated Operating Income and Operating Expenses (on a cash and accrual
basis), including amounts required to establish, maintain and/or increase the
Funds, and (ii) a Replacement Expense budget (the "Replacement Budget") showing,
on a month-by-month basis, in reasonable detail, each line item of anticipated
Replacement Expenses.
6.9.6 Delivery of Financial Information. After notice to any
Borrower of a Secondary Market Transaction, such Borrower shall, concurrently
with any delivery to Lender,
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deliver copies of all financial information provided in this Article VI to the
Applicable Rating Agencies, the Servicer, any trustee or any other party
reasonably requested by Lender.
6.10 Environmental Matters.
6.10.1 Hazardous Substances. So long as any Borrower owns or is in
possession of any Collateral Property, such Borrower (i) shall keep such
Collateral Property free from Hazardous Substances (other than Routine Hazardous
Substances) and in compliance with all Environmental Laws, (ii) shall promptly
notify Lender if such Borrower shall become aware that (A) any Hazardous
Substance (other than Routine Hazardous Substances) is on or immediately
adjacent to such Collateral Property, (B) such Collateral Property is in direct
or indirect violation of any Environmental Laws or (C) any condition on or near
such Collateral Property shall pose a threat to the health, safety or welfare of
humans, (iii) shall remove such Hazardous Substances and/or cure such violations
and/or remove such threats, as applicable, as required by law, promptly after
such Borrower becomes aware of same and is required to do so by a Governmental
Authority, at such Borrower's sole expense and (iv) shall take all actions
described in the environmental report delivered to Lender in connection with the
Loan as being necessary to comply with all applicable laws. Nothing herein shall
prevent any Borrower from recovering such expenses from any other party that may
be liable for such removal or cure.
6.10.2 Environmental Monitoring. (a) Each Borrower shall give prompt
written notice to Lender of (i) any proceeding or inquiry by any party
(including any Governmental Authority) with respect to the presence of any
Hazardous Substance on, under, from or about its Collateral Property, (ii) all
claims made or threatened in writing by any third party (including any
Governmental Authority) against such Borrower or its Collateral Property or any
party occupying such Collateral Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) such Borrower's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of
its Collateral Property that could cause such Collateral Property to be subject
to any investigation or cleanup pursuant to any Environmental Law. Each Borrower
shall permit Lender to join and participate in, as a party if it so elects, any
legal proceedings or other actions initiated with respect to its Collateral
Property in connection with any Environmental Law or Hazardous Substance, and
such Borrower shall pay all reasonable attorneys' fees and disbursements
incurred by Lender in connection therewith.
(b) Upon Lender's request, at any time and from time to time, each
Borrower shall provide an inspection or audit of its Collateral Property
prepared by a licensed hydrogeologist, licensed environmental engineer or
qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near such Collateral
Property. The cost and expense of such audit or inspection shall be paid by a
Borrower with respect to its Collateral Property if Lender, in its good faith
judgment, determines that reasonable cause exists for the performance of an
environmental inspection or audit of such Collateral Property, in which case
such inspections or audits shall be at the Borrower's sole expense. If a
Borrower fails to order any such inspection or audit within thirty (30) days
after such request, Lender may order same, and such Borrower hereby grants to
Lender and its employees and agents access to its Collateral Property and a
license to undertake such inspection or audit. The cost of such inspection or
audit shall, to the extent required to be paid by a
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Borrower pursuant to this paragraph, be paid by such Borrower upon demand and if
not paid, shall be added to the Debt and shall bear interest thereafter at the
Default Rate until paid.
(c) If any environmental site assessment report prepared in
connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for any Hazardous Substance, whether such
Hazardous Substance existed prior to the ownership by a Borrower of its
Collateral Property, or presently exists or is reasonably suspected of existing,
the applicable Borrower shall cause such operations and maintenance plan to be
prepared and implemented at its expense upon request of Lender. If a licensed
hydrogeologist, licensed environmental engineer or other qualified environmental
consulting firm engaged by Lender ("Lender's Consultant") determines that any
investigation, site monitoring, containment, cleanup, removal, restoration or
other work of any kind is required to cure a violation of an applicable
Environmental Law or to comply with an order or directive of any court or
governmental agency ("Remedial Work"), the applicable Borrower shall commence
and thereafter diligently prosecute to completion all such Remedial Work within
thirty (30) days after written demand by Lender for performance thereof (or such
shorter period of time as may be required under applicable law). All Remedial
Work shall be performed by contractors reasonably approved in advance by Lender,
and under the supervision of a consulting engineer reasonably approved by
Lender. All costs of such Remedial Work shall be paid by the applicable
Borrower, including Lender's reasonable attorneys' fees and disbursements
incurred in connection with the monitoring or review of such Remedial Work. If
the applicable Borrower does not timely commence and diligently prosecute to
completion the Remedial Work, Lender may (but shall not be obligated to) cause
such Remedial Work to be performed. All costs and expenses (including reasonable
attorneys' fees and disbursements) relating to or incurred by Lender in
connection with monitoring, reviewing or performing any Remedial Work in
accordance herewith shall be paid by the applicable Borrower upon demand from
Lender and if not, shall be added to the Debt and shall bear interest thereafter
at the Default Rate until paid. Notwithstanding the foregoing, no Borrower shall
be required to commence such Remedial Work within the above specified time
period: (x) if prevented from doing so by any Governmental Authority, (y) if
commencing such Remedial Work within such time period would result in such
Borrower or such Remedial Work violating any Environmental Law, or (z) if such
Borrower, at its expense and after prior written notice to Lender, is contesting
by appropriate legal, administrative or other proceedings, conducted in good
faith and with due diligence, the need to perform Remedial Work. Each Borrower
shall have the right to contest the need to perform such Remedial Work; provided
that (1) such Borrower is permitted by the applicable Environmental Laws to
delay performance of the Remedial Work pending such proceedings, (2) neither the
affected Collateral Property nor any part thereof or interest therein will be
sold, forfeited or lost if such Borrower fails to promptly perform the Remedial
Work being contested, and if Borrower fails to prevail in contest, such Borrower
would thereafter have the opportunity to perform such Remedial Work, (3) Lender
would not, by virtue of such permitted contest, be exposed to any risk of any
civil liability for which such Borrower has not furnished additional security as
provided in clause (4) below, or to any risk of criminal liability, and neither
the Collateral Property nor any interest therein would be subject to the
imposition of any Lien for which such Borrower has not furnished additional
security as provided in clause (4) below, as a result of the failure to perform
such Remedial Work and (4) if requested by Lender at any time, such Borrower
shall have furnished to Lender additional security in respect of the Remedial
Work being contested and the loss or damage that may result from such Borrower's
failure to
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prevail in such contest in such amount as may be reasonably requested by Lender
but in no event less than one hundred twenty-five percent (125%) of the cost of
such Remedial Work and any loss or damage that may result from such Borrower's
failure to prevail in such contest.
(d) No Borrower shall install or permit to be installed on its
Collateral Property any underground storage tank without Lender's prior written
consent; provided, however, that (i) a Borrower may permit the Tenant under any
"anchor," "big box" or TBA (tires, batteries and accessories) Lease to install
an underground storage tank provided that (x) such Tenant has the right to do so
under its Lease and (y) such installation and the maintenance and repair of such
tank is performed in accordance with all applicable Legal Requirements and (ii)
Borrower may install an underground storage tank if it reasonably determines
that an above ground storage tank is not reasonably feasible, provided that such
Borrower complies with all of the provisions of the preceding clause (y) in
connection with such underground storage tank.
(e) Borrower's obligations to Lender to remediate an environmental
condition existing at any Collateral Property shall terminate if Lender's Lien
on such Collateral Property is released in connection with a Substitution of
Collateral Property pursuant to Section 2.3; provided, however, that Borrower's
indemnification obligations under Section 6.16 with respect to such
environmental condition shall not terminate upon such Substitution.
6.10.3 Title to the Property. Borrower will warrant and defend (a)
the title to each Collateral Property and every part thereof, subject only to
Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Mortgage and the Assignment of Leases
on each Collateral Property, subject only to Liens permitted hereunder
(including Permitted Encumbrances), in each case against the claims of all
Persons whomsoever. Borrower shall reimburse Lender for any losses, costs,
damages or expenses (including reasonable attorneys' fees and court costs)
incurred by Lender if an interest in any Collateral Property, other than as
permitted hereunder, is claimed by another Person.
6.10.4 Easements; Dedications. Without the consent of Lender,
Borrower shall have the right from time to time to release property, grant
easements, or dedicate property in connection with lot line adjustments, utility
or road requirements or other similar items, provided that any such release,
easement or dedication will not have a material adverse effect on the value, use
or operation of the applicable Collateral Property and such Collateral Property
will remain in compliance with all Requirements of Law.
6.11 Leases.
6.11.1 Form of Lease. All Leases other than Material Leases shall be
written on the standard forms of lease which have been approved by Lender. In
negotiating Leases, changes may be made to the standard form of lease provided
that (i) such changes are commercially reasonable, and (ii) no changes may be
made to the following provisions in Borrowers' standard form of lease without
the prior written consent of Lender: provisions relating to subordination,
attornment, estoppels, mortgagee's right to notice and opportunity to cure
landlord's defaults, and mortgagee's rights with respect to lease amendments and
prepayment of rents. In addition, all renewals of Leases and all proposed leases
shall provide for
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rental rates comparable to existing local market rates and shall be arms length
transactions. All Leases entered into after the date hereof shall provide for
(x) subordination to the Mortgages and, at Lender's election, attornment to
Lender or any purchaser at a sale by foreclosure or power of sale, and (y) the
Lender's unilateral right to subordinate the Mortgages to the Leases. No Lease
entered into after the date hereof will contain any option to purchase, any
right of first refusal to purchase, any right to terminate (except in the event
of the destruction of substantially all of the applicable Collateral Property),
any non-disturbance or similar agreement or any requirement that a Borrower
rebuild any Collateral Property (except as provided in the forms of Lease that
have been approved by Lender); provided, however, that "small shop" leases
entered into after the date hereof and covering not more than fifteen percent
(15%) of the gross leasable area of any Collateral Property may contain so
called "kick-out" clauses permitting either landlord or the Tenant to terminate
the Lease if the specified sales revenue is not attained. Upon request, each
Borrower shall furnish Lender with executed copies of all Leases affecting its
Collateral Property then in effect.
6.11.2 New and Renewal Leases. All Leases executed after the date
hereof, and all amendments, modifications, terminations or surrenders of
existing Leases, shall (a) be undertaken in a manner consistent with the
standing leasing practices of Borrower and the Manager, (b) be the product of an
arms-length transaction, and (c) not result in a material adverse effect on the
Collateral Property taken as a whole. Upon the occurrence of a Cash Management
Event and during the continuance thereof, any Leases written thereafter for more
than 7,500 square feet, and any amendments, modifications, terminations or
surrenders of existing Leases for more than 7,500 square feet, shall be approved
by Lender, which approval shall not be unreasonably withheld, conditioned or
delayed.
6.11.3 Leasing Covenants. Each Borrower (i) shall observe and
perform the material obligations imposed upon the lessor under the Leases; (ii)
shall enforce in a commercially reasonable manner the terms, covenants and
conditions contained in the Leases upon the part of the lessee thereunder to be
observed or performed; (iii) shall not collect any of the rents more than one
(1) month in advance (other than security deposits) except as approved by Lender
or as provided in Leases in existence as of the date hereof; (iv) shall not
execute any other assignment of lessor's interest in the Leases or the Rents
(except as contemplated by the Loan Documents); (v) shall not alter, modify or
change the terms of the Leases in a manner inconsistent within the provisions of
the Loan Documents; (vi) shall promptly send copies to Lender of all notices of
default such Borrowers shall give or receive with respect to any Lease demising
20,000 or more square feet of gross leasable area; and (vii) shall execute and
deliver at the request of lender all such further assurances, confirmations and
assignments in connection with the Leases as Lender shall from time to time
reasonably require.
6.11.4 Non-disturbance Agreements. At a Borrower's request, Lender
shall enter into a subordination, non-disturbance and attornment agreement as to
any Lease permitted under the Loan Documents. Such agreement shall be in the
form attached hereto as Exhibit B, with such changes thereto as may be
reasonably acceptable to Lender.
6.11.5 Reciprocal Easement Agreements. No Borrower shall enter into,
terminate or modify any REA without Lender's consent, which consent shall not be
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unreasonably withheld or delayed. Lender shall subordinate the lien of the
applicable Mortgages to any REA Amendment consented to by Lender.
6.11.6 Notice to Tenants. Promptly after the date hereof (but in no
event later than the date on which such Borrower sends out bills for Rents due
in January, 1999), each Borrower shall deliver a notice in the form of Exhibit A
attached hereto to each existing Tenant at such Borrower's Collateral Property
directing them to remit their rent checks directly to the Agent and shall also
deliver such a notice to each future tenant at such Collateral Property.
6.12 Estoppel Statement. After request by Lender, each Borrower shall
within ten (10) days furnish Lender with a statement, duly acknowledged and
certified, setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii)
the date installments of interest and/or Principal were last paid, (iv) any
offsets or defenses to the payment of the Debt, (v) that the Loan Documents are
valid, legal and binding obligations and have not been modified or if modified,
giving particulars of such modification and (vi) such other information
concerning the Loan as Lender may request. After request by Lender (but no more
frequently than once in any twelve (12) month period), each Borrower shall,
within thirty (30) days, request Tenant estoppel certificates from each Tenant
at such Borrower's Collateral Property in form and substance reasonably
satisfactory to Lender, and thereafter use commercially reasonable efforts to
obtain such estoppel certificates and deliver them to Lender. From time to time
upon the reasonable request of Lender, each Borrower whose Collateral Property
is subject to a Ground Lease will endeavor to obtain from Ground Lessor an
estoppel certificate in form and substance reasonably satisfactory to Lender.
6.13 Property Management.
6.13.1 Management Agreement. Each Borrower shall (i) cause its
Collateral Property to be managed pursuant to the Management Agreement; (ii)
promptly perform and observe all of the covenants required to be performed and
observed by it under the Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder, (iii) promptly
notify Lender of any default under the Management Agreement of which it is
aware; (iv) promptly deliver to Lender a copy of any notice of default or other
material notice received by such Borrower under the Management Agreement; and
(v) promptly enforce the performance and observance of all of the covenants
required to be performed and observed by Manager under the Management Agreement.
6.13.2 Termination of Manager. If a Cash Management Event shall
exist, each Borrower shall, at the request of Lender, hire a property management
firm designated by Lender to thereafter serve as a property management
consultant (the "Management Consultant") for each such Borrower and its
Collateral Property. Any Borrower's failure to retain such property management
firm within thirty (30) days after Lender designates such firm shall constitute
an immediate Event of Default. Each Borrower shall continue to retain its
Management Consultant until a Cash Management Termination occurs. The Management
Consultant at each Collateral Property shall oversee and approve and fully
participate in all actions and decisions of the Manager at such Collateral
Property, including the incurring of any expenses, the retention of any broker,
the negotiation and execution of any leases or lease "term sheets", decisions as
to tenants and "tenant mix" and repairs, alterations and improvements. Each
Borrower shall cause
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its Manager to cooperate with the applicable Management Consultant to enable the
Management Consultant to perform its responsibilities as described above and in
the applicable agreement between such Borrower and its Management Consultant.
All fees payable to the Management Consultant shall be an Approved Operating
Expense.
6.13.3 Manager's Subordination. Each Borrower shall cause its
Manager to enter into a Manager Consent and Subordination of Management
Agreement (the "Manager Consent and Subordination Agreement") in the form of
Exhibit C-1 hereto; provided, however, that if such Manager is wholly owned,
directly or indirectly by Westfield Holdings Limited, such Manager may enter
into a Manager Consent and Subordination of Management Agreement in the form of
Exhibit C-2 hereto.
6.14 Special Purpose Entity. Each Borrower is and shall continue to be a
Special Purpose Entity.
6.15 Expenses. Each Borrower shall reimburse Lender upon receipt of notice
for all reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with the
Loan, including (i) the preparation, negotiation, execution and delivery of the
Loan Documents and the consummation of the transactions contemplated thereby and
all the costs of furnishing all opinions by counsel for Borrowers; (ii) all
costs, fees and expenses (including the fees of any Rating Agencies, trustee or
Servicer) incurred in connection with any Substitution of a Collateral Property,
any release of a Collateral Property (but excluding the fees payable to the
Rating Agencies in connection with the initial issuance of Securities) or any
Transfer of any Collateral Property; (iii) each Borrower's and Lender's ongoing
performance under and compliance with the Loan Documents, including confirming
compliance with environmental and insurance requirements; (iv) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications of or under any Loan Document and any other
documents or matters requested by Lender, (v) filing and recording of any Loan
Documents; (vi) title insurance, surveys, inspections and appraisals; (vii) the
creation, perfection or protection of Lender's Liens in the Collateral
Properties, the Cash Management Accounts and the Funds (including fees and
expenses for title and lien searches, intangibles taxes, personal property
taxes, mortgage recording taxes, due diligence expenses, travel expenses,
accounting firm fees, costs of appraisals, environmental reports and Lender's
Consultant, surveys and engineering reports); (viii) enforcing or preserving any
rights in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against under or
affecting any Borrower, the Loan Documents, any Collateral Property, or any
other security given for the Loan; and (ix) enforcing any obligations of or
collecting any payments due from any Borrower under any Loan Document or with
respect to any Collateral Property or in connection with any refinancing or
restructuring of the Loan in the nature of a "work-out", or any insolvency or
bankruptcy proceedings. Any costs and expenses due and payable to Lender
hereunder which are not paid by any Borrower within ten (10) days after demand
may be paid from any amounts in the Cash Management Accounts, with notice
thereof to Borrowers. The obligations and liabilities of each Borrower under
this Section 6.15 shall survive the Term and the exercise by Lender of any of
its rights or remedies under the Loan Documents, including the acquisition of
any Collateral Property by foreclosure or a conveyance in lieu of foreclosure.
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6.16 Indemnity. Each Borrower shall indemnify and hold harmless Lender and
each of its Affiliates and their respective successors and assigns (including
their respective directors, officers, participants, employees, professionals and
agents and each other Person, if any, who Controls Lender, its Affiliates or any
of the foregoing) (each, an "Indemnified Party") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for an Indemnified
Party in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not Lender shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against any
Indemnified Party (collectively, the "Indemnified Liabilities") in any manner,
relating to or arising out of or by reason of the Loan, including: (i) any
breach by a Borrower of its obligations under, or any misrepresentation by a
Borrower contained in, any Loan Document; (ii) the use or intended use of the
proceeds of the Loan; (iii) any information provided by or on behalf of a
Borrower, or contained in any documentation approved by a Borrower; (iv)
ownership of any Mortgage, any Collateral Property or any interest therein, or
receipt of any Rents; (v) any accident, injury to or death of persons or loss of
or damage to property occurring in, on or about any Collateral Property or on
the adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (vi) any use, non-use or condition in, on or about any
Collateral Property or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vii) performance of any labor or
services or the furnishing of any materials or other property in respect of any
Collateral Property; (viii) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release of any Hazardous
Substance on, from or affecting any Collateral Property; (ix) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Substance; (x) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Substance; (xi) any violation of the Environmental Laws which is based upon or
in any way related to such Hazardous Substance, including, without limitation,
the costs and expenses of any Remedial Work, attorney and consultant fees and
disbursements, investigation and laboratory fees, court costs, and litigation
expenses; (xii) any failure of any Collateral Property to comply with any Legal
Requirement; (xiii) any claim by brokers, finders or similar persons claiming to
be entitled to a commission in connection with any Lease or other transaction
involving any Collateral Property or any part thereof, or any liability asserted
against Lender with respect thereto; and (xiv) the claims of any lessee of any
portion of any Collateral Property or any person acting through or under any
lessee or otherwise arising under or as a consequence of any Lease; no Borrower
shall have any obligation to any Indemnified Party hereunder to the extent that
it is finally judicially determined that such Indemnified Liabilities arise from
the gross negligence, illegal acts, fraud or willful misconduct of such
Indemnified Party. If any Indemnified Party becomes involved in any action,
proceeding or investigation in connection with any transaction or matter
referred to or contemplated in this Agreement, Borrowers shall periodically
reimburse any Indemnified Party upon demand therefor in an amount equal to its
reasonable legal and other expenses (including the costs of any investigation
and preparation) incurred in connection therewith. To the extent that the
undertaking to indemnify and hold harmless set forth in the preceding sentence
may be unenforceable because it violates any law or public policy, Borrowers
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by any Indemnified Party. Any amounts payable to any
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Indemnified Party by reason of the application of this paragraph shall become
immediately due and payable and shall bear interest at the Default Rate from the
date loss or damage is sustained by any Indemnified Party until paid. The
obligations and liabilities of Borrower under this Section 6.16 shall survive
the Term and the exercise by Lender of any of its rights or remedies under the
Loan Documents, including the acquisition of any Collateral Property by
foreclosure or a conveyance in lieu of foreclosure. As used in this Section
6.16, the term "Collateral Property" includes any property that was at any time
subject to the Lien of a Mortgage.
6.17 Third Party Reports. Within thirty (30) days after any request by
Lender, each Borrower shall deliver to Lender and pay for (or reimburse Lender
for cost of) any reports of third parties (e.g., engineers or environmental
consultants) requested by Lender as to any Collateral Property the Net Operating
Income for which has declined by ten percent (10%) or more since the date on
which it first became a Collateral Property.
6.18 Year 2000 Compliance. Borrower acknowledges awareness of the
potential effect of the problem generally known as "Year 2000 computer-related
dysfunction" ("Year 2000"). Borrower represents that to the best of Borrower's
knowledge, all computers and computer-dependant systems of Borrower, are, or
will be, on or before December 20, 1999, able to function notwithstanding Year
2000. Borrower will promptly notify Lender in the event Borrower discovers or
determines that any of the above-referenced computers will not be Year 2000
compliant prior to December 20, 1999. Borrower hereby covenants and agrees that
it will promptly commence and diligently prosecute the remediation of any such
Year 2000 dysfunction.
6.19 Intentionally Deleted.
6.20 Performance by Borrower. Borrower shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document executed and delivered by, or applicable to, Borrower, and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower without the prior written consent of Lender.
6.21 Secondary Market Transaction Master Estoppel. (A) Prior to the
contemplated Secondary Market Transaction, Borrower and WALP shall provide to
Lender a master estoppel letter ("Master Estoppel") in form and substance
satisfactory to Lender stating, without limitation, that as of the date of the
Master Estoppel, the information contained in each of the Tenant estoppel
letters delivered to Lender on or prior to the date of the closing of the Loan
("Closing Estoppels") is true and accurate in all material respects, and to the
extent any information in the Closing Estoppels is not accurate as of the date
of the Master Estoppel, then such Master Estoppel shall include a schedule of
exceptions to the accuracy of the Closing Estoppels, and (B) Borrower covenants
that commencing immediately, Borrower shall use commercially reasonable efforts
to provide to Lender an executed tenant estoppel letter, which shall be in form
and substance satisfactory to Lender, from (a) each Anchor Tenant, (b) each
Tenant paying base rent in an amount equal to or exceeding five percent (5%) of
the Operating Income from the applicable Collateral Property occupied by such
Tenant and (c) disregarding the area leased by those Tenants described in
clauses (a) and (b), Tenants of not less than seventy-
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five percent (75%) of the remaining gross leasable area of each Collateral
Property. In the event that Borrower and WALP are required to provide the Lender
a Master Estoppel pursuant to subsection (A) of this Section 6.21, WALP agrees
to execute simultaneously with the execution of the Master Estoppel a limited
recourse guaranty for the benefit of Lender guaranteeing that, in the event that
any of the information provided in the Master Estoppel is materially false or
misleading at the time the Master Estoppel is provided to Lender, WALP shall
indemnify and hold Lender harmless from any and all losses incurred by Lender in
connection with such misrepresentations made by WALP. To the extent tenant
estoppel letters are subsequently delivered to Lender in connection with a
Secondary Market Transaction as set forth in subsection (B) hereof, WALP and
Borrower shall be released from the Master Estoppel limited recourse guaranty.
6.22 Exercise of Option to Purchase. Borrower agrees to (a) exercise all
of the renewal options granted to the tenant in the that certain Lease and
Option to Purchase, a copy of which was recorded on August 31, 1967 in Book
67-08-31 at Page 1196 in the Official Records of Sacramento County (the "Air
Rights Lease") in accordance with the terms of the Air Rights Lease and (b) so
long as the Loan remains outstanding, the Borrower must, in the event that the
Air Rights Lease cannot be extended beyond the renewals currently granted
therein, exercise its option to purchase the Leased Property (as defined in the
Air Rights Lease) no later than one (1) year prior to the date that the last
renewal term of the Air Rights Lease expires, or, in the event that the Air
Rights Lease has been amended or otherwise modified to grant Borrower additional
renewal term options, then the Borrower may extend the term of the Air Rights
Lease through the Scheduled Maturity Date of the Loan (if such extensions are
available to Borrower).
VII NEGATIVE COVENANTS
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Mortgages encumbering the Collateral Properties in accordance with
the terms of this Agreement and the other Loan Documents, each Borrower
covenants and agrees with Lender that it will not do, directly or indirectly,
any of the following:
7.1 Management Agreement. Without Lender's prior consent: (i) surrender,
terminate, cancel, extend or renew the Management Agreement (other than an
extension or renewal on the same terms as the expiring Management Agreement,
with only such modifications as do not require consent of Lender or any
Applicable Rating Agency hereunder) or otherwise replace the Manager or enter
into any other management agreement (except pursuant to Section 6.13.2); (ii)
reduce or consent to the reduction of the term of the Management Agreement;
(iii) increase or consent to the increase of the amount of any charges under the
Management Agreement; (iv) otherwise modify, change, supplement, alter or amend
in any material respect, or waive or release in any material respect any of its
rights and remedies under, the Management Agreement; or (v) suffer or permit the
occurrence and continuance of a default beyond any applicable cure period under
the Management Agreement (or any successor management agreement) if such default
permits the Manager to terminate the Management Agreement (or such successor
management agreement);
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7.2 Liens. Without Lender's prior consent, create, incur, assume, permit
or suffer to exist any mechanic's, materialmen's or other Lien (other than an
inchoate mechanic's lien the amount of which is not yet due and payable) on any
portion of its Collateral Property or legal or beneficial ownership interest in
such Borrower, except Permitted Encumbrances, unless such Lien is bonded or
discharged within thirty (30) days after such Borrower first receives notice of
such Lien; provided, however, that the existence of liens resulting from
mechanics or materialmen hired by a Tenant shall not constitute a Default or
Event of Default hereunder so long as the applicable Borrower is diligently
taking all commercially reasonable action to enforce the obligation of such
Tenant to cause such lien to be removed;
7.3 Dissolution. Dissolve, terminate, liquidate, merge with or consolidate
into another Person;
7.4 Change In Business or Operation of Property. Enter into any line of
business other than the ownership and operation of its Collateral Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business or otherwise cease to operate its Collateral
Property as a retail property or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to its
Collateral Property);
7.5 Debt Cancellation. Cancel or otherwise forgive or release any claim or
debt owed to such Borrower by any Person, except in the ordinary course of such
Borrower's business in its reasonable judgment and in a manner consistent with
the operation of first class retail properties;
7.6 Assets. Purchase or own any property other than its Collateral
Property and other property intended to be subject to the lien of a Mortgage;
7.7 Transfers. Without the prior written consent of Lender which will not
be unreasonably withheld or delayed, neither Borrower nor any other Person
having an ownership or beneficial interest, direct or indirect, in Borrower or
the general partner or managing member of Borrower shall (a) directly or
indirectly sell, transfer, convey, mortgage, pledge, or assign any Collateral
Property, any part thereof or any interest therein (including any ownership
interest in Borrower or such general partner or managing member (a "Transfer"),
(b) further encumber, alienate, grant a Lien or grant any other interest in any
Collateral Property or any part thereof (including any ownership interest in
Borrower and such general partner or managing member), whether voluntarily or
involuntarily or (c) enter into any easement or other agreement granting rights
in or restricting the use or development of any Collateral Property which may
have a material adverse effect on the Collateral Property.
(a) Notwithstanding the foregoing prohibition on Transfers, the
Lender shall grant a consent to the Transfer by any or all Borrower(s) of its
interests in any or all of the Collateral Properties that such Borrower owns and
the assumption of the Loan by the transferee upon reasonable satisfaction of the
following conditions:
(i) No Default or Event of Default shall have occurred or be
continuing;
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(ii) Borrower shall deliver to Lender any documents reasonably
required by Lender to evidence the assumption of this Agreement, the Note,
the Mortgages and the other Loan Documents by the proposed transferee,
subject to the provisions of Section 11.1 of this Agreement;
(iii) Borrower shall pay all of Lender's reasonable costs and
expenses incurred in connection with the Lender's consent and approval of
the Transfer in accordance with Section 6.15;
(iv) Borrower shall deliver to Lender a Rating Comfort Letter;
(v) Borrower shall deliver an non-consolidation opinion with regard
to the proposed transferee and its partners or members, as the case may
be, in form and substance reasonably satisfactory to Lender;
(vi) The proposed transferee must be a Special Purpose Entity and
comply with the representations and covenants contained in Sections 5.1.1
and 5.1.39 of this Agreement; and
(vii) Such other conditions as Lender shall determine in its
reasonable discretion to be in the interest of Lender, including, without
limitation, Lender's approval of the creditworthiness, reputation and
qualifications of the proposed transferee with respect to the Loan and the
Collateral Property.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower's Transfer of any Collateral Property
or any part thereof (including any individual Collateral Property) without
Lender's consent. This provision shall apply to every Transfer of any Collateral
Property regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer of any Collateral Property.
(b) Provided no Default or Event of Default has occurred and is
continuing under this Agreement or the other Loan Documents, the prior written
consent of the Lender and the approval of the Applicable Rating Agencies shall
not be required for the following Transfers provided that any reasonable costs
and expenses incurred by the Lender in reviewing any such proposed Transfer
shall be paid by Borrower, regardless of whether such consent or approval is
given by Lender:
(i) Any Transfer of any interest in any Borrower between and among
that Borrower's partners or members to Affiliates of such Borrower and
Borrower's partners or members;
(ii) Any Transfer of interests in any of any Borrower's partners or
members (between and among the partners and members);
(iii) Any Transfer by devise or descent or by operation of law upon
the death of a partner of any Borrower; or
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(iv) Any Transfers of limited partnership or membership interests in
any Borrower up to an aggregate of fifty percent (50%) of such interests;
provided, however that
(A) Lender must receive at least sixty (60) days prior
written notice of any proposed Transfer pursuant to this
subsection;
(B) Westfield America Limited Partnership or an approved
general partner (collectively, "Westfield") must retain
at least fifty percent (50%) ownership interest in the
applicable Borrower and Westfield must, following any
such Transfer, retain control of the applicable Borrower
and the day to day operations of the applicable
Collateral Property;
(C) Lender shall have received evidence satisfactory to it
that the Borrower and its partners or members, as the
case may be, following such transfer, remain Special
Purpose Entities in accordance with the standards of the
Applicable Rating Agencies; and
(D) If requested by Lender, Lender shall have received a
non-consolidation opinion with regard to the proposed
transferee and its partners or members, as the case may
be, in form and substance satisfactory to Lender.
(c) Notwithstanding the foregoing restrictions on Transfers, nothing
contained in this Agreement or the other Loan Documents shall in any way
restrict or prohibit, nor shall any notice to Lender or consent of Lender be
required in connection with, (i) the transfer or issuance of any securities or
interests in Westfield America, Inc. ("WEA"), (ii) the merger or consolidation
of WEA (iii) the transfer or issuance of any securities or interests in
Westfield America Limited Partnership ("WALP") or (iv) the merger or
consolidation of WALP. With respect to the events set forth in subsections (iii)
and (iv) hereof, to the extent that such transfers, issuance of securities or
interests, merger or consolidation of WALP result in a change of ownership or
control in WALP, the Borrower must be owned and controlled by an entity that
provides the same expertise as WALP in conducting business of the nature
currently conducted by WALP. Prior to completing any action with respect to WALP
pursuant to subsections (iii) and (iv) hereof that will result in a change in
control of WALP, the Borrower must deliver to Lender a Rating Comfort Letter and
a non-consolidation opinion with regard to the proposed transferee and its
partners or members, as the case may be, in form and substance satisfactory to
Lender, provided that no Rating Comfort Letter or non-consolidation opinion
shall be required in connection with subsection (i) or (ii) hereof.
(d) In accordance with the provisions of the entity documents of
each Borrower, in no event shall the provisions of this Section 7.7 be amended
or modified in any manner until such time as the Borrower has obtained a Rating
Comfort Letter.
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7.8 Debt. Create, incur or assume any indebtedness other than (i) the
Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses and Approved
Leasing Expenses and (iii) other trade debt incurred in the ordinary course of
business relating to the ownership and operation of its Collateral Property
which other trade debt does not exceed, at any time, a maximum aggregate amount
of $1,000,000.00 for each Collateral Property being operated as a retail
shopping center or a mixed use retail/office project and $500,000.00 for each
Collateral Property being operated as a power center, and such trade debt is
paid within sixty (60) days of the date incurred (other than amounts being
disputed in good faith);
7.9 Assignment of Rights. Without Lender's prior consent, attempt to (i)
assign such Borrower's rights or interest under any Loan Document in
contravention of any Loan Document or (ii) if such Borrower's Collateral
Property is affected by a Ground Lease, surrender, terminate, cancel, modify or
amend such Ground Lease;
7.10 Principal Place of Business. Change its principal place of business
without first giving Lender thirty (30) days' prior written notice;
7.11 Corporate Organization. Make any change, amendment or modification to
the organizational documents of such Borrower, or take any other action, if such
change, amendment, modification or action could result in (x) such Borrower not
being a Special Purpose Bankruptcy Remote Entity or (y) the term of any Borrower
or Borrower Representative being shortened; or
7.12 ERISA.
(a) Borrower shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (B) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R.ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.ss.2510.3-101(c)
or (e).
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7.13 No Joint Assessment. No Borrower shall suffer, permit or initiate the
joint assessment of any Collateral Property with (a) any other real property
constituting a tax lot separate from such Collateral Property, or (b) any
portion of such Collateral Property which may be deemed to constitute personal
property, or any other procedure whereby the Lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
such Collateral Property.
7.14 Affiliate Transactions. No Borrower shall enter into, or be a party
to, any transaction with an Affiliate of any Borrower or any of the partners of
any Borrower except in the ordinary course of business and on terms which are
fully disclosed to Lender in advance and are no less favorable to such Borrower
or such Affiliate than would be obtained in a comparable arm's-length
transaction with an unrelated third party. Lender hereby acknowledges that it
has reviewed and approved the Master Development Framework Agreement by and
between Westfield America, Inc. (formerly known as CenterMark Properties, Inc.),
a Missouri corporation and Westfield Corporation, Inc., a Delaware corporation,
dated as of July 1, 1996 and amended on May 21, 1997 and the Management
Agreement.
VIII INSURANCE.
8.1.1 Coverage. Each Borrower, at its sole cost, for the mutual
benefit of such Borrower and Lender, shall obtain and maintain during the Term
the following policies of insurance with respect to the Collateral Property
owned by such Borrower:
(a) Property insurance insuring against loss or damage by standard,
"all-risk" perils, which shall (i) be in an amount equal to the greatest of (A)
the then full replacement cost of the Collateral Property without deduction for
physical depreciation, (B) the unpaid Principal, and (C) such amount as is
necessary so that the insurer would not deem such Borrower a co-insurer under
such policies, (ii) have deductibles or self insured retentions no greater than
$25,000 (or, in the case of earthquake insurance, five percent (5%) of the total
insured values at risk), (iii) be paid annually in advance and (iv) contain an
"agreed amounts" and a "Replacement Cost Endorsement" with a waiver of
depreciation.
(b) Flood insurance if any part of the Collateral Property is
located in an area identified by the Federal Emergency Management Agency as an
area having special flood hazards in an amount to be determined by Lender.
(c) Commercial general public liability insurance, including broad
form property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate per location for any policy year;
together with at least $50,000,000 excess and/or umbrella liability insurance
for any and all claims, including all legal liability imposed upon Borrower and
all court costs and attorneys' fees incurred in connection with the ownership,
operation and maintenance of the Collateral Property.
(d) Rental loss and/or business interruption insurance in an amount
equal the estimated Rents for the next succeeding 18-month period. The amount of
such insurance shall be increased from time to time during the Term as and when
the estimated or actual Rents increase.
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(e) Insurance against loss or damage from (i) leakage of sprinkler
systems and (ii) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and Equipment, pressure vessels or similar apparatus
now or hereafter installed in any of the Improvements (without exclusion for
explosions), in an amount at least equal to $2,000,000.
(f) Worker's compensation insurance with respect to any employees of
such Borrower, as required by any Legal Requirement.
(g) During any period of repair or restoration, builder's "all-risk"
insurance in an amount equal to not less than the full insurable value of the
Collateral Property, against such risks (including fire and extended coverage
and collapse of the Improvements to agreed limits) as Lender may request, in
form and substance acceptable to Lender.
(h) Ordinance or Law Coverage to compensate for the diminished value
of the subject Collateral Property, the cost of demolition and the increased
cost of construction in an amount satisfactory to Lender.
(i) Such other insurance (including earthquake insurance and
windstorm insurance) as may from time to time be reasonably required by Lender
in order to protect its interests and as is otherwise commercially reasonable.
8.1.2 Policies.
(a) All policies of insurance (the "Policies") required pursuant to
Section 8.1.1 (other than earthquake insurance) shall (i) be issued by companies
approved by Lender and licensed to do business in the State, with a claims
paying ability rating of "AA" or better by S&P and a rating of A:VII or better
in the current Best's Insurance Reports ("Approved Insurer"); (ii) name Lender
and its successors and/or assigns as their interest may appear as the mortgagee
(in the case of property insurance) or an additional insured (in the case of
liability insurance); (iii) contain (in the case of property insurance) a
Non-Contributory Standard Lender Clause and a Lender's Loss Payable Endorsement,
or their equivalents, naming Lender as the person to which all payments made by
such insurance company shall be paid; (iv) contain a waiver of subrogation
against Lender, (v) be delivered to Lender (provided that copies may be
delivered in lieu of originals) together with an insurance certificate; (vi)
contain such provisions as Lender deems reasonably necessary or desirable to
protect its interest, including endorsements providing that neither the
applicable Borrower, Lender nor any other party shall be a co-insurer under the
Policies and that Lender shall receive at least 30 days' prior written notice of
any modification, reduction or cancellation of any of the Policies; and (vii) be
satisfactory in form and substance to Lender and approved by Lender as to
amounts, form, risk coverage, deductibles, loss payees and insureds. Each
Borrower shall pay the premiums for the Policies required to be maintained by it
hereunder (the "Insurance Premiums") as the same become due and payable and
furnish to Lender evidence of the renewal of each of the Policies together with
(unless such Insurance Premiums have been paid by Lender pursuant to Section
4.3) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If a Borrower does not furnish such evidence
and receipts at least thirty (30) days prior to the expiration of any expiring
Policy, then Lender may, but shall not be obligated to, procure such insurance
and pay the Insurance Premiums therefor, and such
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Borrower shall reimburse Lender for the cost of such Insurance Premiums promptly
on demand, with interest accruing at the Default Rate. Each Borrower shall
deliver to Lender a copy of each Policy (and an insurance certificate pertaining
thereto) required to be maintained by it hereunder within ninety (90) days after
its effective date. Within ninety (90) days after request by Lender, each
Borrower shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices, and such coverage as is commercially available.
8.2 Casualty.
8.2.1 Notice; Restoration. If any Collateral Property is damaged or
destroyed, in whole or in part, by fire or other casualty (a "Casualty"),
Borrower shall give prompt notice thereof to Lender. Following the occurrence of
a Casualty, the Borrower that owns such Collateral Property, regardless of
whether insurance proceeds are available, shall promptly proceed to restore,
repair, replace or rebuild such Collateral Property in accordance with Legal
Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction.
8.2.2 Settlement of Proceeds. In the event of a Casualty covered by
any of the Policies (an "Insured Casualty") where the loss does not exceed
$1,000,000, the applicable Borrower may settle and adjust any claim without the
consent of Lender; provided such adjustment is carried out in a competent and
timely manner; and such Borrower is hereby authorized to collect and receipt for
the insurance proceeds (the "Proceeds"). In the event of an Insured Casualty
where the loss equals or exceeds $1,000,000, Lender may settle and adjust any
claim without the consent of any Borrower and agree with the insurer(s) on the
amount to be paid on the loss, and the Proceeds shall be due and payable solely
to Lender and held by Lender in the Casualty/Condemnation Fund and disbursed in
accordance herewith. The expenses incurred by Lender in the adjustment and
collection of the Proceeds shall become part of the Debt and shall be reimbursed
by the applicable Borrower to Lender upon demand.
8.3 Condemnation.
8.3.1 Notice; Restoration. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding affecting any Collateral Property (a "Condemnation") and shall
deliver to Lender copies of any and all papers served in connection with such
Condemnation. Following the occurrence of a Condemnation, the applicable
Borrower, regardless of whether an Award is available, shall promptly proceed to
restore, repair, replace or rebuild such Collateral Property in accordance with
all Legal Requirements to the extent practicable to be of at least equal value
and of substantially the same character as prior to such Condemnation.
8.3.2 Collection of Award. Lender is hereby irrevocably appointed as
each Borrower's attorney-in-fact, coupled with an interest, with exclusive power
to collect, receive and retain any award or payment in respect of a Condemnation
(an "Award") in excess of $1,000,000 and to make any compromise or settlement in
connection with such Condemnation. Notwithstanding any Condemnation (or any
transfer made in lieu of or in anticipation of such
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Condemnation), Borrower shall continue to pay the Debt at the time and in the
manner provided for in the Loan Documents, and the Debt shall not be reduced
unless and until any Award shall have been actually received and applied by
Lender to expenses of collecting the Award and to discharge of the Debt. Lender
shall not be limited to the interest paid on the Award by the condemning
authority but shall be entitled to receive out of the Award interest at the
Applicable Interest Rate. If a Collateral Property that is the subject of a
Condemnation is sold, through foreclosure or otherwise, prior to the receipt by
Lender of such Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall be recoverable or shall have been sought, recovered
or denied, to receive all or a portion of the Award sufficient to pay the Debt.
Each Borrower shall cause any Award that is payable to such Borrower to be paid
directly to Lender. Lender shall hold such Award in the Casualty/Condemnation
Fund and disburse such Award in accordance with the terms hereof.
8.4 Application of Proceeds or Award.
8.4.1 Application to Restoration. In the event of an Insured
Casualty or Condemnation with respect to any Collateral Property where (i) the
loss is in an aggregate amount less than 25% of the Allocated Loan Amount with
respect to such Collateral Property, (ii) in the reasonable judgment of Lender,
such Collateral Property can be restored within six (6) months, and prior to the
Anticipated Repayment Date and the expiration of the business interruption
insurance with respect thereto, to an economic unit not less valuable and not
less useful than the same was prior to the Insured Casualty or Condemnation, and
after such restoration will, together with the other Collateral Properties,
adequately secure the unpaid Principal, and (iii) no Event of Default shall have
occurred and be then continuing, then the Proceeds or the Award, as the case may
be (after reimbursement of any expenses incurred by Lender), shall be applied to
reimburse the applicable Borrower for the cost of restoring, repairing,
replacing or rebuilding such Collateral Property (the "Restoration"), in the
manner set forth herein. The applicable Borrower shall commence and diligently
prosecute such Restoration; provided that (x) such Borrower shall pay (and if
required by Lender, such Borrower shall deposit with Lender in advance) all
costs of such Restoration in excess of the net amount of the Proceeds or the
Award made available pursuant to the terms hereof; and (y) Lender shall have
received evidence reasonably satisfactory to it that during the period of the
Restoration, the Rents (including all Proceeds from the business interruption
insurance required pursuant to Section 8.1.1)from such Collateral Property,
together with the Rents from the other Collateral Properties, will be sufficient
to satisfy all of Borrower's Obligations.
8.4.2 Application to Debt. Except as provided in Section 8.4.1, the
Proceeds and any Award in excess of 1,000,000 may, at the option of Lender in
its sole discretion, be applied to the payment of the Debt as set forth in
Section 3.2.2, or applied to reimburse the applicable Borrower for the cost of
any Restoration, in the manner set forth in Section 8.4.3. Any such application
to the prepayment of the Loan shall be without any prepayment consideration or
penalty, unless the Debt or any portion thereof is accelerated prior to, or
within one year after, the date the Proceeds are received from the insurance
company or the Award is received from the condemning authority, as the case may
be, in which event the Borrower shall pay to Lender an additional amount equal
to the Yield Maintenance Premium, if any, that may be required with respect to
the amount of the Proceeds or Award applied to the Debt.
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8.4.3 Procedure for Application to Restoration. If a Borrower is
entitled to reimbursement out of the Proceeds or an Award held by Lender, such
Proceeds or Award shall be disbursed from time to time from the
Casualty/Condemnation Fund upon Lender being furnished with (i) evidence
satisfactory to it of the estimated cost of completion of the Restoration, (ii)
funds or, at Lender's option, assurances satisfactory to Lender that such funds
are available sufficient, in addition to the Proceeds or Award, to complete the
proposed Restoration, (iii) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as Lender may
reasonably require and approve, and (iv) all plans and specifications for such
Restoration, such plans and specifications to be approved by Lender prior to
commencement of any work. No payment made prior to the final completion of the
Restoration shall exceed ninety percent (90%) of the value of the work performed
from time to time; funds other than the Proceeds or Award shall be disbursed
prior to disbursement of such Proceeds or Award; and at all times, the
undisbursed balance of such Proceeds or Award remaining in the hands of Lender,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of the applicable Borrower for that
purpose, shall be at least sufficient in the reasonable judgment of Lender to
pay for the cost of completion of the Restoration, free and clear of all Liens
or claims for Lien. Any surplus that remains out of the Proceeds held by Lender
after payment of such costs of Restoration shall be paid to the applicable
Borrower. Any surplus that remains out of the Award received by Lender after
payment of such costs of Restoration shall, in the sole and absolute discretion
of Lender, be retained by Lender and applied to payment of the Debt or returned
to the applicable Borrower.
8.4.4 Ground Lease; Anchor Lease; REA. If Lender shall have the
right or option hereunder to apply Proceeds or an Award to payment of the Debt,
but under any controlling provision in any Ground Lease, "anchor" Lease or REA
such Proceeds or Awards are required to be applied to Restoration of a
Collateral Property, then, notwithstanding anything to the contrary in this
Article 8, such Proceeds or Award shall be applied to Restoration in accordance
with such Ground Lease, "anchor" Lease or REA, subject to such conditions and
procedures as Lender may impose which are not inconsistent with the terms of
such Ground Lease, "anchor" Lease or REA.
IX DEFAULTS.
9.1 Events of Default. An "Event of Default" shall exist with respect to
the Loan upon the occurrence of any of the following events:
(a) any portion of the Debt is not paid when due;
(b) Borrower shall fail to pay when due any deposit into any Fund;
(c) any of the Taxes applicable to any Collateral Property are not
paid when due (other than Taxes for which funds have been deposited with Lender
pursuant to Section 4.3), subject to Borrower's right to contest Taxes
applicable to its Collateral Property in accordance with Section 6.2;
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(d) the Policies with respect to any Collateral Property are not
delivered to Lender within ninety (90) days after their respective applicable
effective dates or within ten days after written demand from Lender, whichever
is later, or such Policies are not kept in full force and effect;
(e) a Transfer other than a Transfer permitted pursuant to Section
7.7 occurs with respect to any Collateral Property, any interest in any Borrower
or an interest in any Borrower Representative of any Borrower;
(f) any representation or warranty made by any Borrower or in any
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by any Borrower in connection with
any Loan Document, shall be false or misleading in any material respect as of
the date the representation or warranty was made;
(g) any Borrower or any Borrower's Borrower Representative shall
make an assignment for the benefit of creditors, or shall generally not be
paying its debts as they become due;
(h) a receiver, liquidator or trustee shall be appointed for any
Borrower or such Borrower's Borrower Representative, or any Borrower or such
Borrower's Borrower Representative shall be adjudicated a bankrupt or insolvent;
or any petition for bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law, shall be filed by
or against, consented to, or acquiesced in by, any Borrower or such Borrower's
Borrower Representative, as the case may be; or any proceeding for the
dissolution or liquidation of any Borrower or such Borrower's Borrower
Representative shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
such Borrower or such Borrower's Borrower Representative, as the case may be,
only upon the same not being discharged, stayed or dismissed within sixty (60)
days;
(i) any Borrower breaches any negative covenant contained in
Sections 7.3, 7.4, 7.6, 7.7, 7.8, 7.10 or 7.11 or any affirmative covenant
contained in Section 6.14;
(j) any Borrower shall be in default under any other mortgage or
security agreement covering any part of the Collateral Property owned by such
Borrower whether it be superior or junior in Lien to a Mortgage, and such
default shall continue after the expiration of any applicable notice and grace
period provided therein;
(k) except as permitted hereunder, any Borrower shall commence any
alteration, improvement, demolition or removal of any of the Improvements
constituting part of such Borrower's Collateral Property without the prior
consent of Lender;
(l) an Event of Default as defined or described in any other Loan
Document occurs; or any other event shall occur or condition shall exist, if the
effect of such event or condition is to accelerate or to permit Lender to
accelerate the maturity of the Debt;
(m) any Borrower shall be in default under any term, covenant or
provision set forth herein or in any other Loan Document which specifically
contains a notice requirement or grace period and such notice has been given and
such grace period has expired;
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(n) any of the assumptions contained in the Insolvency Opinion or an
Additional Insolvency Opinion were not true and correct as of the date of such
opinion or thereafter became untrue or incorrect and such Borrower fails to
deliver to Lender, within twenty (20) days after such Borrower first become
aware that any such assumption is not true or is incorrect, a new substantive
non-consolidation opinion from the same counsel (or other counsel acceptable to
Lender and the Applicable Rating Agencies) which omits all such untrue or
incorrect assumptions and is otherwise in the same form as the Insolvency
Opinion or the Additional Insolvency Opinion, as applicable (other than for
changes approved by Lender and the Applicable Rating Agencies);
(o) Intentionally Deleted;
(p) any Borrower shall fail to pay when due any rent, additional
rent or other charge payable under any Ground Lease (which term, for purposes of
this paragraph (p) shall mean any Ground Lease affecting such Borrower's
Collateral Property or any portion thereof); or any Borrower shall default in
the observance or performance of any other term, covenant or condition of any
Ground Lease and such default is not cured within twenty (20) days prior to the
expiration of any applicable grace period provided therein; or any event shall
occur that would cause any Ground Lease to terminate without notice or action by
the landlord thereunder or would entitle such landlord to terminate any Ground
Lease and the term thereof by giving notice to such Borrower; or any Ground
Lease shall be surrendered, terminated or canceled for any reason or under any
circumstance whatsoever; or any term of any Ground Lease shall be modified or
supplemented without Lender's consent; or any Borrower shall fail, within ten
(10) Business Days after demand by Lender, to exercise its option to renew or
extend the term of any Ground Lease or shall fail or neglect to pursue
diligently all actions necessary to exercise such renewal rights pursuant to
such Ground Lease;
(q) any Borrower shall permit any event to occur that would cause
any REA to terminate without notice or action by any party thereto or would
entitle any party to terminate any REA and the term thereof by giving notice to
such Borrower; or any REA shall be surrendered, terminated or canceled for any
reason or under any circumstance whatsoever; or any term of any REA shall be
modified or supplemented without Lender's consent; or any Borrower shall fail,
within ten (10) Business Days after demand by Lender, to exercise its option to
renew or extend the term of any REA or shall fail or neglect to pursue
diligently all actions necessary to exercise such renewal rights pursuant to
such REA; or
(r) any Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or any other Loan
Document not specified in this Section 9.1, for ten (10) days after notice to
such Borrower from Lender, in the case of any Default which can be cured by the
payment of a sum of money, or for thirty (30) days after notice from Lender in
the case of any other Default; provided, however, that if such non-monetary
Default is susceptible of cure but cannot reasonably be cured within such 30-day
period, and such Borrower shall have commenced to cure such Default within such
30-day period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for an additional period of time as
is reasonably necessary for such Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed 90 days.
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9.2 Remedies.
9.2.1 Acceleration. Upon the occurrence of an Event of Default with
respect to the Loan (other than an Event of Default described in paragraph (g)
or (h) of Section 9.1) and at any time and from time to time thereafter, in
addition to any other rights or remedies available to it pursuant to the Loan
Documents or at law or in equity, Lender may take such action, without notice or
demand, that Lender deems advisable to protect and enforce its rights against
Borrower and in and to any and all Collateral Properties and any and all Ground
Leases to which any Borrower is a party, and upon any Event of Default described
in paragraph (g) or (h) of Section 9.1, the Debt (including unpaid interest,
Default Rate interest, Late Payment Charges, Yield Maintenance Premium and any
other amounts owing by Borrower) shall immediately and automatically become due
and payable, without notice or demand, and Borrower hereby expressly waives any
such notice or demand, anything contained in any Loan Document to the contrary
notwithstanding.
9.2.2 Remedies Cumulative. Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Borrower under the Loan Documents or at law
or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth in the Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is continuing, (i) to the
extent permitted by applicable law, Lender is not subject to any "one action" or
"election of remedies" law or rule, and (ii) all Liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against the Collateral
Properties, each Mortgage has been foreclosed, the Collateral Properties have
been sold and/or otherwise realized upon in satisfaction of the Debt or the Debt
has been paid in full. To the extent permitted by applicable law, nothing
contained in any Loan Document shall be construed as requiring Lender to resort
to any portion of the Collateral Pool for the satisfaction of any of the Debt in
preference or priority to any other portion, and Lender may seek satisfaction
out of the entire Collateral Pool or any part thereof, in its absolute
discretion.
9.2.3 Severance. Lender shall have the right from time to time to
sever the Note and the other Loan Documents into one or more separate notes,
mortgages and other security documents in such denominations as Lender shall
determine in its sole discretion for purposes of evidencing and enforcing its
rights and remedies. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and
execute all documents necessary or desirable to effect such severance, Borrower
ratifying all that such attorney shall do by virtue thereof.
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9.2.4 Delay. No delay or omission to exercise any remedy, right,
power accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender shall impair any such remedy, right or power hereunder or
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one Default or Event of Default shall not be construed to be a waiver of any
subsequent Default or Event of Default or to impair any remedy, right or power
consequent thereon. Notwithstanding any other provision of this Agreement, to
the extent permitted by applicable law, Lender reserves the right to seek a
deficiency judgment or preserve a deficiency claim, in connection with the
foreclosure of any Mortgage, to the extent necessary to foreclose on any other
Collateral Property or part thereof, the Rents, the Funds or any other
collateral that constitutes security for the same obligation.
9.2.5 Lender's Right to Perform. If Borrower fails to perform any
covenant or obligation contained herein and such failure shall continue for a
period of (5) five Business Days after Borrower's receipt of written notice
thereof from Lender, without in any way limiting Lender's right to exercise any
of its rights as provided hereunder or under any of the other Loan Documents,
Lender may, but shall have no obligation to, perform, or cause performance of,
such covenant or obligation, and the expenses of Lender incurred in connection
therewith shall be payable by such Borrower to Lender upon demand and if not
paid shall be added to the Debt and shall bear interest thereafter at the
Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to
send notice to such Borrower of any other Borrower of any such failure.
X SPECIAL PROVISIONS
10.1 Sale of Note and Secondary Market Transaction.
10.1.1 Cooperation. At Lender's request (to the extent not already
required to be provided by Borrowers under this Agreement), Borrower and WALP
shall cooperate with Lender to enable Lender to satisfy the market standards to
which Lender customarily adheres or which may be reasonably required in the
marketplace or by the Applicable Rating Agencies in connection with one or more
sales or assignments of the Note or participations therein or securitizations
(including any FASIT) of rated single or multi-class securities (the
"Securities") secured by or evidencing ownership interests in the Note and the
Mortgage (each such sale, assignment, participation and/or securitization, a
"Secondary Market Transaction"). No Borrower shall be required to incur any
out-of-pocket expense to comply with the provisions of this Section 10.1.1
(unless Lender agrees to reimburse such Borrower therefor). In furtherance of
the foregoing, each Borrower and WALP shall, at the request of Lender in
connection with any Secondary Market Transaction, and so long as the Loan is
still outstanding:
(a) (i) provide updates of financial and other information with
respect to its Collateral Property, such Borrower and its Affiliates, Manager
and any Tenants of its Collateral Property, (ii) provide updated business plans
and budgets relating to its Collateral Property and (iii) perform or permit or
cause to be performed or permitted such site inspection, appraisals, surveys,
market studies, environmental reviews and reports (Phase I's and, if
appropriate, Phase II's), engineering reports and other due diligence
investigations of its Collateral Property, as may be reasonably requested from
time to time by Lender or the Applicable Rating Agencies or as may be necessary
or appropriate in connection with a Secondary Market Transaction or
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Exchange Act requirements (the items provided to Lender pursuant to this
paragraph (a) being called the "Provided Information"), together, if customary,
with appropriate verification of and/or consents to the Provided Information
through letters of auditors or opinions of counsel of independent attorneys
acceptable to Lender and the Applicable Rating Agencies;
(b) use reasonable efforts to cause counsel to render opinions as to
non-consolidation, fraudulent conveyance, true sale and true contribution and
any other opinion customary in securitization transactions with respect to its
Collateral Property, each Borrower and its respective Affiliates, which counsel
and opinions shall be reasonably satisfactory to Lender and the Applicable
Rating Agencies;
(c) provide current certificates of good standing and qualification
with respect to such Borrower and WALP from appropriate Governmental
Authorities; and
(d) execute such amendments to the Loan Documents and each
Borrower's organizational documents as may be requested by Lender or the
Applicable Rating Agencies or otherwise to effect a Secondary Market
Transaction, provided that nothing contained in this subsection (d) shall result
in an economic change in the transaction or impose any material legal
obligations on any Borrower or restrict Borrower in any material way;
(e) assist Lender in the event Lender requires the severance of the
Note or any other Loan Document in order to adjust its security interest in the
Collateral Properties to enhance its position in the context of a Secondary
Market Transaction, provided that such severance of the Note or other applicable
adjustment in the security of the Loan pursuant to a Secondary Market
Transaction shall be completed at the sole cost of the Lender;
(f) deliver to Lender and/or any Applicable Rating Agency, (a) one
or more Officer's Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of the
Loan Closing in all relevant jurisdictions or, if such representations are no
longer accurate, certifying as to what modifications to the representations
would be required to make such representations accurate, and (b) certificates of
the relevant Governmental Authorities in all relevant jurisdictions indicating
the good standing and qualification of Borrower and it's Borrower Representative
as of the date of the Secondary Market Transaction;
(g) make such other representations and warranties as of the closing
date of the Secondary Market Transaction with respect to the Collateral
Properties, Borrower, WALP, and the Loan Documents as are customarily provided
in securitization transactions and as may be reasonably requested by the holder
of the Note or the Rating Agencies and consistent with the facts covered by such
representations and warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents;
(h) participate in any meeting reasonably requested by the Lender,
such meeting to be attended by senior management of Borrower and/or WALP; and
(i) obtain ratings of the Securities from two (2) or more Rating
Agencies.
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10.1.2 Use of Information. Each Borrower understands that certain of
the Provided Information and the Required Records may be included in disclosure
documents in connection with a Secondary Market Transaction, including a
prospectus or private placement memorandum (each, a "Disclosure Document") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers or other parties relating
to the Secondary Market Transaction. In the event that the Disclosure Document
is required to be revised, each Borrower shall cooperate with Lender in updating
the Provided Information or Required Records for inclusion or summary in the
Disclosure Document or for other use reasonably required in connection with a
Secondary Market Transaction by providing all current information pertaining to
such Borrower, and its Collateral Property necessary to keep the Disclosure
Document accurate and complete in all material respects with respect to such
matters. Such disclosure may include the opinion or judgment of Lender or
Servicer concerning the Provided Information or other matters disclosed.
10.1.3 Borrower's Obligations Regarding Disclosure Documents. In
connection with a Disclosure Document, each Borrower shall:
(a) if requested by Lender, certify in writing that such Borrower
has carefully examined those portions of such Disclosure Document, pertaining to
such Borrower, its Collateral Property, the Manager and the Loan, including
applicable portions of the sections entitled "Special Considerations",
"Description of the Mortgages", "Description of the Mortgage Loans and Mortgaged
Property", "The Manager," "The Borrower" and "Certain Legal Aspects of the
Mortgage Loan," and such portions (and portions of any other sections reasonably
requested and pertaining to such Borrower, its Collateral Property, the Manager
or the Loan) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading;
(b) indemnify (i) any underwriter, syndicate member or placement
agent (collectively, the "Underwriters") retained by Lender or its issuing
company affiliate (the "Issuer") in connection with a Secondary Market
Transaction, (ii) Lender and (iii) the Issuer that is named in the Disclosure
Document or registration statement relating to a Secondary Market Transaction
(the "Registration Statement"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"UBS Group"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the "Underwriter Group") for any losses,
claims, damages or liabilities (the "Liabilities") to which Lender, the UBS
Group or the Underwriter Group may become subject (including reimbursing all of
them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue statement of any material fact contained in any
of the Required Records or in any of the applicable portions of such sections of
the Disclosure Document applicable to Borrower, Manager, any Collateral Property
or the Loan,
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or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated in the applicable portions of such
sections or necessary in order to make the statements in the applicable portions
of such sections in light of the circumstances under which they were made, not
misleading, provided, however, that no Borrower shall be required to indemnify
Lender for any Liabilities relating to untrue statements or omissions or
inadequacies of disclosure which (i) such Borrower identified to Lender in
writing at the time of such Borrower's examination of such Disclosure Document
or (ii) are set forth in a report prepared by a third party not Affiliated with
such Borrower; and
(c) reimburse any member of the UBS Group for any legal or other
expenses reasonably incurred by such member in connection with investigating or
defending the Liabilities.
Borrowers' Liability under clause (a) or (b) above shall be limited to
Liabilities arising out of or based upon any such untrue statement or omission
made therein in reliance upon and in conformity with information furnished to
Lender by or on behalf of a Borrower in connection with the preparation of those
portions of the Disclosure Document pertaining to Borrower, Manager, the
Collateral Properties or the Loan or in connection with the underwriting of the
debt including financial statements of each Borrower, operating statements, rent
rolls and other Required Records, environmental site assessment reports and
property condition reports with respect to the Collateral Properties. The
foregoing indemnity will be in addition to any liability which Borrowers may
otherwise have. Lender shall give Borrower a copy of any Disclosure Document
that is to be subject to the foregoing indemnification obligations a reasonable
amount of time prior to its delivery to potential investors pursuant to an
offering.
10.1.4 Borrowers Indemnity Regarding Filings. In connection with
filings under the Exchange Act, Borrower shall (i) indemnify Lender, the UBS
Group and the Underwriter Group for any Liabilities to which Lender, the UBS
Group or the Underwriter Group may become subject insofar as the Liabilities
arise out of or are based upon the omission or alleged omission to state in the
Provided Information or Required Records a material fact required to be stated
in the Provided Information or Required Records in order to make the statements
in the Provided Information or Required Records, in light of the circumstances
under which they were made not misleading and (ii) reimburse Lender, the UBS
Group or the Underwriter Group for any legal or other expenses reasonably
incurred by Lender, UBS Group or the Underwriter Group in connection with
defending or investigating the Liabilities.
10.1.5 Indemnification Procedure. Promptly after receipt by an
indemnified party under Section 10.1.3 or 10.1.4 of notice of the commencement
of any action for which a claim for indemnification is to be made against
Borrower, such indemnified party shall notify Borrower in writing of such
commencement, but the omission to so notify the Borrower will not relieve
Borrower from any liability that it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to Borrower. In the
event that any action is brought against any indemnified party, and it notifies
Borrower of the commencement thereof, Borrower will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice of commencement, to assume the
defense thereof with counsel satisfactory to such indemnified party in its sole
discretion. After notice from
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Borrower to such indemnified party under this Section 10.1.5, Borrower shall not
be responsible for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both any Borrower and an indemnified party, and any indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to Borrower, then the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Borrower shall not be liable for the expenses of
more than one separate counsel unless there are legal defenses available to it
that are different from or additional to those available to another indemnified
party.
10.1.6 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 10.1.3 or 10.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 10.1.3
or 10.1.4, Borrower shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
the UBS Group's and Borrower's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and each
Borrower hereby agree that it may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
XI MISCELLANEOUS
11.1 Exculpation.
(a) Subject to the qualifications below, Lender shall not enforce
the liability and obligation of any Borrower to perform and observe the
obligations contained in the Loan Documents by any action or proceeding wherein
a money judgment shall be sought against such Borrower, except that Lender may
bring a foreclosure action, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and realize upon
its interest and rights under the Loan Documents, or in the Collateral
Properties, the Rents or any other collateral given to Lender pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be enforceable against a
Borrower only to the extent of Borrower's interest in its Collateral Property,
in the Rents and in any other collateral given to Lender, and Lender shall not
sue for, seek or demand any deficiency judgment against any Borrower in any such
action or proceeding under or by reason of or under or in connection with any
Loan Document. The provisions of this section shall not, however, (i) constitute
a waiver, release or impairment of any obligation evidenced or secured by any
Loan Document; (ii) impair the right of Lender to name any Borrowers as a party
defendant in any action or suit for foreclosure and sale under any Mortgage;
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(iii) affect the validity or enforceability of any of the Loan Documents or any
guaranty made in connection with the Loan or any of the rights and remedies of
Lender thereunder, (iv) impair the right of Lender to obtain the appointment of
a receiver, (v) impair the enforcement of any Assignment of Leases; (vi)
constitute a prohibition against Lender to commence any other appropriate action
or proceeding in order for Lender to fully realize the security granted by the
Mortgages or to exercise its remedies against the Collateral Properties; or
(vii) constitute a waiver of the right of Lender to enforce the liability and
obligation of any Borrower, by money judgment or otherwise, to the extent of any
loss, damage, cost, expense, liability, claim or other obligation incurred by
Lender (including attorneys' fees and costs reasonably incurred) arising out of
or in connection with the following: (a) fraud or intentional misrepresentation
by such Borrower or any guarantor in connection with the Loan; (b) the gross
negligence or willful misconduct of such Borrower; (c) the breach of any
representation, warranty, covenant or indemnification in any Loan Document
concerning Environmental Laws or Hazardous Substances, including Sections 5.1.32
and 6.10, and clauses (viii) through (xi) of Section 6.16; (d) physical waste or
after an Event of Default, the removal or disposal of any portion of any
Collateral Property; (e) the misapplication or conversion by such Borrower of
(x) any Proceeds paid by reason of any Insured Casualty, (y) any Award received
in connection with a Condemnation, or (z) any Rents, refunds of Taxes or Other
Charges or Funds (i.e., use of Rents or refunds of Taxes or Other Charges or
Funds to make distributions or payments to members/partners/shareholders of such
Borrower during the continuance of an Event of Default); (f) failure to pay
charges for labor or materials or other charges that can create Liens on any
portion of any Collateral Property unless such charges are the subject of a bona
fide dispute in which the applicable Borrower is contesting the amount or
validity thereof, (g) any security deposits collected with respect to any
Collateral Property which are not delivered to Lender upon a foreclosure of any
Mortgage encumbering such Collateral Property or action in lieu thereof, except
to the extent any such security deposits were applied in accordance with the
terms and conditions of any of the Leases prior to the occurrence of the Event
of Default that gave rise to such foreclosure or action in lieu thereof; and (h)
such Borrower's indemnifications of Lender set forth in Sections 10.1.3 and
10.1.4.
(b) Notwithstanding anything to the contrary in this Agreement or
any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt or to require that all collateral shall continue to secure all of the
Debt in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrowers in the event that (1) any Borrower or any Person owning an
interest (directly or indirectly) in any Borrower commences any action, suit,
claim, arbitration, governmental investigation or other proceeding (x) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to any Borrower, or seeking to adjudicate
any Borrower a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to any Borrower or any Borrower's debts, or (y) seeking appointment
of a receiver (other than a Borrowers seeking the appointment of a receiver
during the pendency of a foreclosure action against such Borrower commenced by
Lender), trustee, custodian or other similar official for any Borrower or for
all or substantially all of any Borrower's assets or (2) any Borrower ever
ceases to be a Special Purpose Entity.
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11.2 Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document (a "notice") shall be given
in writing and shall be effective for all purposes if hand delivered or sent (i)
by (a) certified or registered United States mail, postage prepaid, or (ii) by
(A) expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, and (B) by telecopier (with
answer back acknowledged), in any case addressed as follows (or to such other
address or Person as a party shall designate from time to time by any party
hereto, as the case may be, in a written notice to the other parties hereto in
the manner provided for in this Section):
If to Lender: UBS Principal Finance LLC
299 Park Avenue
New York, New York 10171
Attention: Douglas Renfield-Miller
Facsimile No. (212) 821-5720
with a copy to: Cadwalader, Wickersham & Taft
227 West Trade Street, Suite 2400
Charlotte, North Carolina 28202
Attention: James P. Carroll, Esq.
Facsimile No. (704) 348-5200
If to Borrower: c/o Westfield Corporation, Inc.
11601 Wilshire Boulevard, Suite 1200
Los Angeles, California 90025-1748
Attention: Mark Stefanek
Facsimile No. (310) 478-3987
With a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills, Esq.
Facsimile No. (212) 909-6836
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
11.2.1 Borrower's Representative.
(a) Each Borrower's Representative shall notify Lender of the names
of its officers and employees authorized to request and take other actions on
behalf of its Borrower (each a "Responsible Officer") and shall provide Lender
with a specimen signature of each such officer or employee. Lender shall be
entitled to rely conclusively on a Responsible Officer's authority to give and
receive notices and take other all other actions of any kind on behalf of
Borrower or any of them until Lender receives written notice to the contrary.
Lender shall have no duty to verify the authenticity of the signature appearing
on any notice.
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(b) EACH BORROWER DOES HEREBY DESIGNATE AND APPOINT CT CORPORATION
SYSTEM AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, AS ITS AUTHORIZED AGENT
TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY
BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT
IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT
SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF SUCH BORROWER MAILED OR
DELIVERED TO SUCH BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH BORROWER (1) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE
DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN
NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
11.3 Brokers and Financial Advisors. Each Borrower hereby represents that
it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the Loan. Borrowers and Lender
shall indemnify and hold the other harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person that such Person acted on behalf of the indemnifying
party in connection with the transactions contemplated herein. The provisions of
this Section 11.3 shall survive the expiration and termination of this Agreement
and the repayment of the Debt.
11.4 Retention of Servicer. Lender reserves the right to retain the
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, any Pooling and Servicing Agreement or similar agreement entered into
as a result of a Secondary Market Transaction, the Cash Management Agreement or
otherwise, together with such other powers as are reasonably incidental thereto.
Borrowers shall pay any reasonable fees and expenses of the Servicer in
connection with a release or substitution of any Collateral Properties,
assumption or modification of the Loan, enforcement of the Loan Documents or any
other action taken by Servicer hereunder on behalf of Lender.
11.5 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as any of the Debt is unpaid unless a longer period is expressly set
forth herein or in the other Loan Documents. Each Borrower's covenants and
agreements in this Agreement shall inure to the benefit of the respective legal
representatives, successors and assigns of Lender.
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11.6 Lender's Discretion. Whenever pursuant to this Agreement or any other
Loan Document, Lender exercises any right given to it to approve or disapprove,
or any arrangement or term is to be satisfactory to Lender, the decision of
Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
11.7 Governing Law; Venue.
(a) THIS AGREEMENT WAS MADE BY LENDER AND ACCEPTED BY BORROWERS IN
THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO
WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, TIES AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND PROCEDURES RELATING TO ENFORCEMENT
OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE COLLATERAL PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT
PERMITTED BY LAW, EACH BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES
ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO ss.
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO ss. 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND EACH BORROWER WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
11.8 Modification; Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by any Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party against whom enforcement is
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sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to or demand on any Borrower shall entitle such
Borrower or any other Borrower to any other or future notice or demand in the
same, similar or other circumstances.
11.9 Delay Not a Waiver. Neither any failure nor any delay on the part of
Lender in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising any right, power, remedy or privilege hereunder, or
under any other Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under any Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under the Loan Documents, or to declare an Event of Default for
failure to effect prompt payment of any such other amount.
11.10 TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING
IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER.
11.11 Heading. The Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
11.12 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.13 Preferences. To the extent any Borrower makes a payment to Lender,
or Lender receives proceeds of any collateral, which is in whole or part
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Debt or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender. This provision
shall survive the expiration or termination of this Agreement and the repayment
of the Debt.
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11.14 Waiver of Notice. No Borrower shall be entitled to any notices of
any nature whatsoever from Lender except with respect to matters for which this
Agreement or any other Loan Document specifically and expressly provides for the
giving of notice by Lender to such Borrower and except with respect to matters
for which such Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Each Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for which
no Loan Document specifically and expressly provides for the giving of notice by
Lender to such Borrower.
11.15 Remedies of Borrower. In the event that a claim or adjudication is
made that Lender or its agent, including Servicer, has acted unreasonably or
unreasonably delayed acting in any case where by law or under any Loan Document,
Lender or such agent, as the case may be, has an obligation to act reasonably or
promptly, each Borrower agrees that neither Lender nor its agents, including
Servicer, shall be liable for any monetary damages, and such Borrower's sole
remedy shall be to commence an action seeking injunctive relief or declaratory
judgment. Any action or proceeding to determines whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment. Each
Borrower specifically waives any claim against Lender and its agents, including
Servicer, with respect to actions taken by Lender or its agents on any
Borrower's behalf pursuant to Section 9.2.5.
11.16 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents.
11.17 Offsets, Counterclaims and Defenses.
Each Borrower hereby waives the right to assert a counterclaim, other than
a compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents, including Servicer. Any assignee of Lender's interest in
and to the Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses that are unrelated to the Loan Documents which any
Borrower may otherwise have against any assignor of such documents, and no such
unrelated offset, counterclaim or defense shall be interposed or asserted by any
Borrower in any action or proceeding brought by any such assignee upon such
documents, and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by each Borrower.
11.18 Publicity. All news releases, publicity or advertising by any
Borrower or its Affiliates through any media intended to mach the general
public, which refers to the Loan Documents, the Loan, Lender, any member of the
UBS Group, a Loan purchaser, the Servicer or the trustee in a Secondary Market
Transaction, shall be subject to the prior written approval of Lender.
11.19 No Usury. Borrowers and Lender intend at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 11.19 shall
control every other agreement in the Loan Documents. If the applicable
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law (state or federal) is ever judicially interpreted so as to render usurious
any amount called for under the Note or any other Loan Document, or contracted
for, charged, taken, reserved or received with respect to the Debt, or if
Lender's exercise of the option to accelerate the maturity of the Loan or any
prepayment by Borrower results in Borrower having paid any interest in excess of
that permitted by applicable law, then it is Borrower's and Lender's express
intent that all excess amounts theretofore collected by Lender shall be credited
against the unpaid Principal and all other Debt (or, if the Debt has been or
would thereby be paid in full, refunded to the Borrower, and the provisions of
the Loan Documents immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for thereunder. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Debt does not
exceed the maximum lawful rate from time to time in effect and applicable to the
Debt for so long as the Debt is outstanding. Notwithstanding anything to the
contrary contained in any Loan Document, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
11.20 Conflict; Construction of Documents. In the event of any conflict
between the provisions of this Agreement and any of the other Loan Documents,
the provisions of this Agreement shall control. The parties hereto acknowledge
that each is represented by separate counsel in connection with the negotiation
and drafting of the Loan Documents and that the Loan Documents shall not be
subject to the principle of construing their meaning against the party that
drafted them.
11.21 No Joint Venture or Partnership; No Third Party Beneficiaries. (a)
Borrower and Lender intend that the relationships created hereunder and under
the other Loan Documents be solely that of borrower and lender. Nothing herein
or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Properties other than that of mortgagee,
beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
11.22 Yield Maintenance Premium. Each Borrower acknowledges that Lender
intends to enter into a Secondary Market Transaction which may result in various
classes of
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<PAGE>
Securities with different coupon rates. Each Borrower also acknowledges that (i)
the proceeds of any partial prepayment of Principal may be utilized to retire
Securities bearing a coupon rate lower than the Interest Rate, (ii) that
following such prepayment the remaining outstanding Securities may bear a
weighted average coupon rate in excess of the Interest Rate and (iii) that,
absent the Yield Maintenance Premium payable hereunder in connection with such
prepayment, Lender will not receive the benefits intended to be conferred by the
Loan Documents. For these reasons, and to induce Lender to make the Loan,
Borrower expressly waives any right or privilege to prepay the Loan except as
may be specifically permitted herein and agrees that, except as expressly
provided for herein, any prepayments, whether voluntary or involuntary, will be
accompanied by the Yield Maintenance Premium. Such Yield Maintenance Premium
shall be required whether payment is made by Borrower, by a Person on behalf of
Borrower, or by the purchaser at any foreclosure sale, and may be included in
any bid by Lender at such sale. Each Borrower further acknowledges that (A) it
is a knowledgeable real estate developer and/or investor; (B) it fully
understands the effect of the provisions of this Section 11.22, as well the
other provisions of the Loan Documents; (C) the making of the Loan by Lender at
the Applicable Interest Rate and other terms set forth in the Loan Documents are
sufficient consideration for such Borrower's obligation to pay a Yield
Maintenance Premium (if required); and (D) Lender would not make the Loan on the
terms set forth herein without the inclusion of such provisions. Borrower also
acknowledges that the provisions of this Agreement limiting the right of
prepayment and providing for the payment of the Yield Maintenance Premium and
other charges specified herein were independently negotiated and bargained for,
and constitute a specific material part of the consideration given by Borrower
to Lender for the making of the Loan.
11.23 Assignment. The Loan, the Note, the Loan Documents and all Lender's
rights, title, obligations and interests therein may be assigned by Lender at
any time in its sole discretion whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise. Upon such assignment, all
references to Lender in this Loan Agreement and in any Loan Document shall be
deemed to refer to such assignee or successor in interest and such assignee or
successor in interest shall thereafter stand in the place of Lender; provided,
however that the original named Lender herein shall not be released of its
obligations in respect of Advances which Lender is thereafter required to make
hereunder. No Borrower may assign its rights, interests or obligations under
this Loan Agreement or under any of the Loan Documents except as expressly
permitted hereunder.
11.24 Cross-Default; Waiver of Marshalling of Assets.
(a) Borrower acknowledges that Lender has made the Loan to Borrower
upon the security of its collective interest in the Collateral Pool and in
reliance upon Lender's determination that the aggregate of the Collateral Pool
taken together being of greater value as collateral security than the sum of
each Collateral Property taken separately. Borrower agrees that the Mortgages
are and will be cross-defaulted with each other so that (i) an Event of Default
under any of the Mortgages shall constitute an Event of Default under each of
the other Mortgages which secure the Note; (ii) an Event of Default under the
Note or this Loan Agreement shall constitute an Event of Default under each
Mortgage; and (iii) each Mortgage shall constitute security for the Note as if a
single blanket lien were placed on all of the Collateral Properties as security
for the Note.
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<PAGE>
(b) To the fullest extent permitted by law, each Borrower, for
itself and its successors and assigns, waives all rights to a marshalling of the
assets of each Borrower, each Borrower's partners and others with interests in
any Borrower, and of the Collateral Properties, or to a sale in inverse order of
alienation in the event of foreclosure of all or any of the Mortgages, and
agrees not to assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale
of the Collateral Properties for the collection of the Debt without any prior or
different resort for collection or of the right of Lender to the payment of the
Debt out of the net proceeds of the Collateral Properties in preference to every
other claimant whatsoever. In addition, Borrower, for itself and its successors
and assigns, waives in the event of foreclosure of any or all of the Mortgages,
any equitable right otherwise available to Borrower which would require the
separate sale of the Collateral Properties or require Lender to exhaust its
remedies against any Collateral Property or any combination of the Collateral
Properties before proceeding against any other Collateral Property or
combination of Collateral Properties; and further in the event of such
foreclosure Borrower does hereby expressly consent to and authorize, at the
option of Lender, the foreclosure and sale either separately or together of any
combination of the Collateral Properties.
11.25 Joint and Several Liability. Each Borrower shall be jointly and
severally liable with each other Borrower for payment of all amounts including
those that are not specific to any particular Collateral Property or Borrower
that become due under this Agreement, the Note or the other Loan Documents, such
as payment of all fees and expenses pursuant to Section 6.15.
[SIGNATURE PAGES IMMEDIATELY FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
DOWNTOWN PLAZA LLC,
a Delaware limited liability company
By: Westfield America Limited Partnership,
a Delaware limited partnership,
its sole member
By: Westfield America, Inc.
a Missouri corporation,
its general partner
By: /s/ Irv Hepner
---------------------------------------
Name: IRV HEPNER
Title: SECRETARY
EASTLAND SHOPPING CENTER LLC,
a Delaware limited liability company
By: Eastland Manager LLC,
a Delaware limited liability company,
its managing member
By: Westfield America Limited Partnership,
a Delaware limited partnership,
its sole member
By: Westfield America, Inc.,
a Missouri corporation,
its general partner
By: /s/ Irv Hepner
--------------------------------
Name: IRV HEPNER
Title: SECRETARY
[Signatures Continue on Next Page]
<PAGE>
WESTLAND SOUTH SHORE MALL L.P.,
a California limited partnership
By: South Shore Mall LLC,
a Delaware limited liability company,
its general partner
By: South Shore Manager LLC,
a Delaware limited liability company,
its managing member
By: Westfield America Limited
Partnership, a Delaware limited
partnership, its sole member
By: Westfield America, Inc.,
a Missouri corporation,
its general partner
By: /s/ Irv Hepner
-------------------------------------
Name: IRV HEPNER
Title: SECRETARY
<PAGE>
LENDER:
UBS PRINCIPAL FINANCE LLC,
a Delaware limited liability company
By: /s/ John Cutting
-------------------------------------------
Name: John Cutting
Title: Executive Director
By: /s/ Brian Harris
-------------------------------------------
Name: Brian Harris
Title: Executive Director
<PAGE>
Exhibit A
Form of Notice To Tenants
[BORROWER'S NAME AND ADDRESS]
_____________, 2000
[Name and Address of Tenant]
Re: Lease of Store at
(the "Center")
Ladies and Gentlemen:
The undersigned is the Owner of the Center and the landlord under
your lease of a store at the Center (your "Lease").
By this letter, you are hereby directed (1) to make all checks, in
payment of rent and other sums due to the landlord under your Lease, payable to
the order of [applicable Agent], and (2) to deliver such checks or otherwise
make such payments to the following address:
[Name and Address of Agent]
The foregoing direction is irrevocable, except with the written
consent of our mortgagee, UBS Principal Finance LLC (or its successors or
assigns), notwithstanding any future contrary request or direction from the
undersigned or any other person (other than UBS Principal Finance LLC (or its
successors or assigns)). Thank you for your cooperation.
Very truly yours,
[BORROWER]
By: ________________________________________
Name: _______________________________
Title: ______________________________
A - 1
<PAGE>
Exhibit B
Form of Subordination, Nondisturbance and Attornment Agreement
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Non-Disturbance and Attornment Agreement (this Agreement), made as of
___________, 199_, by and between , a limited
liability company organized under the laws of Delaware and having an address at
(the Lender) and _________________, a
_________________, having an address at _______________________ (the Tenant);
WITNESSETH:
WHEREAS, by the lease (as the same may be amended from time to time, the
Lease) dated _________, 19__, between _______________ (the Landlord), as
landlord, and Tenant, as tenant, the Landlord leased to Tenant a certain portion
of the building known as and located at __________________, being more fully
described in said Lease (the Premises);
WHEREAS, the Landlord has executed and delivered to the Lender a mortgage
note in the original principal amount of ____________ ($____________) Dollars,
which note is secured by, among other things, a mortgage or deed of trust (which
mortgage or deed of trust, and all amendments, renewals, increases,
modifications, replacements, substitutions, extensions, spreaders, restatements
and consolidations thereof and all re-advances thereunder and additions thereto
is referred to as the Mortgage) encumbering certain land being more particularly
described in Schedule A attached hereto (the Land), together with the buildings
and other improvements located or to be located thereon (such buildings and
other improvements and the Land, collectively, the Mortgaged Property)
including, without limitation, the Premises.
NOW, THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
1. The Lease, as the same may hereafter be modified, amended or
extended, is and shall be subject and subordinate in each and every respect to
the Mortgage, to all renewals,
B - 1
<PAGE>
modifications, replacements and extensions thereof, to all terms, conditions and
provisions thereof and to each and every advance hertofore made or hereafter
made under the Mortgage.
2. The Lender agrees that if any action or proceeding is commenced
by the Lender for the foreclosure of the Mortgage or the sale of the Mortgaged
Property, the Tenant shall not be named as a party therein (unless required by
law), and the sale of the Mortgaged Property in any such action or proceeding
and the exercise by the Lender of any of its other rights under the Mortgage, or
under the note secured by the Mortgage, shall be made subject to all rights of
the Tenant under the Lease, provided that at the time of the commencement of any
such action or proceeding and at the time of any such sale or exercise of any
such other rights, the Tenant shall not be in default under any of the terms,
covenants or conditions of the Lease or of this Agreement on the Tenant's part
to be observed or performed.
3. The Tenant shall concurrently give the Lender copies of all
notices and other communications given by the Tenant to the Landlord relating to
(i) defaults or alleged defaults on the part of the Landlord or the Tenant under
the Lease, (ii) any violations of any ordinances, statues, laws, rules, codes
regulations or requirements of any governmental agency, and (iii) any assignment
or subletting of all or any portion of the Premises.
4. In the event of any act or omission by the Landlord which would
give the Tenant the right, either immediately or after the lapse of a period of
time, to terminate the Lease, or to claim a partial or total eviction, the
Tenant will not exercise any such right (i) until it has sent written notice of
such act or omission to the Lender as provided herein, and (ii) unless the
Lender shall have failed within sixty (60) days after receipt of such notice to
cure such default or, if such default is not reasonably susceptible of cure
within such sixty (60) days, the Lender shall not have commenced the cure of
such default within sixty (60) days of receipt of such notice and thereafter
diligently pursued such action.
5. In the event that the interest of the Landlord is transferred by
reason of, or assigned in lieu of foreclosure or other proceedings for
enforcement of the Mortgage, then, subject to the provisions of this Agreement,
the Lease shall nevertheless continue in full force and effect and, upon the
written request of the Lender, the Tenant shall attorn to the Lender and shall
recognize the Lender as its landlord. Although the foregoing provision shall be
self-operative, in order to confirm such attornment, upon the request of the
Lender, the Tenant shall execute and deliver to the Lender (i) an agreement of
attornment in form and content reasonably satisfactory to the Lender, at the
Tenant's sole cost and expense, confirming the foregoing attornment and agreeing
to perform all the terms, covenants and conditions of the Lease on the Tenant's
part to be performed for the benefit of such Lender with the same force and
effect as if such Lender were the Landlord originally named in this Lease or
(ii) a new lease with the
B - 2
<PAGE>
Lender, as landlord, for the remaining term of the Lease and otherwise on the
same terms and conditions and with the same options, if any, then remaining.
Nothing herein contained shall be construed however, to obligate the Lender to
cure any default by the Landlord under the Lease occurring prior to any date on
which the Lender shall succeed to the rights of the Landlord, it being expressly
agreed that under no circumstances shall the Lender be obligated to remedy any
such default.
6. If the Lender shall succeed to the interest of the Landlord, the
Lender shall have no personal liability as successor to the Landlord, and the
Tenant shall look only to the estate and property of the Lender in the Mortgaged
Property or the proceeds thereof for the satisfaction of the Tenant's remedies
for the collection of a judgement (or other judicial process) requiring the
payment or money in the event of any default by the Lender as landlord under the
Lease. In addition, the Lender as holder of the Mortgage or as landlord under
the Lease if it succeeds to that position, shall in no event (i) be liable to
the Tenant for any act or omission of any prior landlord, (ii) be subject to any
offset or defense which the Tenant might have against any prior landlord, (iii)
be liable to the Tenant for any liability or obligation of any prior landlord
occurring prior to the date that the Lender or any subsequent owner acquires
title to the Premises, or (iv) be liable to the Tenant for any security or other
deposits given to secure the performance of the Tenant's obligations under the
Lease, except to the extent that the Lender shall have acknowledged actual
receipt of such security or other deposits in writing. No other property or
assets of the Lender shall be subject to levy, execution or other enforcement
procedure for the satisfaction of the Tenant's remedies under or with respect to
the Lease, the relationship of the landlord and the tenant thereunder or the
Tenant's use or occupancy of the Premises.
7. All notices and other communications hereunder shall be sent by
certified or registered mail (postage prepaid, return receipt requested) to the
Lender at the address set forth above, Attention: _________, or to the Tenant at
the address set forth in the Lease, or to such other address or person as may be
specified in a notice sent in accordance with the provisions of this Section 7,
and shall be deemed given when received at the addresses specified above.
8. No prepayment of rent or additional rent due under the Lease of
more than one month in advance shall be binding upon the Lender, as holder of
the Mortgage or as landlord under the Lease if the Lender succeeds to that
position, unless consented to by the Lender, and from and after the date hereof,
no amendment, modification, surrender or cancellation of the Lease shall be
binding upon the Lender, as holder of the Mortgage or as landlord under the
Lease if the Lender succeeds to that position, unless such amendment,
modification, surrender or cancellation is done in compliance with the terms of
the Mortgage.
B - 3
<PAGE>
9. This Agreement shall apply to, bind and inure to the benefit of
the parties hereto and their respective successors and assigns. As used herein,
the term Tenant shall mean and include the present tenant under the Lease, any
permitted subtenant under the Lease, any permitted assignee of the Lease and any
successor of any of them. The term Lender as used herein shall include the
holder of the Mortgage, the successors and assigns of the Lender, and any
person, party or entity which shall become the owner of the Mortgaged Property
by reason of a foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or other proceedings for enforcement of the
Mortgage or otherwise. The term Landlord as used herein shall mean and include
the present landlord under the Lease and such landlord's predecessors and
successors in interest under the Lease.
10. This Agreement may not be modified in any manner or terminated
except by an instrument in writing executed by the parties hereto.
[11. This Agreement satisfies the condition to the subordination of
the Lease to the Mortgage set forth in Section _____ of the Lease with respect
to the execution and delivery of ____.]
12. This Agreement shall be governed by and construed in accordance
with the laws of the State of ____________.
13. Both the Tenant and the Lender hereby irrevocably waive all
right to trial by jury in any action, proceeding or counterclaim arising out of
or relating to the Lease or this Agreement.
B - 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
By:
--------------------------------
Name:
Title:
[TENANT]
By:
--------------------------------
Name:
Title:
B - 5
<PAGE>
EXHIBIT C-1
Form of Manager Consent and Subordination
(Manager other than Westfield)
CONSENT AND SUBORDINATION OF MANAGER
----------
UBS Principal Finance
299 Park Avenue
New York, NY 10171
Ladies and Gentlemen:
Reference is made to (i) that certain Management Agreement (the
"Management Agreement"), dated as of _______________, between
______________________ (the "Borrower") and the undersigned (the "Manager") with
respect to the property known as __________________ and located in the City of
_____________ County, _________ (the "Property"), and (ii) that certain Loan
Agreement (the "Loan Agreement") dated as of ______________, 199_, between the
Borrower and (together with its successors and assigns, the
"Lender"). Any capitalized terms used herein but not defined herein shall have
the same meanings as are ascribed to them in the Loan Agreement.
The Manager acknowledges and understands that delivery of this letter to
you is a condition to the Lender making a certain loan to the Borrower pursuant
to the Loan Agreement in the original principal amount of up to $___________
(the "Loan").
The Borrower and the Manager hereby agree as follows:
1. The Management Agreement is and shall be subject and subordinate in all
respects to (i) the Mortgage (and to the lien of the Mortgage), (ii) the Loan
Documents, and (iii) any and all modifications, amendments, renewals and/or
substitutions of the Mortgage and/or any of the other Loan Documents. This
paragraph 1 shall be self-operative and no further instrument of
C-1-1
<PAGE>
subordination shall be required. If requested, however, the Borrower and/or the
Manager shall execute and deliver such further instruments as the Lender may
deem reasonably necessary to effectuate this subordination.
2. If there shall have occurred and be continuing an Event of Default and
the Lender shall have obtained (i) title to the Property (or any portion
thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise and/or (ii) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee, the Manager
shall, if and to the extent requested in writing by the Lender, continue
performance under the Management Agreement in accordance with the terms thereof
so long as the Manager is paid compensation thereafter accruing under the
Management Agreement. The Borrower and the Manager understand, however, that
nothing contained herein, in the Mortgage or in any of the other Loan Documents
shall be construed to obligate the Lender to perform or discharge any of the
Borrower's obligations, duties or liabilities under the Management Agreement.
3. Upon the occurrence of any default by the Borrower under the terms of
the Management Agreement, the Manager shall, promptly upon becoming aware
thereof, provide the Lender with notice in writing thereof, and after receipt of
said notice, the Lender shall have the same time period within which to cure
said default as the Borrower has under the Management Agreement although the
Borrower and the Manager understand that the Lender shall not have any
obligation to do so. Notwithstanding the foregoing, the failure by the Manager
to notify the Lender of a default under the Management Agreement shall not be
deemed to constitute a waiver by the Manager of such default. Furthermore, the
Borrower and the Manager agree that the Lender may terminate the Management
Agreement (i) in accordance with Section of the Loan Agreement or in the event
of the Manager's gross negligence, malfeasance or willful misconduct(1), or (ii)
by giving five days' notice to the Manager upon the Lender (or a successor
owner, as the case may be) obtaining (A) title to the Property (or any portion
thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise, and/or (B) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee. If the Lender
elects to terminate the Management Agreement in accordance with this Paragraph
3, the Borrower and the Manager understand and agree that the Manager shall look
solely to the Borrower for any and all fees, charges or other sums payable to
the Manager under the Management Agreement. If the Management Agreement shall be
so terminated by the Lender, the Manager agrees to cooperate with the Lender to
ensure a smooth transition to the new property manager.
- ----------
(1) The Management Agreement must permit the Borrower to terminate the
Management Agreement in the event of the Manager's gross negligence,
malfeasance or willful misconduct.
C-1-2
<PAGE>
4. The Manager hereby confirms that (i) the term of the Management
Agreement shall expire on or before the Anticipated Prepayment Date, and (ii) if
the Debt has not been repaid in full on or before the Anticipated Prepayment
Date, the term of the Management Agreement may only be renewed or extended
beyond the Anticipated Prepayment Date with the prior written approval of the
Servicer.(2)
5. This letter shall inure to the benefit of the Lender and its successors
and assigns, including the trustee in a Secondary Market Transaction. In the
event of any inconsistency or conflict with the provisions of this letter and
the provisions of the Management Agreement, the provisions of this letter shall
control.
6. The Manager agrees that it shall not change, amend, modify or terminate
the Management Agreement without the Lender's prior written approval in each
instance, which approval may be given or denied by the Lender in its sole
discretion. If the Manager does so amend, modify or terminate the Management
Agreement without the Lender's prior written approval, such amendment,
modification or termination shall be void ab initio.
7. This letter shall be governed by, and construed in accordance with the
law of the State of New York.
8. Without limiting the generality of any other provisions contained
herein or in the other Loan Documents, no failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of the Lender provided
herein and in the other Loan Documents are cumulative and are in addition to,
and are not exclusive of, any rights or remedies provided by law or in equity.
9. The Manager represents and warrants to the Lender that as of the date
hereof (i) the Management Agreement is in full force and effect and has not been
amended, modified, assigned, terminated or supplemented, (ii) the Manager is not
in default under the provisions of the Management Agreement and there is no
condition which, with the giving of notice and/or the lapse of time, would
constitute such a default, and (iii) to the best of Manager's knowledge, the
Borrower is not in default under the provisions of the Management Agreement and
there is no condition which, with the giving of notice and/or the lapse of time,
would constitute such a default.
- ----------
(2) The Management Agreement must expire on or before the Anticipated
Prepayment Date and may not be renewed or extended without the prior
written approval of the Servicer.
C-1-3
<PAGE>
10. This letter may not be amended, modified, terminated or supplemented
without the written approval of each of the Manager, the Borrower and the
Lender.
Very truly yours,
[MANAGER]
By: ________________________________
Name:
Title:
AGREED AND CONSENTED
TO AS OF _______________, 199_
[BORROWER]
By: ______________________, its _____________
By: ___________________________
Name:
Title:
C-1-4
<PAGE>
Exhibit C-2
MANAGER'S CONSENT AND SUBORDINATION
OF MANAGEMENT AGREEMENT
THIS MANAGER'S CONSENT AND SUBORDINATION OF MANAGEMENT AGREEMENT
(this "Agreement"), dated as of , is executed by the undersigned,
WESTFIELD MANAGEMENT COMPANY, a Delaware general partnership ("Manager"), as an
inducement to UBS Principal Finance LLC, a Delaware limited liability company
(together with its successors and assigns, the "Lender"), to make a loan to
, a Delaware limited liability company ("Borrower") in a
principal amount not to exceed $16,840,000.00 (the "Loan") pursuant to that
certain Loan Agreement dated as of the date hereof (the "Loan Agreement"), in
connection with various properties, including the property owned by
(the "Property").
1. Definitions. All capitalized terms not defined herein shall have
the meanings ascribed thereto in the Loan Agreement.
2. Manager's Representations. Manager warrants and represents to
Lender, as of the date hereof, that the following are true and correct:
(a) That Manager has agreed to act as manager of the Property
pursuant to that certain management agreement, between Borrower and Manager,
which agreement is described on Exhibit A attached hereto and made a part
hereof, and has not been amended, modified or supplemented except as set forth
on said Exhibit A (the "Management Agreement").
(b) That the entire agreement between Manager and Borrower for the
management of the Property is evidenced by the Management Agreement.
(c) That the Management Agreement constitutes the valid and binding
agreement of Manager, is enforceable in accordance with its terms, and Manager
has full authority under all state or local laws and regulations, to perform all
of its obligations under said Management Agreement.
(d) That neither Borrower nor Manager is in default in the
performance of any of its obligations under the Management Agreement.
(e) That Manager has received and reviewed a copy of the Loan
Agreement and the Cash Management Agreement.
3. Manager's Agreements. Manager hereby consents to and agrees to
each and every one of the following covenants and agreements for the benefit of
Lender and as a condition to Lender's making the Loan:
(a) No Termination of Management Agreement. Manager shall not
terminate the Management Agreement without first obtaining Lender's written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed.
C-2-1
<PAGE>
Notwithstanding the foregoing, Manager shall have the right to terminate the
Management Agreement upon default by Borrower with respect to non-payment of the
management fee due thereunder by giving Lender thirty (30) days' prior written
notice of such termination. In the event Lender shall cure such non-payment
default in the aforesaid thirty (30)-day period, then any such termination
notice shall be of no further force or effect.
(b) Subordination of Management Agreement to Lien of Mortgages. Any
and all liens, rights and interests (whether choate or inchoate and including,
without limitation, all mechanics' and materialmen's liens under applicable law)
owned, claimed or held, or to be owned, claimed or held, by Manager in and to
the Property, other than rights of Manager to receive payment of the basic
management fee and all other amounts payable under the Management Agreement for
periods prior to the termination thereof, are and shall be, and are hereby made,
in all respects subordinate and inferior to the liens and security interests
created or to be created for the benefit of Lender, its successors and assigns,
and securing the repayment of the Debt and including, without limitation, those
created under and by virtue of the Mortgage.
(c) Lender's Right to Terminate. Upon the occurrence of a Cash
Management Event, Manager shall, at the request of Lender, continue performance,
subject to Paragraph 3(d) hereof, on behalf of Lender, of all of Manager's
obligations under the terms of the Management Agreement with respect to the
Property, provided that Lender gives Manager the notice provided for in
Paragraph 3(j) hereof and Lender (or Borrower) performs or causes to be
performed the obligations of Borrower to Manager under the Management Agreement
accruing or arising from and after, and with respect to the period commencing
upon, the effective date of such notice. Notwithstanding anything contained in
the Management Agreement to the contrary, Lender, or Borrower at Lender's
direction pursuant to the Loan Documents, shall have the right to terminate the
Management Agreement upon, or at any time after, Lender or any third party
acquires the Property, whether by foreclosure, deed-in-lieu of foreclosure or
otherwise, by giving Manager thirty (30) days' prior written notice of such
termination, in which event Manager shall resign as manager of the Property
effective upon the end of such thirty (30)-day period. Manager agrees not to
look to Lender for payment of any accrued but unpaid fees relating to the
Property accruing from and after the effective date of such termination.
(d) Cooperation with Management Consultant. If, pursuant to the Loan
Agreement, Borrower retains a Management Consultant, Manager shall cooperate
with the Management Consultant to enable the Management Consultant to perform
its responsibilities as described in the Loan Agreement.
(e) No Amendments to Management Agreement. Manager will not amend or
modify the Management Agreement in any manner which would (i) materially and
adversely affect the management, operation or value of the Property, or (ii)
increase the base management fee payable thereunder, without the prior written
consent of Lender which consent shall not be unreasonably withheld, delayed or
conditioned. In the event Manager fails to secure such approval, the Management
Agreement shall, for the
C-2-2
<PAGE>
purposes of Manager's obligations to Lender pursuant to this Agreement,
including Manager's obligation aforesaid to continue performance thereunder for
Lender's benefit pursuant to the terms of this Agreement, be deemed not to have
been modified by such amendment.
(f) Delivery of Rent Roll and Service Contracts. Within twenty (20)
Business Days after Lender's request therefor, but not more than once in any
calendar quarter, and only to the extent not furnished by Borrower. Manager
shall furnish to Lender a current rent roll of all Tenants of the Property,
including a list of which Tenants are in default under their respective leases,
and a schedule of all other entities with whom Manager has entered into leases,
contracts or other agreements relating to the Property, together with copies of
all such leases, contracts or agreements.
(g) Further Assurances. Manager further agrees, without cost to
Manager, to (i) execute such affidavits and certificates as Lender shall
reasonably require to further evidence the agreements herein contained, (ii) on
request from Lender, and only to the extent not furnished by Borrower, furnish
Lender with copies of such information as Borrower is entitled to receive under
the Manager Agreement, and (iii) at reasonable times, and upon reasonable
advance notice, cooperate with Lender's representative or agent in any
inspection of the Property.
(h) Assignment of Rents and Leases. Manager acknowledges that, in
connection with the Loan, Borrower has executed and delivered to Lender an
Assignment of Leases and Rents, dated as of the date hereof, assigning to
Lender, among other things, all of Borrower's right, title and interest in and
to all of the Leases, including any of Borrower's rights in the security
deposits thereunder (to the extent permitted by applicable law). Manager hereby
agrees that as of the date hereof, Manager shall henceforth deliver to the
Lockbox Account, and cause all Tenants under Leases to deliver to the Lockbox
Account, for application in accordance with the terms and conditions of
the Loan Agreement, the Cash Management Agreement and the other Loan Documents,
all Rents and other proceeds received after the date hereof from any and all
Tenants or other parties occupying or using any portion of the Property.
(i) No Joint Venture. Lender has no obligation to Manager with
respect to the Debt and Manager shall not be a third party beneficiary with
respect to any of Lender's obligations to Borrower set forth in the Loan
Documents. The relationship of Lender to Borrower is one of a creditor to a
debtor, and Lender is not a joint venturer or partner of Borrower.
(j) Lender Not Obligated Under Management Agreement. Manager further
agrees that, except as hereinafter set forth, nothing herein shall impose upon
Lender any obligation for payment or performance in favor of Manager. In the
event that Lender notifies Manager in writing of the occurrence of a Cash
Management Event and that Lender has elected to assert the rights of Borrower
under the Management Agreement, Lender shall pay Manager the sums due Manager
under the terms of the Management Agreement (subject to and in accordance with
the terms of the Management Agreement and this Agreement) for the period
commencing on the effective date of
C-2-3
<PAGE>
Lender's notice to Manager and ending on the expiration date or earlier
termination of the Management Agreement.
(k) Lender's Reliance on Representations. Manager has executed this
Agreement for the purpose of inducing the Lender to make the Loan in accordance
with the Loan Agreement and with full knowledge that Lender shall rely upon the
representations, warranties and agreements herein contained when making the
Loan, and that but for this instrument and the representations, warranties and
agreements herein contained, the Lender would not take such actions.
(l) Governed by Loan Documents. Manager agrees that until such time
as the Debt has been repaid in full, the terms and provisions of this Agreement
and the Note, the Loan Agreement and the other Loan Documents shall be superior
to the terms and provisions of the Management Agreement with respect to the
payment of any management fees thereunder (other than with respect to payment of
management fees; and other amounts payable under the Management Agreement for
any periods prior to the termination thereof) and termination of the Management
Agreement, and to the extent there are any inconsistencies between the
Management Agreement and this Agreement and the Loan Documents with respect to
such terms and provisions, the terms, provisions and conditions in this
Agreement and the Loan Documents shall govern in all respects.
4. Borrower Consent. Borrower has joined herein to evidence its
consent to all the agreements of Manager contained in this Agreement.
5. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
6. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
collectively constitute but one and the same instrument.
7. Assignment. Lender shall have the right to transfer, sell and
assign its interest in this Agreement to any Person. All references to "Lender"
hereunder shall be deemed to include the successors and assigns of Lender.
8. Notices. Any notice, election, request, communication or demand
which is required or permitted to be given or served hereunder shall be in
writing and shall be given or served by hand delivery against receipt, by any
nationally recognized overnight courier service providing evidence of the date
of delivery or by certified mail return receipt requested, postage prepaid,
addressed to
C-2-4
<PAGE>
If to Lender: UBS Principal Finance LLC
299 Park Avenue
New York, New York 10171
Attention: Douglas Renfield-Miller
Facsimile No. (212) 821-5720
with a copy to: Cadwalader, Wickersham & Taft
227 West Trade Street, Suite 2400
Charlotte, North Carolina 28202
Attention: James P. Carroll, Esq.
Facsimile No. (704) 348-5200
If to Borrower: 11601 Wilshire Boulevard, Suite 1200
Los Angeles, California 90025-1748
Attention: Mark Stefanek, Chief
Financial Officer
Facsimile No. (310) 478-3987
With a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills, Esq.
Facsimile No. (212) 909-6836
Any such notice or demand given hereunder shall be effective upon delivery or
three (3) days after mailing aforesaid. All notices, elections, requests,
communications and demands required or permitted hereunder shall be in the
English language.
9. Non-Recourse. Anything contained in this Agreement to the
contrary notwithstanding (except as provided below), Lender's recourse with
respect to any claims arising under or in connection with this Agreement shall
be limited solely to the interest of Manager in the Management Agreement, and
none of (i) Manager or any of its Affiliates, (ii) any Persons who presently or
in the future own any direct ownership interest in Manager or any successor of
Manager (each, a "Direct Beneficial Owner") or any affiliate thereof, (iii) any
Person owning, directly or indirectly, any legal or beneficial interest in
Manager or any Direct Beneficial Owner of any Affiliate thereof, or (iv) any
partner, principal, officer, controlling person, beneficiary, trustee, advisor,
shareholder, employee, agent, nominee, Affiliate or director of any Person
described in clauses (i) through (iii) above shall be personally liable for the
performance of any obligation thereunder or the payment of any amount due
hereunder; provided, however, that the foregoing limitation on the personal
liability of the Persons described in clauses (i) through (iv) above shall not
impair the validity of this Agreement or the right of Lender to enforce any of
its rights or remedies hereunder or under any of the other Loan Documents upon
the occurrence of a Cash Management Event as provided in this Agreement. Nothing
contained herein shall release, impair or otherwise affect any right, remedy or
recourse Lender may have against Manager or Borrower with respect to (a) any
fraud or bad faith or any material and intentional misrepresentation by Manager
or its Affiliates made in connection with the transactions contemplated hereby,
(b) bad
C-2-5
<PAGE>
faith waste by Manager, (c) any misapplication of Rents following and during the
continuance of a Cash Management Event, or (d) any misapplication of proceeds of
any insurance policies required to be maintained by Borrower or Manager.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
C-2-6
<PAGE>
Schedule 1
Allocated Loan Amounts
DOWNTOWN PLAZA: $85,861,500.00
EASTLAND PLAZA: $41,486,500.00
SOUTH SHORE MALL: $88,432,000.00
Schedule 1 - 1
<PAGE>
Schedule 2
Monthly Rollover Deposit
MONTHLY ROLLOVER DEPOSIT
SHALL BE AS SET FORTH IN
SECTION 4.5.1 OF THE
LOAN AGREEMENT
Schedule 2 - 1
<PAGE>
Schedule 3
Exceptions To Borrower Representations
NONE
Schedule 3 - 1
<PAGE>
Schedule 4
Contracts
EXHIBIT BEGINS ON NEXT PAGE
Schedule 4 - 1
<PAGE>
Downtown Plaza
Contracts
SERVICE: PROVIDER: MONTHLY COST: TERM. DATE:
HVAC Linford AirCon $ 3,268 Montly*
Elev. /Escal. Montgomery KONE $ 22,000 Sept. 2000
Fire System Simplex $ 620 Dec. 2000
Janitorial ABM $ 62,000 Monthly**
Security P.S.C. $ 77,181 Jan. 2001
Landscaping Environmental Care $ 6,266 Dec. 2000
Fountains Clear Advantage $ 150 Jan. 2000
Chiller American Chiller $ 1,263 Mar. 2000
Pest Control Cal-X $ 695 Dec. 2000
Trash Removal Waste Management $ 6,400 Monthly ***
* AirCon has a new contract. We are awaiting their signed copies.
** A new, supplies included, contract has been signed by ABM and has
been sent to our r
*** New contract is in progress
<PAGE>
Westfield
[ILLEGIBLE]
SERVICE CONTRACT LOG
Center Name: EASTLAND SHOPPING CENTER
1999
<TABLE>
<CAPTION>
====================================================================================================================================
Contract # Contractor Type of Contract Commencement Termination Contract
Date Date Amount
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
98-01 Professional Security Consultants Sercurity Services (2nd year) 01/08/1999 03/07/2000 $ 103,524.24
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
99-01 Reliable Lighting Serives Pkg Lot Canopy Lighting Min. 04/01/1999 03/31/2000 $ 2,400.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-02 SC Property Services Inc. Parking Lot Sweeping 07/01/1999 6/30/2000 $ 40,980.00
- ------------------------------------------------------------------------------------------------------------------------------------
SC Property Services Inc. Parking Lot Sweeping (2nd yr) 07/01/2000 06/30/2001 $ 41,799.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-03 Centerscapes, Inc. Landscaping 07/01/1999 6/30/2000 $ 48,200.00
- ------------------------------------------------------------------------------------------------------------------------------------
Centerscapes, Inc. Landscaping (2nd yr) 07/01/2000 6/30/2001 $ 48,600.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-04 Oscoo Landscape, Co. Slab & Sidewalk Repair 06/25/1999 07/26/1999 $ 2,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-05 Pacific Powers Asphalt Repair 07/01/1999 07/30/1999 $ 30,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-06 Reliable Lighting Coke Machines Electrical 06/10/1999 08/30/1999 $ 4,675.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-07 Arrow Pkg. Lot Service Stripping 08/10/1999 08/30/1999 $ 5,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-08 Osce Landscape Tree Pruning 09/07/1999 09/30/99 $ 3,500.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-09 Reliable Lighting Underground Electrical Work 10/13/1999 11/31/1999 $ 6,200.00
- ------------------------------------------------------------------------------------------------------------------------------------
99-10 Reliable Lighting Tower Lights 10/13/1999 01/06/2000 $ 3,700.00
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ILLEGIBLE]
<PAGE>
SERVICE CONTRACT LOG
WESTFILED SHOPPING TOWN
SOUTH SHORE
11/23/1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Commencement Term
Contract # Contractor Type of Contract Date Date
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
99-01 Cleaning Systems Management Corp. Cleaning Maintenance 11/23/1998 11/20/2001
- ------------------------------------------------------------------------------------------------------------------------
99-02 Cleaning Systems Management Corp. Mechanical Maintenance 11/23/1999 11/20/2001
- ------------------------------------------------------------------------------------------------------------------------
99-11 Team Construction Snow Removal 11/15/1999 04/15/2000
- ------------------------------------------------------------------------------------------------------------------------
99-12 Team Construction Parking Lot Sweeping 12/01/1999 11/30/2000
- ------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] Elite Protection [ILLEGIBLE] Corp. Services Security Services 3/31/1997 Month to Month
- ------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] Chem-Aqua Condenser Water treat 08/07/1999 05/01/2000
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Annual
Contract # Contractor Amount Comments
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
99-01 Cleaning Systems Management Corp. $521,754.00
- ------------------------------------------------------------------------------------------------------------------------------
99-02 Cleaning Systems Management Corp. $131,208.00 Cost + 3% $ based on budget
- ------------------------------------------------------------------------------------------------------------------------------
99-11 Team Construction $50,000.00 Actual cost based on snowfall, $ based on budget
- ------------------------------------------------------------------------------------------------------------------------------
99-12 Team Construction $33,000.00
- ------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] Elite Protection [ILLEGIBLE] Corp. Services $400,000.00 New contract signed commencing 2/1/99
- ------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] Chem-Aqua $ 2,250.00
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 5
Ownership for Borrower
EXHIBIT BEGINS ON FOLLOWING PAGE
Schedule 5 - 1
<PAGE>
SCHEDULE 5 continued
Simplified WEA UPREIT Structure at 6/1/99
Westfield Shoppingtown Downtown Plaza
---------------------
WEA
---------------------
| |
1% | | 96.61% LP(1)
GP | |
| | ~~~~~~~~~
| | Investors
| | ~~~~~~~~~
| | |
| | 2.39% |
| | -------------------
| | |
========================
Westfield America
Limited Partnership
("OP")
========================
|
|
|
========================
Downtown Plaza LLC
========================
|
|
~~~~~~~~~~~~~~~~~~~~~~~~
Westfield Shoppingtown
Downtown Plaza
~~~~~~~~~~~~~~~~~~~~~~~~
Legend:
-------------
Corporations:
-------------
=============
Partnership
or LLC
=============
~~~~~~~~~~~~~
Property:
~~~~~~~~~~~~~
(1) Owned by WEA and certain of its wholly owned subsidiaries.
<PAGE>
SCHEDULE 5
Simplified WEA UPREIT Structure
Westfield Shoppingtown Eastland
---------------------
WEA
---------------------
| | |
----------------- | |
Westfield America | 1% | 96.68% LP(1)
G.P., Inc. | GP |
----------------- | | ~~~~~~~~~
| | | Investors
| | | ~~~~~~~~~
| | | |
------ | | 2.32% |
| | | -------------------
| | | |
1% | ==============================
GP | Westfield America
| Limited Partnership
| (The OP)
| ==============================
| 99% | | |
| ----------- | |
| | | 100% |
================== | |
Westfield America ================ |
Investor L.P. Eastland Manager |
================== LLC |
| ================ |
1% | | |
| | 1% |
| | Managing |
----------------- | Member | 98%
| | |
| | |
============================
Eastland Shopping
Center LLC
============================
|
| 100%
|
~~~~~~~~~~~~~~~~~~~~~~~~
Westfield Shoppingtown
Eastland
~~~~~~~~~~~~~~~~~~~~~~~~
Legend:
-------------
Corporations:
-------------
=============
Partnership
or LLC
=============
~~~~~~~~~~~~~
Property:
~~~~~~~~~~~~~
(1) Owned by WEA and/or certain of its wholly owned subsidiaries.
<PAGE>
SCHEDULE 5 Continued
Simplified WEA UPREIT Structure
Westfield Shoppingtown South Shore
---------------------
WEA
---------------------
| | |
----------------- | |
Westfield America | 1% | 96.88% LP(1)
G.P., Inc. | GP |
----------------- | | ~~~~~~~~~
| | | Investors
| | | ~~~~~~~~~
| | | |
------ | | 2.32% |
| | | -------------------
| | | |
1% | ==================================
GP | Westfield America
| Limited Partnership
| (The OP)
| ==================================
| 99% | | | |
| ----------- | | |
| | | 100% | |
================== | | |
Westfield America ================ | |
Investor L.P. South Shore | |
================== Manager LLC | |
| ================ | |
1% | | | |
| | 1% | |
| | Managing | |
----------------- | Member | 98% | 0.1% LP
| | | |
| | | |
============================ |
South Shore Mall |
LLC |
============================ |
| |
| 98.9% LP |
| 1% GP |
============================
Westland South
Shore Mall LP
============================
|
| 100%
|
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Westland Shoppingtown
South Shore
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Legend:
-------------
Corporations:
-------------
=============
Partnership
or LLC
=============
~~~~~~~~~~~~~
Property:
~~~~~~~~~~~~~
(1) Owned by WEA and/or certain of its wholly owned subsidiaries.
<PAGE>
Schedule 6
Rollover Release Amount Schedule
Schedule 6 - 1
<PAGE>
SCHEDULE 6
Collateral Gross Mall Reserve Yearly Total Average PSF release
Property Square footage Rollover amount
Per Year
Eastland 514,000 $0.75 385,500.00 50,382 $7.65
South Shore 285,851 $0.75 214,388.25 24,076 $8.90
Downtown 687,847 $0.75 515,885.25 54,115 $9.53
<PAGE>
Exhibit 10.32
- --------------------------------------------------------------------------------
LOAN AGREEMENT
Dated as of December 9, 1999
Between
ANNAPOLIS SHOPPINGTOWN LLC,
as Borrower
ANNAPOLIS MALL LIMITED PARTNERSHIP
and
ANNAPOLIS LAND LLC,
as Owner
And
UBS PRINCIPAL FINANCE LLC,
as Lender
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
I DEFINITIONS: PRINCIPLES OF CONSTRUCTION.................................1
1.1 Specific Definitions............................................1
1.2 Index of Other Definitions.....................................20
1.3 Principles of Construction.....................................22
II THE LOAN...............................................................22
2.1 The Loan.......................................................22
2.1.1 Commitment..............................................22
2.1.2 Note....................................................22
2.1.3 Use of Loan Proceeds....................................22
2.2 Conditions Precedent to Closing................................22
2.2.1 Representations and Warranties; Compliance with
Conditions ............................................22
2.2.2 First Mortgage and Loan Documents.......................23
2.2.3 Title Insurance.........................................23
2.2.4 Environmental Audit.....................................23
2.2.5 Insurance...............................................23
2.2.6 Financial Statements....................................24
2.2.7 Searches................................................24
2.2.8 Survey..................................................24
2.2.9 Management..............................................24
2.2.10 Leases and Material Contracts ..........................24
2.2.11 UBS Letter of Credit ...................................24
2.2.12 Tenant Estoppels .......................................24
2.2.13 Property Condition Report ..............................24
2.2.14 Appraisal ..............................................25
2.2.15 Zoning Compliance, Etc .................................25
2.2.16 Recording Taxes ........................................25
2.2.17 Perfection of Security Interests .......................25
2.2.18 Opinions of Owner's and Borrower's Counsel .............25
2.2.19 Intentionally Deleted ..................................25
2.2.20 REA ....................................................25
2.2.21 Reserves and Escrows ...................................26
2.2.22 Rent Roll ..............................................26
2.2.23 Further Documents ......................................26
2.2.24 Completion of Proceedings ..............................26
2.2.25 Delivery of Organizational Documents ...................26
-i-
<PAGE>
2.2.26 Expenses ...............................................26
2.2.27 Tax Lot ................................................26
2.2.28 Encumbrances ...........................................26
2.3 Intentionally Deleted..........................................26
2.4 Defeasance.....................................................26
2.4.1 Defeasance..............................................27
2.4.2 Intentionally Deleted ..................................28
2.4.3 Defeasance Collateral Account. .........................28
2.4.4 Successor Borrower. ....................................28
III INTEREST; PAYMENTS.....................................................29
3.1 Interest; Monthly Loan Payments................................29
3.1.1 Interest Generally......................................29
3.1.2 Payment Before Anticipated Repayment Date...............29
3.1.3 Payment After Anticipated Repayment Date................29
3.1.4 Payment on Maturity Date................................29
3.1.5 Property Cash Flow Allocation...........................29
3.1.6 Payments after Default; Default Rate....................30
3.2 Loan Repayment; Voluntary Prepayment; Prepayment
After Default.................................................30
3.2.1 Repayment...............................................30
3.2.2 Mandatory Prepayments...................................31
3.3 Release of Property............................................31
3.3.1 Release of Collateral Property..........................31
3.3.2 Release on Payment in Full..............................32
3.3.3 Release Documents.......................................32
3.3.4 Release of Funds........................................32
3.4 Payments and Computations......................................32
3.4.1 Making of Payments......................................32
3.4.2 Interest Calculation....................................32
3.4.3 Late Payment Charge.....................................32
3.5 Taxes..........................................................33
IV CASH MANAGEMENT; ESCROWS AND RESERVES..................................33
4.1 Cash Management Arrangements...................................33
4.1.1 Lockbox Account.........................................33
4.1.2 Deposits into Lockbox Account...........................34
4.1.3 The Accounts............................................34
-ii-
<PAGE>
4.2 Letter of Credit Proceeds Fund.................................34
4.3 Tax and Insurance Escrow Fund..................................35
4.4 Replacements and Replacement Reserves..........................36
4.4.1 Replacement Reserve Fund................................36
4.4.2 Payment of Replacement Expenses.........................37
4.5 Rollover Reserves..............................................37
4.5.1 Rollover Reserve Fund...................................37
4.5.2 Payment of Leasing Expenses.............................38
4.6 Construction Interest Reserve..................................38
4.6.1 Construction Interest Reserve Fund......................38
4.7 Operating Expense Reserves.....................................39
4.7.1 Operating Expense Reserve Fund..........................39
4.7.2 Payment of Approved Operating Expenses..................39
4.8 Casualty/Condemnation Fund.....................................40
4.9 Security Deposits..............................................40
4.10 Funds, Generally...............................................41
4.10.1 Grant of Security Interest; Application of Funds .......41
4.10.2 Investments of Funds ...................................41
4.11 Cash Collateral Fund...........................................42
V REPRESENTATIONS AND WARRANTIES.........................................42
5.1 Owner and Borrower Representations.............................42
5.1.1 Organization; Special Purpose...........................42
5.1.2 Proceedings; Enforceability.............................43
5.1.3 No Conflicts............................................43
5.1.4 Litigation..............................................43
5.1.5 Agreements..............................................43
5.1.6 Title...................................................43
5.1.7 Survey..................................................44
5.1.8 No Bankruptcy Filing....................................44
5.1.9 Full and Accurate Disclosure............................44
5.1.10 No Plan Assets .........................................44
5.1.11 Compliance .............................................44
5.1.12 Contracts ..............................................45
5.1.13 Financial Information ..................................45
5.1.14 Condemnation ...........................................45
5.1.15 Federal Reserve Regulations ............................45
-iii-
<PAGE>
5.1.16 Utilities and Public Access ............................45
5.1.17 Not a Foreign Person ...................................46
5.1.18 Separate Lots ..........................................46
5.1.19 Assessments ............................................46
5.1.20 Enforceability .........................................46
5.1.21 Insurance ..............................................46
5.1.22 Use of Property; Licenses ..............................46
5.1.23 Flood Zone .............................................46
5.1.24 Physical Condition .....................................46
5.1.25 Boundaries and Encroachments ...........................47
5.1.26 Leases and Rent Roll ...................................47
5.1.27 Filing and Recording Taxes .............................48
5.1.28 Investment Company Act .................................48
5.1.29 Fraudulent Transfer ....................................48
5.1.30 Ownership of Owner and Borrower ........................48
5.1.31 Management Agreement ...................................49
5.1.32 Hazardous Substances ...................................49
5.1.33 Name; Principal of Business ............................49
5.1.34 Subordinated Debt ......................................50
5.1.35 Intentionally Deleted ..................................50
5.1.36 REA ....................................................50
5.1.37 Tenant Estoppels .......................................50
5.1.38 No Prior Assignment ....................................50
5.1.39 Special Purpose Entity/Separateness ....................50
5.1.40 Illegal Activity .......................................51
5.2 Survival of Representations and Covenants......................51
VI AFFIRMATIVE COVENANTS..................................................51
6.1 Existence......................................................51
6.2 Taxes and Other Charges........................................51
6.3 Repairs; Maintenance and Compliance; Alterations;
Required Repairs 52
6.3.1 Repairs and Maintenance.................................52
6.3.2 Legal Compliance........................................52
6.3.3 Alterations.............................................52
6.3.4 New Construction........................................53
-iv-
<PAGE>
6.4 Litigation.....................................................53
6.5 Performance of Other Agreements................................54
6.6 Notices........................................................54
6.7 Cooperate in Legal Proceedings.................................54
6.8 Further Assurances.............................................54
6.9 Financial Reporting............................................54
6.9.1 Bookkeeping.............................................54
6.9.2 Annual Reports..........................................55
6.9.3 Monthly and Quarterly Reports...........................55
6.9.4 Other Reports...........................................56
6.9.5 Annual Budget...........................................56
6.9.6 Delivery of Financial Information.......................56
6.10 Environmental Matters..........................................56
6.10.1 Hazardous Substances ...................................56
6.10.2 Environmental Monitoring ...............................57
6.10.3 Title to the Property ..................................59
6.10.4 Easements; Dedications .................................59
6.11 Leases.........................................................59
6.11.1 Form of Lease ..........................................59
6.11.2 New and Renewal Leases .................................59
6.11.3 Leasing Covenants ......................................60
6.11.4 Non-disturbance Agreements .............................60
6.11.5 Reciprocal Easement Agreements .........................60
6.11.6 Notice to Tenants ......................................60
6.12 Estoppel Statement.............................................60
6.13 Property Management............................................61
6.13.1 Management Agreement ...................................61
6.13.2 Termination of Manager .................................61
6.13.3 Manager's Subordination ................................61
-v-
<PAGE>
6.14 Special Purpose Entity.........................................61
6.15 Expenses.......................................................61
6.16 Indemnity......................................................62
6.17 Third Party Reports............................................63
6.18 Year 2000 Compliance...........................................63
6.19 Intentionally Deleted..........................................64
6.20 Performance by Owner and Borrower..............................64
6.21 Secondary Market Transaction Master Estoppel...................64
6.22 Intentionally Deleted..........................................64
VII NEGATIVE COVENANTS.....................................................64
7.1 Management Agreement...........................................64
7.2 Liens..........................................................65
7.3 Dissolution....................................................65
7.4 Change In Business or Operation of Property....................65
7.5 Debt Cancellation..............................................65
7.6 Assets.........................................................65
7.7 Transfers......................................................65
7.8 Debt...........................................................68
7.9 Assignment of Rights...........................................68
7.10 Principal Place of Business....................................68
7.11 Corporate Organization.........................................68
7.12 ERISA..........................................................69
7.13 No Joint Assessment............................................69
7.14 Affiliate Transactions.........................................69
VIII INSURANCE..............................................................70
-vi-
<PAGE>
8.1.1 Coverage................................................70
8.1.2 Policies................................................71
8.2 Casualty.......................................................71
8.2.1 Notice; Restoration.....................................71
8.2.2 Settlement of Proceeds..................................72
8.3 Condemnation...................................................72
8.3.1 Notice; Restoration.....................................72
8.3.2 Collection of Award.....................................72
8.4 Application of Proceeds or Award...............................72
8.4.1 Application to Restoration..............................72
8.4.2 Application to Debt.....................................73
8.4.3 Procedure for Application to Restoration................73
8.4.4 Anchor Lease; REA.......................................74
IX DEFAULTS...............................................................74
9.1 Events of Default..............................................74
9.2 Remedies.......................................................76
9.2.1 Acceleration............................................76
9.2.2 Remedies Cumulative.....................................76
9.2.3 Severance...............................................77
9.2.4 Delay...................................................77
9.2.5 Lender's Right to Perform...............................77
X SPECIAL PROVISIONS.....................................................77
10.1 Sale of Note and Secondary Market Transaction..................77
10.1.1 Cooperation ............................................77
10.1.2 Use of Information .....................................79
10.1.3 Owner's and Borrower's Obligations Regarding
Disclosure Documents ..................................79
10.1.4 Owner's and Borrower's Indemnity Regarding Filings .....80
10.1.5 Indemnification Procedure ..............................81
10.1.6 Contribution ...........................................81
XI MISCELLANEOUS..........................................................82
11.1 Exculpation....................................................82
11.2 Notices........................................................83
11.2.1 Owner's Representative; Borrower's Representative ......84
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11.3 Brokers and Financial Advisors.................................84
11.4 Retention of Servicer..........................................85
11.5 Survival.......................................................85
11.6 Lender's Discretion............................................85
11.7 Governing Law; Venue...........................................85
11.8 Modification; Waiver in Writing................................86
11.9 Delay Not a Waiver.............................................86
11.10 TRIAL BY JURY..................................................86
11.11 Heading........................................................87
11.12 Severability...................................................87
11.13 Preferences....................................................87
11.14 Waiver of Notice...............................................87
11.15 Remedies of Owner and Borrower.................................87
11.16 Prior Agreements...............................................87
11.17 Offsets, Counterclaims and Defenses............................88
11.18 Publicity......................................................88
11.19 No Usury.......................................................88
11.20 Conflict; Construction of Documents............................88
11.21 No Joint Venture or Partnership; No Third Party Beneficiaries..89
11.22 Yield Maintenance Premium......................................89
11.23 Assignment.....................................................90
11.24 Waiver of Marshalling of Assets................................90
11.25 Joint and Several Liability....................................90
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LOAN AGREEMENT
LOAN AGREEMENT dated as of December 9, 1999 between ANNAPOLIS SHOPPINGTOWN
LLC, a Delaware limited liability company (together with any permitted
successors and assigns, "Borrower"), ANNAPOLIS MALL LIMITED PARTNERSHIP, a
Maryland limited partnership ("AMLP"), as co-owner, and ANNAPOLIS LAND LLC, a
Delaware limited liability company (formerly known as WEA Annapolis, Inc.)
("AL"), as co-owner (AMLP and AL, together with any permitted successors and
assigns, are hereinafter collectively referred to as "Owner") and UBS PRINCIPAL
FINANCE LLC, a Delaware limited liability company (together with its successors
and assigns, "Lender").
I DEFINITIONS: PRINCIPLES OF CONSTRUCTION
1.1 Specific Definitions. The following terms have the meanings set forth
below:
"Acceptable Appraisal": an appraisal of the Collateral Property (i) dated
not more than 180 days prior to the Closing Date, (ii) signed by a qualified
MAI/FIRREA appraiser with no interest, direct or indirect, in the Loan, or the
Collateral Property, and whose compensation is not affected by the Appraised
Value (and Lender agrees that as of the date hereof Landauer Associates, Inc.
satisfies the foregoing criteria), (iii) addressed to Lender and its successors
and assigns, (iv) made in compliance with the Uniform Standards of Appraisal
Practice, and (v) otherwise reasonably satisfactory to Lender in all respects.
"ADA": shall mean The Americans with Disabilities Act of 1990.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.
"Agent": shall mean LaSalle National Bank.
"Agreement": this Loan Agreement.
"Anchor Tenant": shall mean any Tenant from time to time leasing more than
75,000 square feet of gross leasable area in the Collateral Property.
"Anticipated Repayment Date": shall mean December 11, 2009.
"Applicable Interest Rate": shall mean (a) from the date hereof through
but not including the Anticipated Repayment Date, the Regular Interest Rate and
(b) from and after the Anticipated Repayment Date through and including the date
the Loan is paid in full, the Matured Performing Rate.
"Applicable Rating Agencies": means the Rating Agencies that have rated
any Securities issued in connection with a Secondary Market Transaction.
<PAGE>
"Appraised Value": the fair market value of the Collateral Property, as
reflected in an Acceptable Appraisal.
"Approved Leasing Expenses": expenses incurred by Owner or Borrower in
leasing space at the Collateral Property pursuant to Leases entered into in
accordance with the Loan Documents, including brokerage commissions, tenant
improvements and other inducements, which expenses (i) are (A) specifically
approved by Lender in connection with approving the applicable Lease, (B)
incurred in the ordinary course of business and on market terms and conditions
in connection with Leases which do not require Lender's approval under the Loan
Documents, or (C) otherwise approved by Lender, which approval shall not be
unreasonably withheld or delayed, and (ii) are substantiated by executed Lease
documents and brokerage agreements.
"Approved Manager": Westfield Management Company, a Delaware general
partnership, or Westfield Management Acquisition, Inc., a Delaware corporation,
or any other wholly owned subsidiary of Westfield Holdings Limited, or any
successor or assignee of any of the foregoing, provided that each successor or
assignee shall be (i) approved by Lender in Lender's reasonable discretion
(unless such successor or assign is wholly owned, directly or indirectly, by
Westfield Holdings Limited and evidence thereof reasonably satisfactory to
Lender has been delivered to Lender prior to the change in Manager, in which
case Lender's approval shall not be required) and (ii) after any Secondary
Market Transaction, approved by each Rating Agency (provided that such Rating
Agency approval shall not be necessary as to any Manager wholly owned, directly
or indirectly, by Westfield Holdings Limited if each Rating Agency has received
a nonconsolidation opinion as to such Manager from Debevoise & Plimpton or
another law firm acceptable to the Rating Agencies in form and substance
satisfactory to the Rating Agencies).
"Approved Operating Expenses": Operating Expenses incurred by Owner or
Borrower following the occurrence of a Cash Management Event or the Anticipated
Repayment Date which (i) are included in the Operating Budget for the Current
Month for the Collateral Property, (ii) are for electric, gas, oil, water, sewer
or other utility service to, or Management Fees for, the Collateral Property, or
(iii) have been approved by Lender, which approval shall not be unreasonably
withheld or delayed.
"Approved Replacement Expenses": Replacement Expenses incurred by Owner or
Borrower which (i) are included in the approved Replacement Budget for the
Current Month for the Collateral Property or (ii) have been approved by Lender,
which approval shall not be unreasonably withheld or delayed.
"Assignment of Leases": shall mean that certain first priority Assignment
of Leases and Rents, dated as of the date hereof, from Owner and Borrower, as
assignor, to Lender, as assignee, assigning to Lender all of the Owner's and
Borrower's interest in and to the Leases and Rents of the Collateral Property as
security for the Loan, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Business Day": means any day other than (i) a Saturday or a Sunday, and
(ii) a day on which federally insured depository institutions in New York, New
York or San Francisco,
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California are authorized or obligated by law, regulation, governmental decree
or executive order to be closed.
"Cash Management Agreement": shall mean that certain Cash Management
Agreement dated as of the date hereof by and between Owner, Borrower, Lender,
Manager and Agent.
"Cash Management Event": either (A) an Event of Default occurs or (B) the
Debt Service Coverage Ratio at any time is less than 1.25, subject to a One Time
Cash Management Event Cure by the Borrower.
"Cash Management Fee": the fees charged from time to time by the Agent in
accordance with the Cash Management Agreement.
"Cash Management Termination": the giving by Lender to the Agent of notice
that the sweeping of funds into the Rollover Reserve Account, Replacement
Reserve Account, Operating Expense Account and the Cash Collateral Account may
cease (a "Cash Management Termination Notice"), which notice Lender shall only
be required to give if (x) no other Cash Management Event has subsequently
occurred, and (y) and the Debt Service Coverage Ratio has been 1.25x or higher
for two consecutive fiscal quarters (such Debt Service Coverage Ratio being
tested on a quarterly basis) since the occurrence of the Cash Management Event.
"Closing Date": shall mean the date of the funding of the Loan.
"Code": the Internal Revenue Code of 1986, as amended, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"Collateral Property": shall mean that certain parcel of real property,
the Improvements thereon, the Equipment and all personal property owned by Owner
and encumbered by the Mortgage, together with all rights pertaining to such
property and Improvements, as more particularly described in the granting
clauses of the Mortgage.
"Control": with respect to any Person, either (i) ownership directly or
through other entities of more than fifty percent (50%) of all beneficial equity
interest in such Person, or (ii) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership of voting securities, by contract or otherwise.
"Current Month": as of any date of determination following the occurrence
of a Cash Management Event or the Anticipated Repayment Date, the then current
calendar month.
"Debt": the unpaid principal, all interest accrued and unpaid thereon, any
Yield Maintenance Premium and all other sums due to Lender in respect of the
Loan under the Note, this Agreement, the Mortgage, or under any Loan Document.
"Debt Service": with respect to any particular period of time, the
scheduled amount of Principal and interest payments due under the Note in such
period.
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<PAGE>
"Debt Service Coverage Ratio": as of any date, the ratio calculated by
Lender of (i) the Net Operating Income for the twelve (12) month period ending
with the most recently completed calendar quarter to (ii) the Debt Service for
the same period.
"Default": the occurrence of any event under any Loan Document which, but
for the giving of notice or passage of time, or both, would be an Event of
Default.
"Default Rate": prior to the Stated Maturity Date: a rate per annum equal
to the lesser of (i) the Maximum Rate and (ii) three percent (3%) above the
Applicable Interest Rate, compounded monthly.
"Defeasance Collateral": shall mean obligations or securities not subject
to prepayment, call or early redemption which are direct obligations of, or
obligations fully guaranteed as to timely payment by, the United States of
America or any agency or instrumentality of the United States of America, or the
obligations of which are backed by the full faith and credit of the United
States of America, the ownership of which will not cause Lender to be an
"investment company" under the Investment Company Act of 1940, as amended, as
evidenced by an opinion of counsel reasonably acceptable to Lender, and which
qualify under ss. 1.860G-2(a)(8) of the Treasury regulations. All such
obligations or securities shall mature or be redeemable, or provide for payments
of interest thereon, on or prior to the Business Day preceding the date such
amounts are required to be applied under this Agreement and shall provide
payments (i) on or prior to, but as close as possible to, all Payment Dates and
other scheduled payment dates if any, under the Note after the Defeasance Date
and up to and including the Anticipated Repayment Date, and (ii) in amounts
equal to or greater than the Schedule Defeasance Payments.
"Eligible Account": shall mean a separate and identifiable account from
all other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.
ss.9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"Eligible Institution" shall mean a federal or state chartered depository
institution or trust company, the long-term unsecured debt obligations of which
are rated at least (A) "A+" by S&P and (B) "A+" by Fitch IBCA, Inc. ("Fitch")
or, if not rated by Fitch, at least "A" or its equivalent by another nationally
recognized statistical rating agency (other than S&P) if the deposits are to be
held in such account 30 days or more or the short-term debt obligations of which
have a short-term rating of not less than "A-1" from S&P and "F-1+" from Fitch
or if not rated by Fitch, at least "F-1+" or its equivalent by another
nationally recognized statistical rating agency (other than S&P) if the deposits
are to be held in such account for less than thirty (30) days, or such other
account or accounts with respect to which the Applicable Rating Agencies shall
have confirmed in writing that the then current ratings assigned in any
Secondary Market Transaction will not be qualified, downgraded or withdrawn by
reason thereof.
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<PAGE>
"Environmental Event": means, with respect to the Collateral Property, (a)
a violation of any Environmental Law of which Owner or Borrower has received
written notice from a governmental authority, or (b) the presence of any
Hazardous Substance on, about, or under the Collateral Property that, under or
pursuant to any Environmental Law, would require remediation, if in the case of
either (a) or (b), such event or circumstance could result in a material adverse
effect on the value or operations of the Collateral Property.
"ERISA": the Employment Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.
"ERISA Affiliate": all members of a controlled group of corporations and
all trades and business (whether or not incorporated) under common control and
all other entities which, together with Owner and/or Borrower, are treated as a
single employer under any or all of Section 414(b), (c), (m) or (o) of the Code.
"FASIT": Financial Asset Securitization Investment Trust within the
meaning of Section 860L (a)(1) of the Code.
"Fiscal Year": each twelve month period commencing on January 1 and ending
on December 31 during each year of the Term.
"GAAP": generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.
"Governmental Authority": any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental unit (federal, state,
county, district, municipal, city or otherwise) now or hereafter in existence.
"Guaranty": shall mean that certain Indemnity Payment Guaranty of even
date herewith from Owner to Lender.
"Improvements": shall have the meaning set forth in the granting clause of
the Mortgage with respect to the Collateral Property.
"Independent Director": shall mean a director or manager of the SPE Member
who is not at the time of initial appointment, or at any time while serving as a
director of the SPE Member, and has not been at any time during the preceding
five (5) years: (a) a stockbroker, director (with the exception of serving as
the Independent Director of the SPE Member), officer, employee, partner,
attorney or counsel of the SPE Member, the Owner, Borrower or any Affiliate of
any of them; (b) a customer, supplier or other person who derives any of its
purchases or revenues from its activities with the SPE Member, the Owner,
Borrower or any Affiliate of any of them; (c) a Person controlling or under
common control with any such stockholder, partner, customer, supplier or other
Person; or (d) a member of the immediate family of any such stockholder,
director, officer, employee, partner, customer, supplier or other person. As
used in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or activities of a Person, whether through ownership of voting
securities, by contract or otherwise. An individual that otherwise satisfies the
foregoing shall not be disqualified from serving as an Independent Director of
the SPE
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<PAGE>
Member if such individual is at the time of initial appointment, or at any time
while serving as an Independent Director of the SPE Member, an Independent
Director of a Special Purpose Entity Affiliated with the Owner, Borrower or the
SPE Member.
"Insolvency Opinion": shall mean one or more substantive non-consolidation
opinion letters, dated the date hereof, delivered by Debevoise & Plimpton on
behalf of Owner and Borrower in connection with the Loan.
"Interest Period": (i) the period from the Closing Date through the first
day thereafter that is an Interest Period Termination Date and (ii) each period
thereafter from an Interest Period Commencement Date through an Interest Period
Termination Date; except that the Interest Period, if any, that would otherwise
commence before and end after the Maturity Date shall end on the Maturity Date.
"Interest Period Commencement Date": the eleventh (11th) day of each
calendar month; provided, however, that if the Payment Date is changed by Lender
pursuant to the definition thereof, Lender may adjust this definition
accordingly.
"Interest Period Termination Date": the tenth (10th) day of each calendar
month (notwithstanding that the succeeding Payment Date may not be an Interest
Period Commencement Date because the day after such Interest Period Termination
Date is not a Business Day); provided, however, that if the Payment Date is
changed by Lender pursuant to the definition thereof, Lender may adjust this
definition accordingly.
"Lease Rollover Number": as to any calendar year, the aggregate number of
square feet of gross leaseable area in the Improvements that are covered by
Leases the expiration dates of which (after taking into account all renewals and
extensions that have been unconditionally exercised as of the date in question)
are scheduled to occur in such calendar year.
"Lease Rollover Percentage": as to any calendar year, a fraction,
expressed as a percentage, the numerator of which is the Lease Rollover Number
for such calendar year and the denominator of which is the aggregate number of
square feet of gross leaseable area of the Improvements.
"Leases": all leases and other agreements existing on the date hereof or
hereafter entered into affecting the use, or occupancy of, or the conduct of any
activity upon or in, the Collateral Property or any Improvements thereon,
including any extensions, renewals, modifications or amendments thereof, but
excluding (i) reciprocal easement and operating agreements, and (ii) subleases
where the sublessee is not in privity with Owner.
"Legal Requirements": statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of, or agreements with,
Governmental Authorities affecting all or part of the Collateral Property or the
construction, use, alteration or operation thereof, whether now or hereafter
enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instrument, either of record or known to Owner or
Borrower, at any time in force affecting all or part of the Collateral Property,
including any that may (i) require repairs, modifications or
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alterations in or to all or part of the Collateral Property, or (ii) in any way
limit the use and enjoyment thereof.
"Letter of Credit": shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit in favor of Lender and
entitling Lender to draw thereon in New York, New York, issued by a domestic
Eligible Institution or the U.S. agency or branch of a foreign Eligible
Institution, or if there are no domestic banks or financial institutions which
qualify as an Eligible Institution or U.S. agencies or branches of a foreign
bank or financial institution which qualifies as an Eligible Institution then
issuing letters of credit, then such letter of credit may be issued by any
domestic bank with a long term unsecured debt rating that is the highest such
rating then given by each Rating Agency to a domestic commercial bank.
"Letter of Credit Agreement": shall mean that certain Letter of Credit
Agreement, dated as of the date hereof, by and between Owner, Borrower and
Lender, pursuant to which Owner and Borrower have caused to be delivered to
Lender the UBS Letter of Credit as additional collateral for Borrower's
performance of its Obligations hereunder.
"Lien": any mortgage, deed of trust, indemnity deed of trust, lien,
pledge, hypothecation, assignment, security interest or any other encumbrance,
charge or transfer of, on or affecting all or part of the Collateral Property or
any interest therein, or in an Owner or in any Owner Representative, including
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, the
filing of any financing statement, and mechanic's, materialmen's and other
similar liens and encumbrances.
"Loan": shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"Loan Documents": this Agreement and all other documents, agreements and
instruments evidencing, securing or delivered to Lender in connection with the
Loan, whether now existing or hereafter executed, including the following: (i)
the Note, (ii) the indemnity deed of trust on the Collateral Property (the
"Mortgage"), (iii) the Assignment of Leases with respect to the Collateral
Property, (iv) the Guaranty, (v) the Letter of Credit Agreement, (vi) the
Assignment of Agreements with respect to the Collateral Property, (vii) the
Manager's Consent and Subordination of Management Agreement with respect to the
Collateral Property, and (viii) the Cash Management Agreement, and all other
documents executed and/or delivered in connection with the Loan, as each of the
foregoing may be (and each of the foregoing defined terms shall refer to such
documents as they may be) amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Maintenance and Repairs": items of maintenance and repair to the
Improvements or Equipment similar to the items of work (but not limited to such
specific items) described in the physical inspection report delivered to Lender
in connection with the closing of the Loan.
"Management Agreement": the management agreement in effect on the date
hereof between Owner and the Approved Manager, pursuant to which the Approved
Manager is to manage the Collateral Property, as same may be amended, restated,
replaced, supplemented or otherwise modified from time to time with the prior
approval of Lender (which consent shall not
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<PAGE>
be reasonably withheld or delayed), and after any Secondary Market Transaction,
the approval of each Rating Agency (provided, however, that any modification
which does not modify the term or economics of the Management Agreement or
otherwise materially modify the Management Agreement, shall require prior notice
to, but not the consent of, Lender, and shall not require the consent of any
Rating Agency).
"Management Fee(s)": as to any Management Agreement, all fees in the
nature of management fees payable to Manager under such Management Agreement.
"Manager": the Approved Manager under the Management Agreement for the
Collateral Property.
"Material Alteration": any alteration (other than the New Construction)
affecting structural elements of the Collateral Property, the cost of which
exceeds five percent (5%) of the Loan amount per calendar year; provided,
however, that in no event shall tenant improvement work, or alterations
performed as part of a Restoration, constitute a Material Alteration.
"Material Lease": any Lease (i) which demises more than five percent (5%)
of the Collateral Property's gross leaseable area or (ii) the fixed annual rent
under which exceeds five percent (5%) of the aggregate fixed annual rent payable
under all Leases of the Collateral Property.
"Matured Performing Rate": shall mean a rate per annum equal to the
Regular Interest Rate plus four hundred (400) basis points.
"Maturity Date": the date on which the final payment of Principal of the
Note becomes due and payable as therein or herein provided, whether at the
Stated Maturity Date, by declaration of acceleration, or otherwise.
"Maximum Rate": the maximum interest rate allowed by applicable law in
effect with respect to the Loan on the date for which a determination of
interest accrued hereunder is made, after taking into account all fees, payments
and other charges that are, under applicable law, characterized as interest.
"Monthly Debt Service Payment Amount": shall mean a constant monthly
payment of $ 1,077,278.12.
"Monthly Replacement Deposit": the amount reasonably determined by Lender,
based on the property condition report for the Collateral Property reviewed by
Lender, in connection with Lender's making of the Loan. On each anniversary of
the date of this Agreement (or, if any such anniversary is not a Payment Date,
on the first Payment Date following such anniversary) the Monthly Replacement
Deposit shall automatically increase by 2.5% of the then current Monthly
Replacement Deposit amount. The initial Monthly Replacement Deposit for the
Collateral Property is set forth in Schedule 1 hereto.
"Monthly Rollover Deposit": an amount equal to one-twelfth (1/12th) of the
average annual cost (as determined by Lender) to Owner for tenant improvements
and leasing
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commissions in respect of the Collateral Property during the sixty (60) month
period prior to the Closing Date, as set forth on Schedule 2 hereto.
"Net Operating Income": for any period, the excess, if any, of Operating
Income for such period over Operating Expenses for such period.
"Net Operating Income After Debt Service": for any period shall mean the
amount obtained by subtracting Debt Service for such period from Net Operating
Income for such period.
"New Construction": shall mean the expansion of the Collateral Property to
add an additional 70,000 square feet of gross leasable area, all as is more
specifically provided for in the Letter of Credit Agreement.
"Obligations": all obligations, liabilities and Debt of Owner and Borrower
to Lender, whether now existing or hereafter arising, under this Agreement or
any of the other Loan Documents.
"Officer's Certificate": a certificate delivered to Lender by Owner or
Borrower, as applicable, which is signed by a senior executive officer of
Owner's Owner Representative or Borrower's Borrower Representative.
"One Time Cash Management Event Cure": In the event that a Cash Management
Event is due to the Debt Service Coverage Ratio being below 1.25, the Borrower
shall have the opportunity one (1) time during the Loan term to deposit cash or
a Letter of Credit with the Lender in an amount sufficient to raise the Debt
Service Coverage Ratio to 1.30; provided, however, that the Debt Service
Coverage Ratio must be 1.25 or greater at the end of the immediately following
quarter.
"Operating Expenses": shall mean the total of all expenditures, computed
in accordance with GAAP, of whatever kind relating to the operation, maintenance
and management of the Collateral Property that are incurred on a regular monthly
or other periodic basis, including without limitation, utilities, ordinary
repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees, payroll and related taxes,
computer processing charges, operational equipment or other lease payments, and
other similar costs, but excluding depreciation, Debt Service, Replacement
Expenses, non-cash items such as depreciation and amortization or any
extraordinary one time expenditures not considered operating expenses under
GAAP.
"Operating Income": for any period, all regular on-going revenues actually
received by Owner from the operation of the Collateral Property during such
period, including (i) Rents, (ii) amounts withdrawn from any Funds pursuant to
this Agreement, and (iii) all other amounts actually received which in
accordance with GAAP are required to be or are included in Owner's annual
financial statements as operating income of the Collateral Property; provided,
that Operating Income will not include (1) income from non-recurring income
sources; (2) advance Rents or other payments; (3) deposits or escrows other than
the Funds, without duplication; (4) any income otherwise includable in Operating
Income but paid to a Person other than Owner
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or Borrower; (5) proceeds of Casualty insurance or Condemnation Awards; or (6)
income from a sale, financing or other capital transaction.
"Other Charges": all managing member, maintenance charges, impositions
other than Taxes, and any other charges, including vault charges and license
fees for the use of vaults, chutes and similar areas adjoining the Collateral
Property, now or hereafter levied or assessed or imposed against the Collateral
Property or any part thereof, including all interest and penalties on any of the
foregoing.
"Owner Representative". Each Owner's general partner or managing member.
"Payment Date": the eleventh (11th) day of each calendar month (or such
other day of a calendar month selected by Lender to collect debt service
payments under loans which it makes and securitizes) or, if such day is not a
Business Day, the first Business Day thereafter.
"Permitted Encumbrances": (a) the Liens created by the Loan Documents, (b)
all Liens and other matters disclosed in the Title Insurance Policies insuring
the Mortgage on the Collateral Property, (c) Liens, if any, for Taxes or Other
Charges not yet payable or delinquent, (d) easements for utilities and rights of
way which do not have a material adverse affect on the use, operation or value
of such Collateral Property and (e) such other title and survey exceptions as
Lender approves in writing in Lender's reasonable discretion.
"Permitted Investments": shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Secondary Market
Transaction or any of their respective Affiliates, payable on demand or having a
maturity date not later than the Business Day immediately prior to the first
Payment Date following the date of acquiring such investment and meeting one of
the appropriate standards set forth below:
(1) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
(2) Federal Housing Administration debentures;
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(3) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Student Loan Marketing Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations); provided, however, that the investments described in this clause
must (A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their maturity;
(4) federal funds, unsecured certificates of deposit, time deposits,
the short term obligations of which at all times are rated in the highest short
term rating category by each Applicable Rating Agency (or, if not rated by all
Rating Agencies, rated by at least one Rating Agency in the highest short term
rating category and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(5) fully Federal Deposit Insurance Corporation-insured demand and
time deposits in, or certificates of deposit of any bank or trust company,
savings and loan association or savings bank, the short term obligations of
which at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise acceptable
to each other Rating Agency, as confirmed in writing that such investment would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
(6) debt obligations with maturities of not more than 365 days and
at all times rated by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to each
other Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities) in its
highest long-term unsecured rating category; provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating,
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(C) if such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;
(7) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) with maturities
of not more than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
(8) units of taxable money market funds or mutual funds, which funds
are regulated investment companies, seek to maintain a constant net asset value
per share and invest solely in obligations backed by the full faith and credit
of the United States, which funds have the highest rating available from each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed
in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds or mutual
funds; and
(9) any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (a) Lender and (b) each Rating
Agency, as evidenced by a written confirmation that the designation of such
security, obligation or investment as a Permitted Investment will not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities by such Rating
Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Person": any individual, corporation, partnership, joint venture, estate,
trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.
"Plan": (i) an employee benefit or other plan established or maintained by
Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate
makes or is obligated to make
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contributions and (ii) which is covered by Title IV of ERISA or Section 302 of
ERISA or Section 412 of the Code.
"Pooling and Servicing Agreement": the Servicing Agreement entered into
with the Servicer in connection with any Secondary Market Transaction, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Prepayment Lockout Expiration Date": shall mean the date that is the
later of (a) three (3) years from the Closing Date or (b) two (2) years from the
"startup day" within the meaning of Section 860G(a)(9) of the Code of the REMIC
Trust.
"Qualified REA": an REA all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion and as to which each of
the parties to the REA (other than Owner) has executed and delivered to Lender
an estoppel certificate in form, scope and substance satisfactory to Lender in
its sole and absolute discretion.
"Rating Agency": any of Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. ("S&P"), Moody's Investors Service, Inc., Duff & Phelps Credit
Rating Co., Fitch IBCA, Inc. or any other nationally-recognized statistical
rating agency which has issued a rating of any Securities.
"Rating Comfort Letter": a letter issued by each of the Applicable Rating
Agencies which confirms that the taking of the action referenced to therein will
not result in any qualification, withdrawal or downgrading of any existing
ratings of Securities created in a Secondary Market Transaction.
"REA": any "construction, operation and reciprocal easement agreement" or
similar agreement (including any "separate agreement" or other agreement between
Owner and one or more other parties to an REA with respect to an REA) affecting
the Collateral Property or any portion thereof.
"Real Property": as to the Collateral Property, the portions thereof
constituting land, Improvements thereon and all rights pertaining to such land
and Improvements.
"Regular Interest Rate": shall mean 8.177% per annum.
"REMIC": a "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code that holds the Note.
"Rents": all rents, rent equivalents, moneys payable as damages or in lieu
of rent or rent equivalents, royalties (including, all oil and gas or other
mineral royalties and bonuses), income, fees, receivables, receipts, revenues,
deposits (including security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, and other payment and
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Owner, Manager (in its capacity as manager of the
Collateral Property, and excluding sums payable by Borrower to Manager pursuant
to the Management Agreement) or any of their agents or employees from any and
all sources arising from or attributable to the Collateral Property and the
Improvements thereon, including all receivables, customer obligations,
installment payment
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obligations and other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of the Collateral Property or rendering of
services by Owner or Manager (in its capacity as manager of the Collateral
Property, and excluding sums payable by Borrower to Manager pursuant to the
Management Agreement), and proceeds, if any, from business interruption or other
loss of income insurance.
"Replacement Expenses": expenses incurred to pay for replacements,
improvements and/or Maintenance and Repairs of the Improvements or Equipment or
portions of either.
"Required Record": any financial statement, certificate, report or
information required to be delivered under Section 6.9.
"Routine Hazardous Substances": Hazardous Substances typically used in the
ordinary course of business at retail properties, which are generated, used,
stored and disposed of in compliance with all applicable Environmental Laws.
"Scheduled Defeasance Payments": shall mean scheduled payments of interest
and principal under the Note in the case of a Defeasance for all Payment Dates
occurring after the Defeasance Date and up to and including the Anticipated
Repayment Date (including, the outstanding Principal balance on the Note as of
the Anticipated Repayment Date), and all payments required after the Defeasance
Date, if any, under the Loan Documents for servicing fees, fees to Agent and
other similar charges.
"Security Agreement": shall mean a security agreement in form and
substance satisfactory to Lender pursuant to which Borrower grants Lender a
perfected, first priority security interest in the Defeasance Collateral Account
and the Defeasance Collateral.
"Servicer": Bank of New York, or its successor in interest, or if any
successor servicer is appointed pursuant to the Pooling and Servicing Agreement,
such successor servicer.
"SPE Member": shall have the meaning set forth in subparagraph (5) of the
definition of "Special Purpose Entity" contained in this Section 1.1.
"Special Purpose Entity": shall mean a corporation, limited partnership or
limited liability company which at all times on and after the date hereof:
(1) is organized solely for the purpose of (A) acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging,
managing and operating the Collateral Property, entering into this Agreement
with the Lender, refinancing the Collateral Property in connection with a
permitted repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing; (B) acting as a
general partner of the limited partnership that owns the Collateral Property or
member of the limited liability company that owns the Collateral Property; (C)
acting as a Borrower under this Agreement; (D) guaranteeing the obligations
under this Agreement and securing its obligations under such guarantee with the
Collateral Property and/or; (E) acting as the sole managing member or sole
managing partner of the Borrower or any entity which owns a partnership
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interest or a membership interest in (i) the Borrower or Owner or (ii) any
parent of the Borrower or Owner.
(2) is not engaged and will not engage in any business unrelated to
the purposes described in paragraph (1) above;
(3) does not have and will not have any assets other than those
related to the Collateral Property and other than for the purposes described in
paragraph (1) above;
(4) has not engaged, sought or consented to and will not engage in,
seek or consent to any dissolution, winding up, liquidation, consolidation,
merger, sale of all or substantially all of its assets, transfer of partnership
or membership interests (if such entity is a general partner in a limited
partnership or a member in a limited liability company) or amendment of its
limited partnership agreement, articles of incorporation, articles of
organization, certificate of formation or operating agreement (as applicable)
with respect to the matters set forth in this definition;
(5) if such entity is a limited partnership, has, as its only
general partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability companies (with more than one member)
(together with the members required pursuant to subparagraph (7) below (if
applicable), the "SPE Member");
(6) if such entity is a corporation, has at least two (2)
Independent Directors, and has not caused or allowed and will not cause or allow
the board of directors or managers of such entity to take any action requiring
the unanimous affirmative vote of 100% of the members of its board of directors
or managers unless all Independent Directors shall have participated in such
vote;
(7) (a) if such entity is a limited liability company, has at least
one member that is a Special Purpose Entity that has at least two (2)
Independent Directors and that owns at least one percent (1%) of the equity of
the limited liability company or (b) is wholly-owned by WALP or Owner;
(8) if such entity is (a) a limited liability company, has articles
of organization, a certificate of formation and/or an operating agreement, as
applicable, (b) a limited partnership, has a limited partnership agreement, or
(c) a corporation, has a certificate of incorporation or articles that, in each
case, provide that such entity will not: (1) dissolve, merge, liquidate,
consolidate; (2) sell all or substantially all of its assets or the assets of
the Owner or Borrower (as applicable); (3) engage in any other business
activity, or amend its organizational documents with respect to the matters set
forth in this definition without the consent of the Lender; or (4) without the
affirmative vote of all Independent Directors and of all other directors or
managers of the corporation or entity (that is such entity or the general
partner or managing or co-managing member of such entity), file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with respect
to itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest;
(9) if such entity is a limited partnership or a limited liability
company that is the general partner of a limited partnership or the member of a
limited liability company
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that is the Owner or Borrower, has an entity that owns at least one percent (1%)
of the equity of such entity as its general partner or managing member, as
applicable, that is a Special Purpose Entity;
(10) is and will remain solvent and pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) from its
assets as the same shall become due, and is maintaining and will maintain
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated business operations;
(11) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(12) maintains and will maintain its accounts, books and records
separate from any other Person and will file its own tax returns, except to the
extent that it is required to file consolidated tax returns by law;
(13) maintains and will maintain its own records, books, resolutions
and agreements;
(14) other than as provided in the Cash Management Agreement, (a)
does not and will not commingle its funds or assets with those of any other
Person and (b) does not participate and will not participate in any cash
management system with any other Person;
(15) has held and will hold its assets in its own name;
(16) has conducted and will conduct its business in its name or in a
name franchised or licensed to it by an entity, except for services rendered
under a business management services agreement with an Affiliate that complies
with the terms contained in Section 7.14 of this Agreement, so long as the
manager, or equivalent thereof, under such business management services
agreement holds itself out as an agent of the Owner;
(17) maintains and will maintain its financial statements,
accounting records and other entity documents separate from any other Person and
has not permitted and will not permit its assets to be listed as assets on the
financial statement of any other entity except as required by GAAP;
(18) pays and will pay its own liabilities and expenses, including
the salaries of its own employees, out of its own funds and assets, and has
maintained and will maintain a sufficient number of employees in light of its
contemplated business operations;
(19) has observed and will observe all partnership, corporate or
limited liability company formalities, as applicable;
(20) will not create, incur or assume any indebtedness other than
(i) the Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses and
Approved Leasing Expenses and (iii) other trade debt incurred in the ordinary
course of business relating to the ownership and operation of its Collateral
Property which other trade debt does not exceed, at any
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time, a maximum aggregate amount of $1,000,000.00 for the Collateral Property,
and such trade debt is paid within sixty (60) days of the date incurred (other
than amounts being disputed in good faith);
(21) does not and will not assume or guarantee or become obligated
for the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person except as permitted pursuant to this
Agreement;
(22) does not and will not acquire obligations or securities of its
partners, members or shareholders or any other Affiliate except as permitted
pursuant to this Agreement;
(23) allocates and will allocate fairly and reasonably any overhead
expenses that are shared with any Affiliate, including, but not limited to,
paying for shared office space and services performed by any employee of an
affiliate;
(24) the stationary, invoices, and checks utilized by the Special
Purpose Entity or utilized to collect its funds or pay its expenses shall bear
its own name and shall not bear the name of any other entity unless such entity
is clearly designated as being the Special Purpose Entity's Manager.
(25) will not pledge its assets for the benefit of any other Person
except as otherwise permitted in the Loan Agreement or the Pledge and Security
Agreement;
(26) will hold itself out and identify itself as a separate and
distinct entity under its own name or in a name franchised or licensed to it by
an entity and not as a division or part of any other Person, except for services
rendered under a business management services agreement with an Affiliate that
complies with the terms contained in Section 7.14 herein, so long as the
manager, or equivalent thereof, under such business management services
agreement holds itself out as an agent of the Owner;
(27) will maintain its assets in such a manner that it will not be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any other Person;
(28) will not make loans to any Person or hold evidence of
indebtedness issued by any other person or entity (other than cash and
investment-grade securities issued by an entity that is not an Affiliate of or
subject to common ownership with such entity) except as permitted pursuant to
this Agreement;
(29) will not identify its partners, members or shareholders, or any
Affiliate of any of them, as a division or part of it, and has not identified
itself and shall not identify itself as a division of any other Person;
(30) has not entered into or been a party to, and will not enter
into or be a party to, any transaction with its partners, members, shareholders
or Affiliates except (A) those referred to in Section 7.14 of this Agreement,
(B) in the ordinary course of its business and on terms which are intrinsically
fair, commercially reasonable and are no less favorable to it than
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would be obtained in a comparable arm's-length transaction with an unrelated
third party and (C) in connection with this Agreement;
(31) will not have any obligation to, and will not, indemnify its
partners, officers, directors or members, as the case may be, or has such an
obligation that is fully subordinated to the Debt and will not constitute a
claim against it in the event that cash flow in excess of the amount required to
pay the Debt is insufficient to pay such obligation;
(32) if such entity is a corporation, it shall consider the
interests of its creditors in connection with all corporate actions referred to
in clause 8(c)(4) of this definition;
(33) will not have any of its obligations guaranteed by any
Affiliate other than those obligations guaranteed in connection with the Loan
except as otherwise permitted pursuant to this Agreement or in connection with
obligations relating to the New Construction and other permitted alterations or
additions to the Collateral Property; and
(34) has complied and will comply with all of the terms and
provisions contained in its organizational documents.
"State": the state or commonwealth in which the Collateral Property or any
part thereof is located.
"Stated Maturity Date": December 11, 2029.
"Survey": a current as-built survey of the Collateral Property prepared by
a surveyor licensed by the State in which the Collateral Property is located and
certified to Lender and the Title Company and prepared in accordance with the
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys meeting
the Accuracy Standards of an Urban Survey, with accuracy and precision
requirements modified to meet current angular and linear tolerance requirements
of the State, showing the legal description and street address of the Collateral
Property; all visible or recorded easements, building lines, curb cuts, and
party walls; all parking, sewage, water, electricity, gas and other utility
facilities, together with recording information concerning the documents
creating any such easements and building lines; stating the net, after deduction
of land dedicated or used or subject to easements for roads, highways, fire
lanes, utilities, storm drains or any other public purpose, and gross area of
the land; and including the following Table A items: 1, 2, 3, 4, 6, 7(a),
7(b)(1), 8, 10, 11 and 13.
"Taxes": all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against all
or any part of the Collateral Property.
"Tenant": shall mean any Person leasing, subleasing or otherwise occupying
any portion of the Collateral Property under a Lease or other occupancy
agreement with Owner.
"Term": the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Owner or Borrower pursuant to the Loan Documents.
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"Title Company": collectively, Chicago Title Insurance Company and First
American Title Insurance Company of New York together with any other title
company providing re-insurance in connection with Lender's Title Insurance
Policy, and their respective successors.
"Title Insurance Policy": a policy of title insurance, in form and amount
acceptable to Lender, issued by the Title Company for the benefit of Lender, its
successors and assigns, insuring the Lien of the Mortgage on the Collateral
Property subject to no Liens other than Liens acceptable to Lender, and
containing such endorsements and affirmative coverages (including affirmative
coverage as to "creditors' rights" and "tie-in" or "aggregation" coverage) as
Lender may require.
"Transfer": any sale, conveyance, transfer, lease (including any
amendment, extension, modification, waiver or renewal thereof), assignment,
mortgage, pledge, grant of a security interest or hypothecation, whether by law
or otherwise, of or in (i) all or part of the Collateral Property (including any
legal or beneficial direct or indirect interest therein), (ii) any direct or
indirect interest in Owner or Borrower, or (iii) any direct or indirect interest
in the Owner Representative of Owner or the Borrower Representative of Borrower.
"UBS": shall mean UBS AG, Stamford Branch.
"UBS Letter of Credit": shall mean that certain irrevocable letter of
credit issued by UBS for the benefit of Lender in the original principal amount
of $15,000,000.00. The UBS Letter of Credit shall serve as additional collateral
for the performance by Borrower of its Obligations hereunder and under the other
Loan Documents and Borrower's and Lender's rights with respect thereto are
governed by the terms and provisions of the Letter of Credit Agreement.
"UCC": the Uniform Commercial Code as in effect in the State in which the
Collateral Property is located.
"Yield Maintenance Premium": shall mean an amount equal to the present
value as of the Prepayment Date of the Calculated Payments from the Prepayment
Date through the Anticipated Repayment Date determined by discounting such
payments at the Discount Rate. As used in this definition, the term "Prepayment
Date" shall mean the date on which a prepayment is made. As used in this
definition, the term "Calculated Payments" shall mean the monthly payments of
interest only which would be due based on the principal amount of the Loan being
prepaid on the Prepayment Date and assuming an interest rate per annum equal to
the difference (if such difference is greater than zero) between (y) the Regular
Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in this
definition, the term "Discount Rate" shall mean the rate which, when compounded
monthly is equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term "Yield Maintenance Treasury
Rate" shall mean the yield calculated by the linear interpolation of the yields,
as reported in the Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. Government Securities/Treasury Constant Maturities
for the week ending prior to the Prepayment Date, of U.S. Treasury Constant
Maturities with maturity dates (one longer or one shorter) most nearly
approximating the Anticipated Repayment Maturity Date. In the event Release H.15
is no longer published, Lender shall select a comparable publication to
determine
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the Yield Maintenance Treasury Rate. In no event, however, shall Lender be
required to reinvest any prepayment proceeds in U.S. Treasury obligations or
otherwise.
1.2 Index of Other Definitions. The following terms are defined in the
sections or Loan Documents indicated below:
"Account(s)" - 4.1.3
"Accrued Interest" - 3.1.3
"Additional Insolvency Opinion" - 5.1.39
"Annual Budget" - 6.9.5
"Applicable Taxes" - 3.5
"Approved Insurer" - 8.1.2
"Award" - 8.3.2
"Bankruptcy Proceeding" - 5.1.8
"Cash Collateral Account" - 4.1.3
"Cash Management Account" - 4.1.2
"Cash Management Accounts" - 4.10.1
"Casualty" - 8.2.1
"Casualty/Condemnation Prepayment" - 3.2.2
"Casualty/Condemnation Fund" - 4.8
"Closing Estoppels" - 6.21
"Condemnation" - 8.3.1
"Construction Cash Collateral Agreement" - 6.3.4
"Construction Interest Reserve Account" - 4.1.3
"Construction Interest Reserve Fund" - 4.6.1
"Debt Service Reserve Account" - 4.1.3
"Defeasance Collateral Account" - 2.4.3
"Defeasance Date" - 2.4.1
"Disclosure Document" - 10.1.2
"Environmental Laws" - 5.1.32
"Equipment" - Mortgage
"Event of Default" - 9.1
"Exchange Act" - 10. 1.2
"Funds" - 4.10.1
"Hazardous Substances" - 5.1.32
"Improvements" - Mortgage
"Indemnified Liabilities" - 6.16
"Indemnified Party" - 6.16
"Insurance Premiums" - 8.1.2
"Insured Casualty" - 8.2.2
"Issuer" - 10.1.3
"Late Payment Charge" - 3.4.3
"Lease Termination Payments" - 4.5.1
"Lender's Consultant" - 6.10.2
"Letter of Credit Proceeds Fund" - 4.2
"Liabilities" - 10.1.3
"Licenses" - 5.1.22
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"Lockbox Account" - 4.1.1
"Major Decisions" - 7.7
"Management Consultant" - 6.13.2
"Manager Consent and Subordination Agreement" - 6.13.3
"Master Estoppel" - 6.21
"Minimum Reserve Balance" - 4.6.1
"Monthly Insurance Amount" - 4.3
"Monthly Operating Expense Deposit" - 4.7.1
"Monthly Replacement Deposit" - 4.4.1
"Monthly Rollover Deposit" - 4.5.1
"Monthly Insurance Amount" - 4.3
"Monthly Tax Amount" - 4.3
"Mortgage" - Definition of "Loan Documents"
"New Construction Proceeds" - 6.3.4
"Note" - 2.1.2
"Operating Budget" - 6.9.5
"Operating Expense Account" - 4.1.3
"Operating Expense Reserve Fund" - 4.7.1
"Other Taxes" - 3.5
"Phase II" - 6.10.2
"Pledge and Security Agreement" - 7.7(a)
"Policies" - 8.1.2
"Principal" - 2.1.1
"Proceeds" - 8.2.2
"Provided Information" - 10.1.1
"Reduced Rating" - 4.2
"Registration Statement" - 10.1.3
"Remedial Work" - 6.10.2
"Rent Roll" - 5.1.26
"Replacement Budget" - 6.9.5
"Replacement Reserve Account" - 4.1.3
"Replacement Reserve Fund" - 4.4.1
"Responsible Officer" - 11.2.1
"Restoration" - 8.4.1
"Rollover Reserve Account" - 4.1.3
"Rollover Reserve Fund" - 4.5.1
"Securities" - 10.1.1
"Securities Act" - 10.1.2
"Secondary Market Transaction" - 10.1.1
"Successor Borrower" - 2.4.4
"Tax and Insurance Escrow Fund": - 4.3
"Tax and Insurance Account" - 4.1.3
"Transfer" - 7.7
"UBS Group" - 10.1.3
"Underwriter Group" - 10.1.3
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"Underwriters" - 10.1.3
"Voluntary Prepayment" - 3.2.1
"WALP" - 7.7
"WEA" - 7.7
"Westfield" - 7.7
"Year 2000" - 6.18
1.3 Principles of Construction. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the word "including" means "including but not limited to," and (v)
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
II THE LOAN
2.1 The Loan.
2.1.1 Commitment. Subject to and upon the terms and conditions of
this Agreement, Lender agrees to make a loan to the Borrower on the Closing Date
in an aggregate maximum principal sum of $144,380,000.00 (the "Principal").
Borrower may request and receive only one borrowing hereunder in respect of the
Loan, except the New Construction Proceeds are to be funded separately to an
account as designated by Borrower and UBS. The Loan shall mature on the Stated
Maturity Date. No amount borrowed and repaid hereunder in respect of the Loan
may be reborrowed.
2.1.2 Note. The Loan shall be evidenced by a promissory note in the
maximum principal sum of $144,380,000.00 (the "Note") executed by Borrower and
secured by the Mortgage, the Assignment of Leases and the other Loan Documents.
2.1.3 Use of Loan Proceeds. The proceeds of the Loan shall be used
by the Borrower for certain Affiliate matters and to (i) repay and discharge
existing loans relating to the Collateral Property; (ii) fund certain of the
Funds required to be funded by Borrower; (iii) pay approved costs and expenses
in connection with the foregoing and the Loan; and (iv) make distributions to
the members or partners of such Borrower to the extent any Loan proceeds remain
upon payment of the aforementioned items.
2.2 Conditions Precedent to Closing. The obligation of Lender to make the
Loan hereunder is subject to the fulfillment by Borrower of the following
conditions precedent no later than the Closing Date.
2.2.1 Representations and Warranties; Compliance with Conditions.
The representations and warranties of Borrower contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if made on and as of such
date, and no Default or an Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan
Document on its part to be observed or performed.
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2.2.2 First Mortgage and Loan Documents. A Mortgage which shall
constitute a valid first mortgage lien on the fee simple title to the Collateral
Property, which shall secure the Debt, subject only to such Liens as are
acceptable to Lender, and Owner shall have delivered UCC-1 financing statements
covering fixtures owned or to be owned by Owner and affixed to, or used in
connection with, the Collateral Property, in each case appropriately completed
and duly executed and delivered to Lender, or at Lender's discretion, the Title
Company, for filing in the appropriate county and state offices. Lender shall
have also received from Borrower fully executed and duly delivered counterparts
of this Agreement, the Note and each of the other Loan Documents.
2.2.3 Title Insurance. Lender shall have received a Title Insurance
Policy for the Collateral Property and the Borrower shall have paid to the Title
Company (and shall have delivered to Lender evidence of such payment) all
premiums, and expenses of the Title Company in connection with the issuance of
such Title Insurance Policy and an amount equal to the recording and the
applicable stamp taxes (including mortgage recording taxes), if any, payable in
connection with recording the insured Mortgage in the appropriate county land
offices. Such Title Insurance Policy shall (i) provide coverage in amounts
satisfactory to Lender, (ii) insure Lender that the Mortgage creates a valid
first priority lien on the Collateral Property free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (iii)
contain such endorsements and affirmative coverages as Lender may request, and
(iv) name Lender and its successors and assigns as the insured. The Title
Insurance Policy shall be assignable.
2.2.4 Environmental Audit. Lender shall be satisfied that (A) there
are no pending or threatened claims, suits, actions or proceedings arising out
of or relating to the existence of any Hazardous Substances at, in, on or under
the Collateral Property, (B) the Collateral Property is in compliance in all
material respects with all applicable Environmental Laws, and (C) no Hazardous
Substances exist at, in, on or under the Collateral Property except in
compliance in all material respects with applicable Environmental Laws. Lender
shall have received, without limitation, (1) a comprehensive environmental audit
of the Collateral Property (which shall include a visual survey, a record
review, an area reconnaissance and a Phase I environmental study and, if the
Phase I study shall so require, a Phase II environmental study), reasonably
satisfactory in form and substance to Lender, conducted and certified by a
qualified, independent environmental consultant within six (6) months of the
Closing Date, (2) evidence that all required approvals have been obtained from
all governmental and quasi-governmental authorities having jurisdiction with
respect to the Collateral Property, and (3) such other environmental reports,
inspections and investigations pertaining to the Collateral Property as Lender
shall require, prepared, in each instance, by engineers or other consultants
reasonably satisfactory to Lender.
2.2.5 Insurance. Lender shall have received evidence of the
existence of all insurance required to be maintained by Owner or Borrower
pursuant to the Loan Documents and the designation of Lender as the mortgagee
and loss payee or additional insured, as applicable, thereunder to the extent
required by the Loan Documents, in form and substance specified in the Loan
Documents, and evidence of the payment of all premiums payable for the existing
policy period.
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2.2.6 Financial Statements. Lender shall have received, with respect
to the Collateral Property, (i) an unaudited operating statement for the
trailing twelve (12) month period, certified by the Chief Financial Officer or
Treasurer of Owner and a statement of current operations certified by the Owner
Representative and (ii) audited combined financial statements for Owner for
calendar year 1998. If Lender determines, in its sole discretion, that there
have been significant changes at the Collateral Property since the most recent
audited financial statement delivered to Lender, Owner shall deliver to Lender a
letter from an accounting firm acceptable to Lender in its sole discretion
verifying current expenses and revenue of the Collateral Property.
2.2.7 Searches. Lender shall have received copies of UCC filing
searches, tax lien searches, judgment searches and real estate tax searches and
municipal department searches setting forth any and all building violations (if
available) in the county where the Collateral Property is located (and in the
case of UCC filing searches, in the office of the Secretary of State or other
applicable state office of the State where the Collateral Property is located),
demonstrating as of a recent date the existence of no other financing
statements, tax liens, judgments, building violations or delinquent real estate
taxes, together with evidence that all fees payable in connection with any such
searches have been paid.
2.2.8 Survey. Lender shall have received a Survey of the Collateral
Property that is satisfactory to Lender and certified to Lender and its
successors and assigns, the Title Company and any other parties requested by
Lender as of a certification date satisfactory to the Title Company and
reasonably satisfactory to Lender.
2.2.9 Management. The Manager of the Collateral Property shall have
executed and delivered a manager consent and subordination in accordance with
Section 6.13.3.
2.2.10 Leases and Material Contracts. Lender shall have received
certified copies of all Leases, reciprocal easement agreements and material
contracts relating to the Collateral Property, including all amendments and
modifications thereto, and such Leases, reciprocal easement agreements and
contracts shall be in form and substance reasonably satisfactory to Lender.
2.2.11 UBS Letter of Credit. Lender shall have received the UBS
Letter of Credit in form, substance and content acceptable to Lender.
2.2.12 Tenant Estoppels. Lender shall have received an executed
tenant estoppel letter, which shall be in form and substance satisfactory to
Lender, from (a) each Anchor Tenant, (b) each Tenant paying base rent in an
amount equal to or exceeding five percent (5%) of the Operating Income from the
Collateral Property occupied by such Tenant and (c) disregarding the area leased
by those described in clauses (a) and (b), lessees of not less than seventy-five
percent (75%) of the remaining gross leasable area of the Collateral Property.
2.2.13 Property Condition Report. Lender shall have received reports
covering the physical and structural condition of the Collateral Property in
form and substance, and prepared by a qualified independent engineer, reasonably
satisfactory to Lender and dated no more than six (6) months prior to the
Closing Date, which shall (i) identify code and ADA
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compliance, (ii) include a schedule of deferred maintenance and the cost
thereof, (iii) include a schedule of all capital expenditures projected to be
required in the twelve (12) year period following the Closing Date, and (iv) if
the Collateral Property is in a State in which Lender reasonably determines that
there has been a history of earthquakes, assess the probable maximum loss in the
event of the occurrence of an earthquake.
2.2.14 Appraisal. Lender shall have received an Acceptable Appraisal
of the Collateral Property.
2.2.15 Zoning Compliance, Etc. Lender shall have received, with
respect to the Collateral Property, evidence, in the form of (i) letters or
other evidence from the appropriate municipal authorities, (ii) an ALTA 3.1
zoning endorsement (including parking coverage) for the Title Insurance Policy,
or (iii) a zoning opinion, in each case in substance reasonably satisfactory to
Lender, that all improvements constituting part of the Collateral Property have
been constructed and are being used and operated in compliance in all material
respects with (A) 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
Collateral Property, (B) all building permits issued in respect of the
Collateral Property, and (C) the certificates of occupancy for the Collateral
Property (copies of which certificates of occupancy shall have been delivered to
Lender).
2.2.16 Recording Taxes. Borrower shall have paid any mortgage
recording taxes payable (if any) in the jurisdiction in which the Collateral
Property is located in connection with the recordation of the Mortgage.
2.2.17 Perfection of Security Interests. Lender shall have received
evidence that all actions necessary or, in the opinion of Lender, desirable to
perfect and protect the Liens and security interests created by the Loan
Documents have been or will be taken, including evidence that the Mortgage has
been or will be duly filed and recorded in the appropriate governmental offices
and that the related UCC financing statements have been or will be duly filed in
the appropriate governmental offices.
2.2.18 Opinions of Owner's and Borrower's Counsel. Lender shall have
received an opinion of counsel as to Owner and Borrower and an opinion of local
counsel to Lender in the State in which the Collateral Property is located, in
each case with respect to such matters as Lender may request (including as to
enforceability of the Loan Documents against Owner and Borrower) and an
Insolvency Opinion with respect to Owner and Borrower, its partners, the Manager
of the Collateral Property and such other persons as Lender shall designate,
which Insolvency Opinion must be in form and substance reasonably satisfactory
to Lender.
2.2.19 Intentionally Deleted.
2.2.20 REA. If the Collateral Property is subject to an REA, such
REA is a Qualified REA.
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2.2.21 Reserves and Escrows. Borrower shall have made such initial
deposits into the Funds [,including, the Construction Interest Fund,] as Lender
may require in accordance with this Agreement and the other Loan Documents.
2.2.22 Rent Roll. A Rent Roll (in spread sheet format, containing
such information as Lender may reasonably require) for the Collateral Property,
certified by the Borrower Representative on behalf of the Borrower, shall have
been delivered to Lender.
2.2.23 Further Documents. Borrower shall have executed and delivered
to Lender such documents, opinions and agreements and taken such action
including executing such amendments or supplements to, and assumptions of, the
Loan Documents, which Lender may reasonably require.
2.2.24 Completion of Proceedings. All corporate and other
proceedings taken or to be taken by Borrower in connection with the transactions
contemplated by this Agreement and the other Loan Documents and all documents
incidental thereto shall be satisfactory in form and substance to Lender, and
Lender shall have received all such counterpart originals or certified copies of
such documents as Lender may reasonably request.
2.2.25 Delivery of Organizational Documents. Borrower shall have
delivered or caused to be delivered to Lender copies certified by the Borrower
of all organizational documentation related to Borrower and/or the formation,
structure, existence, good standing and/or qualification to do business, as
Lender may request, including, without limitation, good standing certificates,
qualifications to do business in the appropriate jurisdictions, resolutions
authorizing the entering into of the Loan and incumbency certificates as may be
reasonably requested by Lender. Owner shall have delivered or caused to be
delivered to Lender copies certified by the Owner of all organizational
documentation related to Owner and/or the formation, structure, existence, good
standing and/or qualification to do business, as Lender may request, including,
without limitation, good standing certificates, qualifications to do business in
the appropriate jurisdictions, resolutions authorizing the entering into of the
Loan and incumbency certificates as may be reasonably requested by Lender.
2.2.26 Expenses. Borrower shall have paid all amounts required to be
paid by Borrower under Section 6.15.
2.2.27 Tax Lot. Lender shall have received evidence that the
Collateral Property constitutes one (1) or more separate tax lots, which
evidence shall be reasonably satisfactory in form and substance to Lender.
2.2.28 Encumbrances. Borrower shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected first
Lien as of the Closing Date with respect to the Mortgage on the Collateral
Property, subject only to applicable Permitted Encumbrances and such other Liens
as are permitted pursuant to the Loan Documents, and Lender shall have received
satisfactory evidence thereof.
2.3 Intentionally Deleted.
2.4 Defeasance.
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2.4.1 Defeasance.
(a) Provided no Event of Default shall have occurred and remain
uncured, Borrower shall have the right at any time after the Prepayment Lockout
Expiration Date and prior to the Anticipated Repayment Date to obtain a release
of the Lien of the Mortgage encumbering the Collateral Property (a
"Defeasance"), in full only and not in part, upon satisfaction of the following
conditions:
(i) Borrower shall provide Lender thirty (30) days prior written
notice specifying a Payment Date (the "Defeasance Date") on which Borrower
shall have satisfied the conditions in this Section 2.4.1 and on which it
shall effect the Defeasance;
(ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the Principal balance of the Note to and including the
Defeasance Date and (B) all other sums, then due under the Note, this
Agreement, the Mortgage and the other Loan Documents;
(iii) Borrower shall deposit the Defeasance Collateral into the
Defeasance Collateral Account and otherwise comply with the provisions of
Sections 2.4.3 and 2.4.4 hereof;
(iv) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the
Defeasance Collateral;
(v) Borrower shall deliver to Lender (1) an opinion of counsel
for Borrower satisfactory to a prudent lender opining, among other things,
that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Defeasance
Collateral, (B) if a Secondary Market Transaction has occurred, the REMIC
Trust formed pursuant to such Secondary Market Transaction will not fail
to maintain its status as a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code as a result of the
Defeasance pursuant to this Section 2.4.1, and (C) delivery of the
Defeasance Collateral and the grant of a security interest therein to
Lender shall not constitute an avoidable preference under Section 547 of
the U.S. Bankruptcy Code or applicable state law, and (2) an Insolvency
Opinion with respect to the Successor Borrower;
(vi) Borrower shall deliver to Lender a Rating Comfort Letter
with respect to the Defeasance;
(vii) Borrower shall deliver an Officer's Certificate certifying
that the requirements set forth in this Section 2.4.1(a) have been
satisfied;
(viii) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the Defeasance
Collateral will generate monthly amounts equal to or greater than the
Scheduled Defeasance Payments;
(ix) Borrower shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request; and
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(x) Borrower shall pay all reasonable costs and expenses of
Lender incurred in connection with the defeasance, including Lender's
reasonable attorneys' fees and expenses and Rating Agency fees and
expenses.
(b) If Borrower has elected to Defease the Note and the requirements
of this Section 2.4.1 have been satisfied, the Collateral Property shall be
released from the Lien of the Mortgage and the Defeasance Collateral, pledged
pursuant to the Security Agreement, shall be the sole source of collateral
securing the Note. In connection with the release of the Lien, Borrower shall
submit to Lender, not less than thirty (30) days prior to the Defeasance Date,
releases of Liens (and related Loan Documents) for execution by Lender. Such
releases shall be in a form appropriate in the jurisdiction in which the
Collateral Property is located and satisfactory to Lender in its reasonable
discretion. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release,
together with an Officer's Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, and (ii) will effect such release in
accordance with the terms of this Agreement. Borrower shall pay all costs, taxes
and expenses associated with the release of the Lien of the Mortgage, including
Lender's reasonable attorneys' fees. Except as set forth in this Section 2.4.1,
or otherwise in this Agreement, no repayment, prepayment or defeasance of all or
any portion of the Note shall cause, give rise to a right to require, or
otherwise result in, the release of the Lien of the Mortgage on the Collateral
Property.
2.4.2 Intentionally Deleted .
2.4.3 Defeasance Collateral Account. On or before the date on which
Borrower delivers the Defeasance Collateral, Borrower shall open at any Eligible
Institution the defeasance collateral account (the "Defeasance Collateral
Account") which shall at all times be an Eligible Account. The Defeasance
Collateral Account shall contain only (i) the Defeasance Collateral, and (ii)
cash from interest and principal paid on the Defeasance Collateral. All cash
from interest and principal payments paid on the Defeasance Collateral shall be
paid over to Lender on each Payment Date and applied first to accrued and unpaid
interest and then to principal. Any cash from interest and principal paid on the
Defeasance Collateral not needed to pay accrued and unpaid interest or Principal
shall be retained in the Defeasance Collateral Account as additional collateral
for the Loan. Borrower shall cause the Eligible Institution at which the
Defeasance Collateral is deposited to enter into an agreement with Borrower and
Lender, satisfactory to Lender in its reasonable discretion, pursuant to which
such Eligible Institution shall agree to hold and distribute the Defeasance
Collateral in accordance with this Agreement. Borrower shall be the owner of the
Defeasance Collateral Account and shall report all income accrued on the
Defeasance Collateral for federal, state and local income tax purposes in its
income tax return. Borrower shall prepay all costs and expenses associated with
opening and maintaining the Defeasance Collateral Account. Lender shall not in
any way be liable by reason of any insufficiency in the Defeasance Collateral
Account.
2.4.4 Successor Borrower. In connection with a Defeasance under this
Section 2.4, Borrower shall establish or designate a successor entity
unaffiliated with the Borrower (the "Successor Borrower") which shall be a
Special Purpose Entity approved by Lender. Lender hereby specifically reserves
the right to require that the Successor Borrower be an Affiliate of Lender or
Servicer. Borrower shall transfer and assign all obligations, rights and
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duties under and to the Note, together with the Defeasance Collateral to such
Successor Borrower. Such Successor Borrower shall assume the obligations under
the Note and the Security Agreement and Borrower shall be relieved of its
obligations under such documents. Borrower shall pay $1,000 to any such
Successor Borrower as consideration for assuming the obligations under the Note
and the Security Agreement. Borrower shall pay all costs and expenses incurred
by Lender, including Lender's attorney's fees and expenses, incurred in
connection therewith.
III INTEREST; PAYMENTS
3.1 Interest; Monthly Loan Payments.
3.1.1 Interest Generally. Interest on the outstanding Principal
balance of the Loan shall accrue from the Closing Date to but excluding the
Maturity Date at the Applicable Interest Rate.
3.1.2 Payment Before Anticipated Repayment Date. Borrower shall pay
to Lender (a) on the first Payment Date following the Closing Date, an amount
equal to interest only on the outstanding principal balance of the Loan from the
Closing Date up to but not including such Payment Date and (b) on each Payment
Date thereafter up to but not including the Anticipated Repayment Date, an
amount equal to the Monthly Debt Service Payment Amount, which payments shall be
applied first to accrued and unpaid interest and the balance to principal.
3.1.3 Payment After Anticipated Repayment Date. Borrower shall pay
to Lender on each Payment Date on and after the Anticipated Repayment Date (a)
an amount equal to the Monthly Debt Service Payment Amount, such payment to be
applied to interest in an amount equal to interest that would have accrued on
the outstanding principal balance of the Loan (without adjustment for Accrued
Interest) at the Regular Interest Rate and the balance applied to principal and
(b) an amount equal to the Net Operating Income After Debt Service for the
preceding month, such payment to be applied to principal. Interest accrued at
the Matured Performing Rate and not paid pursuant to the preceding sentence
("Accrued Interest"), shall be added to the outstanding principal balance and
shall earn interest at the Applicable Interest Rate, to the extent permitted by
law.
3.1.4 Payment on Maturity Date. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance, all accrued and unpaid interest
(including without limitation the Accrued Interest) and all other amounts due
hereunder and under the Note, the Mortgage and other the Loan Documents.
3.1.5 Property Cash Flow Allocation.
(a) Commencing on the January, 2000 Payment Date and continuing on
each Payment Date occurring prior to the Maturity Date, except following the
acceleration of all or any part of the Debt, all Rents with respect to the
Collateral Property shall be applied as follows in the following order of
priority: (i) First, to make payments to the Tax and Insurance Escrow Fund
required to be made by Borrower, (ii) Second, to pay the monthly portion of the
Cash Management Fee due and payable by Borrower; (iii) Third, to Lender to pay
the interest payment
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and principal payment required under Section 3.1.2 or 3.1.3, as applicable,
(plus, if applicable, interest at the Default Rate and any other charges then
due to Lender under the Loan Documents); (iv) Fourth, during the continuance of
a Cash Management Event, to make payments to the Rollover Reserve Fund required
to be made by Borrower; (v) Fifth, and only during the continuance of a Cash
Management Event or the Anticipated Repayment Date, to make payments for
Approved Operating Expenses pertaining to the Collateral Property; (vi) Sixth,
during the continuance of a Cash Management Event, to make payments to the
Replacement Reserve Fund required to be made by Borrower; (vii) Lastly, payments
to Borrower of any excess amounts unless the Debt Service Coverage Ratio falls
below 1.25 (subject to a One Time Cash Management Event Cure) (the Debt Service
Coverage Ratio shall be tested on a quarterly basis at the end of each calendar
quarter (or portion thereof, if applicable) from and after the Closing Date), in
which case all Rents remaining after application thereof pursuant to subsection
(vii) hereof shall be applied by Lender in accordance with Section 4.11 until
such time as a Cash Management Termination occurs.
(b) Subject to the provisions of the Cash Management Agreement and
as otherwise set forth herein in Section 4.11, the failure of Borrower to make
all of the payments required under clauses (i) through (vi) of Section 3.1.5(a)
in full on each Payment Date shall constitute an Event of Default under this
Agreement.
(c) At any time after the Maturity Date or after the acceleration of
all or any portion of the Debt, Lender may, in its sole discretion, permit the
application of Rents in any order, and to any portion or portions of the Debt,
as Lender shall determine.
3.1.6 Payments after Default; Default Rate. After the occurrence and
during the continuance of an Event of Default, the entire unpaid Debt shall bear
interest at the Default Rate, and shall be payable upon demand from time to time
to the extent permitted by applicable law. Payment or acceptance of interest at
the Default Rate is not a permitted alternative to timely payment and shall not
constitute a waiver of any Default or Event of Default or an amendment to this
Agreement or any other Loan Document and shall not otherwise prejudice or limit
any rights or remedies of Lender.
3.2 Loan Repayment; Voluntary Prepayment; Prepayment After Default.
3.2.1 Repayment. Subject to the provisions of Section 8.4 of this
Agreement, Borrower shall repay the Loan in full on the Maturity Date, together
with interest thereon to (but excluding) the date of repayment and any other
amounts due and owing under the Note, this Agreement and the other Loan
Documents. Borrower shall not have the right to prepay all or any portion of the
Principal before the Stated Maturity Date; provided, however, if no Default or
Event of Default shall then exist, and Borrower provides not less than thirty
(30) days prior written notice to Lender, (x) Borrower may prepay the Loan in
full (but not in part) without penalty or premium at any time within three (3)
months of the Anticipated Repayment Date and (y) Borrower may prepay the Loan in
full (but not in part) on any Payment Date occurring on or after the Prepayment
Lockout Expiration Date provided that such prepayment is accompanied by the
Yield Maintenance Premium applicable thereto and any other sums including all
accrued and unpaid interest on the Principal due under the Note, this Agreement
and the other Loan Documents (such repayments in (x) and (y) above being
referred to as a "Voluntary
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Prepayment"). In the event any such Voluntary Prepayment is not made on a
Payment Date, Borrower shall also pay interest that would have accrued on such
prepaid Principal to but not including the next Payment Date. Except during the
continuance of an Event of Default, all proceeds of a Voluntary Prepayment of
the Loan shall be applied by Lender as follows in the following order of
priority: (i) First, to accrued and unpaid interest on the Loan at the
Applicable Interest Rate; (ii) Second, to Principal of the Loan; and (iii)
Third, to any other amounts then due and owing under the Loan Documents. If at
any time prior to the Anticipated Repayment Date the Debt is accelerated by
reason of an Event of Default, any principal payment received by Lender (whether
as a result of a foreclosure of the Mortgage, the exercise of any of Lender's
other rights or remedies under the Loan Documents or otherwise), then Lender
shall be entitled to receive, in addition to all other sums due under the Loan
Documents, an amount equal to the Yield Maintenance Premium applicable to such
prepayment. During the continuance of an Event of Default, all proceeds of
repayment, including any payment or recovery on the Collateral Property (whether
as a result of foreclosure of the Mortgage, the exercise of any of Lender's
other rights or remedies or otherwise) shall, unless otherwise provided in the
Loan Documents, be applied in such order and in such manner as Lender shall
elect in Lender's discretion.
3.2.2 Mandatory Prepayments. The Loan is subject to mandatory
prepayment, without premium or penalty, in certain instances of Insured Casualty
or Condemnation (each a "Casualty/Condemnation Prepayment"), in the manner and
to the extent set forth in Section 8.4.2. Each Casualty/Condemnation Prepayment
shall be made on a Payment Date and shall be applied as follows in the following
order of priority: (i) First, to costs and expenses of Lender (if any),
including reasonable attorney's fees and disbursements, in connection with such
prepayment or reasonably expended by Lender to protect the collateral value of
the Collateral Property; (ii) Second, accrued and unpaid interest at the
Applicable Interest Rate; (iii) Third, to Principal; and (iv) Fourth, to any
other amounts then due and owing under the Loan Documents. If such
Casualty/Condemnation Prepayment is not paid on a Payment Date, the payment
amount will include interest that would have accrued on the Principal prepaid to
but not including the next Payment Date.
3.3 Release of Property. Except as set forth in this Section 3.3 and
otherwise set forth in this Agreement, no repayment or prepayment shall cause,
give rise to a right to require, or otherwise result in, the release of the Lien
of the Mortgage.
3.3.1 Release of Collateral Property. Borrower may obtain (i) the
release of the Collateral Property from the Lien of the Mortgage thereon (and
related Loan Documents) and (ii) the release of Owner's and Borrower's
obligations under the Loan Documents with respect to Collateral Property (other
than those expressly stated to survive), upon satisfaction of each of the
following conditions:
(a) Either (i) conditions for Voluntary Prepayment of the entire
Loan pursuant to Section 3.2.1 hereof are satisfied; or (ii) Lender is required
to release the Collateral Property pursuant to Section 2.4 in connection with a
Defeasance (it being understood that a release pursuant to Section 2.4 need not
satisfy any Release Conditions not expressly set forth in Section 2.4).
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(b) Borrower shall submit to Lender the Release Documents set forth
in Section 3.3.3 below, together with all other documentation Lender reasonably
requires to be delivered by such Borrower in connection with such release,
together with an Officer's Certificate of Borrower.
3.3.2 Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of the Debt in
accordance herewith, release the Lien of the Mortgage if not theretofore
released.
3.3.3 Release Documents. When the terms of Section 3.3 are satisfied
with respect to the Collateral Property, Lender shall execute and deliver to the
Borrower such documents as may be necessary or appropriate to release the Owner
and Borrower from their respective obligations under the Loan Documents and to
release all liens held by Lender on the Collateral Property. All such documents
shall be prepared by Borrower's counsel, shall be in a form appropriate in the
jurisdiction in which such Collateral Property is located, shall be reasonably
acceptable to Lender in form and substance and shall be delivered to Lender at
least thirty (30) days before the proposed release date.
3.3.4 Release of Funds. Upon the completion of the release of the
Collateral Property pursuant to Section 3.3.1, the Lender shall refund to the
Borrower all amounts on deposit in the Funds with respect to the Collateral
Property.
3.4 Payments and Computations.
3.4.1 Making of Payments. Each payment by Borrower hereunder or
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 1:00 p.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the first Business
Day preceding such scheduled Payment Date. All payments made by Borrower
hereunder or under the other Loan Documents, shall be without any deduction,
set-off or counterclaim, whatsoever and are payable without relief from
valuation and appraisement laws and with all costs and charges incurred in the
collection or enforcement thereof, including attorneys' fees and court costs.
Payments to Lender made from the Accounts shall be deemed to have been made
before 1:00 p.m., New York City time, on the date such payment is made.
3.4.2 Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate based on a three hundred sixty (360) day year by (c) the outstanding
Principal balance.
3.4.3 Late Payment Charge. If any Principal, interest or other sum
due under any Loan Document is not paid on the date on which it is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of five percent
(5%) of such unpaid sum or the maximum amount permitted by applicable law (the
"Late Payment Charge"), in order to defray the expense incurred by Lender in
handling and processing such delinquent payment and to
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compensate Lender for the loss of the use of such delinquent payment; provided
that if no such late payment has occurred within the prior twelve (12) month
period, Borrower shall only be required to pay the late payment charge provided
for in this Section 3.4.3 if such failure to pay continues for two (2) Business
Days after notice from Lender. Such amount shall be secured by the Loan
Documents. Any action by Lender regarding the collection of a Late Payment
Charge will be without prejudice to any other rights, nor act as a waiver of any
other rights, that Lender may have as provided herein, at law or in equity. No
Late Payment Charge shall be due in connection with any payment to be made from
the Accounts, provided that on the date such payment is due there are sufficient
funds in such Accounts to make the payment in question.
3.5 Taxes. Any and all payments by Borrower hereunder and under the other
Loan Documents shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on Lender's income, and franchise taxes imposed on Lender by the law or
regulation of any Governmental Authority (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to in this Section 3.5 as "Applicable Taxes"). If Borrower shall be
required by law to deduct any Applicable Taxes from or in respect of any sum
payable hereunder to Lender, the following shall apply provided the Applicable
Taxes do not result because the Lender (due to permitted succession or
assignment) is not a United States person as defined at section 7701(a)(30) of
the Code or the Lender has failed to provide information necessary to avoid
back-up withholding pursuant to section 3406 of the Code: (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.5), Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions and (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
Borrower also agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or recordation of, or
otherwise with respect to, this Agreement or any other Loan Document ("Other
Taxes"). Borrower shall indemnify Lender for the full amount of Applicable Taxes
or Other Taxes (including any Applicable Taxes or Other Taxes imposed by any
jurisdiction on amounts paid or payable under this Section 3.5) paid by Lender
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Applicable Taxes or Other Taxes
were correctly or legally asserted. Payments pursuant to this Section 3.5 shall
be made within fifteen (15) days after the date Lender makes written demand
therefor. Borrower shall have the right to contest such taxes referred to in
this Section 3.5 in accordance with the terms of Section 6.2 of this Agreement.
IV CASH MANAGEMENT; ESCROWS AND RESERVES
4.1 Cash Management Arrangements.
4.1.1 Lockbox Account. On or before the Closing Date, Borrower shall
open an account (the "Lockbox Account") with Agent which shall be the depository
account for Borrower into which all sums due to Borrower will be deposited. The
Lockbox Account shall be in Lender's name, or at Lender's option, in the
Servicer's name. The Lockbox Account shall be
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under the sole dominion and control of Lender. The Lockbox Account will be
opened and maintained as an Eligible Account.
4.1.2 Deposits into Lockbox Account. Owner and Borrower shall cause
all Tenants at the Collateral Property to pay Rent directly into the Lockbox
Account on or before the date such Rent is due under the terms of the applicable
Lease. When bills to Tenants are delivered pursuant to Section 6.11.6 of this
Agreement, Owner and Borrower shall send a notice, substantially in the form of
Exhibit A attached hereto, to all Tenants at the Collateral Property directing
them to pay all Rent into the Lockbox Account. In the event that Owner,
Borrower, their respective Affiliates or the Manager receives any Rents
directly, Owner and Borrower agree to deposit, or cause to be deposited, all
such Rents into the Lockbox Account within one (1) Business Day. All sums
deposited into the Lockbox Account shall be swept daily into a cash management
account established by Owner and Borrower with Agent on or before the Closing
Date (the "Cash Management Account") (the Cash Management Account shall be held
and administered in accordance with the Cash Management Agreement). The Cash
Management Account shall be in Lender's name, or at Lender's option, in the
Servicer's name. The Cash Management Account shall be under the sole dominion
and control of Lender. The Cash Management Account will be opened and maintained
as an Eligible Account. Neither the Lockbox Account, the Cash Management Account
nor the Cash Management Agreement shall alter or diminish in any way Borrower's
obligation to make timely payment and deposits to all sums required to be paid
or deposited under any Loan Document.
4.1.3 The Accounts. On or before the Closing Date, Borrower shall
open with Agent separate accounts for each of the following Funds (hereinafter
defined): Tax and Insurance Escrow Fund (the "Tax and Insurance Account"),
Replacement Reserve Fund (the "Replacement Reserve Account"), Rollover Reserve
Fund (the "Rollover Reserve Account"), Operating Expense Reserve Fund (the
"Operating Expense Account"), the Cash Collateral Fund (the "Cash Collateral
Account"), the Debt Service Reserve Fund (the "Debt Service Reserve Account"),
the Letter of Credit Proceeds (the "Letter of Credit Account") and the
Construction Interest Reserve Fund (the "Construction Interest Reserve Fund").
Tax and Insurance Escrow Fund shall be held in the Tax and Insurance Account.
Replacement Reserve Funds shall be held in the Replacement Reserve Account.
Rollover Reserve Funds shall be held in the Rollover Reserve Account. Operating
Expense Reserve Funds shall be held in the Operating Expense Account. The Debt
Service Reserve Fund shall be held in the Debt Service Reserve Account The
Letter of Credit Proceeds Fund shall be held in the Letter of Credit Account.
All Funds remaining in the Accounts after application pursuant to Sections 3.1.5
and 4.11 shall be held in the Cash Collateral Account. The accounts defined in
this Section may be hereinafter referred to from to time as an "Account" or
collectively as the "Accounts." At Lender's option, each of the Accounts shall
be opened in Lender's name or in Servicer's name. Each of the Accounts shall be
under the sole dominion and control of Lender. Each of the Accounts shall be
opened and maintained as an Eligible Account.
4.2 Letter of Credit Proceeds Fund. Pursuant to the terms of the Letter of
Credit Agreement, in the event that:
(a) If, sixty days prior to the maturity date of the UBS Letter of
Credit, (1) Completion (as defined in the Letter of Credit Agreement) has not
occurred on or before June 30,
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2001, (2) the Letter of Credit Amount (as defined in the Letter of Credit
Agreement) has not yet been reduced to zero, or (3) an Event of Default has
occurred and is continuing, Lender shall have the right, upon notice to the
Borrower of such failure, to draw upon the UBS Letter of Credit in full and the
proceeds thereof (the "Letter of Credit Proceeds") shall be applied to the
outstanding principal amount of the Note and any other Obligations of Borrower
under the Loan Documents.
(b) In the event that (i) Borrower fails to renew the UBS Letter of
Credit delivered under the Letter of Credit Agreement at least sixty (60) days
prior to its expiration for an additional period of not less than one (1) year,
provided that if the UBS Letter of Credit has a term of one (1) year it may be
extended from time to time but in no event shall it expire prior to the
satisfaction of the Cash Flow Coverage Ratio (as defined in the Letter of Credit
Agreement) governing the release of the UBS Letter of Credit set forth in
Section 4(b) of the Letter of Credit Agreement; provided, however, that UBS has
not committed to issue the UBS Letter of Credit for a term that expires after
December 9, 2001, or (ii) Borrower fails to deliver a substitute letter of
credit (in the form required under the Letter of Credit Agreement and in the
amount of such existing UBS Letter of Credit) sixty (60) days prior to the
expiration of the then existing UBS Letter of Credit from an Eligible
Institution, then, in either case, Lender shall have the right to draw upon the
UBS Letter of Credit in full and the Letter of Credit Proceeds shall be
deposited into the Letter of Credit Account and the amount of the Letter of
Credit Proceeds shall be reduced or released in accordance with Section 4(b) of
the Letter of Credit Agreement, or, for such time as such Letter of Credit
Proceeds are on deposit in the Letter of Credit Account, the Letter of Credit
Proceeds may be used by Lender to satisfy the Obligations at any time upon the
occurrence or continuation of an Event of Default or upon the occurrence of the
events set forth in subsection (a)(1) or (2) above.
(c) In the event that the long term unsecured debt rating by S&P of
any bank which has issued a Letter of Credit under the Letter of Credit
Agreement be reduced such that the issuing bank at any time does not qualify as
an Eligible Institution (any such rating, a "Reduced Rating"), Borrower shall
within five (5) days after the date on which such Reduced Rating shall have been
assigned deliver to Lender a substitute letter of credit from an Eligible
Institution in the form annexed to the Letter of Credit Agreement and in the
amount of the existing Letter of Credit relating to New Construction (which
substitute letter of credit shall thereupon become the Letter of Credit). If
Borrower shall fail to comply with the terms of the preceding sentence, Lender
shall have the right to draw upon the UBS Letter of Credit in full and the
Letter of Credit Proceeds thereof shall be deposited into the Letter of Credit
Account pursuant to the Loan Agreement and shall be retained therein as
additional security for the Obligations. Such Letter of Credit Proceeds shall be
subject to reduction or release pursuant to the terms of Section 4(b) of the
Letter of Credit Agreement until the date upon which such Letter of Credit
should have been released or if the conditions for release have not been
satisfied the Letter of Credit Proceeds may be used by Lender to satisfy the
Obligations at any time upon the occurrence or continuation of an Event of
Default or upon the occurrence of the events set forth in subsection (a)(1) or
(2) above.
4.3 Tax and Insurance Escrow Fund. Borrower shall pay to Lender on each
Payment Date (i) one-twelfth (1/12th) of the Taxes for the Collateral Property
that Lender estimates will be payable during the next twelve (12) months in
order to accumulate with Lender sufficient funds
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to pay all such Taxes at least thirty (30) days prior to their respective due
dates ("Monthly Tax Amount"), and (ii) one-twelfth (1/12th) of the Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage
afforded by the Policies relating to the Collateral Property upon the expiration
thereof in order to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least thirty (30) days prior to the expiration of such
Policies ("Monthly Insurance Amount") (the amounts paid under the foregoing
clauses (i) and (ii) with respect to the Collateral Property, less disbursements
thereof pursuant hereto, being called the "Tax and Insurance Escrow Fund").
Lender will (a) apply the Tax and Insurance Escrow Fund to payments of Taxes and
Insurance Premiums required to be made by Borrower pursuant to Sections 6.2 and
8.1 prior to the date upon which interest or penalties would be imposed,
provided that Borrower has promptly supplied Lender with notices of all Taxes
and Insurance Premiums due for the Collateral Property, or (b) reimburse
Borrower for such amounts upon presentation of evidence of payment and an
Officer's Certificate in form and substance satisfactory to Lender; subject,
however, to Borrower's right to contest Taxes in accordance with Section 6.2.
Following the payment by Lender of any Taxes pursuant to this Section 4.3,
Lender shall send a "paid" receipt to the Borrower. Provided Borrower has
deposited funds into the Tax and Insurance Escrow Fund as required under this
Section and given Lender timely notice of the amount and due date of such taxes,
Borrower shall not be liable for interest or penalties resulting from late
payment of such Taxes by Lender, and, so long as no portion of the Debt has been
accelerated, Lender or Servicer shall be responsible for such interest and
penalties. In making any payment relating to the Tax and Insurance Escrow Fund,
Lender may do so according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Escrow Fund shall exceed the amounts next coming due for Taxes and
Insurance Premiums pursuant to Sections 6.2 and 8.1, Lender shall, in its sole
discretion, return any excess to the applicable Borrower or credit such excess
against future payments to be made to the Tax and Insurance Escrow Fund. If at
any time Lender determines that the Tax and Insurance Escrow Fund is not or will
not be sufficient to pay the Taxes or Insurance Premiums next coming due, Lender
shall notify the Borrower of such determination and the Borrower shall increase
the monthly payments to Lender by the amount that Lender estimates is sufficient
to make up the deficiency at least thirty (30) days prior to delinquency of the
Taxes and/or expiration of the Policies, as the case may be. Lender acknowledges
that Borrower currently causes its Premiums to be paid by Afco Acceptance Corp.
("Afco") through an agreement with Westfield America, Inc., and Lender agrees
that amounts for the Borrower's Premiums held in the Tax and Insurance Escrow
Fund shall be released to reimburse the Borrower for payments made by it to
reimburse Westfield America, Inc. for the amounts paid to Afco with respect to
the Borrower's Premiums (subject to compliance by Borrower with clause (b) of
this Section 4.3 or any other similar arrangements reasonably acceptable to
Lender.
4.4 Replacements and Replacement Reserves.
4.4.1 Replacement Reserve Fund. Upon the occurrence of a Cash
Management Event, Borrower shall pay to Lender on each Payment Date thereafter
(in addition to other payments required hereunder) an amount equal to the
Monthly Replacement Deposit for the Collateral Property (such payments, less
disbursements thereof pursuant hereto, being called
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the "Replacement Reserve Fund"). If the amount of the Replacement Reserve Fund
shall exceed the amounts due for Approved Replacement Expenses pursuant to the
terms hereof, Lender shall, in its discretion, return any excess to the Borrower
or, if future Replacement Reserve Fund payments are then required, credit such
excess against such future payments.
4.4.2 Payment of Replacement Expenses. From time to time (but not
more often than monthly), Lender shall disburse funds held in the Replacement
Reserve Fund to Borrower, within thirty (30) days after the delivery by Borrower
to Lender of a request therefor, in increments of at least $5,000; provided,
that (i) on the day of the request and on the day of payment no Event of Default
shall have occurred and be continuing; (ii) such disbursement is for a
Replacement Expense that has been incurred by Owner or Borrower (provided that,
during the continuance of a Cash Management Event, such Replacement Expense must
be an Approved Replacement Expense); (iii) Lender shall have (if it desires)
verified (by an inspection conducted at Borrower's expense) performance of the
work associated with such Approved Replacement Expense (or Replacement Expense,
as the case may be); and (iv) the request for disbursement is accompanied by (A)
an Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such funds will be used to pay or reimburse Owner or Borrower for Approved
Replacement Expenses (or Replacement Expenses, as the case may be) and a
description thereof, (x) that all outstanding trade payables (other than those
to be paid from the requested disbursement or those otherwise permitted to be
outstanding under Section 7.8) have been paid in full, (y) that the same has not
been the subject of a previous disbursement, and (z) that all previous
disbursements have been used to pay the previously identified Approved
Replacement Expenses (or Replacement Expenses, as the case may be), and (B)
reasonably detailed documentation as to the amount, necessity and purpose
therefor.
4.5 Rollover Reserves.
4.5.1 Rollover Reserve Fund. Upon the occurrence of a Cash
Management Event, Borrower shall pay to Lender on each Payment Date thereafter
monthly deposits for the payment of Approved Leasing Expenses (the "Monthly
Rollover Deposit") for the Collateral Property (in addition to other payments
required hereunder) (such payments, less disbursements thereof pursuant hereto,
being called the "Rollover Reserve Fund") or, at Borrower's option, shall post a
Letter of Credit in such amount determined by Lender based on $.75 a square foot
of gross leasable area excluding Anchor Tenant space for each Collateral
Property. Lender will apply such payments to payment of Approved Leasing
Expenses pursuant to the terms hereof. Borrower shall also deposit into the
Rollover Reserve Fund all payments ("Lease Termination Payments") received from
Tenants in connection with the termination or cancellation of any Lease more
than one year prior to its expiration date, including fees, penalties and
commissions (provided that, upon the releasing of all or any portion of the
space demised under such cancelled or terminated Lease, Lender shall, upon
Borrower's request and provided no Event of Default then exists, release to
Borrower the portion, if any, of the Lease Termination Payment which exceeds the
actual Leasing Expenses incurred or to be incurred in connection with such
releasing). If the amount of the Rollover Reserve Fund shall exceed the amounts
due for Approved Leasing Expenses pursuant to the terms hereof, Lender shall
retain excess Rollover Reserve Funds in accordance with Section 4.11 of this
Agreement. If Lender determines in its reasonable judgment that the amount of
the Rollover Reserve Fund will be insufficient to pay the amounts due or to
become due for Approved Leasing Expenses (after taking into account any
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Lease Termination Payments theretofore deposited into the Rollover Reserve),
Lender may adjust the monthly amounts required to be deposited into the Rollover
Reserve Fund upon thirty (30) days' notice to Borrower. Alternatively, Lender
may in its discretion determine that the amount of the Rollover Reserve Fund
will exceed the amounts due or to become due for Approved Leasing Expenses, in
which case Lender may reduce the monthly amounts to be deposited therein. Lender
shall release funds on deposit in the Rollover Reserve Fund to the Borrower in
an amount calculated based on $8.88 per square foot leased at the Collateral
Property, upon Lender's receipt from Borrower of evidence that (i) a new Lease
has been executed, (ii) the Tenant under such new Lease has taken possession of
the premises leased thereunder and has provided the Borrower and Lender with an
estoppel letter stating that the Tenant has commenced paying rent pursuant to
the terms of its Lease, (iii) all tenant improvement costs or other Approved
Leasing Expenses have been paid pursuant to the terms of the new Lease, and (iv)
any leasing commissions have been paid and there are no outstanding monetary
obligations of the Borrower to the Tenant or any third party due under such new
Lease.
4.5.2 Payment of Leasing Expenses. From time to time (but not more
than once per month) Lender shall disburse funds held in the Rollover Reserve
Fund to Borrower, within fifteen (15) days after the delivery by Borrower to
Lender of a request therefor, in increments of at least $5,000; provided, (i) on
the day of the request and on the day of payment no Event of Default shall have
occurred and be continuing; (ii) such disbursement is for an Approved Leasing
Expense; (iii) Lender shall have (if it desires) verified (by an inspection
conducted at Borrower's expense) performance of any construction work associated
with such Approved Leasing Expense; and (iv) the request for disbursement is
accompanied by (A) an Officer's Certificate certifying (v) the amount of funds
to be disbursed, (w) that such funds will be used only to pay (or reimburse
Owner or Borrower for) Approved Leasing Expenses and a description thereof, (x)
that all outstanding trade payables (other than those to be paid from the
requested disbursement or those otherwise permitted to be outstanding under
Section 7.8) have been paid in full, (y) that the same has not been the subject
of a previous disbursement, and (z) that all previous disbursements have been
used only to pay (or reimburse Owner or Borrower for) the previously identified
Approved Leasing Expenses, and (B) reasonably detailed supporting documentation
as to the amount, necessity and purpose therefor. During the continuance of a
Cash Management Event, any such disbursement to pay (rather than reimburse)
Approved Leasing Expenses may, at Lender's option, be made by joint check
payable to Borrower and the payee of such Approved Leasing Expenses.
4.6 Construction Interest Reserve.
4.6.1 Construction Interest Reserve Fund.
(a) Borrower shall deposit with the Lender on the date hereof the
amount of $1,016,043.71 or an amount equal to nine (9) months of interest at the
rate of 8.177% per annum on an amount equal to $12,612,078 which shall be held
by the Lender in the Construction Interest Reserve Account (the "Construction
Interest Reserve Fund").
(b) Borrower shall deposit in the Construction Interest Reserve Fund
on the date hereof the additional amount of $112,890.00 (the "Minimum Reserve
Balance") or one month's interest at 8.177% per annum on $12,612,078.
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(c) Borrower hereby instructs the Agent, for the benefit of Lender,
to withdraw from the Construction Reserve Account by 10:00 A.M. New York time on
the Business Day immediately prior to each Payment Date during the period from
and including February 11, 2000 through and including October 11, 2000, an
amount equal to $112,890 per month to be applied as partial payment of the Note.
Any portion of the $1,016,043.71 remaining in the Construction Interest Reserve
Account after October 11, 2000, may, at the direction of the Borrower, be
released to the Borrower or be made available to the Lender to fund future
payments of interest payable under the Note and this Agreement. An amount equal
to the Minimum Reserve Balance must be maintained in the Construction Interest
Reserve Account held by the Agent through the date on which the UBS Letter of
Credit is reduced to zero in accordance with the terms of the Letter of Credit
Agreement. Upon the reduction of the amount of the UBS Letter of Credit,
Borrower shall deliver to the Agent a statement setting forth the revised
Minimum Reserve Balance and any amounts being held by Agent in excess of the
revised Minimum Reserve Balance may, at the direction of the Borrower, be
delivered to the Borrower or be made available to the Lender to fund future
payments of interest on the Notes. If at any time after October 11, 2000,
Borrower fails to fund the full interest payment due on the Note in accordance
with the terms of the Note and this Loan Agreement, the Agent, as agent for
Lender, shall draw from the Construction Interest Reserve Account sufficient
sums from the Minimum Reserve Balance to pay current interest due on the Note.
Within five (5) days of such drawing, Borrower shall deliver funds to the Agent
for deposit into the Construction Interest Reserve Account to fund any shortfall
in the Minimum Reserve Balance. The Borrower's failure to restore the Minimum
Reserve Balance shall constitute an Event of Default under this Agreement, the
Note and the other Loan Documents. After drawing any portion of the Minimum
Reserve Balance from the Construction Interest Reserve Account, the Agent shall
so notify the Lender and shall further notify the Lender upon the earlier of (i)
the date that the Borrower deposits the funds required to restore the Minimum
Reserve Balance in the Construction Interest Reserve Account, and (ii) the date
which is five (5) days following such drawing from the Construction Interest
Reserve Account.
4.7 Operating Expense Reserves.
4.7.1 Operating Expense Reserve Fund. After the occurrence of a Cash
Management Event or the Anticipated Repayment Date, Borrower shall pay to Lender
an amount equal to the Approved Operating Expenses for the Collateral Property
for the next Current Month (the "Monthly Operating Expense Deposit") (such
payments, less disbursements thereof pursuant hereto, being called the
"Operating Expense Reserve Fund"). If the amount of the Operating Expense
Reserve Fund shall exceed the amounts due for Approved Operating Expenses
pursuant to the terms hereof, Lender shall retain excess Operating Expense
Reserve Funds in accordance with Section 4.11 of this Agreement.
4.7.2 Payment of Approved Operating Expenses. From time to time (but
not more than once per month) following the occurrence of a Cash Management
Event or the Anticipated Repayment Date, Lender shall disburse funds held in the
Operating Expense Reserve Fund to Borrower, provided (i) on the day of the
request and on the date of payment no portion of the Debt shall have been
accelerated; (ii) such disbursement is for an Approved Operating Expense; and
(iii) such disbursement is requested by Borrower in writing, accompanied by (A)
an Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such
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funds will be used to pay Approved Operating Expenses and a description thereof,
(x) that all outstanding trade payables (other than those to be paid from the
requested disbursement or those otherwise permitted to be outstanding under
Section 7.8) have been paid in full, (y) that the same has not been the subject
of a previous disbursement, and (z) that all previous disbursements have been or
will be used to pay the previously identified Approved Operating Expenses, and
(B) reasonably detailed documentation as to the amount, necessity and purpose
therefor. Subject to satisfaction of the preceding conditions, if Lender
receives from Borrower a valid request for a disbursement for payment of
Approved Operating Expenses for the then Current Month at least five (5)
Business Days prior to the Payment Date occurring in such Current Month, then
the disbursement in respect of such Approved Operating Expenses shall be made to
Borrower on such Payment Date. Notwithstanding anything to the contrary in the
foregoing, during the continuance of an Event of Default Lender shall have the
right, in lieu of disbursing to Borrower funds from the Operating Expense
Reserve Fund, to pay such funds directly to the obligees or to pay such funds to
Borrower and the obligee in question jointly.
4.8 Casualty/Condemnation Fund. The Borrower shall pay, or cause to be
paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation (such
amounts, less disbursements thereof pursuant hereto, the "Casualty/Condemnation
Fund"), in accordance with the provisions of Sections 8.2.2 and 8.3.2 of this
Agreement. All amounts in the Casualty/Condemnation Fund shall be disbursed in
accordance with the provisions of Article VIII.
4.9 Security Deposits.
(a) Security deposits under Leases shall not be commingled with any
other funds of Owner or Borrower (unless permitted by applicable Legal
Requirements) and all security deposits paid in cash under Leases, shall, unless
permitted to be commingled with Owner's or Borrower's funds under applicable
Legal Requirements, be deposited by Borrower, or Borrower shall cause same to be
deposited, into an account with the Agent. After the occurrence of a Cash
Management Event, upon Lender's request, if permitted by applicable Legal
Requirements, Borrower shall turn over, or caused to be turned over to Lender
the security deposits (and any interest theretofore earned thereon) under
Leases, to be held by Lender subject to the terms of the Leases. If applicable
Legal Requirements prohibit Owner or Borrower from turning over to Lender
security deposits under Leases, Borrower shall keep, or cause Owner to keep,
such security deposits at a separately designated account at the Agent so that
the security deposits shall not be commingled with any other funds of Owner or
Borrower. Security deposits held by the Lender will be released by Lender upon
notice from Owner or Borrower together with such evidence as Lender may
reasonably request that such security deposit is required to be returned to a
Tenant pursuant to the terms of a Lease or may be applied as Rent pursuant to
the rights of Owner or Borrower under the applicable Lease.
(b) Any letter of credit or other instrument that Borrower receives
in lieu of a cash security deposit shall (i) be maintained in full force and
effect in the full amount unless replaced by a cash deposit as hereinabove
described, (ii) if pertaining to a Material Lease, be issued by an institution
reasonably satisfactory to Lender, (iii) if permitted pursuant to any Legal
Requirements, name Lender as payee or mortgagee thereunder (or be fully
assignable to Lender) and (iv) in all respects, comply with any applicable Legal
Requirements and, if pertaining to a
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Material Lease, otherwise be reasonably satisfactory to Lender. Upon request,
Borrower shall provide, or cause to be provided, to Lender with evidence
reasonably satisfactory to Lender of Owner's and Borrower's compliance with the
foregoing.
4.10 Funds, Generally.
4.10.1 Grant of Security Interest; Application of Funds. As
additional security for Borrower's payment of the Debt and the performance by
Borrower of all other terms, conditions and provisions of the Loan Documents,
Owner and Borrower hereby pledge and assign to Lender, and grants to Lender a
security interest in, all right, title and interest of Owner and Borrower in and
to all Rents and in and to all payments to or monies held in the Lockbox
Account, the Cash Management Account, the Accounts (collectively, the "Cash
Management Accounts") and in the Casualty/Condemnation Fund (all amounts held in
the Accounts, the Casualty/Condemnation Fund, together with all other funds
designated as or deemed to be "Funds" under this Agreement, are referred to
herein as the "Funds"). Owner and Borrower for themselves and on behalf of each
of their respective Affiliates and the Manager hereby grant to Lender a
continuing security interest in, and agrees to hold in trust for the benefit of
Lender, all Rents in its possession prior to the (i) payment of such Rents to
Lender or (ii) deposit of such Rents into the Lockbox Account in accordance with
this Agreement and the Cash Management Agreement. Neither Owner nor Borrower
shall, without obtaining the prior written consent of Lender, further pledge,
assign or grant any security interest in any Cash Management Account or Fund, or
permit any Lien to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto. This Agreement is, among other things, intended by
the parties to be a security agreement for purposes of the UCC. Upon the
occurrence and during the continuance of an Event of Default, Lender may apply
any sums in the Cash Management Accounts as provided under Section 3.1.5(c).
4.10.2 Investments of Funds. Lender shall direct the Agent to invest
any balances in the Accounts in Permitted Investments as instructed by Borrower,
provided that (i) if Borrower fails to so instruct Lender, or upon the
occurrence and continuation of a Cash Management Event, Lender may direct the
Agent to invest and reinvest such balances of the Funds in Permitted Investments
as Lender shall determine in its sole discretion, (ii) the maturities of the
Permitted Investments on deposit in the Accounts shall be selected and
coordinated to become due not later than one day before any disbursements from
the Accounts must be made, (iii) all such Permitted Investments shall be held in
the name of and be under the sole dominion and control of Lender and subject at
all times to the terms hereof, and (iv) no Permitted Investment shall be made
unless Lender shall have and continue to have a perfected first priority Lien in
such Permitted Investment securing the obligations of Borrower hereunder and
under the other Loan Documents and all filings and other actions necessary to
ensure the validity, perfection, and first priority of such Lien shall have been
taken. Lender shall have no liability for any loss investments of Funds in the
Accounts that are invested in Permitted Investments and no such loss shall
affect Owner's or Borrower's obligations to make the deposits into the Funds
pursuant to this Agreement. Borrower shall report on its federal, state and
local income tax reports at interest or income accrued on Funds in the Accounts.
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4.11 Cash Collateral Fund.
(a) After the occurrence of a Cash Management Event, all Rents
remaining in the Accounts after application thereof pursuant to items (i)
through (vi) of Section 3.1.5(a), shall be transferred to the Cash Collateral
Account (all funds at any time in the Cash Collateral Account being called the
"Cash Collateral Fund").
(b) Funds in the Cash Collateral Account which originally
constituted a part of the Replacement Reserve Fund or the Rollover Reserve Fund
shall be held in the Cash Collateral Account for future disbursement by Lender,
provided no Event of Default then exists, for Approved Replacement Expenses and
Approved Leasing Expenses, respectively, to the extent, but only to the extent,
that Borrower's required Monthly Reserve Deposits and/or required Monthly
Rollover Deposits, respectively, are insufficient to pay for same. Funds in the
Cash Collateral Account which originally constituted a part of some other Fund
shall be held in the Cash Collateral Account for future application, provided no
Event of Default then exists, to such Funds, in such order and manner as Lender
may elect in its sole and absolute discretion.
(c) Any funds deposited with the Lender in connection with a One
Time Cash Management Event Cure shall be secured by the Mortgages and be
otherwise applied in accordance with the terms of this Section 4.11 if the One
Time Cash Management Event Cure does not prevent a Cash Management Event from
occurring at the end of the following quarter upon the Lender's determination of
the Debt Service Coverage Ratio. If there is no Cash Management Event upon such
subsequent determination of the Debt Service Coverage Ratio, or a Cash
Management Termination has occurred, the funds deposited with the Lender in
connection with a One Time Cash Management Event Cure shall be returned to the
Borrower pursuant to subsection (d) below.
(d) Upon a Cash Management Termination, Lender shall deliver to
Borrower, on the next Business Day, all Funds (other than Funds in the Tax and
Insurance Escrow Fund) then on deposit in the Cash Collateral Account.
V REPRESENTATIONS AND WARRANTIES
5.1 Owner and Borrower Representations. Each of Owner and Borrower
represent and warrant as to itself, as of the date hereof that, except to the
extent (if any) disclosed on Schedule 3 with reference to a specific subsection
of this Section 5.1:
5.1.1 Organization; Special Purpose. Each of Owner and Borrower has
been duly organized and is validly existing and in good standing under the laws
of the state of its formation, with requisite power and authority, and all
rights, licenses, permits and authorizations, governmental or otherwise,
necessary to own its properties and to transact the business in which it is now
engaged. Each of Owner and Borrower is duly qualified to do business and is in
good standing in each jurisdiction where it is required to be so qualified in
connection with its properties, business and operations. Each of Owner and
Borrower is a Special Purpose Entity, and the sole business of (i) Owner is the
ownership, management and operation of the Collateral Property, and (ii)
Borrower is its role as borrower hereunder and under the other Loan Documents to
which it is a party
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5.1.2 Proceedings; Enforceability. Each of Owner Borrower has taken
all necessary action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party. The Loan Documents to which each of Owner
and/or Borrower is a party have been duly executed and delivered by Owner or
Borrower, as applicable, and constitute legal, valid and binding obligations of
Owner and Borrower, as applicable, enforceable against Owner and Borrower, as
applicable, in accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law).
5.1.3 No Conflicts. The execution, delivery and performance by each
of Owner or Borrower, as applicable, of the Loan Documents to which it is a
party will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any Lien (other than pursuant to the Loan Documents) upon any of
the property of Owner or Borrower, as applicable, pursuant to the terms of, any
agreement or instrument to which Owner or Borrower, as applicable, is a party or
by which its property is subject, nor will such action result in any violation
of the provisions of any statute or any order, rule or regulation of any
Governmental Authority having jurisdiction over Owner or Borrower or any of
their respective properties. Neither Owner's nor Borrower's rights under the
Licenses and the Management Agreement will be adversely affected by the
execution and delivery of the Loan Documents, Owner's or Borrower's performance
thereunder, the recordation of the Mortgage or the exercise of any remedies by
Lender. Any consent, approval, authorization, order, registration or
qualification of or with any Governmental Authority required for the execution
and delivery by Owner or Borrower, as applicable, of the Loan Documents has been
obtained and is in full force and effect.
5.1.4 Litigation. There are no actions, suits or other proceedings
at law or in equity by or before any Governmental Authority now pending or
threatened against or affecting Owner, Borrower, Owner Representative, Borrower
Representative, the Manager or the Collateral Property, which, if adversely
determined, might materially adversely affect the condition (financial or
otherwise) or business of Borrower, Owner Representative, Borrower
Representative, Manager or the condition or ownership of any Collateral
Property.
5.1.5 Agreements. Neither Owner nor Borrower is a party to any
agreement or instrument or subject to any restriction which might adversely
affect Owner or Borrower or the Collateral Property, or Owner's or Borrower's
business, properties, operations or condition, financial or otherwise. Neither
Owner nor Borrower is in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Permitted Encumbrance or any other agreement or instrument to
which it is a party or by which it or the Collateral Property is bound.
5.1.6 Title. Owner has good fee title to the portion of the
Collateral Property constituting Real Property, and good title to the balance of
the Collateral Property, free and clear of all Liens except the Permitted
Encumbrances. The Mortgage executed by Owner, when properly recorded in the
appropriate records, together with any UCC financing statements required to be
filed in connection therewith, will create (i) valid, perfected first and second
priority lien on the fee interest in the Collateral Property, and (ii) perfected
security interests in
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and to, and perfected collateral assignments of, all personalty purported to be
covered by the Mortgage (including the Leases affecting such Collateral
Property), all in accordance with the terms thereof, in each case subject only
to any applicable Permitted Encumbrances. The Permitted Encumbrances do not
materially adversely affect the value or use of the Collateral Property, or the
ability of Borrower to repay the Loan. There are no claims for payment for work,
labor or materials affecting the Collateral Property which are or may become a
Lien prior to, or of equal priority with, any Liens created by the Loan
Documents.
5.1.7 Survey. To the best of each of Owner's and Borrower's
knowledge, the survey for the Collateral Property delivered to Lender does not
fail to reflect any material matter affecting the Collateral Property or the
title thereto which is required to be reflected thereon in accordance with the
standards for a Survey described in the definition thereof.
5.1.8 No Bankruptcy Filing. Neither Owner nor Borrower is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency law or the liquidation of all or a major portion of its
property (a "Bankruptcy Proceeding"), and neither Owner nor Borrower has any
knowledge of any Person contemplating the filing of any such petition against
Owner or Borrower. In addition, neither Owner, Borrower, Owner Representative or
Borrower Representative or any principal or Affiliate of Owner, Borrower, Owner
Representative or Borrower Representative has been a party to, or the subject,
of a Bankruptcy Proceeding for the past ten (10) years.
5.1.9 Full and Accurate Disclosure. No statement of fact made by
Owner or Borrower in any Loan Document contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained therein not misleading. There is no material fact presently known to
Owner or Borrower that has not been disclosed to Lender which adversely affects,
or, as far as Owner or Borrower can foresee, might adversely affect, the
Collateral Property or the business, operations or condition (financial or
otherwise) of Owner or Borrower.
5.1.10 No Plan Assets. Neither Owner nor Borrower is an "employee
benefit plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA,
and none of the assets of Owner or Borrower constitute or will constitute "plan
assets" of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101. In addition, (a) Neither Owner nor Borrower is a "governmental plan"
within the meaning of Section 3(32) of ERISA and (b) transactions by or with
Owner or Borrower are not subject to state statutes regulating investment of,
and fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code currently in
effect, which prohibit or otherwise restrict the transactions contemplated by
this Loan Agreement.
5.1.11 Compliance. Each of Owner and Borrower and the Collateral
Property and the use thereof comply in all material respects with all applicable
Legal Requirements. Neither Owner nor Borrower is in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which might materially adversely affect the condition (financial or
otherwise) or business of Owner or Borrower. There has not been and shall never
be committed by Owner or Borrower or any other Person in occupancy of or
involved with the operation or use of the Collateral Property any act or
omission affording any
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Governmental Authority the right of forfeiture as against the Collateral
Property or any part thereof or any monies paid in performance of any of Owner's
or Borrower's obligations under any Loan Document.
5.1.12 Contracts. As of the date hereof, there are no material
service, maintenance or repair contracts affecting the Collateral Property other
than those identified on Schedule 4. All information set forth in Schedule 4 is
true, accurate and complete in all material respects as of the date hereof.
Except as disclosed on Schedule 4, there are no material service, maintenance or
repair contracts that are not terminable on one month's notice or less without
cause and without penalty or premium. All service, maintenance or repair
contracts affecting the Collateral Property have been entered into at
arms-length in the ordinary course of Owner's business and provide for the
payment of fees in amounts and upon terms comparable to existing market rates.
5.1.13 Financial Information. All financial data, including the
information required pursuant to Section 2.2.6 hereof and any statements of cash
flow and income and operating expense, that have been delivered to Lender in
respect of the Collateral Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of the
Collateral Property as of the date of such reports, and (iii) to the extent
prepared by an independent certified public accounting firm, have been prepared
in accordance with GAAP consistently applied throughout the periods covered,
except as disclosed therein. Neither Owner nor Borrower has any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that would
have a material adverse affect on the financial condition of Owner or Borrower
or on the Collateral Property or the operation thereof as a retail shopping
center, except as referred to or reflected in said financial statements. Since
the date of such financial statements, there has been no materially adverse
change in the financial condition, operations or business of Owner or Borrower
from that set forth in said financial statements.
5.1.14 Condemnation. No Condemnation or other proceeding has been
commenced or, to Owner's or Borrower's best knowledge, is contemplated with
respect to all or part of any Collateral Property or for the relocation of
roadways providing access to the Collateral Property.
5.1.15 Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose that would be inconsistent with such
Regulation U or any other regulation of such Board of Governors, or for any
purpose prohibited by Legal Requirements or any Loan Document.
5.1.16 Utilities and Public Access. The Collateral Property has
rights of access to public ways and is served by water, sewer, sanitary sewer
and storm drain facilities adequate to service the Collateral Property for its
intended use. All public utilities necessary or convenient to the full use and
enjoyment of the Collateral Property are located either in the public
right-of-way abutting the Collateral Property (which are connected so as to
serve the Collateral Property without passing over other property) or in
recorded easements serving such Collateral Property and such easements are set
forth in and insured by the Title Insurance Policies. All
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roads necessary for the use of the Collateral Property for its current purpose
have been completed and dedicated to public use and accepted by all Governmental
Authorities.
5.1.17 Not a Foreign Person. Neither Owner nor Borrower is a
"foreign person" within the meaning ofss. 1445(f)(3) of the Code.
5.1.18 Separate Lots. The Collateral Property is comprised of one
(1) or more parcels which constitute a separate tax lot or lots and does not
constitute a portion of any other tax lot not a part of the Collateral Property.
5.1.19 Assessments. There are no pending or proposed material
special or other assessments for public improvements or otherwise affecting the
Collateral Property, or any contemplated improvements to the Collateral Property
that may result in such special or other assessments.
5.1.20 Enforceability. The Loan Documents are not subject to, and
neither Owner nor Borrower has asserted, any right of rescission, set-off,
counterclaim or defense, including the defense of usury. No exercise of any of
the terms of the Loan Documents, or any right thereunder, will render any Loan
Document unenforceable.
5.1.21 Insurance. Borrower has obtained and has delivered to Lender
copies of all insurance policies reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement. No Person, including Owner or
Borrower, has done, by act or omission, anything which would impair the coverage
of any such policy.
5.1.22 Use of Property; Licenses. The Collateral Property is used
exclusively for retail and other appurtenant and related uses. Except as
heretofore discussed in writing to Lender, all material certifications, permits,
licenses and approvals, including certificates of completion and occupancy
permits required for the legal use, occupancy and operation of the Collateral
Property (collectively, the "Licenses"), have been obtained and are in full
force and effect. Owner shall keep and maintain all licenses necessary for the
operation of the Collateral Property as a retail shopping center. The use being
made of the Collateral Property is in conformity in all material respects with,
and is permitted under, the certificate of occupancy issued for the Collateral
Property.
5.1.23 Flood Zone. Except as disclosed on a Survey delivered to
Lender, none of the Improvements on the Collateral Property is located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards.
5.1.24 Physical Condition. Except as otherwise disclosed in the
written physical inspection reports heretofore delivered to Lender, the
Collateral Property, including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defects or damages in the
Collateral Property, whether latent or otherwise, and neither Owner nor Borrower
has received notice from any insurance company or bonding company of any defects
or inadequacies in the Collateral Property, or any part
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thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
5.1.25 Boundaries and Encroachments. All of the Improvements on the
Collateral Property included in determining the appraised value of the
Collateral Property lie wholly within the boundaries and building restriction
lines of the Collateral Property, and no improvement on an adjoining property
encroaches upon the Collateral Property, and no easement or other encumbrance
upon the Collateral Property encroaches upon any of the Improvements, so as to
affect the value or marketability of the Collateral Property, except those
insured against by the Title Insurance Policy.
5.1.26 Leases and Rent Roll. Borrower has delivered to Lender a
true, correct and complete rent roll for the Collateral Property ("Rent Roll"),
which includes all Leases affecting the Collateral Property (including schedules
for all executed Leases for Tenants not yet in occupancy or under which the rent
commencement date has not occurred). Except as set forth in the Rent Roll and
estoppel certificates delivered to Lender on or prior to the Closing Date for
the Collateral Property: (i) to the best of each of Owner's and Borrower's
knowledge, each Lease is in full force and effect; (ii) the Tenants under the
Leases have accepted possession of and are in occupancy of all of their
respective demised premises, have commenced the payment of rent under the
Leases, and, to the best of each of Owner's and Borrower's knowledge, there are
no offsets, claims or defenses to the enforcement thereof; (iii) to the best of
each of Owner's and Borrower's knowledge, all rents due and payable under the
Leases have been paid and no portion thereof has been paid for any period more
than thirty (30) days in advance; (iv) the rent payable under each Lease is the
amount of fixed rent set forth in the Rent Roll, and, to the best of each of
Owner's and Borrower's knowledge, there is no claim or basis for a claim by the
Tenant thereunder for an adjustment to the rent; (v) to the best of each of
Owner's and Borrower's knowledge, no Tenant has made any written claim against
the landlord under any Lease which remains outstanding; nor to the best of each
Borrower's knowledge, has Borrower or Manager received, by telephonic,
in-person, e-mail or other communication, any notice of a material default under
any Lease (vi) to the best of each of Owner's and Borrower's knowledge, there is
no present material default by the Tenant under any Lease; (vii) neither Owner
nor Borrower holds any security deposits under the Leases; (viii) Owner is the
sole owner of the entire lessor's or sublessor's interest in each Lease; (ix) to
the best of each of Owner's and Borrower's knowledge, each Lease is the valid,
binding and enforceable obligation of Owner and the applicable Tenant
thereunder; (x) to the best of each of Owner's and Borrower's knowledge, no
Person has any possessory interest in, or right to occupy, the Collateral
Property except under the terms of a Lease; and (xi) neither Owner nor Borrower
has received any written notice of default on the part of landlord under any
Lease. Notwithstanding the foregoing, the breach of any of the representations
contained in the preceding sentence shall not constitute an Event of Default
provided that (i) the relevant Lease is not a Material Lease and (ii) the facts
resulting in such breach do not, after taking into account all other facts
resulting in other breaches of the representations contained in the preceding
sentence, do not have a material adverse affect on the value, Net Operating
Income, use or operation of the Collateral Property. None of the Leases contains
any option to purchase or right of first refusal to purchase the Collateral
Property or any part thereof. Neither the Leases nor the Rents have been
assigned or pledged except to Lender, and no other Person has any interest
therein except the Tenants thereunder.
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5.1.27 Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of the Collateral Property to Owner have been paid.
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgage, has been paid, and, under current Legal
Requirements, and the Mortgage is enforceable in accordance with its terms by
Lender (or any subsequent holder thereof).
5.1.28 Investment Company Act. Neither Owner nor Borrower is (i) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (ii) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (iii)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
5.1.29 Fraudulent Transfer. Neither Owner nor Borrower has entered
into the Loan or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor, and each of Owner and Borrower has received reasonably
equivalent value in exchange for its obligations under the Loan Documents.
Giving effect to the transactions contemplated by the Loan Documents, the fair
saleable value of each of Owner's and Borrower's assets exceeds and will,
immediately following the execution and delivery of the Loan Documents, exceed
each of Owner's and Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of
each of Owner's and Borrower's assets is and will, immediately following the
execution and delivery of the Loan Documents, be greater than each of Owner's
and Borrower's probable liabilities, including the maximum amount of its
contingent liabilities or its debts as such debts become absolute and matured.
Each of Owner's and Borrower's assets do not and, immediately following the
execution and delivery of the Loan Documents will not, constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted. Neither Owner nor Borrower intends to, or believes that it will,
incur debts and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
Owner or Borrower).
5.1.30 Ownership of Owner and Borrower. The sole managing member of
the sole general partner of Owner is its Owner Representative. The sole managing
member of Borrower is Owner. Westfield America Limited Partnership is the owner
of all of the issued and outstanding capital stock of Owner Representative, all
of which capital stock has been validly issued and fully paid and is
nonassessable. The only limited partners or other members of each of Owner and
Borrower are identified on Schedule 5 hereto. The stock of Owner Representative
and all limited partnership or membership interests in each of Owner and
Borrower are owned free and clear of all Liens, warrants, options and rights to
purchase. Neither Owner nor Borrower has an obligation to any Person to
purchase, repurchase or issue any ownership interest
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in it. Attached hereto as Schedule 5 is an organizational chart for each of
Owner and Borrower indicating the ownership interests in each of Owner, Borrower
and Owner Representative.
5.1.31 Management Agreement. The Management Agreement for the
Collateral Property is in full force and effect. There is no default, breach or
violation existing thereunder, and no event has occurred (other than payments
due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation thereunder, by
either party thereto. The Management Fee and the terms and provisions of the
Management Agreement are subordinate to the Loan Documents in accordance with
the term set forth in the applicable Manager Consent and Subordination of
Management Agreement, Lender approves the terms of the Management Agreements
heretofore delivered to Lender.
5.1.32 Hazardous Substances. To the best of each of Owner's and
Borrower's knowledge after due inquiry, except as disclosed in the written
environmental reports delivered to Lender prior to the date hereof. (i) the
Collateral Property is not in violation of any Legal Requirement pertaining to
or imposing liability or standards of conduct concerning environmental
regulation, contamination or clean-up, including the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Emergency Planning and Community Right-to-Know Act of 1986, the
Hazardous Substances Transportation Act, the Solid Waste Disposal Act, the Clean
Water Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking
Water Act, the Occupational Safety and Health Act, any state super-lien and
environmental clean-up statutes, any local law requiring related permits and
licenses and all amendments to and regulations in respect of the foregoing laws
(collectively, "Environmental Laws"); (ii) the Collateral Property is not
subject to any private or governmental Lien or judicial or administrative notice
or action or inquiry, investigation or claim relating to hazardous, toxic,
dangerous and/or regulated substances, wastes, materials, raw materials which
include hazardous constituents, pollutants or contaminants, including asbestos,
asbestos containing materials, petroleum, tremolite, anthlophylite, actinolite,
polychlorinated biphenyls and any other substances or materials which are
included under or regulated by Environmental Laws or which are considered by
scientific opinion to be otherwise dangerous in terms of the health, safety and
welfare of humans (collectively, "Hazardous Substances"); (iii) no Hazardous
Substances are or have been (including the period prior to the acquisition of
the Collateral Property by Owner, discharged, generated, treated, stored on,
incorporated in, or removed from the Collateral Property other than in
compliance with all Environmental Laws; (iv) except for Routine Hazardous
Substances, no Hazardous Substances are or have been (including the period prior
to the acquisition of the Collateral Property by Owner), disposed of or
transported from the Collateral Property other than in compliance with all
Environmental Laws; (v) no Hazardous Substances are present in, on or under any
nearby real property which could migrate to or otherwise affect the Collateral
Property; and (vi) no underground storage tanks exist on the Collateral
Property. There have been no environmental investigations, studies, audits,
reviews or other analyses conducted by or on behalf of Owner or Borrower which
have not been provided to Lender.
5.1.33 Name; Principal of Business. Neither Owner nor Borrower uses
or will use any trade name and has done or will do business under any name other
than its actual name set forth herein or the name of the Collateral Property.
The principal place of business of each of Owner and Borrower is its primary
address for notices as set forth in Section 11.2, and neither
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Owner nor Borrower has any other place of business (other than, as to Owner, the
Collateral Property).
5.1.34 Subordinated Debt. Neither Owner nor Borrower has any
indebtedness with respect to the Collateral Property or any excess cash flow or
any residual interest therein, whether secured or unsecured, other than
Permitted Encumbrances and the permitted indebtedness described in Section 7.8.
5.1.35 Intentionally Deleted.
5.1.36 REA. With respect to each REA: (i) the Borrower has delivered
to Lender a true and correct copy of such REA, together with all amendments and
modifications thereto, and such REA is in full force and effect and has not
otherwise been modified or amended; (ii) except as disclosed in estoppels
delivered to Lender prior to the Closing Date, neither Owner nor Borrower has
received any written claim of a default (other than a technical, non-material
default which would not entitle a party to terminate or exercise any remedies
with respect to an REA) under such REA; (iii) all sums due and payable under
such REA have been paid in full; (iv) no party thereto has commenced any action
or given or received any notice for the purpose of terminating such REA; and (v)
the Owner's interest in such REA may be encumbered by the Mortgage and is
assignable without the consent of any other party to the REA.
5.1.37 Tenant Estoppels. No modifications have been made to any of
the terms and conditions of any of the Leases that would cause any of the
statements made by each of the Tenants in the Tenant estoppel certificates
delivered to Lender prior to the date hereof to be false or misleading in any
material respect.
5.1.38 No Prior Assignment. There are no prior assignments of the
Leases or any portion of the Rents due and payable or to become due and payable
which are presently outstanding.
5.1.39 Special Purpose Entity/Separateness
(a) Until the Debt has been paid in full, each of Owner and Borrower
hereby represents, warrants and covenants that each of Owner and Borrower is,
shall be and shall continue to be a Special Purpose Entity.
(b) The representations, warranties and covenants set forth in
Section 5.1.39(a) shall survive for so long as any portion of the Debt remains
payable to Lender under this Agreement, the Note or any other Loan Document.
(c) All of the assumptions made in the Insolvency Opinion,
including, but not limited to, any exhibits attached thereto, are true and
correct in all respects and any assumptions made in any subsequent
non-consolidation opinion delivered in connection with the Loan Documents or a
Transfer of the Collateral Property (an "Additional Insolvency Opinion"),
including, but not limited to, any exhibits attached thereto, will have been and
shall at all times be true and correct in all respects. Each of Owner and
Borrower has complied and will comply with all of the assumptions made with
respect
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to it in the Insolvency Opinion. Each of Owner and Borrower will have complied
and will comply with all of the assumptions made with respect to it in any
Additional Insolvency Opinion. Each entity other than Owner and Borrower with
respect to which an assumption shall be made in any Additional Insolvency
Opinion will have complied and will comply with all of the assumptions made with
respect to it in any Additional Insolvency Opinion.
5.1.40 Illegal Activity. No portion of the Collateral Property has
been or will be purchased with proceeds of any illegal activity.
5.2 Survival of Representations and Covenants. All of the representations
and warranties in Section 5.1 and elsewhere in the Loan Documents (i) shall
survive for so long as any portion of the Debt remains owing to Lender and (ii)
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf. The
representations, warranties and covenants set forth in Section 5.1.39 and 6.10
shall not be subject to the exculpation provisions of Section 11.1.
VI AFFIRMATIVE COVENANTS
From the date hereof and until payment and performance in full of all
obligations of Owner and Borrower under the Loan Documents or the earlier
release of the Lien of the Mortgage (and all related obligations) in accordance
with the terms of this Agreement and the other Loan Documents, each of Owner and
Borrower hereby covenant and agree with Lender that:
6.1 Existence. Each of Owner and Borrower shall (i) do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
existence, rights, and franchises, (ii) continue to engage in the business
presently conducted by it, (iii) obtain and maintain all Licenses applicable to
it or the Collateral Property, and (iv) qualify to do business and remain in
good standing under the laws of each jurisdiction, in each case as and to the
extent required for the ownership, maintenance, management and operation of the
Collateral Property.
6.2 Taxes and Other Charges. Each of Owner and Borrower shall pay all
Taxes and Other Charges applicable to it and the Collateral Property as the same
become due and payable, and deliver to Lender receipts for payment or other
evidence satisfactory to Lender that such Taxes and Other Charges have been so
paid no later than thirty (30) days before they would be delinquent if not paid
(provided, however, that neither Owner nor Borrower need furnish such receipts
for payment of Taxes paid by Lender pursuant to Section 4.3). Each of Owner and
Borrower shall suffer and shall promptly cause to be paid and discharged any
Lien against the Collateral Property other than Permitted Encumbrances, and
shall promptly pay for all utility services provided to the Collateral Property.
After prior notice to Lender, Owner or Borrower, at its own expense, may contest
by appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application of any Taxes or
Other Charges, provided that (i) no Event of Default has occurred and remains
uncured, (ii) such proceeding shall suspend the collection of such Taxes or
Other Charges, or the Taxes or Other Charges shall have been paid, (iii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Owner and/or Borrower is subject and
shall not constitute a default thereunder, (iv) no part of or interest in the
Collateral Property will be in danger of being sold, forfeited, terminated,
canceled or lost, (v) Owner and/or
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Borrower shall have furnished such security as may be required in the
proceeding, or as may be requested by Lender, to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon, which
shall not be less than 125% of the unpaid Taxes and Other Charges being
contested (and in the case of any Taxes being contested, any sums in the Tax and
Insurance Escrow fund dedicated to payment of such contested Taxes shall count
toward such 125%), and (vi) Owner and/or Borrower shall promptly upon final
determination thereof pay the amount of such Taxes or Other Charges, together
with all costs, interest and penalties. Lender may pay over any such security or
part thereof held by Lender to the claimant entitled thereto at any time when,
in the judgment of Lender, the entitlement of such claimant is established.
6.3 Repairs; Maintenance and Compliance; Alterations; Required Repairs.
6.3.1 Repairs and Maintenance. Each of Owner and Borrower shall at
all times maintain, preserve and protect all franchises and trade names, and
Owner shall cause the Collateral Property to be maintained in a good and safe
condition and repair and shall not, without Lender's prior written consent,
remove or demolish the Improvements or Equipment (except for removal of
Equipment being replaced with Equipment of the same or greater value and
utility, and demolition necessary to perform alterations permitted under Section
6.3.3).
6.3.2 Legal Compliance. Each of Owner and Borrower shall promptly
comply in all material respects with all Legal Requirements applicable to itself
or the Collateral Property and cure properly any violation of a Legal
Requirement within thirty (30) days after Owner or Borrower, as applicable,
receives notice of such violation. Owner shall promptly repair, replace or
rebuild any part of the Collateral Property that becomes damaged, worn or
dilapidated and shall complete and pay for any Improvements constituting part of
the Collateral Property at any time in the process of construction or repair.
Notwithstanding the foregoing, Owner may defer compliance with a Legal
Requirement pending Owner's contest thereof; provided that (1) Owner is
permitted by the applicable Legal Requirement to delay compliance therewith
pending such proceedings, (2) neither the Collateral Property nor any part
thereof or interest therein will be sold, forfeited or lost if Owner fails to
promptly comply with the Legal Requirement being contested, and if Owner fails
to prevail in contest, Owner would thereafter have the opportunity to comply
with such Legal Requirement, (3) Lender would not, by virtue of such permitted
contest, be exposed to any risk of any civil liability for which Owner has not
furnished additional security as provided in clause (4) below, or to any risk of
criminal liability, and neither the Collateral Property nor any interest therein
would be subject to the imposition of any Lien for which Owner has not furnished
additional security as provided in clause (4) below, as a result of the failure
to comply with such Legal Requirement and (4) if requested by Lender at any
time, Owner shall have furnished to Lender additional security in respect of the
Legal Requirement being contested and the loss or damage that may result from
Owner's failure to prevail in such contest in such amount as may be reasonably
requested by Lender but in no event less than one hundred twenty-five percent
(125%) of the cost of complying such Legal Requirement and any loss or damage
that may result from Owner's failure to prevail in such contest.
6.3.3 Alterations. Owner may, without Lender's consent, perform
alterations to the Improvements and Equipment at the Collateral Property which
do not constitute a Material Alteration and which do not adversely affect
Owner's financial condition or the value or net operating income of the
Collateral Property. Owner shall not perform any Material Alteration
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the cost of which is reasonably estimated to exceed five percent (5%) of the
Loan per calendar year for the Collateral Property or which is likely to result
in a decrease of Net Operating Income of the Collateral Property by 2.5% or more
for a period of thirty (30) days or longer, without Lender's prior written
consent, which consent shall not be unreasonably withheld or delayed. Lender
may, as a condition to giving its consent to a Material Alteration, require that
the Borrower deliver to Lender as security for payment of the cost of such
Material Alteration and as additional security for Borrower's payment of the
Debt any of the following: (1) cash, (2) U.S. Treasury securities, (3) other
securities having a rating acceptable to Lender, (4) a Rating Comfort Letter, or
(5) an irrevocable Letter of Credit (payable on sight draft only) issued by an
Eligible Institution. Such security shall be in an amount equal to the cost of
the Material Alteration as reasonably estimated by Lender. Upon the occurrence
of an Event of Default, Lender may apply such security to payment of the Debt.
If the security posted is other than cash, upon substantial completion of the
Material Alteration and submission to Lender of evidence satisfactory to Lender
that (i) the Material Alteration was constructed in accordance with applicable
Legal Requirements and substantially in accordance with plans and specifications
approved by Lender (which approval shall not be unreasonably withheld or
delayed), (ii) all contractors, subcontractors, materialmen and professionals
who provided work, materials or services in connection with the Material
Alteration have been paid in full and have delivered unconditional releases of
lien and (iii) all material Licenses necessary for the use, operation and
occupancy of the Material Alteration (other than those which depend on the
performance of tenant improvement work) have been issued, Lender shall, provided
no Event of Default then exists, return the security (or the unapplied portion
thereof) to the Borrower. At the Borrower's request, Lender shall, provided no
Event of Default then exists, return one-half of the security to Borrower when
Lender has determined, in its sole discretion, that seventy-five percent (75%)
of the Material Alteration has been completed and paid for and that the
remaining security is sufficient to ensure payment in full for all work,
services and materials necessary to complete the Material Alteration as
contemplated in clauses (i), (ii) and (iii) of the preceding sentence. If the
security posted is cash, Lender shall disburse such cash in accordance with the
same procedures as are applicable to disbursement of Proceeds or an Award under
Section 8.4.3. The Borrower shall reimburse Lender upon demand for all
out-of-pocket costs and expenses (including the reasonable fees of all
professionals) incurred by Lender in reviewing plans and specifications or in
making any determinations necessary to implement the provisions of this Section
6.3.3.
6.3.4 New Construction. Borrower hereby directs Lender to disburse
directly to UBS, in accordance with wiring instructions separately delivered to
Lender by Borrower, a portion of the Principal in the amount of $15,000,000.00
(the "New Construction Proceeds"). In connection with the performance of the New
Construction and the payment of the costs thereof, UBS, Borrower and Owner have
entered into that certain Construction Cash Collateral Account Security, Pledge
and Assignment Agreement dated December 9, 1999 (the "Construction Cash
Collateral Agreement"), pursuant to which UBS shall disburse the New
Construction Proceeds to, or at the direction of, Borrower. The New Construction
Proceeds are fully disbursed Loan proceeds and Borrower is fully obligated for
the repayment of same and the payment of interest and other amounts with respect
to same as if such New Construction Proceeds were funded directly to Borrower.
6.4 Litigation. Each of Owner and Borrower shall give prompt written
notice to Lender of any litigation, governmental proceedings or claims or
investigations regarding an alleged
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actual violation of a Legal Requirement pending or threatened against either
Owner or Borrower which would, if adversely determined, materially adversely
affect Owner's or Borrower's condition (financial or otherwise) or business or
the Collateral Property.
6.5 Performance of Other Agreements. Owner shall observe and perform in
all material respects each and every term to be observed or performed by it
pursuant to the terms of any agreement or instrument affecting or pertaining to
the Collateral Property.
6.6 Notices. Each of Owner and Borrower shall promptly advise Lender of
any material adverse change in Owner's or Borrower's condition, financial or
otherwise, or of the occurrence of any Default or Event of Default of which
Owner or Borrower has knowledge. Each of Owner and Borrower shall cause to be
delivered to Lender any Securities and Exchange Commission or other public
filings, if any, of Owner, Borrower, Owner Representative, Borrower
Representative, Manager, or any Affiliate of any of the foregoing within ten
(10) Business Days of such filing.
6.7 Cooperate in Legal Proceedings. Each of Owner and Borrower shall
cooperate fully with Lender with respect to, and permit Lender, at its option,
to participate in, any proceedings before any Governmental Authority which may
in any way affect the rights of Lender under any Loan Document.
6.8 Further Assurances. Each of Owner and Borrower shall, at Borrower's
sole cost and expense, (i) furnish to Lender all then existing instruments,
documents, boundary surveys, footing or foundation surveys, certificates, plans
and specifications, appraisals, title and other insurance reports and
agreements, reasonably requested by Lender; (ii) execute and deliver to Lender
such documents, instruments, certificates, assignments and other writings, and
do such other acts necessary or desirable, to evidence, preserve and/or protect
the collateral at any time securing or intended to secure the Debt, as Lender
may reasonably require from time to time; (iii) do and execute all and such
further lawful and reasonable acts, conveyances and assurances for the better
and more effective carrying out of the intents and purposes of the Loan
Documents, as Lender shall reasonably require from time to time; and (iv) upon
Lender's request therefor given from time to time after the occurrence of any
Default or Event of Default pay for (a) reports of UCC, federal tax lien, state
tax lien judgment and pending litigation searches with respect to Owner or
Borrower and (b) searches of title to the Collateral Property, each such search
to be conducted by search firms reasonably designated by Lender in each of the
locations reasonably designated by Lender.
6.9 Financial Reporting.
6.9.1 Bookkeeping. Each of Owner and Borrower shall keep on a Fiscal
Year basis, in accordance with GAAP, proper and accurate books, records and
accounts reflecting all of the financial affairs of Owner and Borrower, as
applicable, and all items of income and expense and, as to Owner, any services,
Equipment or furnishings provided in connection with the operation of the
Collateral Property, whether such income or expense is realized by Owner,
Borrower, Manager or any Affiliate of Owner, Borrower or Manager. Lender shall
have the right from time to time during normal business hours upon reasonable
notice to examine such books, records and accounts at the office of Owner or
Borrower, as applicable, or other Person
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maintaining them, and to make such copies or extracts thereof as Lender shall
desire. After an Event of Default, Borrower shall pay any costs incurred by
Lender to examine such books, records and accounts, as Lender shall determine to
be necessary or appropriate in the protection of Lender's interest.
6.9.2 Annual Reports. Each of Owner and Borrower shall furnish to
Lender annually, (i) within forty (40) days after each Fiscal Year, unaudited
financial statements of Owner and Borrower, as applicable, and (ii) within
one-hundred twenty (120) days after each Fiscal Year, a complete copy of Owner's
and Borrower's annual financial statements audited by a "Big Five" accounting
firm or another independent certified public accountant (accompanied by an
unqualified opinion from such accounting firm or other independent certified
public accountant) reasonably acceptable to Lender, each in accordance with GAAP
and containing balance sheets and statements of profit and loss for Owner and
Borrower and, as to Owner's financial statement, the Collateral Property, in
such detail as Lender may request. Each statement of Owner (x) shall set forth
the financial condition and the income and expenses for the Collateral Property
for the immediately preceding calendar year, including statements of annual Net
Operating Income, and (y) shall be accompanied by an Officer's Certificate
certifying (1) that such statement presents fairly the financial condition of
the Collateral Property and has been prepared in accordance with GAAP, (2) a
list of Tenants, if any, occupying more than twenty percent (20%) of the
rentable space of the Collateral Property, and (3) a breakdown showing (a) the
year in which each Lease then in effect expires, (b) the percentage of rentable
space covered by such Lease, (c) the percentage of base rent with respect to
which Leases shall expire in each such year, expressed both on a per year and a
cumulative basis. Each statement of Owner and Borrower shall be accompanied by
an Officer's Certificate certifying whether there exists a Default or Event of
Default, and if so, the nature thereof, the period of time it has existed and
the action then being taken to remedy it.
6.9.3 Monthly and Quarterly Reports. Owner shall furnish to Lender
(x) within thirty (30) days after the end of each calendar month the following
items: (i) monthly and year-to-date operating statements, noting Net Operating
Income and other information necessary and sufficient under GAAP to fairly
represent the financial position and results of operation of the Collateral
Property during such calendar month, all in form reasonably satisfactory to
Lender; (ii) a statement that such Borrower has not incurred any indebtedness
other than indebtedness permitted hereunder; and (iii) 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, material special
provisions, concessions or inducements granted to Tenants, and a year-by-year
schedule showing by percentage the rentable area of the Improvements and the
total base rent attributable to Leases expiring each year) and a delinquency
report for the Collateral Property; and (y) within forty (40) days after the end
of each calendar quarter the following items: (i) a balance sheet for such
calendar month; (ii) a comparison of the budgeted income and expenses and the
actual income and expenses for each month and year-to-date for the Collateral
Property, together with a detailed explanation of any variances of ten percent
(10%) or more between budgeted and actual amounts for such period and
year-to-date; (iii) a statement of the actual Replacement Expenses made by Owner
during each calendar quarter as of the last day of such calendar quarter; and
(iv) an aged receivables report. Each such statement shall be accompanied by an
Officer's Certificate certifying (1) that such items are true, correct,
accurate, and complete
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and fairly present the financial condition and results of the operations of
Owner and the Collateral Property in accordance with GAAP (subject to normal
year-end adjustments) and (2) whether there exists a Default or Event of
Default, and if so, the nature thereof, the period of time it has existed and
the action then being taken to remedy it. Borrower shall furnish to Lender,
within thirty (30) days after the end of each calendar month, a statement that
Borrower has not incurred any indebtedness other than indebtedness permitted
hereunder. Each such statement shall be accompanied by an Officer's Certificate
certifying whether there exists a Default or Event of Default, and if so, the
nature thereof, the period of time it has existed and the action being taken to
remedy it.
6.9.4 Other Reports. Each of Owner and Borrower shall furnish to
Lender, within ten (10) Business Days after request, such further detailed
information with respect to the operation of the Collateral Property and the
financial affairs of Owner, Borrower or Manager as may be reasonably requested
by Lender or any Applicable Rating Agency, all such information to conform to
any related requirements of the Securities and Exchange Commission.
6.9.5 Annual Budget. Upon the occurrence of a Cash Management Event
or the Anticipated Repayment Date, Borrower shall prepare and submit (or shall
cause Owner or Manager to prepare and submit) to Lender within thirty (30) days
after a Cash Management Event and by November 15 of each year during the Term
until the occurrence of a Cash Management Termination, for approval by Lender,
which approval shall not be unreasonably withheld or delayed, a proposed pro
forma budget for the Collateral Property for the succeeding Fiscal Year (an
"Annual Budget"), and, promptly after preparation thereof, any revisions to such
Annual Budget. Lender's failure to approve or disapprove any Annual Budget or
revision within thirty (30) days after Lender's receipt thereof shall be deemed
to constitute Lender's approval thereof. The Annual Budget shall consist of (i)
an operating expense budget (the "Operating Budget") showing, on a
month-by-month basis, in reasonable detail, each line item of Owner's
anticipated Operating Income and Operating Expenses (on a cash and accrual
basis), including amounts required to establish, maintain and/or increase the
Funds, and (ii) a Replacement Expense budget (the "Replacement Budget") showing,
on a month-by-month basis, in reasonable detail, each line item of anticipated
Replacement Expenses.
6.9.6 Delivery of Financial Information. After notice to Owner and
Borrower of a Secondary Market Transaction, Owner and Borrower shall,
concurrently with any delivery to Lender, deliver copies of all financial
information provided in this Article VI to the Applicable Rating Agencies, the
Servicer, any trustee or any other party reasonably requested by Lender.
6.10 Environmental Matters.
6.10.1 Hazardous Substances. So long as Owner owns or is in
possession of the Collateral Property, Borrower shall cause Owner to (i) keep
the Collateral Property free from Hazardous Substances (other than Routine
Hazardous Substances) and in compliance with all Environmental Laws, (ii)
promptly notify Lender if Owner shall become aware that (A) any Hazardous
Substance (other than Routine Hazardous Substances) is on or immediately
adjacent to the Collateral Property, (B) the Collateral Property is in direct or
indirect violation of any Environmental Laws or (C) any condition on or near the
Collateral Property shall pose a threat to the health, safety or welfare of
humans, (iii) shall remove such Hazardous Substances and/or
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cure such violations and/or remove such threats, as applicable, as required by
law, promptly after Owner or Borrower becomes aware of same and is required to
do so by a Governmental Authority, at Owner's and Borrower's sole expense and
(iv) shall take all actions described in the environmental report delivered to
Lender in connection with the Loan as being necessary to comply with all
applicable laws. Nothing herein shall prevent Owner or Borrower from recovering
such expenses from any other party that may be liable for such removal or cure.
6.10.2 Environmental Monitoring. (a) Each of Owner and Borrower
shall give prompt written notice to Lender of (i) any proceeding or inquiry by
any party (including any Governmental Authority) with respect to the presence of
any Hazardous Substance on, under, from or about the Collateral Property, (ii)
all claims made or threatened in writing by any third party (including any
Governmental Authority) against Owner, Borrower or the Collateral Property or
any party occupying the Collateral Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) Owner's or Borrower's
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of the Collateral Property that could cause the Collateral Property
to be subject to any investigation or cleanup pursuant to any Environmental Law.
Owner and Borrower shall permit Lender to join and participate in, as a party if
it so elects, any legal proceedings or other actions initiated with respect to
the Collateral Property in connection with any Environmental Law or Hazardous
Substance, and Owner and Borrower shall pay all reasonable attorneys' fees and
disbursements incurred by Lender in connection therewith.
(b) Upon Lender's request, at any time and from time to time,
Borrower shall cause Owner to provide an inspection or audit of the Collateral
Property prepared by a licensed hydrogeologist, licensed environmental engineer
or qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near the Collateral
Property. The cost and expense of such audit or inspection shall be paid by
Owner and Borrower if Lender, in its good faith judgment, determines that
reasonable cause exists for the performance of an environmental inspection or
audit of the Collateral Property. If Borrower fails to cause Owner to order any
such inspection or audit within thirty (30) days after such request, Lender may
order same, and Owner hereby grants to Lender and its employees and agents
access to the Collateral Property and a license to undertake such inspection or
audit. The cost of such inspection or audit shall, to the extent required to be
paid by Owner and Borrower pursuant to this paragraph, be paid by Owner and
Borrower upon demand and if not paid, shall be added to the Debt and shall bear
interest thereafter at the Default Rate until paid.
(c) If any environmental site assessment report prepared in
connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for any Hazardous Substance, whether such
Hazardous Substance existed prior to the ownership by Owner of the Collateral
Property, or presently exists or is reasonably suspected of existing, Owner
shall cause such operations and maintenance plan to be prepared and implemented
at its expense upon request of Lender. If a licensed hydrogeologist, licensed
environmental engineer or other qualified environmental consulting firm engaged
by Lender ("Lender's Consultant") determines that any investigation, site
monitoring, containment, cleanup, removal, restoration or other work of any kind
is required to cure a violation of an applicable Environmental Law or to comply
with an order or directive of any court or governmental agency ("Remedial
Work"), Borrower shall cause Owner to commence and thereafter diligently
prosecute to completion all
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such Remedial Work within thirty (30) days after written demand by Lender for
performance thereof (or such shorter period of time as may be required under
applicable law). All Remedial Work shall be performed by contractors reasonably
approved in advance by Lender, and under the supervision of a consulting
engineer reasonably approved by Lender. All costs of such Remedial Work shall be
paid by Owner and Borrower, including Lender's reasonable attorneys' fees and
disbursements incurred in connection with the monitoring or review of such
Remedial Work. If Borrower does not cause Owner to timely commence and
diligently prosecute to completion the Remedial Work, Lender may (but shall not
be obligated to) cause such Remedial Work to be performed. All costs and
expenses (including reasonable attorneys' fees and disbursements) relating to or
incurred by Lender in connection with monitoring, reviewing or performing any
Remedial Work in accordance herewith shall be paid by Owner and Borrower upon
demand from Lender and if not, shall be added to the Debt and shall bear
interest thereafter at the Default Rate until paid. Notwithstanding the
foregoing, Owner shall not be required to commence such Remedial Work within the
above specified time period: (x) if prevented from doing so by any Governmental
Authority, (y) if commencing such Remedial Work within such time period would
result in Owner or such Remedial Work violating any Environmental Law, or (z) if
Owner, at its expense and after prior written notice to Lender, is contesting by
appropriate legal, administrative or other proceedings, conducted in good faith
and with due diligence, the need to perform Remedial Work. Owner shall have the
right to contest the need to perform such Remedial Work; provided that (1) Owner
is permitted by the applicable Environmental Laws to delay performance of the
Remedial Work pending such proceedings, (2) neither the Collateral Property nor
any part thereof or interest therein will be sold, forfeited or lost if Owner
fails to promptly perform the Remedial Work being contested, and if Owner fails
to prevail in contest, Owner would thereafter have the opportunity to perform
such Remedial Work, (3) Lender would not, by virtue of such permitted contest,
be exposed to any risk of any civil liability for which Owner has not furnished
additional security as provided in clause (4) below, or to any risk of criminal
liability, and neither the Collateral Property nor any interest therein would be
subject to the imposition of any Lien for which Owner has not furnished
additional security as provided in clause (4) below, as a result of the failure
to perform such Remedial Work and (4) if requested by Lender at any time, Owner
shall have furnished to Lender additional security in respect of the Remedial
Work being contested and the loss or damage that may result from Owner's failure
to prevail in such contest in such amount as may be reasonably requested by
Lender but in no event less than one hundred twenty-five percent (125%) of the
cost of such Remedial Work and any loss or damage that may result from Owner's
failure to prevail in such contest.
(d) Owner shall not install or permit to be installed on the
Collateral Property any underground storage tank without Lender's prior written
consent; provided, however, that (i) Owner may permit the Tenant under any
"anchor," "big box" or TBA (tires, batteries and accessories) Lease to install
an underground storage tank provided that (x) such Tenant has the right to do so
under its Lease and (y) such installation and the maintenance and repair of such
tank is performed in accordance with all applicable Legal Requirements and (ii)
Owner may install an underground storage tank if it reasonably determines that
an above ground storage tank is not reasonably feasible, provided that Owner
complies with all of the provisions of the preceding clause (y) in connection
with such underground storage tank.
(e) Intentionally Deleted.
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(g) Borrower shall cause Owner to continue to perform all remedial
actions required to be undertaken pursuant to any operations and maintenance
plans with regard to the Collateral Property, if any.
6.10.3 Title to the Property. Owner and Borrower will warrant and
defend (a) the title to the Collateral Property and every part thereof, subject
only to Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Mortgage and the Assignment of Leases
on the Collateral Property, subject only to Liens permitted hereunder (including
Permitted Encumbrances), in each case against the claims of all Persons
whomsoever. Owner and Borrower shall reimburse Lender for any losses, costs,
damages or expenses (including reasonable attorneys' fees and court costs)
incurred by Lender if an interest in the Collateral Property, other than as
permitted hereunder, is claimed by another Person.
6.10.4 Easements; Dedications. Without the consent of Lender,
Borrower shall have the right from time to time to release property, grant
easements, or dedicate property in connection with lot line adjustments, utility
or road requirements or other similar items, provided that any such release,
easement or dedication will not have a material adverse effect on the value, use
or operation of the Collateral Property and the Collateral Property will remain
in compliance with all Requirements of Law.
6.11 Leases.
6.11.1 Form of Lease. All Leases other than Material Leases shall be
written on the standard forms of lease which have been approved by Lender. In
negotiating Leases, changes may be made to the standard form of lease provided
that (i) such changes are commercially reasonable, and (ii) no changes may be
made to the following provisions in Owner's standard form of lease without the
prior written consent of Lender: provisions relating to subordination,
attornment, estoppels, mortgagee's right to notice and opportunity to cure
landlord's defaults, and mortgagee's rights with respect to lease amendments and
prepayment of rents. In addition, all renewals of Leases and all proposed leases
shall provide for rental rates comparable to existing local market rates and
shall be arms length transactions. All Leases entered into after the date hereof
shall provide for (x) subordination to the Mortgage and, at Lender's election,
attornment to Lender or any purchaser at a sale by foreclosure or power of sale,
and (y) the Lender's unilateral right to subordinate the Mortgage to the Leases.
No Lease entered into after the date hereof will contain any option to purchase,
any right of first refusal to purchase, any right to terminate (except in the
event of the destruction of substantially all of the Collateral Property), any
non-disturbance or similar agreement or any requirement that Owner rebuild the
Collateral Property (except as provided in the form of Lease that has been
approved by Lender); provided, however, that "small shop" leases entered into
after the date hereof and covering not more than fifteen percent (15%) of the
gross leaseable area of the Collateral Property may contain so called "kick-out"
clauses permitting either landlord or the Tenant to terminate the Lease if the
specified sales revenue is not attained. Upon request, Owner shall furnish
Lender with executed copies of all Leases affecting the Collateral Property then
in effect.
6.11.2 New and Renewal Leases. All Leases executed after the date
hereof, and all amendments, modifications, terminations or surrenders of
existing Leases, shall (a) be
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undertaken in a manner consistent with the standing leasing practices of Owner
and the Manager, (b) be the product of an arms-length transaction, and (c) not
result in a material adverse effect on the Collateral Property taken as a whole.
Upon the occurrence of a Cash Management Event and during the continuance
thereof , any Leases written thereafter for more than 7,500 square feet, and any
amendments, modifications, terminations or surrenders of existing Leases for
more than 7,500 square feet, shall be approved by Lender, which approval shall
not be unreasonably withheld, conditioned or delayed.
6.11.3 Leasing Covenants. Borrower shall cause Owner to (i) observe
and perform the material obligations imposed upon the lessor under the Leases;
(ii) enforce in a commercially reasonable manner the terms, covenants and
conditions contained in the Leases upon the part of the lessee thereunder to be
observed or performed; (iii) not collect any of the rents more than one (1)
month in advance (other than security deposits) except as approved by Lender or
as provided in Leases in existence as of the date hereof; (iv) not execute any
other assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) not alter, modify or change the terms
of the Leases in a manner inconsistent within the provisions of the Loan
Documents; (vi) promptly send copies to Lender of all notices of default Owner
shall give or receive with respect to any Lease demising 20,000 or more square
feet of gross leaseable area; and (vii) execute and deliver at the request of
Lender all such further assurances, confirmations and assignments in connection
with the Leases as Lender shall from time to time reasonably require.
6.11.4 Non-disturbance Agreements. At Borrower's request, Lender
shall enter into a subordination, non-disturbance and attornment agreement as to
any Lease permitted under the Loan Documents. Such agreement shall be in the
form attached hereto as Exhibit B, with such changes thereto as may be
reasonably acceptable to Lender.
6.11.5 Reciprocal Easement Agreements. Borrower shall cause Owner to
not enter into, terminate or modify any REA without Lender's consent, which
consent shall not be unreasonably withheld or delayed. Lender shall subordinate
the lien of the Mortgage to any REA Amendment consented to by Lender.
6.11.6 Notice to Tenants. Promptly after the date hereof (but in no
event later than the date on which Owner sends out bills for Rents due in
January, 2000), Borrower shall cause Owner to deliver a notice in the form of
Exhibit A attached hereto to each existing Tenant at the Collateral Property
directing them to remit their rent checks directly to the Agent and shall also
deliver such a notice to each future tenant at the Collateral Property.
6.12 Estoppel Statement. After request by Lender, Borrower shall within
ten (10) days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the date
installments of interest and/or Principal were last paid, (iv) any offsets or
defenses to the payment of the Debt, (v) that the Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification and (vi) such other information concerning the
Loan as Lender may request. After request by Lender (but no more frequently than
once in any twelve (12) month period), Borrower shall cause Owner, within thirty
(30) days, to request Tenant estoppel certificates from each Tenant at the
Collateral Property in form and substance reasonably
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satisfactory to Lender, and thereafter use commercially reasonable efforts to
obtain such estoppel certificates and deliver them to Lender.
6.13 Property Management.
6.13.1 Management Agreement. Borrower shall cause Owner to (i) cause
the Collateral Property to be managed pursuant to the Management Agreement; (ii)
promptly perform and observe all of the covenants required to be performed and
observed by it under the Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder, (iii) promptly
notify Lender of any default under the Management Agreement of which it is
aware; (iv) promptly deliver to Lender a copy of any notice of default or other
material notice received by Owner under the Management Agreement; and (v)
promptly enforce the performance and observance of all of the covenants required
to be performed and observed by Manager under the Management Agreement.
6.13.2 Termination of Manager. If a Cash Management Event shall
exist, at the request of Lender, Borrower shall cause Owner to hire a property
management firm designated by Lender to thereafter serve as a property
management consultant (the "Management Consultant") for Owner and the Collateral
Property. Owner's failure to retain such property management firm within thirty
(30) days after Lender designates such firm shall constitute an immediate Event
of Default. Owner shall continue to retain the Management Consultant until a
Cash Management Termination occurs. The Management Consultant shall oversee and
approve and fully participate in all actions and decisions of the Manager at the
Collateral Property, including the incurring of any expenses, the retention of
any broker, the negotiation and execution of any leases or lease "term sheets",
decisions as to tenants and "tenant mix" and repairs, alterations and
improvements. Owner shall cause Manager to cooperate with the Management
Consultant to enable the Management Consultant to perform its responsibilities
as described above and in the agreement between Owner and the Management
Consultant. All fees payable to the Management Consultant shall be an Approved
Operating Expense.
6.13.3 Manager's Subordination. Owner shall cause Manager to enter
into a Manager Consent and Subordination of Management Agreement (the "Manager
Consent and Subordination Agreement") in the form of Exhibit C-1 hereto;
provided, however, that if such Manager is wholly owned, directly or indirectly
by Westfield Holdings Limited, such Manager may enter into a Manager Consent and
Subordination of Management Agreement in the form of Exhibit C-2 hereto.
6.14 Special Purpose Entity. Each of Owner and Borrower is and shall
continue to be a Special Purpose Entity.
6.15 Expenses. Borrower shall reimburse Lender upon receipt of notice for
all reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) incurred by Lender in connection with the Loan,
including (i) the preparation, negotiation, execution and delivery of the Loan
Documents and the consummation of the transaction contemplated thereby and all
the costs of furnishing all opinions by counsel for Owner and Borrower; (ii) all
costs, fees and expenses (including the fees of any Rating Agencies, trustee or
Servicer) incurred in connection with any release of the Collateral Property
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(but excluding the fees payable to the Rating Agencies in connection with the
initial issuance of Securities) or any Transfer of Owner's Collateral Property;
(iii) Owner's, Borrower's and Lender's ongoing performance under and compliance
with the Loan Documents, including confirming compliance with environmental and
insurance requirements; (iv) the negotiation, preparation, execution, delivery
and administration of any consents, amendments, waivers or other modifications
of or under any Loan Document and any other documents or matters requested by
Lender, (v) filing and recording of any Loan Documents; (vi) title insurance,
surveys, inspections and appraisals; (vii) the creation, perfection or
protection of Lender's Liens in the Collateral Property, the Cash Management
Accounts and the Funds (including fees and expenses for title and lien searches,
intangibles taxes, personal property taxes, mortgage recording taxes, due
diligence expenses, travel expenses, accounting firm fees, costs of appraisals,
environmental reports and Lender's Consultant, surveys and engineering reports);
(viii) enforcing or preserving any rights in response to third party claims or
the prosecuting or defending of any action or proceeding or other litigation, in
each case against under or affecting Owner, Borrower, the Loan Documents, the
Collateral Property, or any other security given for the Loan; and (ix)
enforcing any obligations of or collecting any payments due from Owner or
Borrower under any Loan Document or with respect to the Collateral Property or
in connection with any refinancing or restructuring of the Loan in the nature of
a "work-out", or any insolvency or bankruptcy proceedings. Any costs and
expenses due and payable to Lender hereunder which are not paid by any Borrower
within ten (10) days after demand may be paid from any amounts in the Cash
Management Accounts, with notice thereof to Borrower. The obligations and
liabilities of Borrower under this Section 6.15 shall survive the Term and the
exercise by Lender of any of its rights or remedies under the Loan Documents,
including the acquisition of the Collateral Property by foreclosure or a
conveyance in lieu of foreclosure.
6.16 Indemnity. Each of Owner and Borrower shall indemnify and hold
harmless Lender and each of its Affiliates and their respective successors and
assigns (including their respective directors, officers, participants,
employees, professionals and agents and each other Person, if any, who Controls
Lender, its Affiliates or any of the foregoing) (each, an "Indemnified Party")
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the reasonable fees and
disbursements of counsel for an Indemnified Party in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against any Indemnified Party (collectively, the
"Indemnified Liabilities") in any manner, relating to or arising out of or by
reason of the Loan, including: (i) any breach by Owner or Borrower of any of
their respective obligations under, or any misrepresentation by Owner or
Borrower contained in, any Loan Document; (ii) the use or intended use of the
proceeds of the Loan; (iii) any information provided by or on behalf of Owner or
Borrower, or contained in any documentation approved by Owner or Borrower; (iv)
ownership of the Mortgage, the Collateral Property or any interest therein, or
receipt of any Rents; (v) any accident, injury to or death of persons or loss of
or damage to property occurring in, on or about the Collateral Property or on
the adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (vi) any use, non-use or condition in, on or about the
Collateral Property or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vii) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Collateral Property; (viii) the presence, disposal, escape, seepage,
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leakage, spillage, discharge, emission, release, or threatened release of any
Hazardous Substance on, from or affecting the Collateral Property; (ix) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to such Hazardous Substance; (x) any lawsuit brought
or threatened, settlement reached, or government order relating to such
Hazardous Substance; (xi) any violation of the Environmental Laws which is based
upon or in any way related to such Hazardous Substance, including, without
limitation, the costs and expenses of any Remedial Work, attorney and consultant
fees and disbursements, investigation and laboratory fees, court costs, and
litigation expenses; (xii) any failure of the Collateral Property to comply with
any Legal Requirement; (xiii) any claim by brokers, finders or similar persons
claiming to be entitled to a commission in connection with any Lease or other
transaction involving the Collateral Property or any part thereof, or any
liability asserted against Lender with respect thereto; and (xiv) the claims of
any lessee of any portion of the Collateral Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; neither Owner nor Borrower shall have any obligation to any
Indemnified Party hereunder to the extent that it is finally judicially
determined that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of such Indemnified Party. If any
Indemnified Party becomes involved in any action, proceeding or investigation in
connection with any transaction or matter referred to or contemplated in this
Agreement, Owner and Borrower shall periodically reimburse any Indemnified Party
upon demand therefor in an amount equal to its reasonable legal and other
expenses (including the costs of any investigation and preparation) incurred in
connection therewith. To the extent that the undertaking to indemnify and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrowers shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by any
Indemnified Party. Any amounts payable to any Indemnified Party by reason of the
application of this paragraph shall become immediately due and payable and shall
bear interest at the Default Rate from the date loss or damage is sustained by
any Indemnified Party until paid. The obligations and liabilities of Owner and
Borrower under this Section 6.16 shall survive the Term and the exercise by
Lender of any of its rights or remedies under the Loan Documents, including the
acquisition of the Collateral Property by foreclosure or a conveyance in lieu of
foreclosure.
6.17 Third Party Reports. Within thirty (30) days after any request by
Lender, Borrower shall cause Owner to deliver to Lender and pay for (or
reimburse Lender for cost of) any reports of third parties (e.g., engineers or
environmental consultants) requested by Lender as to the Collateral Property in
the event that the Net Operating Income of the Collateral Property has declined
by ten percent (10%) or more since the date hereof.
6.18 Year 2000 Compliance. Owner and Borrower acknowledge awareness of the
potential effect of the problem generally known as "Year 2000 computer-related
dysfunction" ("Year 2000"). Each of Owner and Borrower represent that to the
best of their knowledge, all computers and computer-dependant systems of Owner
and Borrower, are, or will be, on or before December 20, 1999, able to function
notwithstanding Year 2000. Each of Owner and Borrower will promptly notify
Lender in the event Borrower discovers or determines that any of the
above-referenced computers will not be Year 2000 compliant prior to December 20,
1999. Owner and Borrower hereby covenant and agree that they will promptly
commence and diligently prosecute the remediation of any such Year 2000
dysfunction.
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6.19 Intentionally Deleted.
6.20 Performance by Owner and Borrower. Each of Owner and Borrower shall
in a timely manner observe, perform and fulfill each and every covenant, term
and provision of each Loan Document executed and delivered by, or applicable to
it, and shall not enter into or otherwise suffer or permit any amendment,
waiver, supplement, termination or other modification of any Loan Document
executed and delivered by, or applicable to, it without the prior written
consent of Lender.
6.21 Secondary Market Transaction Master Estoppel. (A) Prior to the
contemplated Secondary Market Transaction, Borrower and WALP shall provide to
Lender a master estoppel letter ("Master Estoppel") in form and substance
satisfactory to Lender stating, without limitation, that as of the date of the
Master Estoppel, the information contained in each of the Tenant estoppel
letters delivered to Lender on or prior to the date of the closing of the Loan
("Closing Estoppels") is true and accurate in all material respects, and to the
extent any information in the Closing Estoppels is not accurate as of the date
of the Master Estoppel, then such Master Estoppel shall include a schedule of
exceptions to the accuracy of the Closing Estoppels, and (B) Borrower covenants
that commencing immediately, Borrower shall use commercially reasonable efforts
to provide to Lender an executed tenant estoppel letter, which shall be in form
and substance satisfactory to Lender, from (a) each Anchor Tenant, (b) each
Tenant paying base rent in an amount equal to or exceeding five percent (5%) of
the Operating Income from the applicable Collateral Property occupied by such
Tenant and (c) disregarding the area leased by those Tenants described in
clauses (a) and (b), Tenants of not less than seventy-five percent (75%) of the
remaining gross leasable area of each Collateral Property. In the event that
Borrower and WALP are required to provide the Lender a Master Estoppel pursuant
to subsection (A) of this Section 6.21, WALP agrees to execute simultaneously
with the execution of the Master Estoppel a limited recourse guaranty for the
benefit of Lender guaranteeing that, in the event that any of the information
provided in the Master Estoppel is materially false or misleading at the time
the Master Estoppel is provided to Lender, WALP shall indemnify and hold Lender
harmless from any and all losses incurred by Lender in connection with such
misrepresentations made by WALP. To the extent tenant estoppel letters are
subsequently delivered to Lender in connection with a Secondary Market
Transaction as set forth in subsection (B) hereof, WALP and Borrower shall be
released from the Master Estoppel limited recourse guaranty.
6.22 Intentionally Deleted.
VII NEGATIVE COVENANTS
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Lien of the Mortgage encumbering the Collateral Property in accordance with the
terms of this Agreement and the other Loan Documents, each of Owner and Borrower
covenant and agree with Lender that it will not do, directly or indirectly, any
of the following:
7.1 Management Agreement. Without Lender's prior consent: (i) surrender,
terminate, cancel, extend or renew the Management Agreement (other than an
extension or renewal on the
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same terms as the expiring Management Agreement, with only such modifications as
do not require consent of Lender or any Applicable Rating Agency hereunder) or
otherwise replace the Manager or enter into any other management agreement
(except pursuant to Section 6.13.2); (ii) reduce or consent to the reduction of
the term of the Management Agreement; (iii) increase or consent to the increase
of the amount of any charges under the Management Agreement; (iv) otherwise
modify, change, supplement, alter or amend in any material respect, or waive or
release in any material respect any of its rights and remedies under, the
Management Agreement; or (v) suffer or permit the occurrence and continuance of
a default beyond any applicable cure period under the Management Agreement (or
any successor management agreement) if such default permits the Manager to
terminate the Management Agreement (or such successor management agreement);
7.2 Liens. Without Lender's prior consent, create, incur, assume, permit
or suffer to exist any mechanic's, materialmen's or other Lien (other than an
inchoate mechanic's lien the amount of which is not yet due and payable) on any
portion of the Collateral Property or legal or beneficial ownership interest in
Owner or Borrower, except Permitted Encumbrances, unless such Lien is bonded or
discharged within thirty (30) days after Owner or Borrower first receives notice
of such Lien; provided, however, that the existence of liens resulting from
mechanics or materialmen hired by a Tenant shall not constitute a Default or
Event of Default hereunder so long as the Owner is diligently taking all
commercially reasonable action to enforce the obligation of such Tenant to cause
such lien to be removed;
7.3 Dissolution. Dissolve, terminate, liquidate, merge with or consolidate
into another Person;
7.4 Change In Business or Operation of Property. Enter into any line of
business other than the ownership and operation of the Collateral Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business or otherwise cease to operate the Collateral
Property as a retail property or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to the
Collateral Property);
7.5 Debt Cancellation. Cancel or otherwise forgive or release any claim or
debt owed to Owner or Borrower by any Person, except in the ordinary course of
such Owner's or Borrower's business in its reasonable judgment and in a manner
consistent with the operation of first class retail properties;
7.6 Assets. Purchase or own any property other than the Collateral
Property and other property intended to be subject to the lien of the Mortgage;
7.7 Transfers. Without the prior written consent of Lender which will not
be unreasonably withheld or delayed, neither Owner or Borrower nor any other
Person having an ownership or beneficial interest, direct or indirect, in Owner
or Borrower or the general partner or managing member of Owner or Borrower, as
applicable, shall (a) directly or indirectly sell, transfer, convey, mortgage,
pledge, or assign the Collateral Property, any part thereof or any interest
therein (including any ownership interest in Owner or Borrower or such general
partner
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or managing member, as applicable, (a "Transfer"), (b) further encumber,
alienate, grant a Lien or grant any other interest in the Collateral Property or
any part thereof (including any ownership interest in Owner or Borrower and such
general partner or managing member), whether voluntarily or involuntarily or (c)
enter into any easement or other agreement granting rights in or restricting the
use or development of the Collateral Property which may have a material adverse
effect on the Collateral Property.
(a) Notwithstanding the foregoing prohibition on Transfers, the
Lender shall grant a consent to the Transfer by any or all Borrower(s) or Owner
of its interests in any or all of the Collateral Properties that such Borrower
or Owner owns and the assumption of the Loan by the transferee upon reasonable
satisfaction of the following conditions:
(i) No Default or Event of Default shall have occurred or be
continuing;
(ii) Borrower shall deliver to Lender any documents reasonably
required by Lender to evidence the assumption of this Agreement, the Note,
the Mortgages and the other Loan Documents by the proposed transferee,
subject to the provisions of Section 11.1 of this Agreement;
(iii) Borrower shall pay all of Lender's reasonable costs and
expenses incurred in connection with the Lender's consent and approval of
the Transfer in accordance with Section 6.15;
(iv) Borrower shall deliver to Lender a Rating Comfort Letter;
(v) Borrower shall deliver an non-consolidation opinion with
regard to the proposed transferee and its partners or members, as the case
may be, in form and substance reasonably satisfactory to Lender;
(vi) The proposed transferee must be a Special Purpose Entity and
comply with the representations and covenants contained in Sections 5.1.1
and 5.1.39 of this Agreement;
(vii) In the case of (A) a transfer by Owner, the Borrower shall
at all times be a wholly-owned subsidiary of Owner (B) a transfer by
Borrower, the Owner shall retain one hundred percent (100%) ownership in
the Borrower, and Owner shall at all times guaranty the Obligations of
Borrower on the same terms as of the date hereof; and
(viii) Such other conditions as Lender shall determine in its
reasonable discretion to be in the interest of Lender, including, without
limitation, Lender's approval of the creditworthiness, reputation and
qualifications of the proposed transferee with respect to the Loan and the
Collateral Property.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon the Transfer of the Collateral Property or any
part thereof without Lender's consent. This provision shall apply to any
Transfer of the Collateral Property regardless of whether voluntary or not, or
whether or not Lender has consented to any previous Transfer of the Collateral
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Property. Notwithstanding anything to the contrary contained herein, for such
time as the UBS Letter of Credit remains outstanding, the Borrower must, in
addition to satisfying the requirements of this subsection (a), obtain the
written consent of UBS prior to completing any Transfer permitted under this
Section 7.7 which will affect the interests in the Owner and Borrower otherwise
pledged to UBS under that certain Pledge and Security Agreement, dated of even
date herewith, by and between Westfield America Investor L.P. and Westfield
America Limited Partnership (the "Pledge and Security Agreement") which is
executed in connection with the issuance of the UBS Letter of Credit under the
Letter of Credit Agreement and all other documents executed in connection
therewith.
(b) Provided no Default or Event of Default has occurred and is
continuing under this Agreement or the other Loan Documents, the prior written
consent of the Lender and the approval of the Applicable Rating Agencies shall
not be required for the following Transfers provided that any reasonable costs
and expenses incurred by the Lender in reviewing any such proposed Transfer
shall be paid by Borrower, regardless of whether such consent or approval is
given by Lender:
(i) Any Transfer of any interest in Owner or Borrower between and
among that Owner's or Borrower's partners or members to Affiliates of such
Borrower and Borrower's partners or members;
(ii) Any Transfer of interests in any of any Owner's or
Borrower's partners or members (between and among the partners and
members);
(iii) Any Transfer by devise or descent or by operation of law
upon the death of a partner or member of Owner or Borrower;
(iv) Any Transfers of interests in the Borrower to UBS AG,
Stamford Branch in its capacity as issuer of the UBS Letter of Credit; or
(v) Any Transfers of limited partnership or membership interests
in Owner or Borrower up to an aggregate of fifty percent (50%) of such
interests; provided, however that
(A) Lender must receive at least sixty (60) days prior written
notice of any proposed Transfer pursuant to this subsection;
(B) Westfield Limited Partnership or an approved general
partner (collectively, "Westfield") must retain at least fifty
percent (50%) ownership interest in Owner and Borrower and Westfield
must, following any such Transfer, retain control of Owner and
Borrower and the day to day operations of the Collateral Property;
(C) Lender shall have received evidence satisfactory to it
that Owner and Borrower and their respective partners or members, as
the case may be, following such transfer, remain Special Purpose
Entities in accordance with the standards of the Applicable Rating
Agencies; and
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(D) If requested by Lender, Lender shall have received a
non-consolidation opinion with regard to the proposed transferee and
its partners or members, as the case may be, in form and substance
satisfactory to Lender.
(c) Notwithstanding the foregoing restrictions on Transfers, nothing
contained in this Agreement or the other Loan Documents shall in any way
restrict or prohibit, nor shall any notice to Lender or consent of Lender be
required in connection with, (i) the transfer or issuance of any securities or
interests in Westfield America, Inc. ("WEA"), (ii) the merger or consolidation
of WEA (iii) the transfer or issuance of any securities or interests in
Westfield America Limited Partnership ("WALP") or (iv) the merger or
consolidation of WALP. With respect to the events set forth in subsections (iii)
and (iv) hereof, to the extent that such transfers, issuance of securities or
interests, merger or consolidation of WALP result in a change of ownership or
control in WALP, the Borrower must be owned and controlled by an entity that
provides the same expertise as WALP in conducting business of the nature
currently conducted by WALP. Prior to completing any action with respect to WALP
pursuant to subsections (iii) and (iv) hereof that will result in a change in
control of WALP, the Borrower must deliver to Lender a Rating Comfort Letter and
a non-consolidation opinion with regard to the proposed transferee and its
partners or members, as the case may be, in form and substance satisfactory to
Lender, provided that no Rating Comfort Letter or non-consolidation opinion
shall be required in connection with subsection (i) or (ii) hereof.
(d) In accordance with the provisions of the entity documents of
each Borrower, in no event shall the provisions of this Section 7.7 be amended
or modified in any manner until such time as the Borrower has obtained a Rating
Comfort Letter.
7.8 Debt. Create, incur or assume any indebtedness other than (i) the
Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses and Approved
Leasing Expenses and (iii) other trade debt incurred in the ordinary course of
business relating to the ownership and operation of the Collateral Property
which other trade debt does not exceed, at any time, a maximum aggregate amount
of $1,000,000.00, and such trade debt is paid within sixty (60) days of the date
incurred (other than amounts being disputed in good faith);
7.9 Assignment of Rights. Without Lender's prior consent, attempt to
assign Owner's or Borrower's rights or interest under any Loan Document in
contravention of any Loan Document.
7.10 Principal Place of Business. Change its principal place of business
without first giving Lender thirty (30) days' prior written notice;
7.11 Corporate Organization. Make any change, amendment or modification to
the organizational documents of Owner or Borrower, or take any other action, if
such change, amendment, modification or action could result in (x) Owner or
Borrower not being a Special Purpose Entity or (y) the term of Owner, Borrower,
Owner Representative or Borrower Representative being shortened.
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7.12 ERISA.
(a) Neither Owner nor Borrower shall engage in any transaction which
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Agreement or the
other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under ERISA.
(b) Each of Owner and Borrower further covenant and agree to deliver
to Lender such certifications or other evidence from time to time throughout the
term of the Loan, as requested by Lender in its sole discretion, that (A)
neither Owner nor Borrower is or maintains an "employee benefit plan" as defined
in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Section 3(3) of ERISA; (B) neither
Owner nor Borrower is subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (C) one or more of
the following circumstances is true:
(i) Equity interests in each of Owner and Borrower are publicly
offered securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in each of Owner and Borrower are held by
"benefit plan investors" within the meaning of 29
C.F.R.ss.2510.3-101(f)(2); or
(iii) Each of Owner and Borrower qualify as an "operating
company" or a "real estate operating company" within the meaning of 29
C.F.R.ss.2510.3-101(c) or (e).
7.13 No Joint Assessment. Neither Owner nor Borrower shall suffer,
permit or initiate the joint assessment of the Collateral Property with (a) any
other real property constituting a tax lot separate from the Collateral
Property, or (b) any portion of the Collateral Property which may be deemed to
constitute personal property, or any other procedure whereby the Lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Collateral Property.
7.14 Affiliate Transactions. Neither Owner nor Borrower shall enter
into, or be a party to, any transaction with an Affiliate of Owner or Borrower
or any of the partners of Owner or Borrower except in the ordinary course of
business and on terms which are fully disclosed to Lender in advance and are no
less favorable to Owner or Borrower or such Affiliate than would be obtained in
a comparable arm's-length transaction with an unrelated third party. Lender
hereby acknowledges that it has reviewed and approved the Design Development and
Construction Agreement between Annapolis Mall Limited Partnership and Westfield
Corporation, Inc., as developer thereunder, dated February 1, 1999 and the
Management Agreement.
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VIII Insurance.
8.1.1 Coverage. Owner and Borrower, at their sole cost, for the
mutual benefit of Owner, Borrower and Lender, shall obtain and maintain during
the Term the following policies of insurance with respect to the Collateral
Property:
(a) Property insurance insuring against loss or damage by standard,
"all-risk" perils, which shall (i) be in an amount equal to the greatest of (A)
the then full replacement cost of the Collateral Property without deduction for
physical depreciation, (B) the unpaid Principal, and (C) such amount as is
necessary so that the insurer would not deem Owner or Borrower a co-insurer
under such policies, (ii) have deductibles or self insured retentions no greater
than $25,000 (or, in the case of earthquake insurance, five percent (5%) of the
total insured values at risk), (iii) be paid annually in advance and (iv)
contain an "agreed amounts" and a "Replacement Cost Endorsement" with a waiver
of depreciation.
(b) Flood insurance if any part of the Collateral Property is
located in an area identified by the Federal Emergency Management Agency as an
area having special flood hazards in an amount to be determined by Lender.
(c) Commercial general public liability insurance, including broad
form property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate per location for any policy year;
together with at least $50,000,000 excess and/or umbrella liability insurance
for any and all claims, including all legal liability imposed upon Borrower and
all court costs and attorneys' fees incurred in connection with the ownership,
operation and maintenance of the Collateral Property.
(d) Rental loss and/or business interruption insurance in an amount
equal to the estimated Rents for the next succeeding 18-month period. The amount
of such insurance shall be increased from time to time during the Term as and
when the estimated or actual Rents increase.
(e) Insurance against loss or damage from (i) leakage of sprinkler
systems and (ii) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and Equipment, pressure vessels or similar apparatus
now or hereafter installed in any of the Improvements (without exclusion for
explosions), in an amount at least equal to $2,000,000.
(f) Worker's compensation insurance with respect to any employees of
Owner, as required by any Legal Requirement.
(g) During the period in which the New Construction is being
undertaken and during any period of repair or restoration, builder's "all-risk"
insurance in an amount equal to not less than the full insurable value of the
Collateral Property, against such risks (including fire and extended coverage
and collapse of the Improvements to agreed limits) as Lender may request, in
form and substance acceptable to Lender.
(h) Ordinance or Law Coverage to compensate for the diminished value
of the Collateral Property, the cost of demolition and the increased cost of
construction in an amount satisfactory to Lender.
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(i) Such other insurance (including earthquake insurance and
windstorm insurance) as may from time to time be reasonably required by Lender
in order to protect its interests and as is otherwise commercially reasonable.
8.1.2 Policies.
(a) All policies of insurance (the "Policies") required pursuant to
Section 8.1.1 (other than earthquake insurance) shall (i) be issued by companies
approved by Lender and licensed to do business in the State, with a claims
paying ability rating of "AA" or better by S&P and a rating of A:VII or better
in the current Best's Insurance Reports ("Approved Insurer"); (ii) name Lender
and its successors and/or assigns as their interest may appear as the mortgagee
(in the case of property insurance) or an additional insured (in the case of
liability insurance); (iii) contain (in the case of property insurance) a
Non-Contributory Standard Lender Clause and a Lender's Loss Payable Endorsement,
or their equivalents, naming Lender as the person to which all payments made by
such insurance company shall be paid; (iv) contain a waiver of subrogation
against Lender, (v) be delivered to Lender (provided that copies may be
delivered in lieu of originals) together with an insurance certificate; (vi)
contain such provisions as Lender deems reasonably necessary or desirable to
protect its interest, including endorsements providing that neither the Owner,
Borrower, Lender nor any other party shall be a co-insurer under the Policies
and that Lender shall receive at least 30 days' prior written notice of any
modification, reduction or cancellation of any of the Policies; and (vii) be
satisfactory in form and substance to Lender and approved by Lender as to
amounts, form, risk coverage, deductibles, loss payees and insureds. Each
Borrower shall pay the premiums for the Policies required to be maintained by it
hereunder (the "Insurance Premiums") as the same become due and payable and
furnish to Lender evidence of the renewal of each of the Policies together with
(unless such Insurance Premiums have been paid by Lender pursuant to Section
4.3) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If Owner or Borrower do not furnish such
evidence and receipts at least thirty (30) days prior to the expiration of any
expiring Policy, then Lender may, but shall not be obligated to, procure such
insurance and pay the Insurance Premiums therefor, and Owner and Borrower shall
reimburse Lender for the cost of such Insurance Premiums promptly on demand,
with interest accruing at the Default Rate. Owner and Borrower shall deliver to
Lender a copy of each Policy (and an insurance certificate pertaining thereto)
required to be maintained by it hereunder within ninety (90) days after its
effective date. Within ninety (90) days after request by Lender, Owner and
Borrower shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices, and such coverage as is commercially available.
8.2 Casualty.
8.2.1 Notice; Restoration. If the Collateral Property is damaged or
destroyed, in whole or in part, by fire or other casualty (a "Casualty"),
Borrower shall give prompt notice thereof to Lender. Following the occurrence of
a Casualty, Owner and Borrower, regardless of whether insurance proceeds are
available, shall promptly proceed to restore, repair, replace or rebuild the
Collateral Property in accordance with Legal Requirements to be of at least
equal value and of substantially the same character as prior to such damage or
destruction.
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8.2.2 Settlement of Proceeds. In the event of a Casualty covered by
any of the Policies (an "Insured Casualty") where the loss does not exceed
$1,000,000, Borrower may settle and adjust any claim without the consent of
Lender; provided such adjustment is carried out in a competent and timely
manner; and Borrower is hereby authorized to collect and receipt for the
insurance proceeds (the "Proceeds"). In the event of an Insured Casualty where
the loss equals or exceeds $1,000,000, Lender may settle and adjust any claim
without the consent of Owner or Borrower and agree with the insurer(s) on the
amount to be paid on the loss, and the Proceeds shall be due and payable solely
to Lender and held by Lender in the Casualty/Condemnation Fund and disbursed in
accordance herewith. The expenses incurred by Lender in the adjustment and
collection of the Proceeds shall become part of the Debt and shall be reimbursed
by the Borrower to Lender upon demand.
8.3 Condemnation.
8.3.1 Notice; Restoration. Owner and Borrower shall promptly give
Lender notice of the actual or threatened commencement of any condemnation or
eminent domain proceeding affecting the Collateral Property (a "Condemnation")
and shall deliver to Lender copies of any and all papers served in connection
with such Condemnation. Following the occurrence of a Condemnation, Owner and
Borrower, regardless of whether an Award is available, shall promptly proceed to
restore, repair, replace or rebuild the Collateral Property in accordance with
all Legal Requirements to the extent practicable to be of at least equal value
and of substantially the same character as prior to such Condemnation.
8.3.2 Collection of Award. Lender is hereby irrevocably appointed as
Owner's and Borrower's attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any award or payment in respect
of a Condemnation in excess of $1,000,000 (an "Award") and to make any
compromise or settlement in connection with such Condemnation. Notwithstanding
any Condemnation (or any transfer made in lieu of or in anticipation of such
Condemnation), Borrower shall continue to pay the Debt at the time and in the
manner provided for in the Loan Documents, and the Debt shall not be reduced
unless and until any Award shall have been actually received and applied by
Lender to expenses of collecting the Award and to discharge of the Debt. Lender
shall not be limited to the interest paid on the Award by the condemning
authority but shall be entitled to receive out of the Award interest at the
Applicable Interest Rate. If the Collateral Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of such Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall be
recoverable or shall have been sought, recovered or denied, to receive all or a
portion of the Award sufficient to pay the Debt. Owner shall cause any Award
that is payable to Owner to be paid directly to Lender. Lender shall hold such
Award in the Casualty/Condemnation Fund and disburse such Award in accordance
with the terms hereof.
8.4 Application of Proceeds or Award.
8.4.1 Application to Restoration. In the event of an Insured
Casualty or Condemnation with respect to the Collateral Property where (i) the
loss is in an aggregate amount less than twenty-five percent (25%) of the
Principal amount of the Loan, (ii) in the reasonable judgment of Lender, the
Collateral Property can be restored within six (6) months,
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and prior to the Anticipated Repayment Date and the expiration of the business
interruption insurance with respect thereto, to an economic unit not less
valuable and not less useful than the same was prior to the Insured Casualty or
Condemnation, and after such restoration will adequately secure the unpaid
Principal, and (iii) no Event of Default shall have occurred and be then
continuing, then the Proceeds or the Award, as the case may be (after
reimbursement of any expenses incurred by Lender), shall be applied to reimburse
the Owner for the cost of restoring, repairing, replacing or rebuilding the
Collateral Property (the "Restoration"), in the manner set forth herein. The
Owner shall commence and diligently prosecute such Restoration; provided that
(x) Owner shall pay (and if required by Lender, Owner shall deposit with Lender
in advance) all costs of such Restoration in excess of the net amount of the
Proceeds or the Award made available pursuant to the terms hereof; and (y)
Lender shall have received evidence reasonably satisfactory to it that during
the period of the Restoration, the Rents (including all Proceeds paid to Lender
from the business interruption insurance required pursuant to Section 8.1.1)
from the Collateral Property will be sufficient to satisfy all of Borrower's
Obligations.
8.4.2 Application to Debt. Except as provided in Section 8.4.1, the
Proceeds and any Award in excess of $1,000,000 may, at the option of Lender in
its sole discretion, be applied to the payment of the Debt as set forth in
Section 3.2.2, or applied to reimburse Owner for the cost of any Restoration, in
the manner set forth in Section 8.4.3. Any such application to the prepayment of
the Loan shall be without any prepayment consideration or penalty, unless the
Debt or any portion thereof is accelerated prior to, or within one year after,
the date the Proceeds are received from the insurance company or the Award is
received from the condemning authority, as the case may be, in which event the
Borrower shall pay to Lender an additional amount equal to the Yield Maintenance
Premium, if any, that may be required with respect to the amount of the Proceeds
or Award applied to the Debt.
8.4.3 Procedure for Application to Restoration. If Owner is entitled
to reimbursement out of the Proceeds or an Award held by Lender, such Proceeds
or Award shall be disbursed from time to time from the Casualty/Condemnation
Fund upon Lender being furnished with (i) evidence satisfactory to it of the
estimated cost of completion of the Restoration, (ii) funds or, at Lender's
option, assurances satisfactory to Lender that such funds are available
sufficient, in addition to the Proceeds or Award, to complete the proposed
Restoration, (iii) such architect's certificates, waivers of lien, contractor's
sworn statements, title insurance endorsements, bonds, plats of survey and such
other evidences of cost, payment and performance as Lender may reasonably
require and approve, and (iv) all plans and specifications for such Restoration,
such plans and specifications to be approved by Lender prior to commencement of
any work. No payment made prior to the final completion of the Restoration shall
exceed ninety percent (90%) of the value of the work performed from time to
time; funds other than the Proceeds or Award shall be disbursed prior to
disbursement of such Proceeds or Award; and at all times, the undisbursed
balance of such Proceeds or Award remaining in the hands of Lender, together
with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Owner for that purpose, shall be at
least sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Any surplus that remains out of the Proceeds held by Lender after payment of
such costs of Restoration shall be paid to Owner. Any surplus that remains out
of the Award received by Lender after payment of such costs of Restoration
shall, in
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the sole and absolute discretion of Lender, be retained by Lender and applied to
payment of the Debt or returned to Owner.
8.4.4 Anchor Lease; REA. If Lender shall have the right or option
hereunder to apply Proceeds or an Award to payment of the Debt, but under any
controlling provision in any "anchor" Lease or REA such Proceeds or Awards are
required to be applied to Restoration of the Collateral Property, then,
notwithstanding anything to the contrary in this Article 8, such Proceeds or
Award shall be applied to Restoration in accordance with such "anchor" Lease or
REA, subject to such conditions and procedures as Lender may impose which are
not inconsistent with the terms of such "anchor" Lease or REA.
IX DEFAULTS
9.1 Events of Default. An "Event of Default" shall exist with respect to
the Loan upon the occurrence of any of the following events:
(a) any portion of the Debt is not paid when due;
(b) Borrower shall fail to pay when due any deposit into any Fund;
(c) any of the Taxes applicable to the Collateral Property are not
paid when due (other than Taxes for which funds have been deposited with Lender
pursuant to Section 4.3), subject to Borrower's right to contest Taxes in
accordance with Section 6.2;
(d) the Policies with respect to the Collateral Property are not
delivered to Lender within ninety (90) days after their respective applicable
effective dates or within ten days after written demand from Lender, whichever
is later, or such Policies are not kept in full force and effect;
(e) a Transfer other than a Transfer permitted pursuant to Section
7.7 occurs with respect to the Collateral Property, any interest in Owner or
Borrower or an interest in or Owner Representative or Borrower Representative of
any Borrower;
(f) any representation or warranty made by Owner or Borrower or in
any Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by Owner or Borrower in connection
with any Loan Document, shall be false or misleading in any material respect as
of the date the representation or warranty was made;
(g) Owner, Borrower, Owner Representative or Borrower Representative
shall make an assignment for the benefit of creditors, or shall generally not be
paying its debts as they become due;
(h) a receiver, liquidator or trustee shall be appointed for Owner,
Borrower, Owner Representative or Borrower Representative, or Owner, Borrower,
Owner Representative or Borrower Representative shall be adjudicated a bankrupt
or insolvent; or any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar
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federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Owner, Borrower, Owner Representative or Borrower Representative, as the
case may be; or any proceeding for the dissolution or liquidation of Owner,
Borrower, Owner Representative or Borrower Representative shall be instituted;
provided, however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Owner, Borrower, Owner Representative or
Borrower Representative, as the case may be, only upon the same not being
discharged, stayed or dismissed within sixty (60) days;
(i) Owner or Borrower breaches any negative covenant contained in
Sections 7.3, 7.4, 7.6, 7.7, 7.8, 7.10 or 7.11 or any affirmative covenant
contained in Section 6.14;
(j) Owner or Borrower shall be in default under any other mortgage
or security agreement covering any part of the Collateral Property owned by such
Borrower whether it be superior or junior in Lien to the Mortgage, and such
default shall continue after the expiration of any applicable notice and grace
period provided therein;
(k) except as permitted hereunder, Owner or Borrower shall commence
any alteration, improvement, demolition or removal of any of the Improvements
constituting part of the Collateral Property without the prior consent of
Lender;
(l) an Event of Default as defined or described in any other Loan
Document (including, without limitation, the Guaranty), occurs; or any other
event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate or to permit Lender to accelerate the maturity of the
Debt;
(m) Owner or Borrower shall be in default under any term, covenant
or provision set forth herein or in any other Loan Document which specifically
contains a notice requirement or grace period and such notice has been given and
such grace period has expired;
(n) any of the assumptions contained in the Insolvency Opinion or an
Additional Insolvency Opinion were not true and correct as of the date of such
opinion or thereafter became untrue or incorrect and Owner or Borrower fails to
deliver to Lender, within twenty (20) days after Owner or Borrower first become
aware that any such assumption is not true or is incorrect, a new substantive
non-consolidation opinion from the same counsel (or other counsel acceptable to
Lender and the Applicable Rating Agencies) which omits all such untrue or
incorrect assumptions and is otherwise in the same form as the Insolvency
Opinion or the Additional Insolvency Opinion, as applicable (other than for
changes approved by Lender and the Applicable Rating Agencies);
(o) Intentionally Deleted;
(p) Intentionally Deleted.
(q) Owner or Borrower shall permit any event to occur that would
cause any REA to terminate without notice or action by any party thereto or
would entitle any party to terminate any REA and the term thereof by giving
notice to Owner or Borrower; or any REA shall be surrendered, terminated or
canceled for any reason or under any circumstance whatsoever; or any term of any
REA shall be modified or supplemented without Lender's consent; or Owner or
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Borrower shall fail, within ten (10) Business Days after demand by Lender, to
exercise its option to renew or extend the term of any REA or shall fail or
neglect to pursue diligently all actions necessary to exercise such renewal
rights pursuant to such REA; or
(r) Owner or Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement or any other Loan
Document not specified in this Section 9.1, for ten (10) days after notice to
Owner or Borrower, as applicable, from Lender, in the case of any Default which
can be cured by the payment of a sum of money, or for thirty (30) days after
notice from Lender in the case of any other Default; provided, however, that if
such non-monetary Default is susceptible of cure but cannot reasonably be cured
within such 30-day period, and Owner or Borrower, as applicable, shall have
commenced to cure such Default within such 30-day period and thereafter
diligently and expeditiously proceeds to cure the same, such 30-day period shall
be extended for an additional period of time as is reasonably necessary for
Owner or Borrower, as applicable, in the exercise of due diligence to cure such
Default, such additional period not to exceed 90 days.
9.2 Remedies.
9.2.1 Acceleration. Upon the occurrence of an Event of Default with
respect to the Loan (other than an Event of Default described in paragraph (g)
or (h) of Section 9.1) and at any time and from time to time thereafter, in
addition to any other rights or remedies available to it pursuant to the Loan
Documents or at law or in equity, Lender may take such action, without notice or
demand, that Lender deems advisable to protect and enforce its rights against
Owner or Borrower and in and to the Collateral Property, and upon any Event of
Default described in paragraph (g) or (h) of Section 9.1, the Debt and all
amounts owing under the Guaranty (including unpaid interest, Default Rate
interest, Late Payment Charges, Yield Maintenance Premium and any other amounts
owing by Owner and/or Borrower) shall immediately and automatically become due
and payable, without notice or demand, and Owner and Borrower hereby expressly
waive any such notice or demand, anything contained in any Loan Document to the
contrary notwithstanding.
9.2.2 Remedies Cumulative. Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Owner and Borrower under the Loan Documents
or at law or in equity may be exercised by Lender at any time and from time to
time, whether or not all or any of the Debt shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents. Any such actions taken by Lender shall be cumulative and
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth in the Loan Documents. Without limiting the
generality of the foregoing, Owner and Borrower agree that if an Event of
Default is continuing, (i) to the extent permitted by applicable law, Lender is
not subject to any "one action" or "election of remedies" law or rule, and (ii)
all Liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
under the Guaranty, against the Collateral Property, the Mortgage has been
foreclosed, the Collateral
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Property has been sold and/or otherwise realized upon in satisfaction of the
Debt or the Debt has been paid in full.
9.2.3 Severance. Lender shall have the right from time to time to
sever the Note and the other Loan Documents into one or more separate notes,
mortgages and other security documents in such denominations as Lender shall
determine in its sole discretion for purposes of evidencing and enforcing its
rights and remedies. Owner and Borrower shall execute and deliver to Lender from
time to time, promptly after the request of Lender, a severance agreement and
such other documents as Lender shall request in order to effect the severance
described in the preceding sentence, all in form and substance reasonably
satisfactory to Lender. Each of Owner and Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect such severance, Owner and Borrower ratifying all that such
attorney shall do by virtue thereof.
9.2.4 Delay. No delay or omission to exercise any remedy, right,
power accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender shall impair any such remedy, right or power hereunder or
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one Default or Event of Default shall not be construed to be a waiver of any
subsequent Default or Event of Default or to impair any remedy, right or power
consequent thereon. Notwithstanding any other provision of this Agreement, to
the extent permitted by applicable law, Lender reserves the right to seek a
deficiency judgment or preserve a deficiency claim, in connection with the
foreclosure of the Mortgage, to the extent necessary to foreclose on the Rents,
the Funds or any other collateral that constitutes security for the same
obligation.
9.2.5 Lender's Right to Perform. If Owner or Borrower fails to
perform any covenant or obligation contained herein and such failure shall
continue for a period of (5) five Business Days after Borrower's receipt of
written notice thereof from Lender, without in any way limiting Lender's right
to exercise any of its rights as provided hereunder or under any of the other
Loan Documents, Lender may, but shall have no obligation to, perform, or cause
performance of, such covenant or obligation, and the expenses of Lender incurred
in connection therewith shall be payable by Borrower to Lender upon demand and
if not paid shall be added to the Debt and shall bear interest thereafter at the
Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to
send notice to Owner or Borrower of such failure.
X SPECIAL PROVISIONS
10.1 Sale of Note and Secondary Market Transaction.
10.1.1 Cooperation. At Lender's request (to the extent not already
required to be provided by Borrower under this Agreement), Owner, Borrower and
WALP shall cooperate with Lender to enable Lender to satisfy the market
standards to which Lender customarily adheres or which may be reasonably
required in the marketplace or by the Applicable Rating Agencies in connection
with one or more sales or assignments of the Note or participations therein or
securitizations (including any FASIT) of rated single or multi-class securities
(the
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"Securities") secured by or evidencing ownership interests in the Note and the
Mortgage (each such sale, assignment, participation and/or securitization, a
"Secondary Market Transaction"). Neither Owner nor Borrower shall be required to
incur any out-of-pocket expense to comply with the provisions of this Section
10.1.1 (unless Lender agrees to reimburse Owner or Borrower therefor). In
furtherance of the foregoing, Owner, Borrower and WALP shall, at the request of
Lender in connection with any Secondary Market Transaction, and so long as the
Loan is still outstanding:
(a) (i) provide updates of financial and other information with
respect to the Collateral Property, Owner, Borrower and their respective
Affiliates, Manager and any Tenants, (ii) provide updated business plans and
budgets relating to the Collateral Property and (iii) perform or permit or cause
to be performed or permitted such site inspections, appraisals, surveys, market
studies, environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), engineering reports and other due diligence investigations of the
Collateral Property, as may be reasonably requested from time to time by Lender
or the Applicable Rating Agencies or as may be necessary or appropriate in
connection with a Secondary Market Transaction or Exchange Act requirements (the
items provided to Lender pursuant to this paragraph (a) being called the
"Provided Information"), together, if customary, with appropriate verification
of and/or consents to the Provided Information through letters of auditors or
opinions of counsel of independent attorneys acceptable to Lender and the
Applicable Rating Agencies;
(b) use reasonable efforts to cause counsel to render opinions as to
non-consolidation, fraudulent conveyance, true sale and true contribution and
any other opinion customary in securitization transactions with respect to the
Collateral Property, Owner, Borrower and their respective Affiliates, which
counsel and opinions shall be reasonably satisfactory to Lender and the
Applicable Rating Agencies;
(c) provide current certificates of good standing and qualification
with respect to Owner, Borrower and WALP from appropriate Governmental
Authorities;
(d) execute such amendments to the Loan Documents and Owner's and
Borrower's organizational documents as may be requested by Lender or the
Applicable Rating Agencies or otherwise to effect a Secondary Market
Transaction, provided that nothing contained in this subsection (d) shall result
in an economic change in the transaction or impose any material legal
obligations on Owner or Borrower or restrict Owner or Borrower in any material
way;
(e) assist Lender in the event Lender requires the severance of the
Note or any other Loan Document in order to adjust its security interest in the
Collateral Property to enhance its position in the context of a Secondary Market
Transaction, provided that such severance of the Note or other applicable
adjustment in the security of the Loan pursuant to a Secondary Market
Transaction shall be completed at the sole cost of the Lender;
(f) deliver to Lender and/or any Applicable Rating Agency, (a) one
or more Officer's Certificates certifying as to the accuracy of all
representations made by Owner and Borrower in the Loan Documents as of the date
of the Loan Closing in all relevant jurisdictions or, if such representations
are no longer accurate, certifying as to what modifications to the
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representations would be required to make such representations accurate, and (b)
certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Owner, Borrower,
Owner Representative and Borrower Representative as of the date of the Secondary
Market Transaction;
(g) make such other representations and warranties as of the closing
date of the Secondary Market Transaction with respect to the Collateral
Property, Owner, Borrower, WALP, and the Loan Documents as are customarily
provided in securitization transactions and as may be reasonably requested by
the holder of the Note or the Rating Agencies and consistent with the facts
covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents;
(h) participate in any meeting reasonably requested by the Lender,
such meeting to be attended by senior management of Owner, Borrower and/or WALP;
and
(i) obtain ratings of the Securities from two (2) or more Rating
Agencies.
10.1.2 Use of Information. Owner and Borrower understand that
certain of the Provided Information and the Required Records may be included in
disclosure documents in connection with a Secondary Market Transaction,
including a prospectus or private placement memorandum (each, a "Disclosure
Document") and may also be included in filings with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), or provided or made available to investors or prospective investors in
the Securities, the Rating Agencies, and service providers or other parties
relating to the Secondary Market Transaction. In the event that the Disclosure
Document is required to be revised, Owner and Borrower shall cooperate with
Lender in updating the Provided Information or Required Records for inclusion or
summary in the Disclosure Document or for other use reasonably required in
connection with a Secondary Market Transaction by providing all current
information pertaining to Owner, Borrower, and the Collateral Property necessary
to keep the Disclosure Document accurate and complete in all material respects
with respect to such matters. Such disclosure may include the opinion or
judgment of Lender or Servicer concerning the Provided Information or other
matters disclosed.
10.1.3 Owner's and Borrower's Obligations Regarding Disclosure
Documents. In connection with a Disclosure Document, Owner and Borrower shall:
(a) if requested by Lender, certify in writing that Owner and
Borrower have carefully examined those portions of such Disclosure Document,
pertaining to Owner and Borrower, the Collateral Property, the Manager and the
Loan, including applicable portions of the sections entitled "Special
Considerations", "Description of the Mortgages", "Description of the Mortgage
Loans and Mortgaged Property", "The Manager," "The Borrower" and "Certain Legal
Aspects of the Mortgage Loan," and such portions (and portions of any other
sections reasonably requested and pertaining to Owner, Borrower, the Collateral
Property, the Manager or the Loan) do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading;
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(b) indemnify (i) any underwriter, syndicate member or placement
agent (collectively, the "Underwriters") retained by Lender or its issuing
company affiliate (the "Issuer") in connection with a Secondary Market
Transaction, (ii) Lender and (iii) the Issuer that is named in the Disclosure
Document or registration statement relating to a Secondary Market Transaction
(the "Registration Statement"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"UBS Group"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the "Underwriter Group") for any losses,
claims, damages or liabilities (the "Liabilities") to which Lender, the UBS
Group or the Underwriter Group may become subject (including reimbursing all of
them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue statement of any material fact contained in any
of the Required Records or in any of the applicable portions of such sections of
the Disclosure Document applicable to Owner, Borrower, Manager, the Collateral
Property or the Loan, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in the
applicable portions of such sections or necessary in order to make the
statements in the applicable portions of such sections in light of the
circumstances under which they were made, not misleading, provided, however,
that neither Owner nor Borrower shall be required to indemnify Lender for any
Liabilities relating to untrue statements or omissions or inadequacies of
disclosure which (i) Owner or Borrower identified to Lender in writing at the
time of Owner's or Borrower's examination of such Disclosure Document or (ii)
are set forth in a report prepared by a third party not Affiliated with Owner or
Borrower; and
(c) reimburse any member of the UBS Group for any legal or other
expenses reasonably incurred by such member in connection with investigating or
defending the Liabilities.
Owner's and Borrowers' Liability under clause (a) or (b) above shall be limited
to Liabilities arising out of or based upon any such untrue statement or
omission made therein in reliance upon and in conformity with information
furnished to Lender by or on behalf of Owner or Borrower in connection with the
preparation of those portions of the Disclosure Document pertaining to Owner or
Borrower, Manager, the Collateral Property or the Loan or in connection with the
underwriting of the debt including financial statements of Owner and Borrower,
operating statements, rent rolls and other Required Records, environmental site
assessment reports and property condition reports with respect to the Collateral
Property. The foregoing indemnity will be in addition to any liability which
Owner or Borrower may otherwise have. Lender shall give Borrower a copy of any
Disclosure Document that is to be subject to the foregoing indemnification
obligations a reasonable amount of time prior to its delivery to potential
investors pursuant to an offering.
10.1.4 Owner's and Borrower's Indemnity Regarding Filings. In
connection with filings under the Exchange Act, Owner and Borrower shall (i)
indemnify Lender, the UBS Group and the Underwriter Group for any Liabilities to
which Lender, the UBS Group or the Underwriter Group may become subject insofar
as the Liabilities arise out of or are based upon
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the omission or alleged omission to state in the Provided Information or
Required Records a material fact required to be stated in the Provided
Information or Required Records in order to make the statements in the Provided
Information or Required Records, in light of the circumstances under which they
were made not misleading and (ii) reimburse Lender, the UBS Group or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender,
UBS Group or the Underwriter Group in connection with defending or investigating
the Liabilities.
10.1.5 Indemnification Procedure. Promptly after receipt by an
indemnified party under Section 10.1.3 or 10.1.4 of notice of the commencement
of any action for which a claim for indemnification is to be made against Owner
or Borrower, such indemnified party shall notify Borrower in writing of such
commencement, but the omission to so notify the Owner and Borrower will not
relieve Owner or Borrower from any liability that it may have to any indemnified
party hereunder except to the extent that failure to notify causes prejudice to
Owner or Borrower. In the event that any action is brought against any
indemnified party, and it notifies Owner and Borrower of the commencement
thereof, Owner and Borrower will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent that it (or they)
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice of commencement, to assume the defense thereof
with counsel satisfactory to such indemnified party in its sole discretion.
After notice from Owner and Borrower to such indemnified party under this
Section 10.1.5, neither Owner nor Borrower shall be responsible for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both Owner and Borrower
and an indemnified party, and any indemnified party shall have reasonably
concluded that there are any legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
Owner and Borrower, then the indemnified party or parties shall have the right
to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Owner and Borrower shall be liable for the expenses of more than one
separate counsel unless there are legal defenses available to it that are
different from or additional to those available to another indemnified party.
10.1.6 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 10.1.3 or 10.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 10.1.3
or 10.1.4, Owner and Borrower shall contribute to the amount paid or payable by
the indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
the UBS Group's and Owner's and/or Borrower's relative knowledge and access to
information concerning the matter with respect to which the claim was asserted;
(ii) the opportunity to correct and prevent any statement or omission; and (iii)
any other equitable considerations appropriate in the circumstances. Lender and
each of Owner and Borrower hereby agree that it may not be equitable if the
amount of such contribution were determined by pro rata or per capita
allocation.
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XI MISCELLANEOUS
11.1 Exculpation.
(a) Subject to the qualifications below and the Guaranty, Lender
shall not enforce the liability and obligation of Owner or Borrower to perform
and observe the obligations contained in the Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Owner or Borrower,
except that Lender may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Lender to
enforce and realize upon its interest and rights under the Loan Documents, or in
the Collateral Property, the Rents or any other collateral given to Lender
pursuant to the Loan Documents; provided, however, that, except as specifically
provided herein, any judgment in any such action or proceeding shall be
enforceable against Owner or Borrower only to the extent of Owner's or
Borrower's interest in the Collateral Property, in the Rents and in any other
collateral given to Lender, and Lender shall not sue for, seek or demand any
deficiency judgment against Owner or Borrower in any such action or proceeding
under or by reason of or under or in connection with any Loan Document. The
provisions of this section shall not, however, (i) constitute a waiver, release
or impairment of any obligation evidenced or secured by any Loan Document; (ii)
impair the right of Lender to name Owner or Borrower as a party defendant in any
action or suit for foreclosure and sale under the Mortgage; (iii) affect the
validity or enforceability of any of the Loan Documents (including, without
limitation, the Guaranty) or any other guaranty made in connection with the Loan
or any of the rights and remedies of Lender thereunder, (iv) impair the right of
Lender to obtain the appointment of a receiver, (v) impair the enforcement of
the Assignment of Leases; (vi) constitute a prohibition against Lender to
commence any other appropriate action or proceeding in order for Lender to fully
realize the security granted by the Mortgage or to exercise its remedies against
the Collateral Property; or (vii) constitute a waiver of the right of Lender to
enforce the liability and obligation of Owner or Borrower, by money judgment or
otherwise, to the extent of any loss, damage, cost, expense, liability, claim or
other obligation incurred by Lender (including attorneys' fees and costs
reasonably incurred) arising out of or in connection with the following: (a)
fraud or intentional misrepresentation by Owner or Borrower or any guarantor in
connection with the Loan; (b) the gross negligence or willful misconduct of
Owner or Borrower; (c) the breach of any representation, warranty, covenant or
indemnification in any Loan Document concerning Environmental Laws or Hazardous
Substances, including Sections 5.1.32 and 6.10, and clauses (viii) through (xi)
of Section 6.16; (d) physical waste or after an Event of Default, the removal or
disposal of any portion of the Collateral Property; (e) the misapplication or
conversion by Owner or Borrower of (x) any Proceeds paid by reason of any
Insured Casualty, (y) any Award received in connection with a Condemnation, or
(z) any Rents, refunds of Taxes or Other Charges or Funds (i.e., use of Rents or
refunds of Taxes or Other Charges or Funds to make distributions or payments to
members/partners/shareholders of Owner or Borrower during the continuance of an
Event of Default); (f) failure to pay charges for labor or materials or other
charges that can create Liens on any portion of the Collateral Property unless
such charges are the subject of a bona fide dispute in which the Owner or
Borrower is contesting the amount or validity thereof, (g) any security deposits
collected with respect to the Collateral Property which are not delivered to
Lender upon a foreclosure of the Mortgage or action in lieu thereof, except to
the extent any such security deposits were applied in accordance with the terms
and conditions of any of the Leases prior to the occurrence of the Event of
Default that gave rise to such foreclosure or action in lieu thereof;
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and (h) Owner's and Borrower's indemnifications of Lender set forth in Sections
10.1.3 and 10.1.4.
(b) Notwithstanding anything to the contrary in this Agreement or
any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt or to require that all collateral shall continue to secure all of the
Debt in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Owner and Borrower in the event that (1) Owner, Borrower or any
Person owning an interest (directly or indirectly) in Owner or Borrower
commences any action, suit, claim, arbitration, governmental investigation or
other proceeding (x) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors seeking to have an order for relief entered with respect to
Owner or Borrower, or seeking to adjudicate Owner or Borrower a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to Owner or
Borrower or any of Owner's or Borrower's debts, or (y) seeking appointment of a
receiver (other than Owner seeking the appointment of a receiver during the
pendency of a foreclosure action against Owner commenced by Lender), trustee,
custodian or other similar official for Owner or Borrower or for all or
substantially all of any of Owner's or Borrower's assets or (2) Owner or
Borrower ever ceases to be a Special Purpose Entity.
11.2 Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document (a "notice") shall be given
in writing and shall be effective for all purposes if hand delivered or sent (i)
by (a) certified or registered United States mail, postage prepaid, or (ii) by
(A) expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, and (B) by telecopier (with
answer back acknowledged), in any case addressed as follows (or to such other
address or Person as a party shall designate from time to time by any party
hereto, as the case may be, in a written notice to the other parties hereto in
the manner provided for in this Section):
If to Lender: UBS Principal Finance LLC
299 Park Avenue
New York, New York 10171
Attention: Douglas Renfield-Miller
Facsimile No. (212) 821-5720
with a copy to: Cadwalader, Wickersham & Taft
227 West Trade Street, Suite 2400
Charlotte, North Carolina 28202
Attention: James P. Carroll, Esq.
Facsimile No. (704) 348-5200
If to Borrower: c/o Westfield Corporation, Inc.
and/or Owner 11601 Wilshire Boulevard, Suite 1200
Los Angeles, California 90025-1748
Attention: Mark Stefanek
Facsimile No. (310) 478-3987
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With a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills, Esq.
Facsimile No. (212) 909-6836
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
11.2.1 Owner's Representative; Borrower's Representative.
(a) Each of Owner Representative and Borrower Representative shall
notify Lender of the names of its officers and employees authorized to request
and take other actions on behalf of Owner and Borrower, respectively, (each a
"Responsible Officer") and shall provide Lender with a specimen signature of
each such officer or employee. Lender shall be entitled to rely conclusively on
a Responsible Officer's authority to give and receive notices and take other all
other actions of any kind on behalf of Borrower or any of them until Lender
receives written notice to the contrary. Lender shall have no duty to verify the
authenticity of the signature appearing on any notice.
(b) EACH OF OWNER AND BORROWER DOES HEREBY DESIGNATE AND APPOINT CT
CORPORATION SYSTEM AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, AS ITS
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL
PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS
UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF OWNER OR
BORROWER MAILED OR DELIVERED TO OWNER OR BORROWER IN THE MANNER PROVIDED HEREIN
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON OWNER AND
BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH
OF OWNER AND BORROWER (1) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED
ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO
TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW
YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS),
AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT
CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.
11.3 Brokers and Financial Advisors. Each of Owner and Borrower hereby
represents that it has dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the Loan. Owner, Borrower
and Lender shall indemnify and hold the other harmless from and against any and
all claims, liabilities, costs and expenses of any kind in any way relating to
or arising from a claim by any Person that such Person acted on
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behalf of the indemnifying party in connection with the transactions
contemplated herein. The provisions of this Section 11.3 shall survive the
expiration and termination of this Agreement and the repayment of the Debt.
11.4 Retention of Servicer. Lender reserves the right to retain the
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, any Pooling and Servicing Agreement or similar agreement entered into
as a result of a Secondary Market Transaction, the Cash Management Agreement or
otherwise, together with such other powers as are reasonably incidental thereto.
Borrower shall pay any reasonable fees and expenses of the Servicer in
connection with a release of the Collateral Property, assumption or modification
of the Loan, enforcement of the Loan Documents or any other action taken by
Servicer hereunder on behalf of Lender.
11.5 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as any of the Debt is unpaid unless a longer period is expressly set
forth herein or in the other Loan Documents. Each of Owner's and Borrower's
covenants and agreements in this Agreement shall inure to the benefit of the
respective legal representatives, successors and assigns of Lender.
11.6 Lender's Discretion. Whenever pursuant to this Agreement or any other
Loan Document, Lender exercises any right given to it to approve or disapprove,
or any arrangement or term is to be satisfactory to Lender, the decision of
Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
11.7 Governing Law; Venue.
(a) THIS AGREEMENT WAS MADE BY LENDER AND ACCEPTED BY OWNER AND
BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED
PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND PROCEDURES RELATING TO
ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
COLLATERAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF
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SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT
PERMITTED BY LAW, EACH OF OWNER AND BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO ss. 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, OWNER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO ss. 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND EACH OF OWNER AND BORROWER WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND EACH OF OWNER AND BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
11.8 Modification; Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by Owner or Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for the purpose,
for which given. Except as otherwise expressly provided herein, no notice to or
demand on Owner or Borrower shall entitle Owner or Borrower to any other or
future notice or demand in the same, similar or other circumstances.
11.9 Delay Not a Waiver. Neither any failure nor any delay on the part of
Lender in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising any right, power, remedy or privilege hereunder, or
under any other Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under any Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under the Loan Documents, or to declare an Event of Default for
failure to effect prompt payment of any such other amount.
11.10 TRIAL BY JURY. OWNER, BORROWER AND LENDER HEREBY AGREE NOT TO ELECT
A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY OWNER, BORROWER AND LENDER, AND IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS
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TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER.
11.11 Heading. The Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
11.12 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.13 Preferences. To the extent Owner or Borrower makes a payment to
Lender, or Lender receives proceeds of any collateral, which is in whole or part
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Debt or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender. This provision
shall survive the expiration or termination of this Agreement and the repayment
of the Debt.
11.14 Waiver of Notice. Neither Owner nor Borrower shall be entitled to
any notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement or any other Loan Document specifically and expressly
provides for the giving of notice by Lender to Owner or Borrower and except with
respect to matters for which Owner or Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice. Each of Owner and
Borrower hereby expressly waives the right to receive any notice from Lender
with respect to any matter for which no Loan Document specifically and expressly
provides for the giving of notice by Lender to Owner or Borrower.
11.15 Remedies of Owner and Borrower. In the event that a claim or
adjudication is made that Lender or its agent, including Servicer, has acted
unreasonably or unreasonably delayed acting in any case where by law or under
any Loan Document, Lender or such agent, as the case may be, has an obligation
to act reasonably or promptly, each of Owner and Borrower agrees that neither
Lender nor its agents, including Servicer, shall be liable for any monetary
damages, and such Borrower's sole remedy shall be to commence an action seeking
injunctive relief or declaratory judgment. Any action or proceeding to
determines whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment. Each of Owner and Borrower specifically waives any
claim against Lender and its agents, including Servicer, with respect to actions
taken by Lender or its agents on Owner's or Borrower's behalf pursuant to
Section 9.2.5.
11.16 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated
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<PAGE>
hereby and thereby, and all prior agreements among or between such parties,
whether oral or written, are superseded by the terms of this Agreement and the
other Loan Documents.
11.17 Offsets, Counterclaims and Defenses.
Each of Owner and Borrower hereby waives the right to assert a
counterclaim, other than a compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents, including Servicer. Any assignee of
Lender's interest in and to the Loan Documents shall take the same free and
clear of all offsets, counterclaims or defenses that are unrelated to the Loan
Documents which Owner or Borrower may otherwise have against any assignor of
such documents, and no such unrelated offset, counterclaim or defense shall be
interposed or asserted by Owner or Borrower in any action or proceeding brought
by any such assignee upon such documents, and any such right to interpose or
assert any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Owner or Borrower.
11.18 Publicity. All news releases, publicity or advertising by Owner or
Borrower or its Affiliates through any media intended to mach the general
public, which refers to the Loan Documents, the Loan, Lender, any member of the
UBS Group, a Loan purchaser, the Servicer or the trustee in a Secondary Market
Transaction, shall be subject to the prior written approval of Lender.
11.19 No Usury. Owner, Borrower and Lender intend at all times to comply
with applicable state law or applicable United States federal law (to the extent
that it permits Lender to contract for, charge, take, reserve or receive a
greater amount of interest than under state law) and that this Section 11.19
shall control every other agreement in the Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Debt, or if Lender's
exercise of the option to accelerate the maturity of the Loan or any prepayment
by Owner or Borrower results in Owner and Borrower having paid any interest in
excess of that permitted by applicable law, then it is Owner's, Borrower's and
Lender's express intent that all excess amounts theretofore collected by Lender
shall be credited against the unpaid Principal and all other Debt (or, if the
Debt has been or would thereby be paid in full, refunded to the Borrower), and
the provisions of the Loan Documents immediately be deemed reformed and the
amounts thereafter collectible thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for thereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance or
detention of the Loan shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum lawful rate from time to time in effect
and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained in any Loan Document, it is
not the intention of Lender to accelerate the maturity of any interest that has
not accrued at the time of such acceleration or to collect unearned interest at
the time of such acceleration.
11.20 Conflict; Construction of Documents. In the event of any conflict
between the provisions of this Agreement and any of the other Loan Documents,
the provisions of this
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<PAGE>
Agreement shall control. The parties hereto acknowledge that each is represented
by separate counsel in connection with the negotiation and drafting of the Loan
Documents and that the Loan Documents shall not be subject to the principle of
construing their meaning against the party that drafted them.
11.21 No Joint Venture or Partnership; No Third Party Beneficiaries. (a)
Owner, Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing
herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Owner, Borrower and
Lender nor to grant Lender any interest in the Collateral Property other than
that of mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender, Owner and Borrower and nothing contained in this Agreement or
the other Loan Documents shall be deemed to confer upon anyone other than
Lender, Owner and Borrower any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein.
All conditions to the obligations of Lender to make the Loan hereunder are
imposed solely and exclusively for the benefit of Lender and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Lender will refuse to make the
Loan in the absence of strict compliance with any or all thereof and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender's sole discretion, Lender deems it advisable or desirable
to do so.
11.22 Yield Maintenance Premium. Each of Owner and Borrower acknowledges
that Lender intends to enter into a Secondary Market Transaction which may
result in various classes of Securities with different coupon rates. Each of
Owner and Borrower also acknowledges that (i) the proceeds of any partial
prepayment of Principal may be utilized to retire Securities bearing a coupon
rate lower than the Interest Rate, (ii) that following such prepayment the
remaining outstanding Securities may bear a weighted average coupon rate in
excess of the Interest Rate and (iii) that, absent the Yield Maintenance Premium
payable hereunder in connection with such prepayment, Lender will not receive
the benefits intended to be conferred by the Loan Documents. For these reasons,
and to induce Lender to make the Loan, Borrower expressly waives any right or
privilege to prepay the Loan except as may be specifically permitted herein and
agrees that, except as expressly provided for herein, any prepayments, whether
voluntary or involuntary, will be accompanied by the Yield Maintenance Premium.
Such Yield Maintenance Premium shall be required whether payment is made by
Borrower, by Owner, by a Person on behalf of Borrower, or by the purchaser at
any foreclosure sale, and may be included in any bid by Lender at such sale.
Each of Owner and Borrower further acknowledges that (A) it is a knowledgeable
real estate developer and/or investor; (B) it fully understands the effect of
the provisions of this Section 11.22, as well the other provisions of the Loan
Documents; (C) the making of the Loan by Lender at the Applicable Interest Rate
and other terms set forth in the Loan Documents are sufficient consideration for
such Borrower's obligation to pay a Yield Maintenance Premium (if required); and
(D) Lender would not make the Loan on the terms set forth herein without the
inclusion of such provisions. Borrower also acknowledges that the provisions of
this Agreement limiting the right of prepayment and providing for the payment of
the Yield Maintenance Premium and other charges specified herein were
independently
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<PAGE>
negotiated and bargained for, and constitute a specific material part of the
consideration given by Borrower to Lender for the making of the Loan.
11.23 Assignment. The Loan, the Note, the Loan Documents and all Lender's
rights, title, obligations and interests therein may be assigned by Lender at
any time in its sole discretion whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise. Upon such assignment, all
references to Lender in this Loan Agreement and in any Loan Document shall be
deemed to refer to such assignee or successor in interest and such assignee or
successor in interest shall thereafter stand in the place of Lender; provided,
however that the original named Lender herein shall not be released of its
obligations in respect of Advances which Lender is thereafter required to make
hereunder. Neither Owner nor Borrower may assign its rights, interests or
obligations under this Loan Agreement or under any of the Loan Documents except
as expressly permitted hereunder.
11.24 Waiver of Marshalling of Assets.
(a) To the fullest extent permitted by law, each of Owner and
Borrower, for itself and its successors and assigns, waives all rights to a
marshalling of the assets of each of Owner and Borrower, each of Owner's and
Borrower's partners or members and others with interests in any of Owner or
Borrower, and of the Collateral Property, or to a sale in inverse order of
alienation in the event of foreclosure of the Mortgage, and agrees not to assert
any right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Collateral Property
for the collection of the Debt without any prior or different resort for
collection or of the right of Lender to the payment of the Debt out of the net
proceeds of the Collateral Property in preference to every other claimant
whatsoever.
11.25 Joint and Several Liability. Each of Owner and Borrower shall be
jointly and severally liable with each other for payment of all amounts that
become due under this Agreement, such as payment of all fees and expenses
pursuant to Section 6.15.
[SIGNATURE PAGES IMMEDIATELY FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
WITNESS/ATTEST BORROWER:
ANNAPOLIS SHOPPINGTOWN LLC,
a Delaware limited liability company
By: Annapolis Mall Limited Partnership,
a Maryland limited partnership,
its sole member
By: Annapolis Mall LLC,
a Delaware limited liability company,
its general partner
By: Annapolis Manager LLC,
a Delaware limited liability company,
its managing member
By: Westfield America Limited Partnership,
a Delaware limited partnership,
its sole member
By: Westfield America, Inc.,
a Missouri corporation,
its general partner
/s/ Rita C. Gaeta By: /s/ Irv Hepner
--------------------- ------------------
Name: Irv Hepner
Title: Secretary
[Signatures Continue on Next Page]
<PAGE>
WITNESS/ATTEST OWNER:
ANNAPOLIS MALL LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Annapolis Mall LLC,
a Delaware limited liability company,
its general partner
By: Annapolis Manager LLC,
a Delaware limited liability company,
its managing member
By: Westfield America Limited Partnership,
a Delaware limited partnership,
its sole member
By: Westfield America, Inc.,
a Missouri corporation,
its general partner
/s/ Rita C. Gaeta By: /s/ Irv Hepner
-------------------- ----------------------
Name: Irv Hepner
Title: Secretary
[Signatures Continue on Next Page]
<PAGE>
WITNESS/ATTEST OWNER:
ANNAPOLIS LAND LLC,
a Delaware limited liability company
By: Annapolis Mall Limited Partnership,
a Maryland limited partnership,
its sole member
By: Annapolis Mall LLC,
a Delaware limited liability company,
its general partner
By: Annapolis Manager LLC,
a Delaware limited liability company,
its managing member
By: Westfield America Limited Partnership,
a Delaware limited partnership,
its sole member
By: Westfield America, Inc.,
a Missouri corporation,
its general partner
/s/ Rita C. Gaeta By: /s/ Irv Hepner
----------------------- ----------------------
Name: Irv Hepner
Title: Secretary
[Signatures Continue on Next Page]
<PAGE>
LENDER:
UBS PRINCIPAL FINANCE LLC, a Delaware limited
liability company
By: /s/ John Cutting
------------------------
Name: John Cutting
Title: Executive Director
By: /s/ Brian Harris
------------------------
Name: Brian Harris
Title: Executive Director
<PAGE>
Exhibit A
Form of Notice To Tenants
[BORROWER'S NAME AND ADDRESS]
_____________, 2000
[Name and Address of Tenant]
Re: Lease of Store at
(the "Center")
Ladies and Gentlemen:
The undersigned is the Owner of the Center and the landlord under
your lease of a store at the Center (your "Lease").
By this letter, you are hereby directed (1) to make all checks, in
payment of rent and other sums due to the landlord under your Lease, payable to
the order of [applicable Agent], and (2) to deliver such checks or otherwise
make such payments to the following address:
[Name and Address of Agent]
The foregoing direction is irrevocable, except with the written
consent of our mortgagee, UBS Principal Finance LLC (or its successors or
assigns), notwithstanding any future contrary request or direction from the
undersigned or any other person (other than UBS Principal Finance LLC (or its
successors or assigns)). Thank you for your cooperation.
Very truly yours,
[BORROWER]
By: ________________________________________
Name: _______________________________
Title: ______________________________
A - 1
<PAGE>
Exhibit B
Form of Subordination, Nondisturbance and Attornment Agreement
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Non-Disturbance and Attornment Agreement (this Agreement), made as of
___________, 199_, by and between , a limited
liability company organized under the laws of Delaware and having an address at
(the Lender) and _________________, a
_________________, having an address at _______________________ (the Tenant);
WITNESSETH:
WHEREAS, by the lease (as the same may be amended from time to time, the
Lease) dated _________, 19__, between _______________ (the Landlord), as
landlord, and Tenant, as tenant, the Landlord leased to Tenant a certain portion
of the building known as and located at __________________, being more fully
described in said Lease (the Premises);
WHEREAS, the Landlord has executed and delivered to the Lender a mortgage
note in the original principal amount of ____________ ($____________) Dollars,
which note is secured by, among other things, a mortgage or deed of trust (which
mortgage or deed of trust, and all amendments, renewals, increases,
modifications, replacements, substitutions, extensions, spreaders, restatements
and consolidations thereof and all re-advances thereunder and additions thereto
is referred to as the Mortgage) encumbering certain land being more particularly
described in Schedule A attached hereto (the Land), together with the buildings
and other improvements located or to be located thereon (such buildings and
other improvements and the Land, collectively, the Mortgaged Property)
including, without limitation, the Premises.
NOW, THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
1. The Lease, as the same may hereafter be modified, amended or
extended, is and shall be subject and subordinate in each and every respect to
the Mortgage, to all renewals,
B - 1
<PAGE>
modifications, replacements and extensions thereof, to all terms, conditions and
provisions thereof and to each and every advance hertofore made or hereafter
made under the Mortgage.
2. The Lender agrees that if any action or proceeding is commenced
by the Lender for the foreclosure of the Mortgage or the sale of the Mortgaged
Property, the Tenant shall not be named as a party therein (unless required by
law), and the sale of the Mortgaged Property in any such action or proceeding
and the exercise by the Lender of any of its other rights under the Mortgage, or
under the note secured by the Mortgage, shall be made subject to all rights of
the Tenant under the Lease, provided that at the time of the commencement of any
such action or proceeding and at the time of any such sale or exercise of any
such other rights, the Tenant shall not be in default under any of the terms,
covenants or conditions of the Lease or of this Agreement on the Tenant's part
to be observed or performed.
3. The Tenant shall concurrently give the Lender copies of all
notices and other communications given by the Tenant to the Landlord relating to
(i) defaults or alleged defaults on the part of the Landlord or the Tenant under
the Lease, (ii) any violations of any ordinances, statues, laws, rules, codes
regulations or requirements of any governmental agency, and (iii) any assignment
or subletting of all or any portion of the Premises.
4. In the event of any act or omission by the Landlord which would
give the Tenant the right, either immediately or after the lapse of a period of
time, to terminate the Lease, or to claim a partial or total eviction, the
Tenant will not exercise any such right (i) until it has sent written notice of
such act or omission to the Lender as provided herein, and (ii) unless the
Lender shall have failed within sixty (60) days after receipt of such notice to
cure such default or, if such default is not reasonably susceptible of cure
within such sixty (60) days, the Lender shall not have commenced the cure of
such default within sixty (60) days of receipt of such notice and thereafter
diligently pursued such action.
5. In the event that the interest of the Landlord is transferred by
reason of, or assigned in lieu of foreclosure or other proceedings for
enforcement of the Mortgage, then, subject to the provisions of this Agreement,
the Lease shall nevertheless continue in full force and effect and, upon the
written request of the Lender, the Tenant shall attorn to the Lender and shall
recognize the Lender as its landlord. Although the foregoing provision shall be
self-operative, in order to confirm such attornment, upon the request of the
Lender, the Tenant shall execute and deliver to the Lender (i) an agreement of
attornment in form and content reasonably satisfactory to the Lender, at the
Tenant's sole cost and expense, confirming the foregoing attornment and agreeing
to perform all the terms, covenants and conditions of the Lease on the Tenant's
part to be performed for the benefit of such Lender with the same force and
effect as if such Lender were the Landlord originally named in this Lease or
(ii) a new lease with the
B - 2
<PAGE>
Lender, as landlord, for the remaining term of the Lease and otherwise on the
same terms and conditions and with the same options, if any, then remaining.
Nothing herein contained shall be construed however, to obligate the Lender to
cure any default by the Landlord under the Lease occurring prior to any date on
which the Lender shall succeed to the rights of the Landlord, it being expressly
agreed that under no circumstances shall the Lender be obligated to remedy any
such default.
6. If the Lender shall succeed to the interest of the Landlord, the
Lender shall have no personal liability as successor to the Landlord, and the
Tenant shall look only to the estate and property of the Lender in the Mortgaged
Property or the proceeds thereof for the satisfaction of the Tenant's remedies
for the collection of a judgement (or other judicial process) requiring the
payment or money in the event of any default by the Lender as landlord under the
Lease. In addition, the Lender as holder of the Mortgage or as landlord under
the Lease if it succeeds to that position, shall in no event (i) be liable to
the Tenant for any act or omission of any prior landlord, (ii) be subject to
any offset or defense which the Tenant might have against any prior landlord,
(iii) be liable to the Tenant for any liability or obligation of any prior
landlord occurring prior to the date that the Lender or any subsequent owner
acquires title to the Premises, or (iv) be liable to the Tenant for any security
or other deposits given to secure the performance of the Tenant's obligations
under the Lease, except to the extent that the Lender shall have acknowledged
actual receipt of such security or other deposits in writing. No other property
or assets of the Lender shall be subject to levy, execution or other enforcement
procedure for the satisfaction of the Tenant's remedies under or with respect to
the Lease, the relationship of the landlord and the tenant thereunder or the
Tenant's use or occupancy of the Premises.
7. All notices and other communications hereunder shall be sent by
certified or registered mail (postage prepaid, return receipt requested) to the
Lender at the address set forth above, Attention: _________, or to the Tenant at
the address set forth in the Lease, or to such other address or person as may be
specified in a notice sent in accordance with the provisions of this Section 7,
and shall be deemed given when received at the addresses specified above.
8. No prepayment of rent or additional rent due under the Lease of
more than one month in advance shall be binding upon the Lender, as holder of
the Mortgage or as landlord under the Lease if the Lender succeeds to that
position, unless consented to by the Lender, and from and after the date hereof,
no amendment, modification, surrender or cancellation of the Lease shall be
binding upon the Lender, as holder of the Mortgage or as landlord under the
Lease if the Lender succeeds to that position, unless such amendment,
modification, surrender or cancellation is done in compliance with the terms of
the Mortgage.
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<PAGE>
9. This Agreement shall apply to, bind and inure to the benefit of
the parties hereto and their respective successors and assigns. As used herein,
the term Tenant shall mean and include the present tenant under the Lease, any
permitted subtenant under the Lease, any permitted assignee of the Lease and any
successor of any of them. The term Lender as used herein shall include the
holder of the Mortgage, the successors and assigns of the Lender, and any
person, party or entity which shall become the owner of the Mortgaged Property
by reason of a foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or other proceedings for enforcement of the
Mortgage or otherwise. The term Landlord as used herein shall mean and include
the present landlord under the Lease and such landlord's predecessors and
successors in interest under the Lease.
10. This Agreement may not be modified in any manner or terminated
except by an instrument in writing executed by the parties hereto.
[11. This Agreement satisfies the condition to the subordination of
the Lease to the Mortgage set forth in Section _____ of the Lease with respect
to the execution and delivery of ____.]
12. This Agreement shall be governed by and construed in accordance
with the laws of the State of ____________.
13. Both the Tenant and the Lender hereby irrevocably waive all
right to trial by jury in any action, proceeding or counterclaim arising out of
or relating to the Lease or this Agreement.
B - 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
By:
--------------------------------
Name:
Title:
[TENANT]
By:
--------------------------------
Name:
Title:
B - 5
<PAGE>
EXHIBIT C-1
Form of Manager Consent and Subordination
(Manager other than Westfield)
CONSENT AND SUBORDINATION OF MANAGER
----------
UBS Principal Finance
299 Park Avenue
New York, NY 10171
Ladies and Gentlemen:
Reference is made to (i) that certain Management Agreement (the
"Management Agreement"), dated as of _______________, between
______________________ (the "Borrower") and the undersigned (the "Manager") with
respect to the property known as __________________ and located in the City of
_____________ County, _________ (the "Property"), and (ii) that certain Loan
Agreement (the "Loan Agreement") dated as of ______________, 199_, between the
Borrower and (together with its successors and assigns, the
"Lender"). Any capitalized terms used herein but not defined herein shall have
the same meanings as are ascribed to them in the Loan Agreement.
The Manager acknowledges and understands that delivery of this letter to
you is a condition to the Lender making a certain loan to the Borrower pursuant
to the Loan Agreement in the original principal amount of up to $___________
(the "Loan").
The Borrower and the Manager hereby agree as follows:
1. The Management Agreement is and shall be subject and subordinate in all
respects to (i) the Mortgage (and to the lien of the Mortgage), (ii) the Loan
Documents, and (iii) any and all modifications, amendments, renewals and/or
substitutions of the Mortgage and/or any of the other Loan Documents. This
paragraph 1 shall be self-operative and no further instrument of
C-1-1
<PAGE>
subordination shall be required. If requested, however, the Borrower and/or the
Manager shall execute and deliver such further instruments as the Lender may
deem reasonably necessary to effectuate this subordination.
2. If there shall have occurred and be continuing an Event of Default and
the Lender shall have obtained (i) title to the Property (or any portion
thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise and/or (ii) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee, the Manager
shall, if and to the extent requested in writing by the Lender, continue
performance under the Management Agreement in accordance with the terms thereof
so long as the Manager is paid compensation thereafter accruing under the
Management Agreement. The Borrower and the Manager understand, however, that
nothing contained herein, in the Mortgage or in any of the other Loan Documents
shall be construed to obligate the Lender to perform or discharge any of the
Borrower's obligations, duties or liabilities under the Management Agreement.
3. Upon the occurrence of any default by the Borrower under the terms of
the Management Agreement, the Manager shall, promptly upon becoming aware
thereof, provide the Lender with notice in writing thereof, and after receipt of
said notice, the Lender shall have the same time period within which to cure
said default as the Borrower has under the Management Agreement although the
Borrower and the Manager understand that the Lender shall not have any
obligation to do so. Notwithstanding the foregoing, the failure by the Manager
to notify the Lender of a default under the Management Agreement shall not be
deemed to constitute a waiver by the Manager of such default. Furthermore, the
Borrower and the Manager agree that the Lender may terminate the Management
Agreement (i) in accordance with Section of the Loan Agreement or in the event
of the Manager's gross negligence, malfeasance or willful misconduct(1), or (ii)
by giving five days' notice to the Manager upon the Lender (or a successor
owner, as the case may be) obtaining (A) title to the Property (or any portion
thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise, and/or (B) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee. If the Lender
elects to terminate the Management Agreement in accordance with this Paragraph
3, the Borrower and the Manager understand and agree that the Manager shall look
solely to the Borrower for any and all fees, charges or other sums payable to
the Manager under the Management Agreement. If the Management Agreement shall be
so terminated by the Lender, the Manager agrees to cooperate with the Lender to
ensure a smooth transition to the new property manager.
- ----------
(1) The Management Agreement must permit the Borrower to terminate the
Management Agreement in the event of the Manager's gross negligence,
malfeasance or willful misconduct.
C-1-2
<PAGE>
4. The Manager hereby confirms that (i) the term of the Management
Agreement shall expire on or before the Anticipated Prepayment Date, and (ii) if
the Debt has not been repaid in full on or before the Anticipated Prepayment
Date, the term of the Management Agreement may only be renewed or extended
beyond the Anticipated Prepayment Date with the prior written approval of the
Servicer.(2)
5. This letter shall inure to the benefit of the Lender and its successors
and assigns, including the trustee in a Secondary Market Transaction. In the
event of any inconsistency or conflict with the provisions of this letter and
the provisions of the Management Agreement, the provisions of this letter shall
control.
6. The Manager agrees that it shall not change, amend, modify or terminate
the Management Agreement without the Lender's prior written approval in each
instance, which approval may be given or denied by the Lender in its sole
discretion. If the Manager does so amend, modify or terminate the Management
Agreement without the Lender's prior written approval, such amendment,
modification or termination shall be void ab initio.
7. This letter shall be governed by, and construed in accordance with the
law of the State of New York.
8. Without limiting the generality of any other provisions contained
herein or in the other Loan Documents, no failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of the Lender provided
herein and in the other Loan Documents are cumulative and are in addition to,
and are not exclusive of, any rights or remedies provided by law or in equity.
9. The Manager represents and warrants to the Lender that as of the date
hereof (i) the Management Agreement is in full force and effect and has not been
amended, modified, assigned, terminated or supplemented, (ii) the Manager is not
in default under the provisions of the Management Agreement and there is no
condition which, with the giving of notice and/or the lapse of time, would
constitute such a default, and (iii) to the best of Manager's knowledge, the
Borrower is not in default under the provisions of the Management Agreement and
there is no condition which, with the giving of notice and/or the lapse of time,
would constitute such a default.
- ----------
(2) The Management Agreement must expire on or before the Anticipated
Prepayment Date and may not be renewed or extended without the prior
written approval of the Servicer.
C-1-3
<PAGE>
10. This letter may not be amended, modified, terminated or supplemented
without the written approval of each of the Manager, the Borrower and the
Lender.
Very truly yours,
[MANAGER]
By: ________________________________
Name:
Title:
AGREED AND CONSENTED
TO AS OF _______________, 199_
[BORROWER]
By: ______________________, its _____________
By: ___________________________
Name:
Title:
C-1-4
<PAGE>
Exhibit C-2
MANAGER'S CONSENT AND SUBORDINATION
OF MANAGEMENT AGREEMENT
THIS MANAGER'S CONSENT AND SUBORDINATION OF MANAGEMENT AGREEMENT
(this "Agreement"), dated as of , is executed by the undersigned,
WESTFIELD MANAGEMENT COMPANY, a Delaware general partnership ("Manager"), as an
inducement to UBS Principal Finance LLC, a Delaware limited liability company
(together with its successors and assigns, the "Lender"), to make a loan to
, a Delaware limited liability company ("Borrower") in a
principal amount not to exceed $16,840,000.00 (the "Loan") pursuant to that
certain Loan Agreement dated as of the date hereof (the "Loan Agreement"), in
connection with various properties, including the property owned by
(the "Property").
1. Definitions. All capitalized terms not defined herein shall have
the meanings ascribed thereto in the Loan Agreement.
2. Manager's Representations. Manager warrants and represents to
Lender, as of the date hereof, that the following are true and correct:
(a) That Manager has agreed to act as manager of the Property
pursuant to that certain management agreement, between Borrower and Manager,
which agreement is described on Exhibit A attached hereto and made a part
hereof, and has not been amended, modified or supplemented except as set forth
on said Exhibit A (the "Management Agreement").
(b) That the entire agreement between Manager and Borrower for the
management of the Property is evidenced by the Management Agreement.
(c) That the Management Agreement constitutes the valid and binding
agreement of Manager, is enforceable in accordance with its terms, and Manager
has full authority under all state or local laws and regulations, to perform all
of its obligations under said Management Agreement.
(d) That neither Borrower nor Manager is in default in the
performance of any of its obligations under the Management Agreement.
(e) That Manager has received and reviewed a copy of the Loan
Agreement and the Cash Management Agreement.
3. Manager's Agreements. Manager hereby consents to and agrees to
each and every one of the following covenants and agreements for the benefit of
Lender and as a condition to Lender's making the Loan:
(a) No Termination of Management Agreement. Manager shall not
terminate the Management Agreement without first obtaining Lender's written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed.
C-2-1
<PAGE>
Notwithstanding the foregoing, Manager shall have the right to terminate the
Management Agreement upon default by Borrower with respect to non-payment of the
management fee due thereunder by giving Lender thirty (30) days' prior written
notice of such termination. In the event Lender shall cure such non-payment
default in the aforesaid thirty (30)-day period, then any such termination
notice shall be of no further force or effect.
(b) Subordination of Management Agreement to Lien of Mortgages. Any
and all liens, rights and interests (whether choate or inchoate and including,
without limitation, all mechanics' and materialmen's liens under applicable law)
owned, claimed or held, or to be owned, claimed or held, by Manager in and to
the Property, other than rights of Manager to receive payment of the basic
management fee and all other amounts payable under the Management Agreement for
periods prior to the termination thereof, are and shall be, and are hereby made,
in all respects subordinate and inferior to the liens and security interests
created or to be created for the benefit of Lender, its successors and assigns,
and securing the repayment of the Debt and including, without limitation, those
created under and by virtue of the Mortgage.
(c) Lender's Right to Terminate. Upon the occurrence of a Cash
Management Event, Manager shall, at the request of Lender, continue performance,
subject to Paragraph 3(d) hereof, on behalf of Lender, of all of Manager's
obligations under the terms of the Management Agreement with respect to the
Property, provided that Lender gives Manager the notice provided for in
Paragraph 3(j) hereof and Lender (or Borrower) performs or causes to be
performed the obligations of Borrower to Manager under the Management Agreement
accruing or arising from and after, and with respect to the period commencing
upon, the effective date of such notice. Notwithstanding anything contained in
the Management Agreement to the contrary, Lender, or Borrower at Lender's
direction pursuant to the Loan Documents, shall have the right to terminate the
Management Agreement upon, or at any time after, Lender or any third party
acquires the Property, whether by foreclosure, deed-in-lieu of foreclosure or
otherwise, by giving Manager thirty (30) days' prior written notice of such
termination, in which event Manager shall resign as manager of the Property
effective upon the end of such thirty (30)-day period. Manager agrees not to
look to Lender for payment of any accrued but unpaid fees relating to the
Property accruing from and after the effective date of such termination.
(d) Cooperation with Management Consultant. If, pursuant to the Loan
Agreement, Borrower retains a Management Consultant, Manager shall cooperate
with the Management Consultant to enable the Management Consultant to perform
its responsibilities as described in the Loan Agreement.
(e) No Amendments to Management Agreement. Manager will not amend or
modify the Management Agreement in any manner which would (i) materially and
adversely affect the management, operation or value of the Property, or (ii)
increase the base management fee payable thereunder, without the prior written
consent of Lender which consent shall not be unreasonably withheld, delayed or
conditioned. In the event Manager fails to secure such approval, the Management
Agreement shall, for the
C-2-2
<PAGE>
purposes of Manager's obligations to Lender pursuant to this Agreement,
including Manager's obligation aforesaid to continue performance thereunder for
Lender's benefit pursuant to the terms of this Agreement, be deemed not to have
been modified by such amendment.
(f) Delivery of Rent Roll and Service Contracts. Within twenty (20)
Business Days after Lender's request therefor, but not more than once in any
calendar quarter, and only to the extent not furnished by Borrower. Manager
shall furnish to Lender a current rent roll of all Tenants of the Property,
including a list of which Tenants are in default under their respective leases,
and a schedule of all other entities with whom Manager has entered into leases,
contracts or other agreements relating to the Property, together with copies of
all such leases, contracts or agreements.
(g) Further Assurances. Manager further agrees, without cost to
Manager, to (i) execute such affidavits and certificates as Lender shall
reasonably require to further evidence the agreements herein contained, (ii) on
request from Lender, and only to the extent not furnished by Borrower, furnish
Lender with copies of such information as Borrower is entitled to receive under
the Manager Agreement, and (iii) at reasonable times, and upon reasonable
advance notice, cooperate with Lender's representative or agent in any
inspection of the Property.
(h) Assignment of Rents and Leases. Manager acknowledges that, in
connection with the Loan, Borrower has executed and delivered to Lender an
Assignment of Leases and Rents, dated as of the date hereof, assigning to
Lender, among other things, all of Borrower's right, title and interest in and
to all of the Leases, including any of Borrower's rights in the security
deposits thereunder (to the extent permitted by applicable law). Manager hereby
agrees that as of the date hereof, Manager shall henceforth deliver to the
Lockbox Account, and cause all Tenants under Leases to deliver to the Lockbox
Account, for application in accordance with the terms and conditions of
the Loan Agreement, the Cash Management Agreement and the other Loan Documents,
all Rents and other proceeds received after the date hereof from any and all
Tenants or other parties occupying or using any portion of the Property.
(i) No Joint Venture. Lender has no obligation to Manager with
respect to the Debt and Manager shall not be a third party beneficiary with
respect to any of Lender's obligations to Borrower set forth in the Loan
Documents. The relationship of Lender to Borrower is one of a creditor to a
debtor, and Lender is not a joint venturer or partner of Borrower.
(j) Lender Not Obligated Under Management Agreement. Manager further
agrees that, except as hereinafter set forth, nothing herein shall impose upon
Lender any obligation for payment or performance in favor of Manager. In the
event that Lender notifies Manager in writing of the occurrence of a Cash
Management Event and that Lender has elected to assert the rights of Borrower
under the Management Agreement, Lender shall pay Manager the sums due Manager
under the terms of the Management Agreement (subject to and in accordance with
the terms of the Management Agreement and this Agreement) for the period
commencing on the effective date of
C-2-3
<PAGE>
Lender's notice to Manager and ending on the expiration date or earlier
termination of the Management Agreement.
(k) Lender's Reliance on Representations. Manager has executed this
Agreement for the purpose of inducing the Lender to make the Loan in accordance
with the Loan Agreement and with full knowledge that Lender shall rely upon the
representations, warranties and agreements herein contained when making the
Loan, and that but for this instrument and the representations, warranties and
agreements herein contained, the Lender would not take such actions.
(l) Governed by Loan Documents. Manager agrees that until such time
as the Debt has been repaid in full, the terms and provisions of this Agreement
and the Note, the Loan Agreement and the other Loan Documents shall be superior
to the terms and provisions of the Management Agreement with respect to the
payment of any management fees thereunder (other than with respect to payment of
management fees; and other amounts payable under the Management Agreement for
any periods prior to the termination thereof) and termination of the Management
Agreement, and to the extent there are any inconsistencies between the
Management Agreement and this Agreement and the Loan Documents with respect to
such terms and provisions, the terms, provisions and conditions in this
Agreement and the Loan Documents shall govern in all respects.
4. Borrower Consent. Borrower has joined herein to evidence its
consent to all the agreements of Manager contained in this Agreement.
5. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
6. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
collectively constitute but one and the same instrument.
7. Assignment. Lender shall have the right to transfer, sell and
assign its interest in this Agreement to any Person. All references to "Lender"
hereunder shall be deemed to include the successors and assigns of Lender.
8. Notices. Any notice, election, request, communication or demand
which is required or permitted to be given or served hereunder shall be in
writing and shall be given or served by hand delivery against receipt, by any
nationally recognized overnight courier service providing evidence of the date
of delivery or by certified mail return receipt requested, postage prepaid,
addressed to
C-2-4
<PAGE>
If to Lender: UBS Principal Finance LLC
299 Park Avenue
New York, New York 10171
Attention: Douglas Renfield Miller
Facsimile No. (212) 821-5720
with a copy to: Cadwalader, Wickersham & Taft
227 West Trade Street, Suite 2400
Charlotte, North Carolina 28202
Attention: James P. Carroll, Esq.
Facsimile No. (704) 348-5200
If to Borrower: 11601 Wilshire Boulevard, Suite 1200
Los Angeles, California 90025-1748
Attention: Mark Stefanek, Chief
Financial Officer
Facsimile No. (310) 478-3987
With a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills, Esq.
Facsimile No. (212) 909-6836
Any such notice or demand given hereunder shall be effective upon delivery or
three (3) days after mailing aforesaid. All notices, elections, requests,
communications and demands required or permitted hereunder shall be in the
English language.
9. Non-Recourse. Anything contained in this Agreement to the
contrary notwithstanding (except as provided below), Lender's recourse with
respect to any claims arising under or in connection with this Agreement shall
be limited solely to the interest of Manager in the Management Agreement, and
none of (i) Manager or any of its Affiliates, (ii) any Persons who presently or
in the future own any direct ownership interest in Manager or any successor of
Manager (each, a "Direct Beneficial Owner") or any affiliate thereof, (iii) any
Person owning, directly or indirectly, any legal or beneficial interest in
Manager or any Direct Beneficial Owner of any Affiliate thereof, or (iv) any
partner, principal, officer, controlling person, beneficiary, trustee, advisor,
shareholder, employee, agent, nominee, Affiliate or director of any Person
described in clauses (i) through (iii) above shall be personally liable for the
performance of any obligation thereunder or the payment of any amount due
hereunder; provided, however, that the foregoing limitation on the personal
liability of the Persons described in clauses (i) through (iv) above shall not
impair the validity of this Agreement or the right of Lender to enforce any of
its rights or remedies hereunder or under any of the other Loan Documents upon
the occurrence of a Cash Management Event as provided in this Agreement. Nothing
contained herein shall release, impair or otherwise affect any right, remedy or
recourse Lender may have against Manager or Borrower with respect to (a) any
fraud or bad faith or any material and intentional misrepresentation by Manager
or its Affiliates made in connection with the transactions contemplated hereby,
(b) bad
C-2-5
<PAGE>
faith waste by Manager, (c) any misapplication of Rents following and during the
continuance of a Cash Management Event, or (d) any misapplication of proceeds of
any insurance policies required to be maintained by Borrower or Manager.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
C-2-6
<PAGE>
Schedule 1
Monthly Replacement Deposit
NONE
Schedule 1 - 1
<PAGE>
Schedule 2
Monthly Rollover Deposit
MONTHLY ROLLOVER DEPOSIT
SHALL BE AS SET FORTH IN
SECTION 4.5.1 OF THE
LOAN AGREEMENT
Schedule 2 - 1
<PAGE>
Schedule 3
Exceptions to Owner and Borrower Representation
NONE
Schedule 3 - 1
<PAGE>
Schedule 4
Contracts
Exhibit Begins on Next Page
Schedule 4 - 1
<PAGE>
[LETTERHEAD OF WESTFIELD SHOPPINGTOWN ANNAPOLIS]
Memo
DATE: November 22, 1999
TO: Lorrie Becker, Assistant to Scott Grossman
CC: Gerry Cecci, General Manager
FROM: Mary Huber, Assistant Manager
SUBJECT: Request for Contract Information
- --------------------------------------------------------------------------------
Per your request:
<TABLE>
<CAPTION>
CONTRACTOR AMOUNT EFFECTIVE DATES
<S> <C> <C>
Apple Signs (L&T sign) $7,476.00 10/22/99-12/1/99
BFI $92/trash haul + 12/8/97-12/31/2000
$38.50/ton
$105/cardboard haul
floating rebate on cardboard
Brask Enterprises
(compactor rental) $2,268/month 12/9/97-12/31/2000
Brickman (landscape maintenance) $59,424/year 3/1/98-12/31/99
Interstate Cleaning Corp.
(Housekeeping) $47,736/month 5/1/98-1/31/99
Interstate Service Company (HVAC) $8,004/year 3 11/14/97-11/14/2000
Jill Casty Design $6,250 10/1/99-12/31/99
Muzak $2,100/year 5/1/97-5/1/2000
$576,305.76/year 1
Professional Security Consultants $592,536.00/year 2 4/24/99-5/1/2001
Reilly Sweeping $45,250.00/year 10/1/98-9/30/2000
Reliable Contracting (snow removal) depends on weather 11/10/99-4/30/99
Simplex monitoring $640/year 2/8/99-2/8/2000
Simplex alarm service $2,800/year 8/5/98-8/5/2000
Stanley Magic-Door (service) $3,705/year 1/1/98-12/31/99
Steritech (pest control) $5,640/year 9/1/98-8/31/2000
Sunset Hills Foliage $44,655.48/year 3/1/99-2/29/2000
</TABLE>
Call if you need further information.
<PAGE>
Schedule 5
Ownership of Owner and Borrower
EXHIBIT BEGINS ON FOLLOWING PAGE
Schedule 5 - 1
<PAGE>
SCHEDULE 5
Proposed Westfield Shoppingtown Annapolis
[FLOWCHART SHOWING PROPOSED OWNERSHIP STRUCTURE]
<PAGE>
Exhibit 10.33
- --------------------------------------------------------------------------------
LOAN AGREEMENT
Dated as of December 9, 1999
Between
EAGLE ROCK PLAZA LLC
And
UBS PRINCIPAL FINANCE LLC,
as Lender
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
I DEFINITIONS: PRINCIPLES OF CONSTRUCTION...................................1
1.1 Specific Definitions.............................................1
1.2 Index of Other Definitions......................................19
1.3 Principles of Construction......................................21
II THE LOAN.................................................................21
2.1 The Loan........................................................21
2.1.1 Commitment...............................................21
2.1.2 Note.....................................................21
2.1.3 Use of Loan Proceeds.....................................21
2.2 Conditions Precedent to Closing.................................21
2.2.1 Representations and Warranties; Compliance with
Conditions...............................................21
2.2.2 First Mortgage and Loan Documents........................22
2.2.3 Title Insurance..........................................22
2.2.4 Environmental Audit......................................22
2.2.5 Insurance................................................22
2.2.6 Financial Statements.....................................23
2.2.7 Searches.................................................23
2.2.8 Survey...................................................23
2.2.9 Management...............................................23
2.2.10 Leases and Material Contracts............................23
2.2.11 Intentionally Deleted....................................23
2.2.12 Tenant Estoppels.........................................23
2.2.13 Property Condition Report................................24
2.2.14 Appraisal................................................24
2.2.15 Zoning Compliance, Etc...................................24
2.2.16 Recording Taxes..........................................24
2.2.17 Perfection of Security Interests.........................24
2.2.18 Opinions of Borrower's Counsel...........................24
2.2.19 Intentionally Deleted....................................24
2.2.20 REA......................................................25
2.2.21 Reserves and Escrows.....................................25
2.2.22 Rent Roll................................................25
2.2.23 Further Documents........................................25
2.2.24 Completion of Proceedings................................25
2.2.25 Delivery of Organizational Documents.....................25
2.2.26 Expenses.................................................25
2.2.27 Tax Lot..................................................25
2.2.28 Encumbrances.............................................25
-i-
<PAGE>
2.3 Intentionally Deleted...........................................25
2.4 Defeasance......................................................26
2.4.2 Intentionally Deleted....................................27
2.4.3 Defeasance Collateral Account. ..........................27
2.4.4 Successor Borrower. .....................................27
III INTEREST; PAYMENTS.......................................................28
3.1 Interest; Monthly Loan Payments.................................28
3.1.1 Interest Generally.......................................28
3.1.2 Payment Before Anticipated Repayment Date................28
3.1.3 Payment After Anticipated Repayment Date.................28
3.1.4 Payment on Maturity Date.................................28
3.1.5 Property Cash Flow Allocation............................28
3.1.6 Payments after Default; Default Rate.....................29
3.2 Loan Repayment; Voluntary Prepayment; Prepayment After
Default.........................................................29
3.2.1 Repayment................................................29
3.2.2 Mandatory Prepayments....................................30
3.3 Release of Property.............................................30
3.3.1 Release of Collateral Property...........................30
3.3.2 Release on Payment in Full...............................31
3.3.3 Release Documents........................................31
3.3.4 Release of Funds.........................................31
3.4 Payments and Computations.......................................31
3.4.1 Making of Payments.......................................31
3.4.2 Interest Calculation.....................................31
3.4.3 Late Payment Charge......................................31
3.5 Taxes...........................................................32
IV CASH MANAGEMENT; ESCROWS AND RESERVES....................................32
4.1 Cash Management Arrangements....................................32
4.1.1 Lockbox Account..........................................32
4.1.2 Deposits into Lockbox Account............................33
4.1.3 The Accounts.............................................33
4.2 Intentionally Deleted...........................................33
4.3 Tax and Insurance Escrow Fund...................................33
4.4 Replacements and Replacement Reserves...........................34
4.4.1 Replacement Reserve Fund.................................34
4.4.2 Payment of Replacement Expenses..........................35
4.5 Rollover Reserves...............................................35
4.5.1 Rollover Reserve Fund....................................35
4.5.2 Payment of Leasing Expenses..............................36
4.6 Intentionally Deleted...........................................36
4.7 Operating Expense Reserves......................................36
4.7.1 Operating Expense Reserve Fund...........................36
-ii-
<PAGE>
4.7.2 Payment of Approved Operating Expenses...................37
4.8 Casualty/Condemnation Fund......................................37
4.9 Security Deposits...............................................37
4.10 Funds, Generally................................................38
4.10.1 Grant of Security Interest; Application of Funds.........38
4.10.2 Investments of Funds.....................................38
4.11 Cash Collateral Fund............................................39
V REPRESENTATIONS AND WARRANTIES...........................................39
5.1 Borrower Representations........................................39
5.1.1 Organization; Special Purpose............................39
5.1.2 Proceedings; Enforceability..............................40
5.1.3 No Conflicts.............................................40
5.1.4 Litigation...............................................40
5.1.5 Agreements...............................................40
5.1.6 Title....................................................40
5.1.7 Survey...................................................41
5.1.8 No Bankruptcy Filing.....................................41
5.1.9 Full and Accurate Disclosure.............................41
5.1.10 No Plan Assets...........................................41
5.1.11 Compliance...............................................41
5.1.12 Contracts................................................41
5.1.13 Financial Information....................................42
5.1.14 Condemnation.............................................42
5.1.15 Federal Reserve Regulations..............................42
5.1.16 Utilities and Public Access..............................42
5.1.17 Not a Foreign Person.....................................42
5.1.18 Separate Lots............................................42
5.1.19 Assessments..............................................43
5.1.20 Enforceability...........................................43
5.1.21 Insurance................................................43
5.1.22 Use of Property; Licenses................................43
5.1.23 Flood Zone...............................................43
5.1.24 Physical Condition.......................................43
5.1.25 Boundaries and Encroachments.............................43
5.1.26 Leases and Rent Roll.....................................44
5.1.27 Filing and Recording Taxes...............................44
5.1.28 Investment Company Act...................................45
5.1.29 Fraudulent Transfer......................................45
5.1.30 Ownership of Borrower....................................45
5.1.31 Management Agreement.....................................45
5.1.32 Hazardous Substances.....................................45
5.1.33 Name; Principal of Business..............................46
5.1.34 Subordinated Debt........................................46
5.1.35 Intentionally Deleted....................................46
-iii-
<PAGE>
5.1.36 REA......................................................46
5.1.37 Tenant Estoppels.........................................47
5.1.38 No Prior Assignment......................................47
5.1.39 Special Purpose Entity/Separateness......................47
5.1.40 Illegal Activity.........................................47
5.2 Survival of Representations and Covenants.......................47
VI AFFIRMATIVE COVENANTS....................................................48
6.1 Existence.......................................................48
6.2 Taxes and Other Charges.........................................48
6.3 Repairs; Maintenance and Compliance; Alterations; Required
Repairs.........................................................48
6.3.1 Repairs and Maintenance..................................48
6.3.2 Legal Compliance.........................................49
6.3.3 Alterations..............................................49
6.3.4 Required Repairs.........................................50
6.4 Litigation......................................................50
6.5 Performance of Other Agreements.................................50
6.6 Notices.........................................................50
6.7 Cooperate in Legal Proceedings..................................50
6.8 Further Assurances..............................................50
6.9 Financial Reporting.............................................51
6.9.1 Bookkeeping..............................................51
6.9.2 Annual Reports...........................................51
6.9.3 Monthly and Quarterly Reports............................52
6.9.4 Other Reports............................................52
6.9.5 Annual Budget............................................52
6.9.6 Delivery of Financial Information........................53
6.10 Environmental Matters...........................................53
6.10.1 Hazardous Substances.....................................53
6.10.2 Environmental Monitoring.................................53
6.10.3 Title to the Property....................................55
6.10.4 Easements; Dedications...................................55
6.11 Leases..........................................................55
6.11.1 Form of Lease............................................55
6.11.2 New and Renewal Leases...................................56
6.11.3 Leasing Covenants........................................56
6.11.4 Non-disturbance Agreements...............................56
6.11.5 Reciprocal Easement Agreements...........................56
6.11.6 Notice to Tenants........................................56
6.12 Estoppel Statement..............................................57
6.13 Property Management.............................................57
6.13.1 Management Agreement.....................................57
6.13.2 Termination of Manager...................................57
6.13.3 Manager's Subordination..................................57
6.14 Special Purpose Entity..........................................58
-iv-
<PAGE>
6.15 Expenses........................................................58
6.16 Indemnity.......................................................58
6.17 Third Party Reports.............................................59
6.18 Year 2000 Compliance............................................60
6.19 [Intentionally Deleted.]........................................60
6.20 Performance by Borrower.........................................60
6.21 Secondary Market Transaction Master Estoppel....................60
6.22 Intentionally Deleted...........................................61
VII NEGATIVE COVENANTS.......................................................61
7.1 Management Agreement............................................61
7.2 Liens...........................................................61
7.3 Dissolution.....................................................61
7.4 Change In Business or Operation of Property.....................61
7.5 Debt Cancellation...............................................62
7.6 Assets..........................................................62
7.7 Transfers.......................................................62
7.8 Debt............................................................64
7.9 Assignment of Rights............................................64
7.10 Principal Place of Business.....................................64
7.11 Corporate Organization..........................................64
7.12 ERISA...........................................................64
7.13 No Joint Assessment.............................................65
7.14 Affiliate Transactions..........................................65
VIII INSURANCE................................................................65
8.1.1 Coverage.................................................65
8.1.2 Policies.................................................66
8.2 Casualty........................................................67
8.2.1 Notice; Restoration......................................67
8.2.2 Settlement of Proceeds...................................67
8.3 Condemnation....................................................68
8.3.1 Notice; Restoration......................................68
8.3.2 Collection of Award......................................68
8.4 Application of Proceeds or Award................................68
8.4.1 Application to Restoration...............................68
8.4.2 Application to Debt......................................69
8.4.3 Procedure for Application to Restoration.................69
8.4.4 Anchor Lease; REA........................................69
IX DEFAULTS.................................................................70
9.1 Events of Default...............................................70
9.2 Remedies........................................................72
-v-
<PAGE>
9.2.1 Acceleration.............................................72
9.2.2 Remedies Cumulative......................................72
9.2.3 Severance................................................72
9.2.4 Delay....................................................72
9.2.5 Lender's Right to Perform................................73
X SPECIAL PROVISIONS.......................................................73
10.1 Sale of Note and Secondary Market Transaction...................73
10.1.1 Cooperation..............................................73
10.1.2 Use of Information.......................................74
10.1.3 Borrower's Obligations Regarding Disclosure Documents....75
10.1.4 Borrowers Indemnity Regarding Filings....................76
10.1.5 Indemnification Procedure................................76
10.1.6 Contribution.............................................77
XI MISCELLANEOUS............................................................77
11.1 Exculpation.....................................................77
11.2 Notices.........................................................78
11.2.1 Borrower's Representative................................79
11.3 Brokers and Financial Advisors..................................80
11.4 Retention of Servicer...........................................80
11.5 Survival........................................................80
11.6 Lender's Discretion.............................................80
11.7 Governing Law; Venue............................................81
11.8 Modification; Waiver in Writing.................................81
11.9 Delay Not a Waiver..............................................81
11.10 TRIAL BY JURY...................................................82
11.11 Heading.........................................................82
11.12 Severability....................................................82
11.13 Preferences.....................................................82
11.14 Waiver of Notice................................................82
11.15 Remedies of Borrower............................................83
11.16 Prior Agreements................................................83
11.17 Offsets, Counterclaims and Defenses.............................83
11.18 Publicity.......................................................83
11.19 No Usury........................................................83
11.20 Conflict; Construction of Documents.............................84
11.21 No Joint Venture or Partnership; No Third Party Beneficiaries...84
11.22 Yield Maintenance Premium.......................................84
11.23 Assignment......................................................85
11.24 Intentionally Deleted...........................................85
11.25 Intentionally Deleted...........................................85
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<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT dated as of December 9, 1999 between the Borrower (as
hereinafter defined) and UBS PRINCIPAL FINANCE LLC, a Delaware limited liability
company (together with its successors and assigns, "Lender").
I DEFINITIONS: PRINCIPLES OF CONSTRUCTION
1.1 Specific Definitions. The following terms have the meanings set forth
below:
"Acceptable Appraisal": an appraisal of the Collateral Property (i) dated
not more than 180 days prior to the Closing Date, (ii) signed by a qualified
MAI/FIRREA appraiser with no interest, direct or indirect, in the Loan or the
Collateral Property, and whose compensation is not affected by the Appraised
Value (and Lender agrees that as of the date hereof Landauer Associates, Inc.
satisfies the foregoing criteria), (iii) addressed to Lender and its successors
and assigns, (iv) made in compliance with the Uniform Standards of Appraisal
Practice, and (v) otherwise reasonably satisfactory to Lender in all respects.
"ADA": shall mean The Americans with Disabilities Act of 1990.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.
"Agent": shall mean LaSalle National Bank.
"Agreement": this Loan Agreement.
"Anchor Tenant": shall mean any Tenant from time to time leasing more than
75,000 square feet of gross leasable area in the Collateral Property.
"Anticipated Repayment Date": shall mean December 11, 2009.
"Applicable Interest Rate": shall mean (a) from the date hereof through
but not including the Anticipated Repayment Date, the Regular Interest Rate and
(b) from and after the Anticipated Repayment Date through and including the date
the Loan is paid in full, the Matured Performing Rate.
"Applicable Rating Agencies": means the Rating Agencies that have rated
any Securities issued in connection with a Secondary Market Transaction.
"Appraised Value": the fair market value of the Collateral Property
reflected in an Acceptable Appraisal.
"Approved Leasing Expenses": expenses incurred by a Borrower in leasing
space at the Collateral Property pursuant to Leases entered into in accordance
with the Loan Documents, including brokerage commissions, tenant improvements
and other inducements, which expenses
<PAGE>
(i) are (A) specifically approved by Lender in connection with approving the
applicable Lease, (B) incurred in the ordinary course of business and on market
terms and conditions in connection with Leases which do not require Lender's
approval under the Loan Documents, or (C) otherwise approved by Lender, which
approval shall not be unreasonably withheld or delayed, and (ii) are
substantiated by executed Lease documents and brokerage agreements.
"Approved Manager": Westfield Management Company, a Delaware general
partnership, or Westfield Management Acquisition, Inc., a Delaware corporation,
or any other wholly owned subsidiary of Westfield Holdings Limited, or any
successor or assignee of any of the foregoing, provided that each successor or
assignee shall be (i) approved by Lender in Lender's reasonable discretion
(unless such successor or assign is wholly owned, directly or indirectly, by
Westfield Holdings Limited and evidence thereof reasonably satisfactory to
Lender has been delivered to Lender prior to the change in Manager, in which
case Lender's approval shall not be required) and (ii) after any Secondary
Market Transaction, approved by each Rating Agency (provided that such Rating
Agency approval shall not be necessary as to any Manager wholly owned, directly
or indirectly, by Westfield Holdings Limited if each Rating Agency has received
a nonconsolidation opinion as to such Manager from Debevoise & Plimpton or
another law firm acceptable to the Rating Agencies in form and substance
satisfactory to the Rating Agencies).
"Approved Operating Expenses": Operating Expenses incurred by Borrower
following the occurrence of a Cash Management Event or the Anticipated Repayment
Date which (i) are included in the Operating Budget for the Current Month for
the Collateral Property, (ii) are for electric, gas, oil, water, sewer or other
utility service to, or Management Fees for, the Collateral Property, or (iii)
have been approved by Lender, which approval shall not be unreasonably withheld
or delayed.
"Approved Replacement Expenses": Replacement Expenses incurred by the
Borrower which (i) are included in the approved Replacement Budget for the
Current Month for the Collateral Property or (ii) have been approved by Lender,
which approval shall not be unreasonably withheld or delayed.
"Assignment of Leases": shall mean that certain first priority Assignment
of Leases and Rents, dated as of the date hereof, from the Borrower, as
assignor, to Lender, as assignee, assigning to Lender all of the Borrower's
interest in and to the Leases and Rents of the Collateral Property as security
for the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Borrower": Eagle Rock Plaza LLC, a Delaware limited liability company,
together with its respective permitted successors and assigns.
"Business Day": means any day other than (i) a Saturday or a Sunday, and
(ii) a day on which federally insured depository institutions in New York, New
York or San Francisco, California are authorized or obligated by law,
regulation, governmental decree or executive order to be closed.
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<PAGE>
"Cash Management Agreement": shall mean that certain Cash Management
Agreement dated as of the date hereof by and between the Borrower, Lender,
Manager and Agent.
"Cash Management Event": either (A) an Event of Default occurs or (B) the
Debt Service Coverage Ratio at any time is less than 1.25, subject to a One Time
Cash Management Event Cure by the Borrower.
"Cash Management Fee": the fees charged from time to time by the Agent in
accordance with the Cash Management Agreement.
"Cash Management Termination": the giving by Lender to the Agent of notice
that the sweeping of funds into the Rollover Reserve Account, Replacement
Reserve Account, Operating Expense Account and the Cash Collateral Account may
cease (a "Cash Management Termination Notice"), which notice Lender shall only
be required to give if (x) no other Cash Management Event has subsequently
occurred, and (y) and the Debt Service Coverage Ratio has been 1.25x or higher
for two consecutive fiscal quarters (such Debt Service Coverage Ratio being
tested on a quarterly basis) since the occurrence of the Cash Management Event.
"Closing Date": shall mean the date of the funding of the Loan.
"Code": the Internal Revenue Code of 1986, as amended, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"Collateral Property": shall mean that certain parcel of real property,
the Improvements thereon, the Equipment and all personal property owned by the
Borrower and encumbered by the Mortgage, together with all rights pertaining to
the property and Improvements, as more particularly described in the granting
clause of the Mortgage.
"Control": with respect to any Person, either (i) ownership directly or
through other entities of more than fifty percent (50%) of all beneficial equity
interest in such Person, or (ii) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership of voting securities, by contract or otherwise.
"Current Month": as of any date of determination following the occurrence
of a Cash Management Event or the Anticipated Repayment Date, the then current
calendar month.
"Debt": the unpaid principal, all interest accrued and unpaid thereon, any
Yield Maintenance Premium and all other sums due to Lender in respect of the
Loan under the Note, this Agreement, the Mortgage, or under any Loan Document.
"Debt Service": with respect to any particular period of time, the
scheduled amount of Principal and interest payments due under the Note in such
period.
"Debt Service Coverage Ratio": as of any date, the ratio calculated by
Lender of (i) the Net Operating Income for the twelve (12) month period ending
with the most recently completed calendar quarter to (ii) the Debt Service for
the same period.
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<PAGE>
"Default": the occurrence of any event under any Loan Document which, but
for the giving of notice or passage of time, or both, would be an Event of
Default.
"Default Rate": prior to the Stated Maturity Date: a rate per annum equal
to the lesser of (i) the Maximum Rate and (ii) three percent (3%) above the
Applicable Interest Rate, compounded monthly.
"Defeasance Collateral": shall mean obligations or securities not subject
to prepayment, call or early redemption which are direct obligations of, or
obligations fully guaranteed as to timely payment by, the United States of
America or any agency or instrumentality of the United States of America, or the
obligations of which are backed by the full faith and credit of the United
States of America, the ownership of which will not cause Lender to be an
"investment company" under the Investment Company Act of 1940, as amended, as
evidenced by an opinion of counsel reasonably acceptable to Lender, and which
qualify under ss. 1.860G-2(a)(8) of the Treasury regulations. All such
obligations or securities shall mature or be redeemable, or provide for payments
of interest thereon, on or prior to the Business Day preceding the date such
amounts are required to be applied under this Agreement and shall provide
payments (i) on or prior to, but as close as possible to, all Payment Dates and
other scheduled payment dates, if any, under the Note after the Defeasance Date
and up to and including the Anticipated Repayment Date, and (ii) in amounts
equal to or greater than the Scheduled Defeasance Payments.
"Eligible Account": shall mean a separate and identifiable account from
all other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.
ss.9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"Eligible Institution" shall mean a federal or state chartered depository
institution or trust company, the long-term unsecured debt obligations of which
are rated at least (A) "A+" by S&P and (B) "A+" by Fitch IBCA, Inc. ("Fitch")
or, if not rated by Fitch, at least "A" or its equivalent by another nationally
recognized statistical rating agency (other than S&P) if the deposits are to be
held in such account 30 days or more or the short-term debt obligations of which
have a short-term rating of not less than "A-1" from S&P and "F-1+" from Fitch
or if not rated by Fitch, at least "F-1+" or its equivalent by another
nationally recognized statistical rating agency (other than S&P) if the deposits
are to be held in such account for less than thirty (30) days, or such other
account or accounts with respect to which the Applicable Rating Agencies shall
have confirmed in writing that the then current ratings assigned in any
Secondary Market Transaction will not be qualified, downgraded or withdrawn by
reason thereof.
"Environmental Event": means, with respect to the Collateral Property, (a)
a violation of any Environmental Law with respect to the Collateral Property of
which Borrower has
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<PAGE>
received written notice from a governmental authority, or (b) the presence of
any Hazardous Substance on, about, or under the Collateral Property that, under
or pursuant to any Environmental Law, would require remediation, if in the case
of either (a) or (b), such event or circumstance could result in a material
adverse effect on the value or operations of the Collateral Property.
"ERISA": the Employment Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.
"ERISA Affiliate": all members of a controlled group of corporations and
all trades and business (whether or not incorporated) under common control and
all other entities which, together with Borrower, are treated as a single
employer under any or all of Section 414(b), (c), (m) or (o) of the Code.
"FASIT": Financial Asset Securitization Investment Trust within the
meaning of Section 860L(a)(1) of the Code.
"Fiscal Year": each twelve month period commencing on January 1 and ending
on December 31 during each year of the Term.
"GAAP": generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.
"Governmental Authority": any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental unit (federal, state,
county, district, municipal, city or otherwise) now or hereafter in existence.
"Improvements": shall have the meaning set forth in the granting clause of
the Mortgage.
"Independent Director": shall mean a director or manager of the SPE Member
who is not at the time of initial appointment, or at any time while serving as a
director of the SPE Member, and has not been at any time during the preceding
five (5) years: (a) a stockbroker, director (with the exception of serving as
the Independent Director of the SPE Member), officer, employee, partner,
attorney or counsel of the SPE Member, the Borrower or any Affiliate of either
of them; (b) a customer, supplier or other person who derives any of its
purchases or revenues from its activities with the SPE Member, the Borrower or
any Affiliate of either of them; (c) a Person controlling or under common
control with any such stockholder, partner, customer, supplier or other Person;
or (d) a member of the immediate family of any such stockholder, director,
officer, employee, partner, customer, supplier or other person. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of management, policies or activities
of a Person, whether through ownership of voting securities, by contract or
otherwise. An individual that otherwise satisfies the foregoing shall not be
disqualified from serving as an Independent Director of the SPE Member if such
individual is at the time of initial appointment, or at any time while serving
as an Independent Director of the SPE Member, an Independent Director of a
Special Purpose Entity Affiliated with the Borrower or the SPE Member.
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<PAGE>
"Insolvency Opinion": shall mean one or more substantive non-consolidation
opinion letters, dated the date hereof, delivered by Debevoise & Plimpton on
behalf of the Borrower in connection with the Loan.
"Interest Period": (i) the period from the Closing Date through the first
day thereafter that is an Interest Period Termination Date and (ii) each period
thereafter from an Interest Period Commencement Date through an Interest Period
Termination Date; except that the Interest Period, if any, that would otherwise
commence before and end after the Maturity Date shall end on the Maturity Date.
"Interest Period Commencement Date": the eleventh (11th) day of each
calendar month; provided, however, that if the Payment Date is changed by Lender
pursuant to the definition thereof, Lender may adjust this definition
accordingly.
"Interest Period Termination Date": the tenth (10th) day of each calendar
month (notwithstanding that the succeeding Payment Date may not be an Interest
Period Commencement Date because the day after such Interest Period Termination
Date is not a Business Day); provided, however, that if the Payment Date is
changed by Lender pursuant to the definition thereof, Lender may adjust this
definition accordingly.
"Lease Rollover Number": as to any calendar year, the aggregate number of
square feet of gross leasable area in the Improvements that are covered by
Leases the expiration dates of which (after taking into account all renewals and
extensions that have been unconditionally exercised as of the date in question)
are scheduled to occur in such calendar year.
"Lease Rollover Percentage": as to any calendar year, a fraction,
expressed as a percentage, the numerator of which is the Lease Rollover Number
for such calendar year and the denominator of which is the aggregate number of
square feet of gross leasable area of the Improvements.
"Leases": all leases and other agreements existing on the date hereof or
hereafter entered into affecting the use, or occupancy of, or the conduct of any
activity upon or in, the Collateral Property or any Improvements thereon,
including any extensions, renewals, modifications or amendments thereof, but
excluding (i) reciprocal easement and operating agreements and (ii) subleases
where the sublessee is not in privity with the Borrower.
"Legal Requirements": statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of, or agreements with,
Governmental Authorities affecting all or part of the Collateral Property or the
construction, use, alteration or operation thereof, whether now or hereafter
enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instrument, either of record or known to the
Borrower, at any time in force affecting all or part of the Collateral Property,
including any that may (i) require repairs, modifications or alterations in or
to all or part of the Collateral Property, or (ii) in any way limit the use and
enjoyment thereof.
"Letter of Credit": shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit in favor of Lender and
entitling Lender to draw thereon in New York, New York, issued by a domestic
Eligible Institution or the U.S. agency or branch of a foreign Eligible
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<PAGE>
Institution, or if there are no domestic banks or financial institutions which
qualify as an Eligible Institution or U.S. agencies or branches of a foreign
bank or financial institution which qualifies as an Eligible Institution then
issuing letters of credit, then such letter of credit may be issued by any
domestic bank with a long term unsecured debt rating that is the highest such
rating then given by each Rating Agency to a domestic commercial bank.
"Lien": any mortgage, deed of trust, indemnity deed of trust, lien,
pledge, hypothecation, assignment, security interest or any other encumbrance,
charge or transfer of, on or affecting all or part of the Collateral Property or
any interest therein, or in the Borrower or in any Borrower Representative,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, the
filing of any financing statement, and mechanic's, materialmen's and other
similar liens and encumbrances.
"Loan": shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"Loan Documents": this Agreement and all other documents, agreements and
instruments evidencing, securing or delivered to Lender in connection with the
Loan, whether now existing or hereafter executed, including the following: (i)
the Note, (ii) the mortgage on the Collateral Property (the "Mortgage"), (iii)
the Assignment of Leases with respect to the Collateral Property, (iv) the
Assignment of Agreements with respect to the Collateral Property, (v) the
Manager's Consent and Subordination of Management Agreement with respect to the
Collateral Property, and (vi) the Cash Management Agreement, and all other
documents executed and/or delivered in connection with the Loan, as each of the
foregoing may be (and each of the foregoing defined terms shall refer to such
documents as they may be) amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Maintenance and Repairs": items of maintenance and repair to the
Improvements or Equipment similar to the items of work (but not limited to such
specific items) described in the physical inspection reports delivered to Lender
in connection with the closing of the Loan.
"Management Agreement": the management agreement in effect on the date
hereof between the applicable Borrower and an Approved Manager for the
Collateral Property, pursuant to which such Approved Manager is to manage the
Collateral Property, as same may be amended, restated, replaced, supplemented or
otherwise modified from time to time with the prior approval of Lender (which
consent shall not be reasonably withheld or delayed), and after any Secondary
Market Transaction, the approval of each Rating Agency (provided, however, that
any modification which does not modify the term or economics of the Management
Agreement or otherwise materially modify the Management Agreement, shall require
prior notice to, but not the consent of, Lender, and shall not require the
consent of any Rating Agency).
"Management Fee(s)": as to any Management Agreement, all fees in the
nature of management fees payable to Manager under such Management Agreement.
"Manager": the Approved Manager under the Management Agreement.
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<PAGE>
"Material Alteration": any alteration affecting structural elements of the
Collateral Property the cost of which exceeds $2,000,000.00 per calendar year;
provided, however, that in no event shall tenant improvement work, or
alterations performed as part of a Restoration, constitute a Material
Alteration.
"Material Lease": any Lease (i) which demises more than five percent (5%)
of the Collateral Property's gross leasable area or (ii) the fixed annual rent
under which exceeds five percent (5%) of the aggregate fixed annual rent payable
under all Leases of the Collateral Property.
"Matured Performing Rate": shall mean a rate per annum equal to the
Regular Interest Rate plus four hundred (400) basis points.
"Maturity Date": the date on which the final payment of Principal of the
Note becomes due and payable as therein or herein provided, whether at the
Stated Maturity Date, by declaration of acceleration, or otherwise.
"Maximum Rate": the maximum interest rate allowed by applicable law in
effect with respect to the Loan on the date for which a determination of
interest accrued hereunder is made, after taking into account all fees, payments
and other charges that are, under applicable law, characterized as interest.
"Monthly Debt Service Payment Amount": shall mean a constant monthly
payment of $125,650.12.
"Monthly Replacement Deposit": the amount reasonably determined by Lender,
based on the property condition report for the Collateral Property reviewed by
Lender, in connection with Lender's making of the Loan. On each anniversary of
the date of this Agreement (or, if any such anniversary is not a Payment Date,
on the first Payment Date following such anniversary) the Monthly Replacement
Deposit shall automatically increase by 2.5% of the then current Monthly
Replacement Deposit amount. The initial Monthly Replacement Deposit for the
Collateral Property is set forth in Schedule 1 hereto.
"Monthly Rollover Deposit": an amount equal to one-twelfth (1/12th) of the
average annual cost (as determined by Lender) to the Borrower for tenant
improvements and leasing commissions in respect of the Collateral Property
during the sixty (60) month period prior to the Closing Date, as set forth on
Schedule 2 hereto.
"Net Operating Income": for any period, the excess, if any, of Operating
Income for such period over Operating Expenses for such period.
"Net Operating Income After Debt Service": for any period shall mean the
amount obtained by subtracting Debt Service for such period from Net Operating
Income for such period.
"Obligations": all obligations, liabilities and Debt of Borrower to
Lender, whether now existing or hereafter arising, under this Agreement or any
of the other Loan Documents.
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<PAGE>
"Officer's Certificate": a certificate delivered to Lender by Borrower
which is signed by a senior executive officer of the Borrower's Borrower
Representative.
"One Time Cash Management Event Cure": In the event that a Cash Management
Event is due to the Debt Service Coverage Ratio being below 1.25, the Borrower
shall have the opportunity one (1) time during the Loan term to deposit cash or
a Letter of Credit with the Lender in an amount sufficient to raise the Debt
Service Coverage Ratio to 1.30; provided, however, that the Debt Service
Coverage Ratio must be 1.25 or greater at the end of the immediately following
quarter.
"Operating Expenses": shall mean the total of all expenditures, computed
in accordance with GAAP, of whatever kind relating to the operation, maintenance
and management of the Collateral Property that are incurred on a regular monthly
or other periodic basis, including without limitation, utilities, ordinary
repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees, payroll and related taxes,
computer processing charges, operational equipment or other lease payments, and
other similar costs, but excluding depreciation, Debt Service, Replacement
Expenses, non-cash items such as depreciation and amortization or any
extraordinary one time expenditures not considered operating expenses under
GAAP.
"Operating Income": for any period, all regular on-going revenues actually
received by Borrower from the operation of the Collateral Property during such
period, including (i) Rents, (ii) amounts withdrawn from any Funds pursuant to
this Agreement, and (iii) all other amounts actually received which in
accordance with GAAP are required to be or are included in the Borrower's annual
financial statements as operating income of the Collateral Property or;
provided, that Operating Income will not include (1) income from non-recurring
income sources; (2) advance Rents or other payments; (3) deposits or escrows
other than the Funds, without duplication; (4) any income otherwise includable
in Operating Income but paid to a Person other than the Borrower; (5) proceeds
of Casualty insurance or Condemnation Awards; or (6) income from a sale,
financing or other capital transaction.
"Other Charges": maintenance charges, impositions other than Taxes, and
any other charges, including vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Collateral Property, now or
hereafter levied or assessed or imposed against the Collateral Property or any
part thereof, including all interest and penalties on any of the foregoing.
"Payment Date": the eleventh (11th) day of each calendar month (or such
other day of a calendar month selected by Lender to collect debt service
payments under loans which it makes and securitizes) or, if such day is not a
Business Day, the first Business Day thereafter.
"Permitted Encumbrances": (a) the Liens created by the Loan Documents, (b)
all Liens and other matters disclosed in the Title Insurance Policy insuring the
Mortgage on the Collateral Property, (c) Liens, if any, for Taxes or Other
Charges not yet payable or delinquent, (d) easements for utilities and rights of
way which do not have a material adverse affect on the use, operation or value
of the Collateral Property and (e) such other title and survey exceptions as
Lender approves in writing in Lender's reasonable discretion.
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"Permitted Investments": shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Secondary Market
Transaction or any of their respective Affiliates, payable on demand or having a
maturity date not later than the Business Day immediately prior to the first
Payment Date following the date of acquiring such investment and meeting one of
the appropriate standards set forth below:
(1) obligations of, or obligations fully guaranteed as to
payment of principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full faith
and credit of the United States of America including, without limitation,
obligations of: the U.S. Treasury (all direct or fully guaranteed obligations),
the Farmers Home Administration (certificates of beneficial ownership), the
General Services Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed pool
certificates), the U.S. Department of Housing and Urban Development (local
authority bonds) and the Washington Metropolitan Area Transit Authority
(guaranteed transit bonds); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(2) Federal Housing Administration debentures;
(3) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations), the
Farm Credit System (consolidated systemwide bonds and notes), the Federal Home
Loan Banks (consolidated debt obligations), the Federal National Mortgage
Association (debt obligations), the Student Loan Marketing Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(4) federal funds, unsecured certificates of deposit, time
deposits, the short term obligations of which at all times are rated in the
highest short term rating category by each Applicable Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest
short term rating category and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed
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spread (if any) and must move proportionately with that index, and (D) such
investments must not be subject to liquidation prior to their maturity;
(5) fully Federal Deposit Insurance Corporation-insured demand
and time deposits in, or certificates of deposit of any bank or trust company,
savings and loan association or savings bank, the short term obligations of
which at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise acceptable
to each other Rating Agency, as confirmed in writing that such investment would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
(6) debt obligations with maturities of not more than 365 days
and at all times rated by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to each
other Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities) in its
highest long-term unsecured rating category; provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(7) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof) with
maturities of not more than 365 days and that at all times is rated by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed
in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest short-term unsecured
debt rating; provided, however, that the investments described in this clause
must (A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their maturity;
(8) units of taxable money market funds or mutual funds, which
funds are regulated investment companies, seek to maintain a constant net asset
value per share and invest solely in obligations backed by the full faith and
credit of the United States, which funds have the highest rating available from
each Rating Agency (or, if not rated by all Rating
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Agencies, rated by at least one Rating Agency and otherwise acceptable to each
other Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities) for
money market funds or mutual funds; and
(9) any other security, obligation or investment which has
been approved as a Permitted Investment in writing by (a) Lender and (b) each
Rating Agency, as evidenced by a written confirmation that the designation of
such security, obligation or investment as a Permitted Investment will not, in
and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities by such
Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Person": any individual, corporation, partnership, joint venture, estate,
trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.
"Plan": (i) an employee benefit or other plan established or maintained by
Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate
makes or is obligated to make contributions and (ii) which is covered by Title
IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
"Pooling and Servicing Agreement": the Servicing Agreement entered into
with the Servicer in connection with any Secondary Market Transaction, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Prepayment Lockout Expiration Date": shall mean the date that is the
later of (a) three (3) years from the Closing Date or (b) two (2) years from the
"startup day" within the meaning of Section 860G(a)(9) of the Code of the REMIC
Trust.
"Qualified REA": an REA all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion and as to which each of
the parties to the REA (other than the Borrower) has executed and delivered to
Lender an estoppel certificate in form, scope and substance satisfactory to
Lender in its sole and absolute discretion.
"Rating Agency": any of Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. ("S&P"), Moody's Investors Service, Inc., Duff & Phelps Credit
Rating Co., Fitch IBCA, Inc. or any other nationally-recognized statistical
rating agency which has issued a rating of any Securities.
"Rating Comfort Letter": a letter issued by each of the Applicable Rating
Agencies which confirms that the taking of the action referenced to therein will
not result in any
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qualification, withdrawal or downgrading of any existing ratings of Securities
created in a Secondary Market Transaction.
"REA": any "construction, operation and reciprocal easement agreement" or
similar agreement (including any "separate agreement" or other agreement between
Borrower and one or more other parties to an REA with respect to an REA)
affecting the Collateral Property or portion thereof.
"Real Property": as to the Collateral Property, the portions thereof
constituting land, Improvements thereon and all rights pertaining to such land
and Improvements.
"Regular Interest Rate": shall mean (8.177%) per annum.
"REMIC": a "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code that holds the Note.
"Rents": with respect to the Collateral Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, all oil and gas or other mineral royalties and bonuses),
income, fees, receivables, receipts, revenues, deposits (including security,
utility and other deposits), accounts, cash, issues, profits, charges for
services rendered, and other payment and consideration of whatever form or
nature received by or paid to or for the account of or benefit of Borrower,
Manager (in its capacity as manager of the Collateral Property, and excluding
sums payable by Borrower to Manager pursuant to the Management Agreement) or any
of their agents or employees from any and all sources arising from or
attributable to the Collateral Property and the Improvements therein, including
all receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of the Collateral Property or rendering of services by the Borrower or
Manager (in its capacity as manager of the Collateral Property, and excluding
sums payable by Borrower to Manager pursuant to Management Agreement), and
proceeds, if any, from business interruption or other loss of income insurance.
"Replacement Expenses": expenses incurred to pay for replacements,
improvements and/or Maintenance and Repairs of the Improvements or Equipment or
portions of either.
"Required Record": any financial statement, certificate, report or
information required to be delivered under Section 6.9.
"Routine Hazardous Substances": Hazardous Substances typically used in the
ordinary course of business at retail properties, which are generated, used,
stored and disposed of in compliance with all applicable Environmental Laws.
"Scheduled Defeasance Payments": shall mean scheduled payments of interest
and principal under the Note in the case of a Defeasance for all Payment Dates
occurring after the Defeasance Date and up to and including the Anticipated
Repayment Date (including the outstanding Principal balance on the Note as of
the Anticipated Repayment Date), and all payments required after the Defeasance
Date, if any, under the Loan Documents for servicing fees, fees to Agent and
other similar charges.
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"Security Agreement": shall mean a security agreement in form and
substance satisfactory to Lender pursuant to which Borrower grants Lender a
perfected, first priority security interest in the Defeasance Collateral Account
and the Defeasance Collateral.
"Servicer": Bank of New York, or its successor in interest, or if any
successor servicer is appointed pursuant to the Pooling and Servicing Agreement,
such successor servicer.
"SPE Member": shall have the meaning set forth in subparagraph (5) of the
definition of "Special Purpose Entity" contained in this Section 1.1.
"Special Purpose Entity": shall mean a corporation, limited partnership or
limited liability company which at all times on and after the date hereof:
(1) is organized solely for the purpose of (A) acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging,
managing and operating the Collateral Property, entering into this Agreement
with the Lender, refinancing the Collateral Property in connection with a
permitted repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing; (B) acting as a
general partner of the limited partnership that owns the Collateral Property or
member of the limited liability company that owns the Collateral Property; (C)
acting as Borrower under this Agreement; (D) guaranteeing the obligations under
this Agreement and securing its obligations under such guarantee with the
Collateral Property and/or; (E) acting as the sole managing member or sole
managing partner of the Borrower or any entity which owns a partnership interest
or a membership interest in (i) the Borrower or (ii) any parent of the Borrower.
(2) is not engaged and will not engage in any business
unrelated to the purposes described in paragraph (1) above;
(3) does not have and will not have any assets other than
those related to the Collateral Property and other than for the purposes
described in paragraph (1) above;
(4) has not engaged, sought or consented to and will not
engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets, transfer
of partnership or membership interests (if such entity is a general partner in a
limited partnership or a member in a limited liability company) or amendment of
its limited partnership agreement, articles of incorporation, articles of
organization, certificate of formation or operating agreement (as applicable)
with respect to the matters set forth in this definition;
(5) if such entity is a limited partnership, has, as its only
general partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability companies (with more than one member)
(together with the members required pursuant to subparagraph (7) below (if
applicable), the "SPE Member");
(6) if such entity is a corporation, has at least two (2)
Independent Directors, and has not caused or allowed and will not cause or allow
the board of directors or managers of such entity to take any action requiring
the unanimous affirmative vote of 100% of
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the members of its board of directors or managers unless all Independent
Directors shall have participated in such vote;
(7) (a) if such entity is a limited liability company, has at
least one member that is a Special Purpose Entity that has at least two (2)
Independent Directors and that owns at least one percent (1%) of the equity of
the limited liability company or (b) is wholly-owned by WALP;
(8) if such entity is (a) a limited liability company, has
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, (b) a limited partnership, has a limited partnership
agreement, or (c) a corporation, has a certificate of incorporation or articles
that, in each case, provide that such entity will not: (1) dissolve, merge,
liquidate, consolidate; (2) sell all or substantially all of its assets or the
assets of the Borrower (as applicable); (3) engage in any other business
activity, or amend its organizational documents with respect to the matters set
forth in this definition without the consent of the Lender; or (4) without the
affirmative vote of all Independent Directors and of all other directors or
managers of the corporation or entity (that is such entity or the general
partner or managing or co-managing member of such entity), file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with respect
to itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest;
(9) if such entity is a limited partnership or a limited
liability company that is the general partner of a limited partnership or the
member of a limited liability company that is the Borrower, has an entity that
owns at least one percent (1%) of the equity of such entity as its general
partner or managing member, as applicable, that is a Special Purpose Entity;
(10) is and will remain solvent and pay its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same shall become due, and is maintaining and will
maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations;
(11) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(12) maintains and will maintain its accounts, books and
records separate from any other Person and will file its own tax returns, except
to the extent that it is required to file consolidated tax returns by law;
(13) maintains and will maintain its own records, books,
resolutions and agreements;
(14) (a) does not and will not commingle its funds or assets
with those of any other Person and (b) does not participate and will not
participate in any cash management system with any other Person;
(15) has held and will hold its assets in its own name;
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(16) has conducted and will conduct its business in its name
or in a name franchised or licensed to it by an entity, except for services
rendered under a business management services agreement with an Affiliate that
complies with the terms contained in Section 7.14 of this Agreement, so long as
the manager, or equivalent thereof, under such business management services
agreement holds itself out as an agent of the Borrower;
(17) maintains and will maintain its financial statements,
accounting records and other entity documents separate from any other Person and
has not permitted and will not permit its assets to be listed as assets on the
financial statement of any other entity except as required by GAAP;
(18) pays and will pay its own liabilities and expenses,
including the salaries of its own employees, out of its own funds and assets,
and has maintained and will maintain a sufficient number of employees in light
of its contemplated business operations;
(19) has observed and will observe all partnership, corporate
or limited liability company formalities, as applicable;
(20) will not create, incur or assume any indebtedness other
than (i) the Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses
and Approved Leasing Expenses and (iii) other trade debt incurred in the
ordinary course of business relating to the ownership and operation of its
Collateral Property which other trade debt does not exceed, at any time, a
maximum aggregate amount of $500,000.00 for the Collateral Property and such
trade debt is paid within sixty (60) days of the date incurred (other than
amounts being disputed in good faith);
(21) does not and will not assume or guarantee or become
obligated for the debts of any other Person or hold out its credit as being
available to satisfy the obligations of any other Person except as permitted
pursuant to this Agreement;
(22) does not and will not acquire obligations or securities
of its partners, members or shareholders or any other Affiliate except as
permitted pursuant to this Agreement;
(23) allocates and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including, but not limited
to, paying for shared office space and services performed by any employee of an
affiliate;
(24) the stationary, invoices, and checks utilized by the
Special Purpose Entity or utilized to collect its funds or pay its expenses
shall bear its own name and shall not bear the name of any other entity unless
such entity is clearly designated as being the Special Purpose Entity's Manager.
(25) will not pledge its assets for the benefit of any other
Person except as permitted in this Agreement;
(26) will hold itself out and identify itself as a separate
and distinct entity under its own name or in a name franchised or licensed to it
by an entity and not as a
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division or part of any other Person, except for services rendered under a
business management services agreement with an Affiliate that complies with the
terms contained in Section 7.14 herein, so long as the manager, or equivalent
thereof, under such business management services agreement holds itself out as
an agent of the Borrower;
(27) will maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person;
(28) will not make loans to any Person or hold evidence of
indebtedness issued by any other person or entity (other than cash and
investment-grade securities issued by an entity that is not an Affiliate of or
subject to common ownership with such entity) except as permitted pursuant to
this Agreement;
(29) will not identify its partners, members or shareholders,
or any Affiliate of any of them, as a division or part of it, and has not
identified itself and shall not identify itself as a division of any other
Person;
(30) has not entered into or been a party to, and will not
enter into or be a party to, any transaction with its partners, members,
shareholders or Affiliates except (A) those referred to in Section 7.14 of this
Agreement, (B) in the ordinary course of its business and on terms which are
intrinsically fair, commercially reasonable and are no less favorable to it than
would be obtained in a comparable arm's-length transaction with an unrelated
third party and (C) in connection with this Agreement;
(31) will not have any obligation to, and will not, indemnify
its partners, officers, directors or members, as the case may be, or has such an
obligation that is fully subordinated to the Debt and will not constitute a
claim against it in the event that cash flow in excess of the amount required to
pay the Debt is insufficient to pay such obligation;
(32) if such entity is a corporation, it shall consider the
interests of its creditors in connection with all corporate actions referred to
in clause 8(c)(4) of this definition;
(33) will not have any of its obligations guaranteed by any
Affiliate other than those obligations guaranteed in connection with the Loan
except as otherwise permitted pursuant to this Agreement or in connection with
obligations relating to alterations or additions to the Collateral Property;
(34) has complied and will comply with all of the terms and
provisions contained in its organizational documents.
"State": the state or commonwealth in which the Collateral Property or any
part thereof is located.
"Stated Maturity Date": December 11, 2029.
"Survey": a current as-built survey of the Collateral Property prepared by
a surveyor licensed by the State in which the Collateral Property is located and
certified to Lender and the Title Company and prepared in accordance with the
Minimum Standard Detail Requirements for
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ALTA/ACSM Land Title Surveys meeting the Accuracy Standards of an Urban Survey,
with accuracy and precision requirements modified to meet current angular and
linear tolerance requirements of the State, showing the legal description and
street address of the Collateral Property; all visible or recorded easements,
building lines, curb cuts, and party walls; all parking, sewage, water,
electricity, gas and other utility facilities, together with recording
information concerning the documents creating any such easements and building
lines; stating the net, after deduction of land dedicated or used or subject to
easements for roads, highways, fire lanes, utilities, storm drains or any other
public purpose, and gross area of the land; and including the following Table A
items: 1, 2, 3, 4, 6, 7(a), 7(b)(1), 8, 10, 11 and 13.
"Taxes": all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against all
or any part of the Collateral Property.
"Tenant": shall mean any Person leasing, subleasing or otherwise occupying
any portion of the Collateral Property under a Lease or other occupancy
agreement with Borrower.
"Term": the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrower pursuant to the Loan Documents.
"Title Company": collectively, Chicago Title Insurance Company and First
American Title Insurance Company of New York together with any other title
company providing re-insurance in connection with Lender's Title Insurance
Policy, and their respective successors.
"Title Insurance Policy": a policy of title insurance, in form and amount
acceptable to Lender, issued by the Title Company for the benefit of Lender, its
successors and assigns, insuring the Lien of the Mortgage on the Collateral
Property subject to no Liens other than Liens acceptable to Lender, and
containing such endorsements and affirmative coverages (including affirmative
coverage as to "creditors' rights" and "tie-in" or "aggregation" coverage) as
Lender may require.
"Transfer": any sale, conveyance, transfer, lease (including any
amendment, extension, modification, waiver or renewal thereof), assignment,
mortgage, pledge, grant of a security interest or hypothecation, whether by law
or otherwise, of or in (i) all or part of the Collateral Property (including any
legal or beneficial direct or indirect interest therein), (ii) any direct or
indirect interest in the Borrower, or (iii) any direct or indirect interest in
the Borrower Representative of Borrower.
"UCC": the Uniform Commercial Code as in effect in the State in which the
Collateral Property is located.
"Yield Maintenance Premium": shall mean an amount equal to the present
value as of the Prepayment Date of the Calculated Payments from the Prepayment
Date through the Anticipated Repayment Date determined by discounting such
payments at the Discount Rate. As used in this definition, the term "Prepayment
Date" shall mean the date on which a prepayment is made. As used in this
definition, the term "Calculated Payments" shall mean the monthly payments of
interest only which would be due based on the principal amount of the Loan being
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prepaid on the Prepayment Date and assuming an interest rate per annum equal to
the difference (if such difference is greater than zero) between (y) the Regular
Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in this
definition, the term "Discount Rate" shall mean the rate which, when compounded
monthly is equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term "Yield Maintenance Treasury
Rate" shall mean the yield calculated by the linear interpolation of the yields,
as reported in the Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. Government Securities/Treasury Constant Maturities
for the week ending prior to the Prepayment Date, of U.S. Treasury Constant
Maturities with maturity dates (one longer or one shorter) most nearly
approximating the Anticipated Repayment Maturity Date. In the event Release H.15
is no longer published, Lender shall select a comparable publication to
determine the Yield Maintenance Treasury Rate. In no event, however, shall
Lender be required to reinvest any prepayment proceeds in U.S. Treasury
obligations or otherwise.
1.2 Index of Other Definitions. The following terms are defined in the
sections or Loan Documents indicated below:
"Account(s)" - 4.1.3
"Accrued Interest" - 3.1.3
"Additional Insolvency Opinion" - 5.1.39
"Annual Budget" - 6.9.5
"Applicable Taxes" - 3.5
"Approved Insurer" - 8.1.2
"Award" - 8.3.2
"Bankruptcy Proceeding" - 5.1.8
"Borrower Representative" - 5.1.30
"Cash Collateral Account" - 4.1.3
"Cash Collateral Fund" - 4.11
"Cash Management Account" - 4.1.2
"Cash Management Accounts" - 4.10.1
"Casualty" - 8.2.1
"Casualty/Condemnation Prepayment" - 3.2.2
"Casualty/Condemnation Fund" - 4.8
"Closing Estoppels" - 6.21
"Condemnation" - 8.3.1
"Debt Service Reserve Account" - 4.1.3
"Defeasance" - 2.7.1
"Defeasance Collateral Account" - 2.4.3
"Defeasance Date"-2.4.1
"Disclosure Document" - 10.1.2
"Environmental Laws" - 5.1.32
"Equipment" - Mortgage
"Event of Default" - 9.1
"Exchange Act" - 10. 1.2
"Funds" - 4.10.1
"Hazardous Substances" - 5.1.32
"Improvements" - Mortgage
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"Indemnified Liabilities" - 6.16
"Indemnified Party" - 6.16
"Insurance Premiums" - 8.1.2
"Insured Casualty" - 8.2.2
"Issuer" - 10.1.3
"Late Payment Charge" - 3.4.3
"Lease Termination Payments" - 4.5.1
"Lender's Consultant" - 6.10.2
"Liabilities" - 10.1.3
"Licenses" - 5.1.22
"Lockbox Account" - 4.1.1
"Management Consultant" - 6.13.2
"Manager Consent and Subordination Agreement" - 6.13.3
"Master Estoppel" - 6.21
"Monthly Operating Expense Deposit" - 4.7.1
"Monthly Replacement Deposit" - 4.4.1
"Monthly Rollover Deposit" - 4.5.1
"Monthly Insurance Amount" - 4.3
"Monthly Tax Amount" - 4.3
"Mortgage" - Definition of "Loan Documents"
"Note" - 2.1.2
"Operating Budget" - 6.9.5
"Operating Expense Account" - 4.1.3
"Operating Expense Reserve Fund" - 4.7.1
"Other Taxes" - 3.5
"Policies" - 8.1.2
"Principal" - 2.1.1
"Proceeds" - 8.2.2
"Provided Information" - 10.1.1
"Registration Statement" - 10.1.3
"Remedial Work" - 6.10.2
"Rent Roll" - 5.1.26
"Replacement Budget" - 6.9.5
"Replacement Reserve Account" - 4.1.3
"Replacement Reserve Fund" - 4.4.1
"Responsible Officer" - 11.2.1
"Restoration" - 8.4.1
"Rollover Reserve Account" - 4.1.3
"Rollover Reserve Fund" - 4.5.1
"Securities" - 10.1.1
"Securities Act" - 10.1.2
"Secondary Market Transaction" - 10.1.1
"Successor Borrower" - 2.4.4
"Tax and Insurance Escrow Fund": - 4.3
"Tax and Insurance Account" - 4.1.3
"Transfer" - 7.7
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"UBS Group" - 10.1.3
"Underwriter Group" - 10.1.3
"Underwriters" - 10.1.3
"Voluntary Prepayment" - 3.2.1
"WALP" - 7.7
"WEA" - 7.7
"Westfield" - 7.7
"Year 2000" - 6.18
1.3 Principles of Construction. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the word "including" means "including but not limited to," and (v)
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
II THE LOAN
2.1 The Loan.
2.1.1 Commitment. Subject to and upon the terms and conditions of
this Agreement, Lender agrees to make a loan to the Borrower on the Closing Date
in an aggregate maximum principal sum of $16,840,000.00 (the "Principal").
Borrower may request and receive only one borrowing hereunder in respect of the
Loan. The Loan shall mature on the Stated Maturity Date. No amount borrowed and
repaid hereunder in respect of the Loan may be reborrowed.
2.1.2 Note. The Loan shall be evidenced by a promissory note in the
maximum principal sum of $16,840,000.00 (the "Note") executed by Borrower and
secured by the Mortgage, the Assignment of Leases and the other Loan Documents.
2.1.3 Use of Loan Proceeds. The proceeds of the Loan shall be used
by the Borrower to (i) repay and discharge existing loans relating to the
Collateral Property; (ii) fund certain of the Funds required to be funded by
Borrower; (iii) pay approved costs and expenses in connection with the foregoing
and the Loan; and (iv) make distributions to the members or partners of Borrower
to the extent any Loan proceeds remain upon payment of the aforementioned items.
2.2 Conditions Precedent to Closing. The obligation of Lender to make the
Loan hereunder is subject to the fulfillment by Borrower of the following
conditions precedent no later than the Closing Date.
2.2.1 Representations and Warranties; Compliance with Conditions.
The representations and warranties of Borrower contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if made on and as of such
date, and no Default or an Event of Default shall
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have occurred and be continuing; and Borrower shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Loan Document on its part to be observed or performed.
2.2.2 First Mortgage and Loan Documents. A Mortgage which shall
constitute a valid first mortgage lien on the fee simple title to the Collateral
Property, which shall secure the Debt, subject only to such Liens as are
acceptable to Lender, and Borrower shall have delivered UCC-1 financing
statements covering fixtures owned or to be owned by Borrower and affixed to, or
used in connection with, the Collateral Property, in each case appropriately
completed and duly executed and delivered to Lender, or at Lender's discretion,
the Title Company, for filing in the appropriate county and state offices.
Lender shall have also received from Borrower fully executed and duly delivered
counterparts of this Agreement, the Note and each of the other Loan Documents.
2.2.3 Title Insurance. Lender shall have received a Title Insurance
Policy for the Collateral Property and the Borrower shall have paid to the Title
Company (and shall have delivered to Lender evidence of such payment) all
premiums, and expenses of the Title Company in connection with the issuance of
such Title Insurance Policy and an amount equal to the recording and the
applicable stamp taxes (including mortgage recording taxes), if any, payable in
connection with recording the insured Mortgage in the appropriate county land
office. Such Title Insurance Policy shall (i) provide coverage in amounts
satisfactory to Lender, (ii) insure Lender that the Mortgage creates a valid
first priority lien on the Collateral Property free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (iii)
contain such endorsements and affirmative coverages as Lender may request, and
(iv) name Lender and its successors and assigns as the insured. The Title
Insurance Policy shall be assignable.
2.2.4 Environmental Audit. Lender shall be satisfied that (A) there
are no pending or threatened claims, suits, actions or proceedings arising out
of or relating to the existence of any Hazardous Substances at, in, on or under
the Collateral Property, (B) the Collateral Property is in compliance in all
material respects with all applicable Environmental Laws, and (C) no Hazardous
Substances exist at, in, on or under the Collateral Property except in
compliance in all material respects with applicable Environmental Laws. Lender
shall have received, without limitation, (1) a comprehensive environmental audit
of the Collateral Property (which shall include a visual survey, a record
review, an area reconnaissance and a Phase I environmental study and, if the
Phase I study shall so require, a Phase II environmental study), reasonably
satisfactory in form and substance to Lender, conducted and certified by a
qualified, independent environmental consultant within six (6) months of the
Closing Date, (2) evidence that all required approvals have been obtained from
all governmental and quasi-governmental authorities having jurisdiction with
respect to the Collateral Property, and (3) such other environmental reports,
inspections and investigations pertaining to the Collateral Property as Lender
shall require, prepared, in each instance, by engineers or other consultants
reasonably satisfactory to Lender.
2.2.5 Insurance. Lender shall have received evidence of the
existence of all insurance required to be maintained by the Borrower pursuant to
the Loan Documents and the
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designation of Lender as the mortgagee and loss payee or additional insured, as
applicable, thereunder to the extent required by the Loan Documents, in form and
substance specified in the Loan Documents, and evidence of the payment of all
premiums payable for the existing policy period.
2.2.6 Financial Statements. Lender shall have received, with respect
to the Collateral Property, (i) an unaudited operating statement for the
trailing twelve (12) month period, certified by the Chief Financial Officer or
Treasurer of Borrower and a statement of current operations certified by the
Borrower Representative and (ii) audited financial statements for the Borrower
for calendar year 1998. If Lender determines, in its sole discretion, that there
have been significant changes to the Collateral Property since the most recent
audited financial statement delivered to Lender, Borrower shall deliver to
Lender a letter from an accounting firm acceptable to Lender in its sole
discretion verifying current expenses and revenue of the Collateral Property.
2.2.7 Searches. Lender shall have received copies of UCC filing
searches, tax lien searches, judgment searches and real estate tax searches and
municipal department searches setting forth any and all building violations (if
available) in the county where the Collateral Property is located (and in the
case of UCC filing searches, in the office of the Secretary of State or other
applicable state office of the State where the Collateral Property is located),
demonstrating as of a recent date the existence of no other financing
statements, tax liens, judgments, building violations or delinquent real estate
taxes, together with evidence that all fees payable in connection with any such
searches have been paid.
2.2.8 Survey. Lender shall have received a Survey of the Collateral
Property that is satisfactory to Lender and certified to Lender and its
successors and assigns, the Title Company and any other parties requested by
Lender as of a certification date satisfactory to the Title Company and
reasonably satisfactory to Lender.
2.2.9 Management. The Manager of the Collateral Property shall have
executed and delivered a manager consent and subordination in accordance with
Section 6.13.3.
2.2.10 Leases and Material Contracts. Lender shall have received
certified copies of all Leases, reciprocal easement agreements and material
contracts relating to the Collateral Property, including all amendments and
modifications thereto, and such Leases, reciprocal easement agreements and
contracts shall be in form and substance reasonably satisfactory to Lender.
2.2.11 Intentionally Deleted.
2.2.12 Tenant Estoppels. Lender shall have received an executed
tenant estoppel letter, which shall be in form and substance satisfactory to
Lender, from (a) each Anchor Tenant, (b) each Tenant paying base rent in an
amount equal to or exceeding five percent (5%) of the Operating Income from the
Collateral Property and (c) disregarding the area leased by those described in
clauses (a) and (b), lessees of not less than seventy-five percent (75%) of the
remaining gross leasable area of the Collateral Property.
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2.2.13 Property Condition Report. Lender shall have received reports
covering the physical and structural condition of the Collateral Property in
form and substance, and prepared by a qualified independent engineer, reasonably
satisfactory to Lender and dated no more than six (6) months prior to the
Closing Date, which shall (i) identify code and ADA compliance, (ii) include a
schedule of deferred maintenance and the cost thereof, (iii) include a schedule
of all capital expenditures projected to be required in the twelve (12) year
period following the Closing Date, and (iv) if the Collateral Property is in a
State in which Lender reasonably determines that there has been a history of
earthquakes, assess the probable maximum loss in the event of the occurrence of
an earthquake.
2.2.14 Appraisal. Lender shall have received an Acceptable Appraisal
of the Collateral Property.
2.2.15 Zoning Compliance, Etc. Lender shall have received, with
respect to the Collateral Property, evidence, in the form of (i) letters or
other evidence from the appropriate municipal authorities, (ii) an ALTA 3.1
zoning endorsement (including parking coverage) for the Title Insurance Policy,
or (iii) a zoning opinion, in each case in substance reasonably satisfactory to
Lender, that all improvements constituting part of the Collateral Property have
been constructed and are being used and operated in compliance in all material
respects with (A) 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
Collateral Property, (B) all building permits issued in respect of the
Collateral Property and (C) the certificates of occupancy for the Collateral
Property (copies of which certificates of occupancy shall have been delivered to
Lender).
2.2.16 Recording Taxes. Borrower shall have paid all mortgage
recording taxes payable (if any) in the jurisdiction in which the Collateral
Property is located in connection with the recordation of the Mortgage.
2.2.17 Perfection of Security Interests. Lender shall have received
evidence that all actions necessary or, in the opinion of Lender, desirable to
perfect and protect the Liens and security interests created by the Loan
Documents have been or will be taken, including evidence that the Mortgage on
the Collateral Property has been or will be duly filed and recorded in the
appropriate governmental offices and that the related UCC financing statements
have been or will be duly filed in the appropriate governmental offices.
2.2.18 Opinions of Borrower's Counsel. Lender shall have received an
opinion of counsel as to the Borrower and an opinion of local counsel to Lender
in the State in which the Collateral Property is located, in each case with
respect to such matters as Lender may request (including as to enforceability of
the Loan Documents against Borrower) and an Insolvency Opinion with respect to
Borrower, its partners, the Manager and such other persons as Lender shall
designate, which Insolvency Opinion must be in form and substance reasonably
satisfactory to Lender.
2.2.19 Intentionally Deleted.
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2.2.20 REA. If the Collateral Property is subject to an REA, such
REA is a Qualified REA.
2.2.21 Reserves and Escrows. Borrower shall have made such initial
deposits into the Funds as Lender may require in accordance with this Agreement
and the other Loan Documents.
2.2.22 Rent Roll. A Rent Roll (in spread sheet format, containing
such information as Lender may reasonably require) for the Collateral Property,
certified by the Borrower Representative on behalf of the Borrower, shall have
been delivered to Lender.
2.2.23 Further Documents. Borrower shall have executed and delivered
to Lender such documents, opinions and agreements and taken such action
including executing such amendments or supplements to, and assumptions of, the
Loan Documents, which Lender may reasonably require.
2.2.24 Completion of Proceedings. All corporate and other
proceedings taken or to be taken by Borrower in connection with the transactions
contemplated by this Agreement and the other Loan Documents and all documents
incidental thereto shall be satisfactory in form and substance to Lender, and
Lender shall have received all such counterpart originals or certified copies of
such documents as Lender may reasonably request.
2.2.25 Delivery of Organizational Documents. Borrower shall have
delivered or caused to be delivered to Lender copies certified by the Borrower
of all organizational documentation related to Borrower and/or the formation,
structure, existence, good standing and/or qualification to do business, as
Lender may request, including, without limitation, good standing certificates,
qualifications to do business in the appropriate jurisdictions, resolutions
authorizing the entering into of the Loan and incumbency certificates as may be
reasonably requested by Lender.
2.2.26 Expenses. Borrower shall have paid all amounts required to be
paid by Borrower under Section 6.15.
2.2.27 Tax Lot. Lender shall have received evidence that the
Collateral Property constitutes one (1) or more separate tax lots, which
evidence shall be reasonably satisfactory in form and substance to Lender.
2.2.28 Encumbrances. Borrower shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected first
Lien as of the Closing Date with respect to the Mortgage on the Collateral
Property, subject only to applicable Permitted Encumbrances and such other Liens
as are permitted pursuant to the Loan Documents, and Lender shall have received
satisfactory evidence thereof.
2.3 Intentionally Deleted.
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2.4 Defeasance.
(a) Provided no Event of Default shall have occurred and remain
uncured, Borrower shall have the right at any time after the Prepayment Lockout
Expiration Date and prior to the Anticipated Repayment Date to obtain a release
of the Lien of the Mortgage encumbering the Collateral Property (a
"Defeasance"), in full only and not in part, upon satisfaction of the following
conditions:
(i) Borrower shall provide Lender thirty (30) days prior
written notice specifying a Payment Date (the "Defeasance Date") on which
Borrower shall have satisfied the conditions in this Section 2.4.1 and on
which it shall effect the Defeasance;
(ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the Principal balance of the Note to and including the
Defeasance Date and (B) all other sums, then due under the Note, this
Agreement, the Mortgage and the other Loan Documents;
(iii) Borrower shall deposit the Defeasance Collateral into
the Defeasance Collateral Account and otherwise comply with the provisions
of Sections 2.4.3 and 2.4.4 hereof;
(iv) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the
Defeasance Collateral;
(v) Borrower shall deliver to Lender (1) an opinion of counsel
for Borrower satisfactory to a prudent lender opining, among other things,
that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Defeasance
Collateral, (B) if a Secondary Market Transaction has occurred, the REMIC
Trust formed pursuant to such Secondary Market Transaction will not fail
to maintain its status as a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code as a result of the
Defeasance pursuant to this Section 2.4.1, and (C) delivery of the
Defeasance Collateral and the grant of a security interest therein to
Lender shall not constitute an avoidable preference under Section 547 of
the U.S. Bankruptcy Code or applicable state law, and (2) an Insolvency
Opinion with respect to the Successor Borrower;
(vi) Borrower shall deliver to Lender a Rating Comfort Letter
with respect to the Defeasance;
(vii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.4.1(a) have
been satisfied;
(viii) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the Defeasance
Collateral will generate monthly amounts equal to or greater than the
Scheduled Defeasance Payments;
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(ix) Borrower shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request; and
(x) Borrower shall pay all reasonable costs and expenses of
Lender incurred in connection with the defeasance, including Lender's
reasonable attorneys' fees and expenses and Rating Agency fees and
expenses.
(b) If Borrower has elected to defease the Note and the requirements
of this Section 2.4.1 have been satisfied, the Collateral Property shall be
released from the Lien of the Mortgage and the Defeasance Collateral, pledged
pursuant to the Security Agreement, shall be the sole source of collateral
securing the Note. In connection with the release of the Lien, Borrower shall
submit to Lender, not less than thirty (30) days prior to the Defeasance Date,
releases of Liens (and related Loan Documents) for execution by Lender. Such
releases shall be in a form appropriate in the jurisdiction in which the
Collateral Property is located and satisfactory to Lender in its reasonable
discretion. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such
releases, together with an Officer's Certificate certifying that such
documentation (i) is in compliance with all Legal Requirements, and (ii) will
effect such release in accordance with the terms of this Agreement. Borrower
shall pay all costs, taxes and expenses associated with the release of the Lien
of the Mortgage, including Lender's reasonable attorneys' fees. Except as set
forth in this Section 2.4.1, or otherwise in this Agreement, no repayment,
prepayment or defeasance of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the releases of the Lien of
the Mortgage on the Collateral Property.
2.4.2 Intentionally Deleted.
2.4.3 Defeasance Collateral Account. On or before the date on which
Borrower delivers the Defeasance Collateral, Borrower shall open at any Eligible
Institution the defeasance collateral account (the "Defeasance Collateral
Account") which shall at all times be an Eligible Account. The Defeasance
Collateral Account shall contain only (i) the Defeasance Collateral, and (ii)
cash from interest and principal paid on the Defeasance Collateral. All cash
from interest and principal payments paid on the Defeasance Collateral shall be
paid over to Lender on each Payment Date and applied first to accrued and unpaid
interest and then to principal. Any cash from interest and principal paid on the
Defeasance Collateral not needed to pay accrued and unpaid interest or Principal
shall be retained in the Defeasance Collateral Account as additional collateral
for the Loan. Borrower shall cause the Eligible Institution at which the
Defeasance Collateral is deposited to enter an agreement with Borrower and
Lender, satisfactory to Lender in its reasonable discretion, pursuant to which
such Eligible Institution shall agree to hold and distribute the Defeasance
Collateral in accordance with this Agreement. Successor Borrower shall be the
owner of the Defeasance Collateral Account and shall report all income accrued
on the Defeasance Collateral for federal, state and local income tax purposes in
its income tax return. Borrower shall prepay all costs and expenses associated
with opening and maintaining the Defeasance Collateral Account. Lender shall not
in any way be liable by reason of any insufficiency in the Defeasance Collateral
Account.
2.4.4 Successor Borrower. In connection with a Defeasance under this
Section 2.4, Borrower shall establish or designate a successor entity
unaffiliated with the
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Borrower (the "Successor Borrower") which shall be a Special Purpose Entity
approved by Lender. Lender hereby specifically reserves the right to require
that the Successor Borrower be an Affiliate of Lender or Servicer. Borrower
shall transfer and assign all obligations, rights and duties under and to the
Note together with the Defeasance Collateral, to such Successor Borrower. Such
Successor Borrower shall assume the obligations under the Note and the Security
Agreement and Borrower shall be relieved of its obligations under such
documents. Borrower shall pay $1,000 to any such Successor Borrower as
consideration for assuming the obligations under the Note and the Security
Agreement. Borrower shall pay all costs and expenses incurred by Lender,
including Lender's attorney's fees and expenses, incurred in connection
therewith.
III INTEREST; PAYMENTS
3.1 Interest; Monthly Loan Payments.
3.1.1 Interest Generally. Interest on the outstanding Principal
balance of the Loan shall accrue from the Closing Date to but excluding the
Maturity Date at the Applicable Interest Rate.
3.1.2 Payment Before Anticipated Repayment Date. Borrower shall pay
to Lender (a) on the first Payment Date following the Closing Date, an amount
equal to interest only on the outstanding principal balance of the Loan from the
Closing Date up to but not including such Payment Date and (b) on each Payment
Date thereafter up to but not including the Anticipated Repayment Date, an
amount equal to the Monthly Debt Service Payment Amount, which payments shall be
applied first to accrued and unpaid interest and the balance to principal.
3.1.3 Payment After Anticipated Repayment Date. Borrower shall pay
to Lender on each Payment Date on and after the Anticipated Repayment Date (a)
an amount equal to the Monthly Debt Service Payment Amount, such payment to be
applied to interest in an amount equal to interest that would have accrued on
the outstanding principal balance of the Loan (without adjustment for Accrued
Interest) at the Regular Interest Rate and the balance applied to principal and
(b) an amount equal to the Net Operating Income After Debt Service for the
preceding month, such payment to be applied to principal. Interest accrued at
the Matured Performing Rate and not paid pursuant to the preceding sentence
("Accrued Interest"), shall be added to the outstanding principal balance and
shall earn interest at the Applicable Interest Rate, to the extent permitted by
law.
3.1.4 Payment on Maturity Date. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance, all accrued and unpaid interest
(including without limitation the Accrued Interest) and all other amounts due
hereunder and under the Note, the Mortgage and other the Loan Documents.
3.1.5 Property Cash Flow Allocation.
(a) Commencing on the February, 2000 Payment Date and continuing on
each Payment Date occurring prior to the Maturity Date, except following the
acceleration of all or any part of the Debt, all Rents with respect to the
Collateral Property shall be applied as follows
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in the following order of priority: (i) First, to make payments to the Tax and
Insurance Escrow Fund required to be made by Borrower, (ii) Second, to pay the
monthly Cash Management Fee due and payable by Borrower; (iii) Third, to Lender
to pay the interest payment and principal payment required under Section 3.1.2
or 3.1.3, as applicable, (plus, if applicable, interest at the Default Rate and
any other charges then due to Lender under the Loan Documents); (iv) Fourth,
during the continuance of a Cash Management Event, to make payments to the
Rollover Reserve Fund required to be made by Borrower; (v) Fifth, and only
during the continuance of a Cash Management Event on or after the Anticipated
Repayment Date, to make payments for Approved Operating Expenses pertaining to
the Collateral Property; (vi) Sixth, during the continuance of a Cash Management
Event, to make payments to the Replacement Reserve Fund required to be made by
Borrower; (vii) Lastly, payments to Borrower of any excess amounts unless the
Debt Service Coverage Ratio falls below 1.25 (subject to a One Time Cash
Management Event Cure) (the Debt Service Coverage Ratio shall be tested on a
quarterly basis at the end of each calendar quarter (or portion thereof, if
applicable) from and after the Closing Date), in which case all Rents remaining
after application thereof pursuant to subsection (vii) hereof shall be applied
by Lender in accordance with Section 4.11 until such time as a Cash Management
Termination occurs.
(b) Subject to the provisions of the Cash Management Agreement and
as otherwise set forth herein in Section 4.11, the failure of Borrower to make
all of the payments required under clauses (i) through (vi) of Section 3.1.5(a)
in full on each Payment Date shall constitute an Event of Default under this
Agreement.
(c) At any time after the Maturity Date or after the acceleration of
all or any portion of the Debt, Lender may, in its sole discretion, permit the
application of Rents in any order, and to any portion or portions of the Debt,
as Lender shall determine.
3.1.6 Payments after Default; Default Rate. After the occurrence and
during the continuance of an Event of Default, the entire unpaid Debt shall bear
interest at the Default Rate, and shall be payable upon demand from time to time
to the extent permitted by applicable law. Payment or acceptance of interest at
the Default Rate is not a permitted alternative to timely payment and shall not
constitute a waiver of any Default or Event of Default or an amendment to this
Agreement or any other Loan Document and shall not otherwise prejudice or limit
any rights or remedies of Lender.
3.2 Loan Repayment; Voluntary Prepayment; Prepayment After Default.
3.2.1 Repayment. Subject to the provisions of Section 8.4 of this
Agreement, Borrower shall repay the Loan in full on the Maturity Date, together
with interest thereon to (but excluding) the date of repayment and any other
amounts due and owing under the Note, this Agreement and the other Loan
Documents. Borrower shall not have the right to prepay all or any portion of the
Principal before the Stated Maturity Date; provided, however, if no Default or
Event of Default shall then exist, and Borrower provides not less than thirty
(30) days prior written notice to Lender, (x) Borrower may prepay the Loan in
full (but not in part) without penalty or premium at any time within three (3)
months of the Anticipated Repayment Date and (y) Borrower may prepay the Loan in
full (but not in part) on any Payment Date occurring on or after the Prepayment
Lockout Expiration Date provided that such prepayment is accompanied by
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the Yield Maintenance Premium applicable thereto and any other sums including
all accrued and unpaid interest on the Principal due under the Note, this
Agreement and the other Loan Documents (such repayments in (x) and (y) above
being referred to as a "Voluntary Prepayment"). In the event any such Voluntary
Prepayment is not made on a Payment Date, Borrower shall also pay interest that
would have accrued on such prepaid Principal to but not including the next
Payment Date. Except during the continuance of an Event of Default, all proceeds
of a Voluntary Prepayment of the Loan shall be applied by Lender as follows in
the following order of priority: (i) First, to accrued and unpaid interest on
the Loan at the Applicable Interest Rate; (ii) Second, to Principal of the Loan;
and (iii) Third, to any other amounts then due and owing under the Loan
Documents. If at any time prior to the Anticipated Repayment Date the Debt is
accelerated by reason of an Event of Default, any principal payment received by
Lender (whether as a result of a foreclosure of the Mortgage, the exercise of
any of Lender's other rights or remedies under the Loan Documents or otherwise),
then Lender shall be entitled to receive, in addition to all other sums due
under the Loan Documents, an amount equal to the Yield Maintenance Premium
applicable to such prepayment. During the continuance of an Event of Default,
all proceeds of repayment, including any payment or recovery on the Collateral
Property (whether as a result of foreclosure of the Mortgage, the exercise of
any of Lender's other rights or remedies or otherwise) shall, unless otherwise
provided in the Loan Documents, be applied in such order and in such manner as
Lender shall elect in Lender's discretion.
3.2.2 Mandatory Prepayments. The Loan is subject to mandatory
prepayment, without premium or penalty, in certain instances of Insured Casualty
or Condemnation (each a "Casualty/Condemnation Prepayment"), in the manner and
to the extent set forth in Section 8.4.2. Each Casualty/Condemnation Prepayment
shall be made on a Payment Date and shall be applied as follows in the following
order of priority: (i) First, to costs and expenses of Lender (if any),
including reasonable attorney's fees and disbursements, in connection with such
prepayment or reasonably expended by Lender to protect the collateral value of
the Collateral Property; (ii) Second, accrued and unpaid interest at the
Applicable Interest Rate; (iii) Third, to Principal; and (iv) Fourth, to any
other amounts then due and owing under the Loan Documents. If such
Casualty/Condemnation Prepayment is not paid on a Payment Date, the payment
amount will include interest that would have accrued on the Principal prepaid to
but not including the next Payment Date.
3.3 Release of Property. Except as set forth in this Section 3.3 and
otherwise set forth in this Agreement, no repayment or prepayment shall cause,
give rise to a right to require, or otherwise result in, the release of the Lien
of the Mortgage.
3.3.1 Release of Collateral Property. Borrower may obtain (i) the
release of the Collateral Property from the Lien of the Mortgage thereon (and
related Loan Documents) and (ii) the release of Borrower's obligations under the
Loan Documents with respect to the Collateral Property (other than those
expressly stated to survive), upon satisfaction of each of the following
conditions:
(a) Either (i) the conditions for Voluntary Prepayment of the entire
Loan pursuant to Section 3.2.1 hereof are satisfied, or (ii) Lender is required
to release such Collateral Property pursuant to Section 2.4 in connection with a
Defeasance (it being understood that a
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release pursuant to Section 2.4 need not satisfy any Release Conditions not
expressly set forth in Section 2.4)
(b) Borrower shall submit to Lender the Release Documents set forth
in Section 3.3.3 below, together with all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate of Borrower.
3.3.2 Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of the Debt in
accordance herewith, release the Lien of the Mortgage if not theretofore
released.
3.3.3 Release Documents. When the terms of Section 3.3 are
satisfied, Lender shall execute and deliver to the Borrower such documents as
may be necessary or appropriate to release Borrower from its obligations under
the Loan Documents and to release all liens held by Lender on the Collateral
Property. All such documents shall be prepared by Borrower's counsel, shall be
in a form appropriate in the jurisdiction in which the Collateral Property is
located, shall be reasonably acceptable to Lender in form and substance and
shall be delivered to Lender at least thirty (30) days before the proposed
release date.
3.3.4 Release of Funds. Upon the completion of the release of the
Collateral Property pursuant to Section 3.3.1, the Lender shall refund to the
Borrower all amounts on deposit in the Funds with respect to the Collateral
Property.
3.4 Payments and Computations.
3.4.1 Making of Payments. Each payment by Borrower hereunder or
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 1:00 p.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the first Business
Day preceding such scheduled Payment Date. All payments made by Borrower
hereunder or under the other Loan Documents, shall be without any deduction,
set-off or counterclaim, whatsoever and are payable without relief from
valuation and appraisement laws and with all costs and charges incurred in the
collection or enforcement thereof, including attorneys' fees and court costs.
Payments to Lender made from the Accounts shall be deemed to have been made
before 1:00 p.m., New York City time, on the date such payment is made.
3.4.2 Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate based on a three hundred sixty (360) day year by (c) the outstanding
Principal balance.
3.4.3 Late Payment Charge. If any Principal, interest or other sum
due under any Loan Document is not paid on the date on which it is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of five percent
(5%) of such unpaid sum or the maximum amount permitted by applicable law (the
"Late Payment Charge"), in order to defray
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the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment; provided that if no such late payment has occurred within the prior
twelve (12) month period, Borrower shall only be required to pay the late
payment charge provided for in this Section 3.4.3 if such failure to pay
continues for two (2) Business Days after notice from Lender. Such amount shall
be secured by the Loan Documents. Any action by Lender regarding the collection
of a Late Payment Charge will be without prejudice to any other rights, nor act
as a waiver of any other rights, that Lender may have as provided herein, at law
or in equity. No Late Payment Charge shall be due in connection with any payment
to be made from the Accounts, provided that on the date such payment is due
there are sufficient funds in such Accounts to make the payment in question.
3.5 Taxes. Any and all payments by Borrower hereunder and under the other
Loan Documents shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on Lender's income, and franchise taxes imposed on Lender by the law or
regulation of any Governmental Authority (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to in this Section 3.5 as "Applicable Taxes"). If Borrower shall be
required by law to deduct any Applicable Taxes from or in respect of any sum
payable hereunder to Lender, the following shall apply provided the Applicable
Taxes do not result because the Lender (due to permitted succession or
assignment) is not a United States person as defined at section 7701(a)(30) of
the Code or the Lender has failed to provide information necessary to avoid
back-up withholding pursuant to section 3406 of the Code: (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.5), Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions and (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
Borrower also agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or recordation of, or
otherwise with respect to, this Agreement or any other Loan Document ("Other
Taxes"). Borrower shall indemnify Lender for the full amount of Applicable Taxes
or Other Taxes (including any Applicable Taxes or Other Taxes imposed by any
jurisdiction on amounts paid or payable under this Section 3.5) paid by Lender
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Applicable Taxes or Other Taxes
were correctly or legally asserted. Payments pursuant to this Section 3.5 shall
be made within fifteen (15) days after the date Lender makes written demand
therefor. Borrower shall have the right to contest such Applicable Taxes and
Other Taxes referred to in this Section 3.5 in accordance with the terms of
Section 6.2 of this Agreement.
IV CASH MANAGEMENT; ESCROWS AND RESERVES
4.1 Cash Management Arrangements.
4.1.1 Lockbox Account. On or before the Closing Date, Borrower shall
open an account (the "Lockbox Account") with Agent which shall be the depository
account for Borrower into which all sums due to Borrower will be deposited. The
Lockbox Account shall be
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in Lender's name, or at Lender's option, in the Servicer's name. The Lockbox
Account shall be under the sole dominion and control of Lender. The Lockbox
Account will be opened and maintained as an Eligible Account.
4.1.2 Deposits into Lockbox Account. Borrower shall cause all
Tenants at the Collateral Property to pay Rent directly into the Lockbox Account
on or before the date such Rent is due under the terms of the applicable Lease.
When bills to Tenants are delivered pursuant to Section 6.11.6 of this
Agreement, Borrower shall send a notice, substantially in the form of Exhibit A
attached hereto, to all Tenants at the Collateral Property directing them to pay
all Rent into the Lockbox Account. In the event that Borrower, it Affiliates or
the Manager receives any Rents directly, Borrower agrees to deposit, or cause to
be deposited, all such Rents into the Lockbox Account within one (1) Business
Day. All sums deposited into the Lockbox Account shall be swept daily into one
cash management account established by Borrower with Agent on or before the
Closing Date (the "Cash Management Account") (the Cash Management Account shall
be held and administered in accordance with the Cash Management Agreement). The
Cash Management Account shall be in Lender's name, or at Lender's option, in the
Servicer's name. The Cash Management Account shall be under the sole dominion
and control of Lender. The Cash Management Account will be opened and maintained
as an Eligible Account. Neither the Lockbox Account, the Cash Management Account
nor the Cash Management Agreement shall alter or diminish in any way Borrower's
obligation to make timely payment and deposits to all sums required to be paid
or deposited under any Loan Document.
4.1.3 The Accounts. On or before the Closing Date, Borrower shall
open with Agent separate accounts for each of the following Funds (hereinafter
defined): Tax and Insurance Escrow Fund (the "Tax and Insurance Account"),
Replacement Reserve Fund (the "Replacement Reserve Account"), Rollover Reserve
Fund (the "Rollover Reserve Account"), Operating Expense Reserve Fund (the
"Operating Expense Account"), the Cash Collateral Fund (the "Cash Collateral
Account") and the Debt Service Reserve Fund (the "Debt Service Reserve
Account"). Tax and Insurance Escrow Funds shall be held in the Tax and Insurance
Account. Replacement Reserve Funds shall be held in the Replacement Reserve
Account. Rollover Reserve Funds shall be held in the Rollover Reserve Account.
Operating Expense Reserve Funds shall be held in the Operating Expense Account.
The Debt Service Reserve Fund shall be held in the Debt Service Reserve Account
All Funds remaining in the Accounts after application pursuant to Sections 3.1.5
and 4.11 shall be held in the Cash Collateral Account. The accounts defined in
this Section may be hereinafter referred to from to time as an "Account" or
collectively as the "Accounts." At Lender's option, each of the Accounts shall
be opened in Lender's name or in Servicer's name. Each of the Accounts shall be
under the sole dominion and control of Lender. Each of the Accounts shall be
opened and maintained as an Eligible Account.
4.2 Intentionally Deleted.
4.3 Tax and Insurance Escrow Fund. Borrower shall pay to Lender on each
Payment Date (i) one-twelfth (1/12th) of the Taxes for the Collateral Property
that Lender estimates will be payable during the next twelve (12) months in
order to accumulate with Lender sufficient funds to pay all such Taxes at least
thirty (30) days prior to their respective due dates ("Monthly Tax Amount"), and
(ii) one-twelfth (1/12th) of the Insurance Premiums that Lender
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estimates will be payable for the renewal of the coverage afforded by the
Policies relating to the Collateral Property upon the expiration thereof in
order to accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of such Policies
("Monthly Insurance Amount") (the amounts paid under the foregoing clauses (i)
and (ii) with respect to the Collateral Property, less disbursements thereof
pursuant hereto, being called the "Tax and Insurance Escrow Fund"). Lender will
(a) apply the Tax and Insurance Escrow Fund to payments of Taxes and Insurance
Premiums required to be made by Borrower pursuant to Sections 6.2 and 8.1 prior
to the date upon which interest or penalties would be imposed, provided that
Borrower has promptly supplied Lender with notices of all Taxes and Insurance
Premiums due for the Collateral Property, or (b) reimburse Borrower for such
amounts upon presentation of evidence of payment and an Officer's Certificate in
form and substance satisfactory to Lender; subject, however, to Borrower's right
to contest Taxes in accordance with Section 6.2. Following the payment by Lender
of any Taxes pursuant to this Section 4.3, Lender shall send a "paid" receipt to
Borrower. Provided Borrower has deposited funds into the Tax and Insurance
Escrow Fund as required under this Section and given Lender timely notice of the
amount and due date of such taxes, Borrower shall not be liable for interest or
penalties resulting from late payment of such Taxes by Lender, and, so long as
no portion of the Debt has been accelerated, Lender or Servicer shall be
responsible for such interest and penalties. In making any payment relating to
the Tax and Insurance Escrow Fund, Lender may do so according to any bill,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts next coming due for Taxes and Insurance Premiums pursuant to Sections
6.2 and 8.1, Lender shall, in its sole discretion, return any excess to the
applicable Borrower or credit such excess against future payments to be made to
the Tax and Insurance Escrow Fund. If at any time Lender determines that the Tax
and Insurance Escrow Fund is not or will not be sufficient to pay the Taxes or
Insurance Premiums next coming due, Lender shall notify the Borrower of such
determination and the Borrower shall increase the monthly payments to Lender by
the amount that Lender estimates is sufficient to make up the deficiency at
least thirty (30) days prior to delinquency of the Taxes and/or expiration of
the Policies, as the case may be. Lender acknowledges that Borrower currently
causes its Premiums to be paid by Afco Acceptance Corp. ("Afco") through an
agreement with Westfield America, Inc., and Lender agrees that amounts for the
Borrower's Premiums held in the Tax and Insurance Escrow Fund shall be released
to reimburse the Borrower for payments made by it to reimburse Westfield
America, Inc. for the amounts paid to Afco with respect to the Borrower's
Premiums (subject to compliance by Borrower with clause (b) of this Section 4.3
or any other similar arrangements reasonably acceptable to Lender.
4.4 Replacements and Replacement Reserves.
4.4.1 Replacement Reserve Fund. Upon the occurrence of a Cash
Management Event, Borrower shall pay to Lender on each Payment Date thereafter
(in addition to other payments required hereunder) an amount equal to the
Monthly Replacement Deposit for the Collateral Property (such payments less
disbursements thereof pursuant hereto, being called the "Replacement Reserve
Fund"). If the amount of the Replacement Reserve Fund shall exceed the amounts
due for Approved Replacement Expenses pursuant to the terms hereof,
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Lender shall, in its discretion, return any excess to the Borrower or, if future
Replacement Reserve Fund payments are then required, credit such excess against
such future payments.
4.4.2 Payment of Replacement Expenses. From time to time (but not
more often than monthly), Lender shall disburse funds held in the Replacement
Reserve Fund to Borrower, within thirty (30) days after the delivery by Borrower
to Lender of a request therefor, in increments of at least $5,000; provided,
that (i) on the day of the request and on the day of payment no Event of Default
shall have occurred and be continuing; (ii) such disbursement is for a
Replacement Expense that has been incurred by Borrower (provided that, during
the continuance of a Cash Management Event, such Replacement Expense must be an
Approved Replacement Expense); (iii) Lender shall have (if it desires) verified
(by an inspection conducted at Borrower's expense) performance of the work
associated with such Approved Replacement Expense (or Replacement Expense, as
the case may be); and (iv) the request for disbursement is accompanied by (A) an
Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such funds will be used to pay or reimburse Borrower for Approved
Replacement Expenses (or Replacement Expenses, as the case may be) and a
description thereof, (x) that all outstanding trade payables (other than those
to be paid from the requested disbursement or those otherwise permitted to be
outstanding under Section 7.8) have been paid in full, (y) that the same has not
been the subject of a previous disbursement, and (z) that all previous
disbursements have been used to pay the previously identified Approved
Replacement Expenses (or Replacement Expenses, as the case may be), and (B)
reasonably detailed documentation as to the amount, necessity and purpose
therefor.
4.5 Rollover Reserves.
4.5.1 Rollover Reserve Fund. Upon the occurrence of a Cash
Management Event, Borrower shall pay to Lender on each Payment Date thereafter
monthly deposits for the payment of Approved Leasing Expenses (the "Monthly
Rollover Deposit") for the Collateral Property (in addition to other payments
required hereunder) (such payments less disbursements thereof pursuant hereto,
being called the "Rollover Reserve Fund") or, at Borrower's option, shall post a
Letter of Credit in such amount determined by Lender based on $.75 a square foot
of gross leasable area excluding Anchor Tenant space for each Collateral
Property. Lender will apply such payments to payment of Approved Leasing
Expenses pursuant to the terms hereof. Borrower shall also deposit into the
Rollover Reserve Fund all payments ("Lease Termination Payments") received from
Tenants in connection with the termination or cancellation of any Lease more
than one year prior to its expiration date, including fees, penalties and
commissions (provided that, upon the releasing of all or any portion of the
space demised under such cancelled or terminated Lease, Lender shall, upon
Borrower's request and provided no Event of Default then exists, release to
Borrower the portion, if any, of the Lease Termination Payment which exceeds the
actual Leasing Expenses incurred or to be incurred in connection with such
releasing). If the amount of the Rollover Reserve Fund shall exceed the amounts
due for Approved Leasing Expenses pursuant to the terms hereof, Lender shall
retain excess Rollover Reserve Funds in accordance with Section 4.11 of this
Agreement. If Lender determines in its reasonable judgment that the amount of
the Rollover Reserve Fund will be insufficient to pay the amounts due or to
become due for Approved Leasing Expenses (after taking into account any Lease
Termination Payments theretofore deposited into the Rollover Reserve), Lender
may adjust the monthly amounts required to be deposited into the Rollover
Reserve Fund upon thirty
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(30) days' notice to Borrower. Alternatively, Lender may in its discretion
determine that the amount of the Rollover Reserve Fund will exceed the amounts
due or to become due for Approved Leasing Expenses, in which case Lender may
reduce the monthly amounts to be deposited therein. Lender shall release funds
on deposit in the Rollover Reserve Fund to the Borrower in an amount calculated
based on $5.97 per square foot leased at the Collateral Property, upon Lender's
receipt from Borrower of evidence that (i) a new Lease has been executed, (ii)
the Tenant under such new Lease has taken possession of the premises leased
thereunder and has provided the Borrower and Lender with an estoppel letter
stating that the Tenant has commenced paying rent pursuant to the terms of its
Lease, (iii) all tenant improvement costs or other Approved Leasing Expenses
have been paid pursuant to the terms of the new Lease, and (iv) any leasing
commissions have been paid and there are no outstanding monetary obligations of
the Borrower to the Tenant or any third party due under such new Lease.
4.5.2 Payment of Leasing Expenses. From time to time (but not more
than once per month) Lender shall disburse funds held in the Rollover Reserve
Fund to Borrower, within fifteen (15) days after the delivery by Borrower to
Lender of a request therefor, in increments of at least $5,000; provided, (i) on
the day of the request and on the day of payment no Event of Default shall have
occurred and be continuing; (ii) such disbursement is for an Approved Leasing
Expense; (iii) Lender shall have (if it desires) verified (by an inspection
conducted at Borrower's expense) performance of any construction work associated
with such Approved Leasing Expense; and (iv) the request for disbursement is
accompanied by (A) an Officer's Certificate certifying (v) the amount of funds
to be disbursed, (w) that such funds will be used only to pay (or reimburse
Borrower for) Approved Leasing Expenses and a description thereof, (x) that all
outstanding trade payables (other than those to be paid from the requested
disbursement or those otherwise permitted to be outstanding under Section 7.8)
have been paid in full, (y) that the same has not been the subject of a previous
disbursement, and (z) that all previous disbursements have been used only to pay
(or reimburse Borrower for) the previously identified Approved Leasing Expenses,
and (B) reasonably detailed supporting documentation as to the amount, necessity
and purpose therefor. During the continuance of a Cash Management Event, any
such disbursement to pay (rather than reimburse) Approved Leasing Expenses may,
at Lender's option, be made by joint check payable to Borrower and the payee of
such Approved Leasing Expenses.
4.6 Intentionally Deleted.
4.7 Operating Expense Reserves.
4.7.1 Operating Expense Reserve Fund. After the occurrence of a Cash
Management Event or the Anticipated Repayment Date, Borrower shall pay to Lender
an amount equal to the Approved Operating Expenses for the Collateral Property
for the next Current Month (the "Monthly Operating Expense Deposit") (such
payments less disbursements thereof pursuant hereto, being called the "Operating
Expense Reserve Fund"). If the amount of the Operating Expense Reserve Fund
shall exceed the amounts due for Approved Operating Expenses pursuant to the
terms hereof, Lender shall retain excess Operating Expense Reserve Funds in
accordance with Section 4.11 of this Agreement.
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4.7.2 Payment of Approved Operating Expenses. From time to time (but
not more than once per month) following the occurrence of a Cash Management
Event or the Anticipated Repayment Date, Lender shall disburse funds held in the
Operating Expense Reserve Fund to Borrower, provided (i) on the day of the
request and on the date of payment no portion of the Debt shall have been
accelerated; (ii) such disbursement is for an Approved Operating Expense; and
(iii) such disbursement is requested by Borrower in writing, accompanied by (A)
an Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such funds will be used to pay Approved Operating Expenses and a
description thereof, (x) that all outstanding trade payables (other than those
to be paid from the requested disbursement or those otherwise permitted to be
outstanding under Section 7.8) have been paid in full, (y) that the same has not
been the subject of a previous disbursement, and (z) that all previous
disbursements have been or will be used to pay the previously identified
Approved Operating Expenses, and (B) reasonably detailed documentation as to the
amount, necessity and purpose therefor. Subject to satisfaction of the preceding
conditions, if Lender receives from Borrower a valid request for a disbursement
for payment of Approved Operating Expenses for the then Current Month at least
five (5) Business Days prior to the Payment Date occurring in such Current
Month, then the disbursement in respect of such Approved Operating Expenses
shall be made to Borrower on such Payment Date. Notwithstanding anything to the
contrary in the foregoing, during the continuance of an Event of Default, Lender
shall have the right, in lieu of disbursing to Borrower funds from the Operating
Expense Reserve Fund, to pay such funds directly to the obligees or to pay such
funds to Borrower and the obligee in question jointly.
4.8 Casualty/Condemnation Fund. The Borrower shall pay, or cause to be
paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation (such
amounts, less disbursements thereof pursuant hereto, the "Casualty/Condemnation
Fund"), in accordance with the provisions of Sections 8.2.2 and 8.3.2. All
amounts in the Casualty/Condemnation Fund shall be disbursed in accordance with
the provisions of Article VIII.
4.9 Security Deposits.
(a) Security deposits under Leases shall not be commingled with any
other funds of Borrower (unless permitted by applicable Legal Requirements) and
all security deposits paid in cash under Leases, shall, unless permitted to be
commingled with Borrower's funds under applicable Legal Requirements, be
deposited by Borrower into an account with the Agent. After the occurrence of a
Cash Management Event, Borrower shall, upon Lender's request, if permitted by
applicable Legal Requirements, turn over to Lender the security deposits (and
any interest theretofore earned thereon) under Leases, to be held by Lender
subject to the terms of the Leases. If applicable Legal Requirements prohibit
Borrower from turning over to Lender security deposits under Leases, Borrower
shall keep such security deposits at a separately designated account at the
Agent so that the security deposits shall not be commingled with any other funds
of Borrower. Security deposits held by the Lender will be released by Lender
upon notice from the Borrower together with such evidence as Lender may
reasonably request that such security deposit is required to be returned to a
Tenant pursuant to the terms of a Lease or may be applied as Rent pursuant to
the rights of Borrower under the applicable Lease.
(b) Any letter of credit or other instrument that Borrower receives
in lieu of a cash security deposit shall (i) be maintained in full force and
effect in the full amount unless
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replaced by a cash deposit as hereinabove described, (ii) if pertaining to a
Material Lease, be issued by an institution reasonably satisfactory to Lender,
(iii) if permitted pursuant to any Legal Requirements, name Lender as payee or
mortgagee thereunder (or be fully assignable to Lender) and (iv) in all
respects, comply with any applicable Legal Requirements and, if pertaining to a
Material Lease, otherwise be reasonably satisfactory to Lender. Borrower shall,
upon request, provide Lender with evidence reasonably satisfactory to Lender of
Borrower's compliance with the foregoing.
4.10 Funds, Generally.
4.10.1 Grant of Security Interest; Application of Funds. As
additional security for Borrower's payment of the Debt and the performance by
Borrower of all other terms, conditions and provisions of the Loan Documents,
Borrower hereby pledges and assigns to Lender, and grants to Lender a security
interest in, all right, title and interest of Borrower in and to all Rents and
in and to all payments to or monies held in the Lockbox Account, the Cash
Management Account, the Accounts (collectively, the "Cash Management Accounts")
and in the Casualty/Condemnation Fund (all amounts held in the Accounts, the
Casualty/Condemnation Fund, together with all other funds designated as or
deemed to be "Funds" under this Agreement, are referred to herein as the
"Funds"). Borrower for itself and on behalf of each of its Affiliates and the
Manager hereby grants to Lender a continuing security interest in, and agrees to
hold in trust for the benefit of Lender, all Rents in its possession prior to
the (i) payment of such Rents to Lender or (ii) deposit of such Rents into the
Lockbox Account in accordance with this Agreement and the Cash Management
Agreement. Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any or all of
the Cash Management Accounts or Fund, or permit any Lien to attach thereto, or
any levy to be made thereon, or any UCC-1 Financing Statements, except those
naming Lender as the secured party, to be filed with respect thereto. This
Agreement is, among other things, intended by the parties to be a security
agreement for purposes of the UCC. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in the Cash
Management Accounts as provided under Section 3.1.5(c).
4.10.2 Investments of Funds. Lender shall direct the Agent to invest
any balances in the Accounts in Permitted Investments as instructed by Borrower,
provided that (i) if Borrower fails to so instruct Lender, or upon the
occurrence and continuation of a Cash Management Event, Lender may direct the
Agent to invest and reinvest such balances of the Funds in Permitted Investments
as Lender shall determine in its sole discretion, (ii) the maturities of the
Permitted Investments on deposit in the Accounts shall be selected and
coordinated to become due not later than one day before any disbursements from
the Accounts must be made, (iii) all such Permitted Investments shall be held in
the name of and be under the sole dominion and control of Lender and subject at
all times to the terms hereof, and (iv) no Permitted Investment shall be made
unless Lender shall have and continue to have a perfected first priority Lien in
such Permitted Investment securing the obligations of Borrower hereunder and
under the other Loan Documents and all filings and other actions necessary to
ensure the validity, perfection, and first priority of such Lien shall have been
taken. Lender shall have no liability for any loss investments of Funds in the
Accounts that are invested in Permitted Investments and no such loss shall
affect Borrower's obligations to make the deposits into the Funds pursuant to
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this Agreement. Borrower shall report on its federal, state and local income tax
reports at interest or income accrued on Funds in the Accounts.
4.11 Cash Collateral Fund.
(a) After the occurrence of a Cash Management Event, all Rents
remaining in the Accounts after application thereof pursuant to items (i)
through (vi) of Section 3.1.5(a), shall be transferred to the Cash Collateral
Account (all funds at any time in the Cash Collateral Account being called the
"Cash Collateral Fund").
(b) Funds in the Cash Collateral Account which originally
constituted a part of the Replacement Reserve Fund or the Rollover Reserve Fund
shall be held in the Cash Collateral Account for future disbursement by Lender,
provided no Event of Default then exists, for Approved Replacement Expenses and
Approved Leasing Expenses, respectively, to the extent, but only to the extent,
that Borrower's required Monthly Reserve Deposits and/or required Monthly
Rollover Deposits, respectively, are insufficient to pay for same. Funds in the
Cash Collateral Account which originally constituted a part of some other Fund
shall be held in the Cash Collateral Account for future application, provided no
Event of Default then exists, to such Funds, in such order and manner as Lender
may elect in its sole and absolute discretion.
(c) Any funds deposited with the Lender in connection with a One
Time Cash Management Event Cure shall be secured by the Mortgages and be
otherwise applied in accordance with the terms of this Section 4.11 if the One
Time Cash Management Event Cure does not prevent a Cash Management Event from
occurring at the end of the following quarter upon the Lender's test of the Debt
Service Coverage Ratio. If there is no Cash Management Event upon such
subsequent test of the Debt Service Coverage Ratio, or a Cash Management
Termination has occurred, the funds deposited with the Lender in connection with
a One Time Cash Management Event Cure shall be returned to the Borrower pursuant
to subsection (d) below.
(d) Upon a Cash Management Termination, Lender shall deliver to
Borrower, on the next Business Day, all Funds then on deposit in the Cash
Collateral Account.
V REPRESENTATIONS AND WARRANTIES
5.1 Borrower Representations. Borrower represents and warrants as to
itself, as of the date hereof that, except to the extent (if any) disclosed on
Schedule 3 with reference to a specific subsection of this Section 5.1:
5.1.1 Organization; Special Purpose. Borrower has been duly
organized and is validly existing and in good standing under the laws of the
State of formation, with requisite power and authority, and all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
own its properties and to transact the business in which it is now engaged.
Borrower is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, business and operations. Borrower is a Special Purpose Entity, and
the sole business of Borrower is the ownership, management and operation of the
Collateral Property.
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5.1.2 Proceedings; Enforceability. Borrower has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party. The Loan Documents to which Borrower is a
party have been duly executed and delivered by Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
5.1.3 No Conflicts. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any Lien (other than pursuant
to the Loan Documents) upon any of the property of Borrower pursuant to the
terms of, any agreement or instrument to which Borrower is a party or by which
its property is subject, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or any of its properties. Borrower's
rights under the Licenses and the Management Agreement will not be adversely
affected by the execution and delivery of the Loan Documents, Borrower's
performance thereunder, the recordation of any Mortgage, or the exercise of any
remedies by Lender. Any consent, approval, authorization, order, registration or
qualification of or with any Governmental Authority required for the execution
and delivery by Borrower of the Loan Documents has been obtained and is in full
force and effect.
5.1.4 Litigation. There are no actions, suits or other proceedings
at law or in equity by or before any Governmental Authority now pending or
threatened against or affecting Borrower, Borrower Representative, the Manager
or the Collateral Property, which, if adversely determined, might materially
adversely affect the condition (financial or otherwise) or business of Borrower,
Borrower Representative, Manager or the condition or ownership of the Collateral
Property.
5.1.5 Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which might adversely affect Borrower
or the Collateral Property, or Borrower's business, properties, operations or
condition, financial or otherwise. Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Collateral
Property is bound.
5.1.6 Title. Borrower has good fee title to the portion of the
Collateral Property constituting Real Property, and good title to the balance of
the Collateral Property, free and clear of all Liens except the Permitted
Encumbrances. The Mortgage executed by Borrower, when properly recorded in the
appropriate records, together with any UCC financing statements required to be
filed in connection therewith, will create (i) valid, perfected first priority
lien on the fee interest in the Collateral Property, and (ii) perfected security
interests in and to, and perfected collateral assignments of, all personalty
purported to be covered by the Mortgage (including the Leases affecting the
Collateral Property), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances. The Permitted
Encumbrances do not materially adversely affect the value or use of the
Collateral Property, or the ability of Borrower to repay the Loan. There are no
claims for payment for work, labor or
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materials affecting the Collateral Property which are or may become a Lien prior
to, or of equal priority with, any Liens created by the Loan Documents.
5.1.7 Survey. To the best of Borrower's knowledge, the survey for
the Collateral Property delivered to Lender does not fail to reflect any
material matter affecting the Collateral Property or the title thereto which is
required to be reflected thereon in accordance with the standards for a Survey
described in the definition thereof.
5.1.8 No Bankruptcy Filing. Borrower is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
law or the liquidation of all or a major portion of its property (a "Bankruptcy
Proceeding"), and Borrower does not have any knowledge of any Person
contemplating the filing of any such petition against Borrower. In addition,
neither Borrower nor Borrower Representative nor any principal or Affiliate of
Borrower or Borrower Representative have been a party to, or the subject of, a
Bankruptcy Proceeding for the past ten (10) years.
5.1.9 Full and Accurate Disclosure. No statement of fact made by
Borrower in any Loan Document contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
therein not misleading. There is no material fact presently known to Borrower
that has not been disclosed to Lender which adversely affects, or, as far as
Borrower can foresee, might adversely affect, the Collateral Property or the
business, operations or condition (financial or otherwise) of Borrower.
5.1.10 No Plan Assets. Borrower is not an "employee benefit plan,"
as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of
the assets of Borrower constitute or will constitute "plan assets" of one or
more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition,
(a) Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to state statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Loan Agreement.
5.1.11 Compliance. Borrower and the Collateral Property and its use
thereof comply in all material respects with all applicable Legal Requirements.
Borrower is not in default or violation of any order, writ, injunction, decree
or demand of any Governmental Authority, the violation of which might materially
adversely affect the condition (financial or otherwise) or business of Borrower.
There has not been and shall never be committed by Borrower or any other Person
in occupancy of or involved with the operation or use of the Collateral Property
any act or omission affording any Governmental Authority the right of forfeiture
as against the Collateral Property or any part thereof or any monies paid in
performance of the Borrower's obligations under any Loan Document.
5.1.12 Contracts. As of the date hereof, there are no material
service, maintenance or repair contracts affecting the Collateral Property other
than those identified on Schedule 4. All information set forth in Schedule 4 is
true, accurate and complete in all material respects as of the date hereof.
Except as disclosed on Schedule 4, there are no material service,
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maintenance or repair contracts that are not terminable on one month's notice or
less without cause and without penalty or premium. All service, maintenance or
repair contracts affecting the Collateral Property have been entered into at
arms-length in the ordinary course of Borrower's business and provide for the
payment of fees in amounts and upon terms comparable to existing market rates.
5.1.13 Financial Information. All financial data, including the
information required pursuant to Section 2.2.6 hereof and any statements of cash
flow and income and operating expense, that have been delivered to Lender in
respect of the Collateral Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of the
Collateral Property as of the date of such reports, and (iii) to the extent
prepared by an independent certified public accounting firm, have been prepared
in accordance with GAAP consistently applied throughout the periods covered,
except as disclosed therein. Borrower has no contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that would have a material adverse
affect on the financial condition of Borrower or on the Collateral Property or
the operation thereof as a retail shopping center, except as referred to or
reflected in said financial statements. Since the date of such financial
statements, there has been no materially adverse change in the financial
condition, operations or business of Borrower from that set forth in said
financial statements.
5.1.14 Condemnation. No Condemnation or other proceeding has been
commenced or, to Borrower's best knowledge, is contemplated with respect to all
or part of the Collateral Property or for the relocation of roadways providing
access to the Collateral Property.
5.1.15 Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose that would be inconsistent with such
Regulation U or any other regulation of such Board of Governors, or for any
purpose prohibited by Legal Requirements or any Loan Document.
5.1.16 Utilities and Public Access. The Collateral Property has
rights of access to public ways and is served by water, sewer, sanitary sewer
and storm drain facilities adequate to service the Collateral Property for its
respective intended uses. All public utilities necessary or convenient to the
full use and enjoyment of the Collateral Property are located either in the
public right-of-way abutting the Collateral Property (which are connected so as
to serve the Collateral Property without passing over other property) or in
recorded easements serving the Collateral Property and such easements are set
forth in and insured by the Title Insurance Policy. All roads necessary for the
use of the Collateral Property for its current purpose have been completed and
dedicated to public use and accepted by all Governmental Authorities.
5.1.17 Not a Foreign Person. Borrower is not a "foreign person"
within the meaning of ss. 1445(f)(3) of the Code.
5.1.18 Separate Lots. The Collateral Property is comprised of one
(1) or more parcels which constitute a separate tax lot or lots and does not
constitute a portion of any other tax lot not a part of the Collateral Property.
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5.1.19 Assessments. There are no pending or proposed material
special or other assessments for public improvements or otherwise affecting the
Collateral Property, or any contemplated improvements to the Collateral Property
that may result in such special or other assessments.
5.1.20 Enforceability. The Loan Documents are not subject to, and
Borrower has not asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury. No exercise of any of the terms of the
Loan Documents, or any right thereunder, will render any Loan Document
unenforceable.
5.1.21 Insurance. Borrower has obtained and has delivered to Lender
copies of all insurance policies reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement. No Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any
such policy.
5.1.22 Use of Property; Licenses. The Collateral Property is used
exclusively for retail and other appurtenant and related uses. Except as
heretofore discussed in writing to Lender, all material certifications, permits,
licenses and approvals, including certificates of completion and occupancy
permits required for the legal use, occupancy and operation of the Collateral
Property (collectively, the "Licenses"), have been obtained and are in full
force and effect. Borrower shall keep and maintain all licenses necessary for
the operation of the Collateral Property as a retail shopping center. The use
being made of the Collateral Property is in conformity in all material respects
with, and is permitted under, the certificate of occupancy issued for the
Collateral Property.
5.1.23 Flood Zone. Except as disclosed on a Survey delivered to
Lender, none of the Improvements on the Collateral Property is located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards.
5.1.24 Physical Condition. Except as otherwise disclosed in the
written physical inspection reports heretofore delivered to Lender, the
Collateral Property, including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defects or damages in the
Collateral Property, whether latent or otherwise, and Borrower has not received
notice from any insurance company or bonding company of any defects or
inadequacies in the Collateral Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
5.1.25 Boundaries and Encroachments. All of the Improvements on the
Collateral Property included in determining the appraised value of the
Collateral Property lie wholly within the boundaries and building restriction
lines of the Collateral Property, and no improvement on an adjoining property
encroaches upon the Collateral Property, and no easement or other encumbrance
upon the Collateral Property encroaches upon any of the Improvements, so
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as to affect the value or marketability of the Collateral Property, except those
insured against by the Title Insurance Policy.
5.1.26 Leases and Rent Roll. Borrower has delivered to Lender a
true, correct and complete rent roll for the Collateral Property (each a, "Rent
Roll"), which includes all Leases affecting the Collateral Property (including
schedules for all executed Leases for Tenants not yet in occupancy or under
which the rent commencement date has not occurred). Except as set forth in the
Rent Rolls and estoppel certificates delivered to Lender on or prior to the
Closing Date for the Collateral Property: (i) to the best of Borrower's
knowledge, each Lease is in full force and effect; (ii) the Tenants under the
Leases have accepted possession of and are in occupancy of all of their
respective demised premises, have commenced the payment of rent under the
Leases, and, to the best of Borrower's knowledge, there are no offsets, claims
or defenses to the enforcement thereof; (iii) to the best of Borrower's
knowledge, all rents due and payable under the Leases have been paid and no
portion thereof has been paid for any period more than thirty (30) days in
advance; (iv) the rent payable under each Lease is the amount of fixed rent set
forth in the Rent Roll, and, to the best of Borrower's knowledge, there is no
claim or basis for a claim by the Tenant thereunder for an adjustment to the
rent; (v) to the best of Borrower's knowledge, no Tenant has made any written
claim of a material default against the landlord under any Lease which remains
outstanding nor, to the best of Borrower's knowledge, has Borrower or Manager
received, by telephonic, in-person, e-mail or other communication, any notice of
a material default under any Lease; (vi) to the best of Borrower's knowledge,
there is no present material default by the Tenant under any Lease; (vii)
Borrower does not hold any security deposits under the Leases; (viii) Borrower
is the sole owner of the entire lessor's or sublessor's interest in each Lease;
(ix) to the best of Borrower's knowledge, each Lease is the valid, binding and
enforceable obligation of Borrower and the applicable Tenant thereunder; (x) to
the best of Borrower's knowledge, no Person has any possessory interest in, or
right to occupy, the Collateral Property except under the terms of a Lease; and
(xi) Borrower has not received any written notice of default on the part of
Landlord under any Lease. Notwithstanding the foregoing, the breach of any of
the representations contained in the preceding sentence shall not constitute an
Event of Default provided that (i) the relevant Lease is not a Material Lease
and (ii) the facts resulting in such breach do not, after taking into account
all other facts resulting in other breaches of the representations contained in
the preceding sentence, do not have a material adverse affect on the value, Net
Operating Income, use or operation of the Collateral Property. None of the
Leases contain any option to purchase or right of first refusal to purchase the
Collateral Property or any part thereof. Neither the Leases nor the Rents have
been assigned or pledged except to Lender, and no other Person has any interest
therein except the Tenants thereunder.
5.1.27 Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of the Collateral Property to Borrower have been
paid. All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgage, have been paid, and, under current Legal
Requirements, the Mortgage is enforceable in accordance with its terms by Lender
(or any subsequent holder thereof).
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5.1.28 Investment Company Act. Borrower is not (i) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (ii) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
5.1.29 Fraudulent Transfer. Borrower has not entered into the Loan
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and Borrower has received reasonably equivalent value in exchange for
its obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of
Borrower's assets is and will, immediately following the execution and delivery
of the Loan Documents, be greater than Borrower's probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute and matured. Borrower's assets do not and, immediately
following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, nor believe that it will, incur
debts and liabilities (including contingent liabilities and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of Borrower).
5.1.30 Ownership of Borrower. The sole managing member of such
Borrower is its Borrower Representative. Westfield America Limited Partnership
is the owner of all of the issued and outstanding capital stock of the Borrower
Representative, all of which capital stock has been validly issued and fully
paid and is nonassessable. The only limited partners or other members of
Borrower are identified on Schedule 5 hereto. The stock of Borrower
Representative, and all membership interests in Borrower are owned free and
clear of all Liens, warrants, options and rights to purchase. Borrower has no
obligation to any Person to purchase, repurchase or issue any ownership interest
in it. Attached hereto as Schedule 5 is an organizational chart for Borrower
indicating the ownership interests in Borrower and its Borrower Representative.
5.1.31 Management Agreement. The Management Agreement for the
Collateral Property is in full force and effect. There is no default, breach or
violation existing thereunder, and no event has occurred (other than payments
due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation thereunder, by
either party thereto. The Management Fee and the terms and provisions of the
Management Agreement are subordinate to the Loan Documents in accordance with
the term set forth in the applicable Manager Consent and Subordination of
Management Agreement, Lender approves the terms of the Management Agreements
heretofore delivered to Lender.
5.1.32 Hazardous Substances. To the best of Borrower's knowledge
after due inquiry, except as disclosed in the written environmental reports
delivered to Lender prior to the date hereof: (i) the Collateral Property is not
in violation of any Legal Requirement pertaining to
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or imposing liability or standards of conduct concerning environmental
regulation, contamination or clean-up, including the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Emergency Planning and Community Right-to-Know Act of 1986, the
Hazardous Substances Transportation Act, the Solid Waste Disposal Act, the Clean
Water Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking
Water Act, the Occupational Safety and Health Act, any state super-lien and
environmental clean-up statutes, any local law requiring related permits and
licenses and all amendments to and regulations in respect of the foregoing laws
(collectively, "Environmental Laws"); (ii) the Collateral Property is not
subject to any private or governmental Lien or judicial or administrative notice
or action or inquiry, investigation or claim relating to hazardous, toxic,
dangerous and/or regulated substances, wastes, materials, raw materials which
include hazardous constituents, pollutants or contaminants, including asbestos,
asbestos containing materials, petroleum, tremolite, anthlophylite, actinolite,
polychlorinated biphenyls and any other substances or materials which are
included under or regulated by Environmental Laws or which are considered by
scientific opinion to be otherwise dangerous in terms of the health, safety and
welfare of humans (collectively, "Hazardous Substances"); (iii) no Hazardous
Substances are or have been (including the period prior to the acquisition of
the Collateral Property by the Borrower), discharged, generated, treated, stored
on, incorporated in, or removed from the Collateral Property other than in
compliance with all Environmental Laws; (iv) except for Routine Hazardous
Substances, no Hazardous Substances are or have been (including the period prior
to the acquisition of the Collateral Property by the Borrower), disposed of or
transported from the Collateral Property other than in compliance with all
Environmental Laws; (v) no Hazardous Substances are present in, on or under any
nearby real property which could migrate to or otherwise affect the Collateral
Property; and (vi) no underground storage tanks exist on the Collateral
Property. There have been no environmental investigations, studies, audits,
reviews or other analyses conducted by or on behalf of Borrower which have not
been provided to Lender.
5.1.33 Name; Principal of Business. Borrower does not use or will
not use any trade name and has not done or will not do business under any name
other than its actual name set forth herein or the name of the Collateral
Property. The principal place of business of Borrower is its primary address for
notices as set forth in Section 11.2, and Borrower has no other place of
business (other than the Collateral Property).
5.1.34 Subordinated Debt. Borrower does not have any indebtedness
with respect to the Collateral Property or any excess cash flow or any residual
interest therein, whether secured or unsecured, other than Permitted
Encumbrances and the permitted indebtedness described in Section 7.8.
5.1.35 Intentionally Deleted.
5.1.36 REA. With respect to any REA: (i) the Borrower has delivered
to Lender a true and correct copy of such REA, together with all amendments and
modifications thereto. Such REA is in full force and effect and has not
otherwise been modified or amended; (ii) except as disclosed in estoppels
delivered to Lender prior to the Closing Date, Borrower has received no written
claim of a default (other than a technical, non-material default which would not
entitle a party to terminate or exercise any remedies with respect to an REA)
under such REA; (iii) all
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sums due and payable under such REA have been paid in full; (iv) no party
thereto has commenced any action or given or received any notice for the purpose
of terminating such REA; and (v) the Borrower's interest in such REA may be
encumbered by the Mortgage granted in connection with the Loan and is assignable
without the consent of any other party to the REA.
5.1.37 Tenant Estoppels. No modifications have been made to any of
the terms and conditions of any of the Leases that would cause any of the
statements made by each of the Tenants in the Tenant estoppel certificates
delivered to Lender prior to the date hereof to be false or misleading in any
material respect.
5.1.38 No Prior Assignment. There are no prior assignments of the
Leases or any portion of the Rents due and payable or to become due and payable
which are presently outstanding.
5.1.39 Special Purpose Entity/Separateness
(a) Until the Debt has been paid in full, Borrower hereby
represents, warrants and covenants that Borrower is, shall be and shall continue
to be a Special Purpose Entity.
(b) The representations, warranties and covenants set forth in
Section 5.1.39(a) shall survive for so long as any portion of the Debt remains
payable to Lender under this Agreement, the Note or any other Loan Document.
(c) All of the assumptions made in the Insolvency Opinion,
including, but not limited to, any exhibits attached thereto, are true and
correct in all respects and any assumptions made in any subsequent
non-consolidation opinion delivered in connection with the Loan Documents or a
Transfer of any Collateral Property (an "Additional Insolvency Opinion"),
including, but not limited to, any exhibits attached thereto, will have been and
shall at all times be true and correct in all respects. Borrower has complied
and will comply with all of the assumptions made with respect to it in the
Insolvency Opinion. Borrower will have complied and will comply with all of the
assumptions made with respect to it in any Additional Insolvency Opinion. Each
entity other than Borrower with respect to which an assumption shall be made in
any Additional Insolvency Opinion will have complied and will comply with all of
the assumptions made with respect to it in any Additional Insolvency Opinion.
5.1.40 Illegal Activity. No portion of the Collateral Property has
been or will be purchased with proceeds of any illegal activity.
5.2 Survival of Representations and Covenants. All of the representations
and warranties in Section 5.1 and elsewhere in the Loan Documents (i) shall
survive for so long as any portion of the Debt remains owing to Lender and (ii)
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf. The
representations, warranties and covenants set forth in Section 5.1.39 and 6.10
shall not be subject to the exculpation provisions of Section 11.1.
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VI AFFIRMATIVE COVENANTS
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Lien of the Mortgage encumbering the Collateral Property (and all related
Obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:
6.1 Existence. Borrower shall (i) do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently
conducted by it, (iii) obtain and maintain all Licenses applicable to it or the
Collateral Property, and (iv) qualify to do business and remain in good standing
under the laws of each jurisdiction, in each case as and to the extent required
for the ownership, maintenance, management and operation of the Collateral
Property.
6.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other
Charges applicable to Borrower and the Collateral Property as the same become
due and payable, and deliver to Lender receipts for payment or other evidence
satisfactory to Lender that such Taxes and Other Charges have been so paid no
later than thirty (30) days before they would be delinquent if not paid
(provided, however, that Borrower need not furnish such receipts for payment of
Taxes paid by Lender pursuant to Section 4.3). Borrower shall not suffer and
shall promptly cause to be paid and discharged any Lien against the Collateral
Property other than Permitted Encumbrances, and shall promptly pay for all
utility services provided to the Collateral Property. After prior notice to
Lender, Borrower, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application of any Taxes or Other Charges,
provided that (i) no Event of Default has occurred and remains uncured, (ii)
such proceeding shall suspend the collection of such Taxes or Other Charges or
the Taxes shall have been paid, (iii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of any other instrument to
which Borrower is subject and shall not constitute a default thereunder, (iv) no
part of or interest in the Collateral Property will be in danger of being sold,
forfeited, terminated, canceled or lost, (v) Borrower shall have furnished such
security as may be required in the proceeding, or as may be requested by Lender,
to insure the payment of any such Taxes or Other Charges, together with all
interest and penalties thereon, which shall not be less than 125% of the unpaid
Taxes and Other Charges being contested (and in the case of any Taxes being
contested, any sums in the Tax and Insurance Escrow fund dedicated to payment of
such contested Taxes shall count toward such 125%), and (vi) Borrower shall
promptly upon final determination thereof pay the amount of such Taxes or Other
Charges, together with all costs, interest and penalties. Lender may pay over
any such security or part thereof held by Lender to the claimant entitled
thereto at any time when, in the judgment of Lender, the entitlement of such
claimant is established.
6.3 Repairs; Maintenance and Compliance; Alterations; Required Repairs.
6.3.1 Repairs and Maintenance. Borrower shall at all times maintain,
preserve and protect all franchises and trade names, and Borrower shall cause
the Collateral Property to be maintained in a good and safe condition and repair
and shall not, without Lender's prior written consent, remove or demolish the
Improvements or Equipment (except for removal of Equipment
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being replaced with Equipment of the same or greater value and utility, and
demolition necessary to perform alterations permitted under Section 6.3.3).
6.3.2 Legal Compliance. Borrower shall promptly comply in all
material respects with all Legal Requirements applicable to itself or the
Collateral Property and cure properly any violation of a Legal Requirement
within thirty (30) days after Borrower receives notice of such violation.
Borrower shall promptly repair, replace or rebuild any part of the Collateral
Property that becomes damaged, worn or dilapidated and shall complete and pay
for any Improvements constituting part of the Collateral Property at any time in
the process of construction or repair. Notwithstanding the foregoing, Borrower
may defer compliance with a Legal Requirement pending Borrower's contest
thereof; provided that (1) Borrower is permitted by the applicable Legal
Requirement to delay compliance therewith pending such proceedings, (2) neither
the Collateral Property nor any part thereof or interest therein will be sold,
forfeited or lost if Borrower fails to promptly comply with the Legal
Requirement being contested, and if Borrower fails to prevail in contest,
Borrower would thereafter have the opportunity to comply with such Legal
Requirement, (3) Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which Borrower has not furnished
additional security as provided in clause (4) below, or to any risk of criminal
liability, and neither the Collateral Property nor any interest therein would be
subject to the imposition of any Lien for which Borrower has not furnished
additional security as provided in clause (4) below, as a result of the failure
to comply with such Legal Requirement and (4) if requested by Lender at any
time, Borrower shall have furnished to Lender additional security in respect of
the Legal Requirement being contested and the loss or damage that may result
from Borrower's failure to prevail in such contest in such amount as may be
reasonably requested by Lender but in no event less than one hundred twenty-five
percent (125%) of the cost of complying such Legal Requirement and any loss or
damage that may result from Borrower's failure to prevail in such contest.
6.3.3 Alterations. Borrower may, without Lender's consent, perform
alterations to the Improvements and Equipment at the Collateral Property which
do not constitute a Material Alteration and which do not adversely affect
Borrower's financial condition or the value or net operating income of the
Collateral Property. Borrower shall not perform any Material Alteration the cost
of which is reasonably estimated to exceed $2,000,000.00 per calendar year for
the Collateral Property or which is likely to result in a decrease of Net
Operating Income of the Collateral Property by 2.5% or more for a period of
thirty (30) days or longer, without Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed. Lender may, as a
condition to giving its consent to a Material Alteration, require that the
Borrower deliver to Lender as security for payment of the cost of such Material
Alteration and as additional security for Borrower's payment of the Debt any of
the following: (1) cash, (2) U.S. Treasury securities, (3) other securities
having a rating acceptable to Lender, (4) a Rating Comfort Letter, or (5) an
irrevocable Letter of Credit (payable on sight draft only) issued by an Eligible
Institution. Such security shall be in an amount equal to the cost of the
Material Alteration as reasonably estimated by Lender. Upon the occurrence of an
Event of Default, Lender may apply such security to payment of the Debt. If the
security posted is other than cash, upon substantial completion of the Material
Alteration and submission to Lender of evidence satisfactory to Lender that (i)
the Material Alteration was constructed in accordance with applicable Legal
Requirements and substantially in accordance with plans and specifications
approved by Lender (which approval shall not be unreasonably withheld or
delayed), (ii) all
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contractors, subcontractors, materialmen and professionals who provided work,
materials or services in connection with the Material Alteration have been paid
in full and have delivered unconditional releases of lien and (iii) all material
Licenses necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued, Lender shall, provided no Event of Default
then exists, return the security (or the unapplied portion thereof) to the
Borrower. At the Borrower's request, Lender shall, provided no Event of Default
then exists, return one-half of the security to Borrower when Lender has
determined, in its sole discretion, that seventy-five percent (75%) of the
Material Alteration has been completed and paid for and that the remaining
security is sufficient to ensure payment in full for all work, services and
materials necessary to complete the Material Alteration as contemplated in
clauses (i), (ii) and (iii) of the preceding sentence. If the security posted is
cash, Lender shall disburse such cash in accordance with the same procedures as
are applicable to disbursement of Proceeds or an Award under Section 8.4.3. The
Borrower shall reimburse Lender upon demand for all out-of-pocket costs and
expenses (including the reasonable fees of all professionals) incurred by Lender
in reviewing plans and specifications or in making any determinations necessary
to implement the provisions of this Section 6.3.3.
6.3.4 Required Repairs. All required repairs shall be done in a good
and workmanlike manner, shall be completed free of liens, shall comply in all
material respects with all applicable Legal Requirements and shall otherwise be
reasonably approved by the Lender.
6.4 Litigation. Borrower shall give prompt written notice to Lender of any
litigation, governmental proceedings or claims or investigations regarding an
alleged actual violation of a Legal Requirement pending or threatened against
Borrower which would, if adversely determined, materially adversely affect
Borrower's condition (financial or otherwise) or business or the Collateral
Property.
6.5 Performance of Other Agreements. Borrower shall observe and perform in
all material respects each and every term to be observed or performed by it
pursuant to the terms of any agreement or instrument affecting or pertaining to
the Collateral Property.
6.6 Notices. Borrower shall promptly advise Lender of any material adverse
change in Borrower's condition, financial or otherwise, or of the occurrence of
any Default or Event of Default of which Borrower has knowledge. Borrower shall
cause to be delivered to Lender any Securities and Exchange Commission or other
public filings, if any, of Borrower, its Borrower Representative, Manager, or
any Affiliate of any of the foregoing within ten (10) Business Days of such
filing.
6.7 Cooperate in Legal Proceedings. Borrower shall cooperate fully with
Lender with respect to, and permit Lender, at its option, to participate in, any
proceedings before any Governmental Authority which may in any way affect the
rights of Lender under any Loan Document.
6.8 Further Assurances. Each Borrower shall, at Borrower's sole cost and
expense, (i) furnish to Lender all then existing instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and agreements,
reasonably requested by Lender; (ii) execute and deliver to Lender such
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documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the Debt, as Lender may
reasonably require from time to time; (iii) do and execute all and such further
lawful and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of the Loan Documents, as
Lender shall reasonably require from time to time and (iv) upon Lender's request
therefor given from time to time after the occurrence of any Default or Event of
Default pay for (a) reports of UCC, federal tax lien, state tax lien judgment
and pending litigation searches with respect to Borrower and (b) searches of
title to the Collateral Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations reasonably
designated by Lender.
6.9 Financial Reporting.
6.9.1 Bookkeeping. Borrower shall keep on a Fiscal Year basis, in
accordance with GAAP, proper and accurate books, records and accounts reflecting
all of the financial affairs of Borrower and all items of income and expense and
any services, Equipment or furnishings provided in connection with the operation
of the Collateral Property, whether such income or expense is realized by
Borrower, Manager or any Affiliate of Borrower or Manager. Lender shall have the
right from time to time during normal business hours upon reasonable notice to
examine such books, records and accounts at the office of Borrower or other
Person maintaining them, and to make such copies or extracts thereof as Lender
shall desire. After an Event of Default, Borrower shall pay any costs incurred
by Lender to examine such books, records and accounts, as Lender shall determine
to be necessary or appropriate in the protection of Lender's interest.
6.9.2 Annual Reports. Borrower shall furnish to Lender annually, (i)
within forty (40) days after each Fiscal Year, unaudited financial statements of
Borrower, and (ii) within one-hundred twenty (120) days after each Fiscal Year,
a complete copy of Borrower's annual financial statements audited by a "Big
Five" accounting firm or another independent certified public accountant
(accompanied by an unqualified opinion from such accounting firm or other
independent certified public accountant) reasonably acceptable to Lender, each
in accordance with GAAP and containing balance sheets and statements of profit
and loss for Borrower and the Collateral Property in such detail as Lender may
request. Each such statement (x) shall set forth the financial condition and the
income and expenses for the Collateral Property for the immediately preceding
calendar year, including statements of annual Net Operating Income, and (y)
shall be accompanied by an Officer's Certificate certifying (1) that such
statement presents fairly the financial condition of the Collateral Property and
has been prepared in accordance with GAAP, (2) whether there exists a Default or
Event of Default, and if so, the nature thereof, the period of time it has
existed and the action then being taken to remedy it, (3) a list of Tenants, if
any, occupying more than twenty percent (20%) of the rentable space of the
Collateral Property, and (4) a breakdown showing (a) the year in which each
Lease then in effect expires, (b) the percentage of rentable space covered by
such Lease, (c) the percentage of base rent with respect to which Leases shall
expire in each such year, expressed both on a per year and a cumulative basis.
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6.9.3 Monthly and Quarterly Reports. Borrower shall furnish to
Lender (x) within thirty (30) days after the end of each calendar month the
following items: (i) monthly and year-to-date operating statements, noting Net
Operating Income and other information necessary and sufficient under GAAP to
fairly represent the financial position and results of the operation of the
Collateral Property during such calendar month, all in form reasonably
satisfactory to Lender; (ii) a statement that Borrower has not incurred any
indebtedness other than indebtedness permitted hereunder; and (iii) 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, material
special provisions, concessions or inducements granted to Tenants, and a
year-by-year schedule showing by percentage the rentable area of the
Improvements and the total base rent attributable to Leases expiring each year)
and a delinquency report for the Collateral Property; and (y) within forty (40)
days after the end of each calendar quarter the following items: (i) a balance
sheet for such calendar month; (ii) a comparison of the budgeted income and
expenses and the actual income and expenses for each month and year-to-date for
the Collateral Property, together with a detailed explanation of any variances
of ten percent (10%) or more between budgeted and actual amounts for such period
and year-to-date; (iii) a statement of the actual Replacement Expenses made by
Borrower during each calendar quarter as of the last day of such calendar
quarter; and (iv) an aged receivables report. Each such statement shall be
accompanied by an Officer's Certificate certifying (1) that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Collateral Property in accordance
with GAAP (subject to normal year-end adjustments) and (2) whether there exists
a Default or Event of Default, and if so, the nature thereof, the period of time
it has existed and the action then being taken to remedy it.
6.9.4 Other Reports. Borrower shall furnish to Lender, within ten
(10) Business Days after request, such further detailed information with respect
to the operation of the Collateral Property and the financial affairs of
Borrower or Manager as may be reasonably requested by Lender or any Applicable
Rating Agency, all such information to conform to any related requirements of
the Securities and Exchange Commission.
6.9.5 Annual Budget. Upon the occurrence of a Cash Management Event
or the Anticipated Repayment Date, Borrower shall prepare and submit (or shall
cause its Manager to prepare and submit) to Lender within thirty (30) days after
a Cash Management Event and by November 15 of each year during the Term until
the occurrence of a Cash Management Termination, for approval by Lender, which
approval shall not be unreasonably withheld or delayed, a proposed pro forma
budget for the Collateral Property for the succeeding Fiscal Year (an "Annual
Budget"), and, promptly after preparation thereof, any revisions to such Annual
Budget. Lender's failure to approve or disapprove any Annual Budget or revision
within thirty (30) days after Lender's receipt thereof shall be deemed to
constitute Lender's approval thereof. The Annual Budget shall consist of (i) an
operating expense budget (the "Operating Budget") showing, on a month-by-month
basis, in reasonable detail, each line item of Borrower's anticipated Operating
Income and Operating Expenses (on a cash and accrual basis), including amounts
required to establish, maintain and/or increase the Funds, and (ii) a
Replacement Expense budget (the "Replacement Budget") showing, on a
month-by-month basis, in reasonable detail, each line item of anticipated
Replacement Expenses.
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6.9.6 Delivery of Financial Information. After notice to Borrower of
a Secondary Market Transaction, Borrower shall, concurrently with any delivery
to Lender, deliver copies of all financial information provided in this Article
VI to the Applicable Rating Agencies, the Servicer, any trustee or any other
party reasonably requested by Lender.
6.10 Environmental Matters.
6.10.1 Hazardous Substances. So long as Borrower owns or is in
possession of the Collateral Property, Borrower (i) shall keep the Collateral
Property free from Hazardous Substances (other than Routine Hazardous
Substances) and in compliance with all Environmental Laws, (ii) shall promptly
notify Lender if Borrower shall become aware that (A) any Hazardous Substance
(other than Routine Hazardous Substances) is on or immediately adjacent to the
Collateral Property, (B) the Collateral Property is in direct or indirect
violation of any Environmental Laws or (C) any condition on or near the
Collateral Property shall pose a threat to the health, safety or welfare of
humans, (iii) shall remove such Hazardous Substances and/or cure such violations
and/or remove such threats, as applicable, as required by law, promptly after
Borrower becomes aware of same and is required to do so by a Governmental
Authority, at Borrower's sole expense and (iv) shall take all actions described
in the environmental report delivered to Lender in connection with the Loan as
being necessary to comply with all applicable laws. Nothing herein shall prevent
Borrower from recovering such expenses from any other party that may be liable
for such removal or cure.
6.10.2 Environmental Monitoring. (a) Borrower shall give prompt
written notice to Lender of (i) any proceeding or inquiry by any party
(including any Governmental Authority) with respect to the presence of any
Hazardous Substance on, under, from or about its Collateral Property, (ii) all
claims made or threatened in writing by any third party (including any
Governmental Authority) against Borrower or the Collateral Property or any party
occupying the Collateral Property relating to any loss or injury resulting from
any Hazardous Substance, and (iii) Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Collateral
Property that could cause the Collateral Property to be subject to any
investigation or cleanup pursuant to any Environmental Law. Borrower shall
permit Lender to join and participate in, as a party if it so elects, any legal
proceedings or other actions initiated with respect to the Collateral Property
in connection with any Environmental Law or Hazardous Substance, and Borrower
shall pay all reasonable attorneys' fees and disbursements incurred by Lender in
connection therewith.
(b) Upon Lender's request, at any time and from time to time,
Borrower shall provide an inspection or audit of the Collateral Property
prepared by a licensed hydrogeologist, licensed environmental engineer or
qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near the Collateral
Property. The cost and expense of such audit or inspection shall be paid by
Borrower with respect to the Collateral Property if Lender, in its good faith
judgment, determines that reasonable cause exists for the performance of an
environmental inspection or audit of the Collateral Property, in which case such
inspections or audits shall be at the Borrower's sole expense. If Borrower fails
to order any such inspection or audit within thirty (30) days after such
request, Lender may order same, and Borrower hereby grants to Lender and its
employees and agents access to the Collateral Property and a license to
undertake such inspection or audit. The cost of such
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inspection or audit shall, to the extent required to be paid by Borrower
pursuant to this paragraph, be paid by Borrower upon demand and if not paid,
shall be added to the Debt and shall bear interest thereafter at the Default
Rate until paid.
(c) If any environmental site assessment report prepared in
connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for any Hazardous Substance, whether such
Hazardous Substance existed prior to the ownership by Borrower of the Collateral
Property, or presently exists or is reasonably suspected of existing, the
Borrower shall cause such operations and maintenance plan to be prepared and
implemented at its expense upon request of Lender. If a licensed hydrogeologist,
licensed environmental engineer or other qualified environmental consulting firm
engaged by Lender ("Lender's Consultant") determines that any investigation,
site monitoring, containment, cleanup, removal, restoration or other work of any
kind is required to cure a violation of an applicable Environmental Law or to
comply with an order or directive of any court or governmental agency ("Remedial
Work"), the Borrower shall commence and thereafter diligently prosecute to
completion all such Remedial Work within thirty (30) days after written demand
by Lender for performance thereof (or such shorter period of time as may be
required under applicable law). All Remedial Work shall be performed by
contractors reasonably approved in advance by Lender, and under the supervision
of a consulting engineer reasonably approved by Lender. All costs of such
Remedial Work shall be paid by the Borrower, including Lender's reasonable
attorneys' fees and disbursements incurred in connection with the monitoring or
review of such Remedial Work. If the Borrower does not timely commence and
diligently prosecute to completion the Remedial Work, Lender may (but shall not
be obligated to) cause such Remedial Work to be performed. All costs and
expenses (including reasonable attorneys' fees and disbursements) relating to or
incurred by Lender in connection with monitoring, reviewing or performing any
Remedial Work in accordance herewith shall be paid by the Borrower upon demand
from Lender and if not, shall be added to the Debt and shall bear interest
thereafter at the Default Rate until paid. Notwithstanding the foregoing,
Borrower shall not be required to commence such Remedial Work within the above
specified time period: (x) if prevented from doing so by any Governmental
Authority, (y) if commencing such Remedial Work within such time period would
result in Borrower or such Remedial Work violating any Environmental Law, or (z)
if Borrower, at its expense and after prior written notice to Lender, is
contesting by appropriate legal, administrative or other proceedings, conducted
in good faith and with due diligence, the need to perform Remedial Work.
Borrower shall have the right to contest the need to perform such Remedial Work;
provided that (1) Borrower is permitted by the applicable Environmental Laws to
delay performance of the Remedial Work pending such proceedings, (2) neither the
Collateral Property nor any part thereof or interest therein will be sold,
forfeited or lost if Borrower fails to promptly perform the Remedial Work being
contested, and if Borrower fails to prevail in contest, Borrower would
thereafter have the opportunity to perform such Remedial Work, (3) Lender would
not, by virtue of such permitted contest, be exposed to any risk of any civil
liability for which Borrower has not furnished additional security as provided
in clause (4) below, or to any risk of criminal liability, and neither the
Collateral Property nor any interest therein would be subject to the imposition
of any Lien for which Borrower has not furnished additional security as provided
in clause (4) below, as a result of the failure to perform such Remedial Work
and (4) if requested by Lender at any time, Borrower shall have furnished to
Lender additional security in respect of the Remedial Work being contested and
the loss or damage that may result from Borrower's failure to prevail in such
contest in such amount as may
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be reasonably requested by Lender but in no event less than one hundred
twenty-five percent (125%) of the cost of such Remedial Work and any loss or
damage that may result from Borrower's failure to prevail in such contest.
(d) Borrower shall not install or permit to be installed on the
Collateral Property any underground storage tank without Lender's prior written
consent; provided, however, that (i) Borrower may permit the Tenant under any
"anchor," "big box" or TBA (tires, batteries and accessories) Lease to install
an underground storage tank provided that (x) such Tenant has the right to do so
under its Lease and (y) such installation and the maintenance and repair of such
tank is performed in accordance with all applicable Legal Requirements and (ii)
Borrower may install an underground storage tank if it reasonably determines
that an above ground storage tank is not reasonably feasible, provided that
Borrower complies with all of the provisions of the preceding clause (y) in
connection with such underground storage tank.
(e) Intentionally Deleted.
6.10.3 Title to the Property. Borrower will warrant and defend (a)
the title to the Collateral Property and every part thereof, subject only to
Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Mortgage and the Assignment of Leases
on the Collateral Property, subject only to Liens permitted hereunder (including
Permitted Encumbrances), in each case against the claims of all Persons
whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in the Collateral Property, other than as permitted
hereunder, is claimed by another Person.
6.10.4 Easements; Dedications. Without the consent of Lender,
Borrower shall have the right from time to time to release property, grant
easements, or dedicate property in connection with lot line adjustments, utility
or road requirements or other similar items, provided that any such release,
easement or dedication will not have a material adverse effect on the value, use
or operation of the Collateral Property and the Collateral Property will remain
in compliance with all Requirements of Law.
6.11 Leases.
6.11.1 Form of Lease. All Leases other than Material Leases shall be
written on the standard forms of lease which have been approved by Lender. In
negotiating Leases, changes may be made to the standard form of lease provided
that (i) such changes are commercially reasonable, and (ii) no changes may be
made to the following provisions in Borrowers' standard form of lease without
the prior written consent of Lender: provisions relating to subordination,
attornment, estoppels, mortgagee's right to notice and opportunity to cure
landlord's defaults, and mortgagee's rights with respect to lease amendments and
prepayment of rents. In addition, all renewals of Leases and all proposed leases
shall provide for rental rates comparable to existing local market rates and
shall be arms length transactions. All Leases entered into after the date hereof
shall provide for (x) subordination to the Mortgage and, at Lender's election,
attornment to Lender or any purchaser at a sale by foreclosure or power of sale,
and (y) the Lender's unilateral right to subordinate the Mortgage to the Leases.
No Lease entered into after the date hereof will contain any option to purchase,
any right of first refusal to
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purchase, any right to terminate (except in the event of the destruction of
substantially all of the Collateral Property), any non-disturbance or similar
agreement or any requirement that Borrower rebuild the Collateral Property
(except as provided in the forms of Lease that have been approved by Lender);
provided, however, that "small shop" leases entered into after the date hereof
and covering not more than fifteen percent (15%) of the gross leasable area of
the Collateral Property may contain so called "kick-out" clauses permitting
either landlord or the Tenant to terminate the Lease if the specified sales
revenue is not attained. Upon request, Borrower shall furnish Lender with
executed copies of all Leases affecting the Collateral Property then in effect.
6.11.2 New and Renewal Leases. All Leases executed after the date
hereof, and all amendments, modifications, terminations or surrenders of
existing Leases, shall (a) be undertaken in a manner consistent with the
standing leasing practices of Borrower and the Manager, (b) be the product of an
arms-length transaction, and (c) not result in a material adverse effect on the
Collateral Property taken as a whole. Upon the occurrence of a Cash Management
Event and during the continuance thereof, any Leases written thereafter for more
than 7,500 square feet, and any amendments, modifications, terminations or
surrenders of existing Leases for more than 7,500 square feet, shall be approved
by Lender, which approval shall not be unreasonably withheld, conditioned or
delayed.
6.11.3 Leasing Covenants. Borrower (i) shall observe and perform the
material obligations imposed upon the lessor under the Leases; (ii) shall
enforce in a commercially reasonable manner the terms, covenants and conditions
contained in the Leases upon the part of the lessee thereunder to be observed or
performed; (iii) shall not collect any of the rents more than one (1) month in
advance (other than security deposits) except as approved by Lender or as
provided in Leases in existence as of the date hereof; (iv) shall not execute
any other assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change the
terms of the Leases in a manner inconsistent within the provisions of the Loan
Documents; (vi) shall promptly send copies to Lender of all notices of default
Borrower shall give or receive with respect to any Lease demising 20,000 or more
square feet of gross leasable area; and (vii) shall execute and deliver at the
request of Lender all such further assurances, confirmations and assignments in
connection with the Leases as Lender shall from time to time reasonably require.
6.11.4 Non-disturbance Agreements. At Borrower's request, Lender
shall enter into a subordination, non-disturbance and attornment agreement as to
any Lease permitted under the Loan Documents. Such agreement shall be in the
form attached hereto as Exhibit B, with such changes thereto as may be
reasonably acceptable to Lender.
6.11.5 Reciprocal Easement Agreements. Borrower shall not enter
into, terminate or modify any REA without Lender's consent, which consent shall
not be unreasonably withheld or delayed. Lender shall subordinate the lien of
the Mortgage to any REA Amendment consented to by Lender.
6.11.6 Notice to Tenants. Promptly after the date hereof (but in no
event later than the date on which Borrower sends out bills for Rents due in
January, 1999), Borrower shall deliver a notice in the form of Exhibit A
attached hereto to each existing Tenant at the Collateral
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Property directing them to remit their rent checks directly to the Agent and
shall also deliver such a notice to each future tenant at the Collateral
Property.
6.12 Estoppel Statement. After request by Lender, Borrower shall within
ten (10) days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the date
installments of interest and/or Principal were last paid, (iv) any offsets or
defenses to the payment of the Debt, (v) that the Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification and (vi) such other information concerning the
Loan as Lender may request. After request by Lender (but no more frequently than
once in any twelve (12) month period), Borrower shall, within thirty (30) days,
request Tenant estoppel certificates from each Tenant at the Collateral Property
in form and substance reasonably satisfactory to Lender, and thereafter use
commercially reasonable efforts to obtain such estoppel certificates and deliver
them to Lender.
6.13 Property Management.
6.13.1 Management Agreement. Borrower shall (i) cause the Collateral
Property to be managed pursuant to the Management Agreement; (ii) promptly
perform and observe all of the covenants required to be performed and observed
by it under the Management Agreement and do all things necessary to preserve and
to keep unimpaired its material rights thereunder, (iii) promptly notify Lender
of any default under the Management Agreement of which it is aware; (iv)
promptly deliver to Lender a copy of any notice of default or other material
notice received by Borrower under the Management Agreement; and (v) promptly
enforce the performance and observance of all of the covenants required to be
performed and observed by Manager under the Management Agreement.
6.13.2 Termination of Manager. If a Cash Management Event shall
exist, Borrower shall, at the request of Lender, hire a property management firm
designated by Lender to thereafter serve as a property management consultant
(the "Management Consultant") for the Borrower and the Collateral Property.
Borrower's failure to retain such property management firm within thirty (30)
days after Lender designates such firm shall constitute an immediate Event of
Default. Borrower shall continue to retain its Management Consultant until a
Cash Management Termination occurs. The Management Consultant shall oversee and
approve and fully participate in all actions and decisions of the Manager,
including the incurring of any expenses, the retention of any broker, the
negotiation and execution of any leases or lease "term sheets", decisions as to
tenants and "tenant mix" and repairs, alterations and improvements. Borrower
shall cause its Manager to cooperate with the Management Consultant to enable
the Management Consultant to perform its responsibilities as described above and
in the agreement between Borrower and its Management Consultant. All fees
payable to the Management Consultant shall be an Approved Operating Expense.
6.13.3 Manager's Subordination. Borrower shall cause its Manager to
enter into a Manager Consent and Subordination of Management Agreement (the
"Manager Consent and Subordination Agreement") in the form of Exhibit C-1
hereto; provided, however, that if such Manager is wholly owned, directly or
indirectly by Westfield Holdings Limited, such
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Manager may enter into a Manager Consent and Subordination of Management
Agreement in the form of Exhibit C-2 hereto.
6.14 Special Purpose Entity. Borrower is and shall continue to be a
Special Purpose Entity.
6.15 Expenses. Borrower shall reimburse Lender upon receipt of notice for
all reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) incurred by Lender in connection with the Loan,
including (i) the preparation, negotiation, execution and delivery of the Loan
Documents and the consummation of the transactions contemplated thereby and all
the costs of furnishing all opinions by counsel for Borrower; (ii) all costs,
fees and expenses (including the fees of any Rating Agencies, trustee or
Servicer) incurred in connection with any release of the Collateral Property
(but excluding the fees payable to the Rating Agencies in connection with the
initial issuance of Securities) or any Transfer of the Collateral Property;
(iii) Borrower's and Lender's ongoing performance under and compliance with the
Loan Documents, including confirming compliance with environmental and insurance
requirements; (iv) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications of or
under any Loan Document and any other documents or matters requested by Lender,
(v) filing and recording of any Loan Documents; (vi) title insurance, surveys,
inspections and appraisals; (vii) the creation, perfection or protection of
Lender's Lien in the Collateral Property, the Cash Management Accounts and the
Funds (including fees and expenses for title and lien searches, intangibles
taxes, personal property taxes, mortgage recording taxes, due diligence
expenses, travel expenses, accounting firm fees, costs of appraisals,
environmental reports and Lender's Consultant, surveys and engineering reports);
(viii) enforcing or preserving any rights in response to third party claims or
the prosecuting or defending of any action or proceeding or other litigation, in
each case against under or affecting Borrower, the Loan Documents, the
Collateral Property, or any other security given for the Loan; and (ix)
enforcing any obligations of or collecting any payments due from Borrower under
any Loan Document or with respect to the Collateral Property or in connection
with any refinancing or restructuring of the Loan in the nature of a "work-out",
or any insolvency or bankruptcy proceedings. Any costs and expenses due and
payable to Lender hereunder which are not paid by Borrower within ten (10) days
after demand may be paid from any amounts in the Cash Management Accounts, with
notice thereof to Borrower. The obligations and liabilities of Borrower under
this Section 6.15 shall survive the Term and the exercise by Lender of any of
its rights or remedies under the Loan Documents, including the acquisition of
the Collateral Property by foreclosure or a conveyance in lieu of foreclosure.
6.16 Indemnity. Borrower shall indemnify and hold harmless Lender and each
of its Affiliates and their respective successors and assigns (including their
respective directors, officers, participants, employees, professionals and
agents and each other Person, if any, who Controls Lender, its Affiliates or any
of the foregoing) (each, an "Indemnified Party") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for an Indemnified
Party in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not Lender shall be designated a
party thereto), that may be imposed on, incurred by, or asserted
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against any Indemnified Party (collectively, the "Indemnified Liabilities") in
any manner, relating to or arising out of or by reason of the Loan, including:
(i) any breach by Borrower of its obligations under, or any misrepresentation by
Borrower contained in, any Loan Document; (ii) the use or intended use of the
proceeds of the Loan; (iii) any information provided by or on behalf of
Borrower, or contained in any documentation approved by Borrower; (iv) ownership
of the Mortgage, the Collateral Property or any interest therein, or receipt of
any Rents; (v) any accident, injury to or death of persons or loss of or damage
to property occurring in, on or about the Collateral Property or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (vi) any use, non-use or condition in, on or about the Collateral
Property or on adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (vii) performance of any labor or services or the
furnishing of any materials or other property in respect of the Collateral
Property; (viii) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release of any Hazardous Substance
on, from or affecting the Collateral Property; (ix) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Substance; (x) any lawsuit brought or threatened,
settlement reached, or government order relating to such Hazardous Substance;
(xi) any violation of the Environmental Laws which is based upon or in any way
related to such Hazardous Substance, including, without limitation, the costs
and expenses of any Remedial Work, attorney and consultant fees and
disbursements, investigation and laboratory fees, court costs, and litigation
expenses; (xii) any failure of the Collateral Property to comply with any Legal
Requirement; (xiii) any claim by brokers, finders or similar persons claiming to
be entitled to a commission in connection with any Lease or other transaction
involving the Collateral Property or any part thereof, or any liability asserted
against Lender with respect thereto; and (xiv) the claims of any lessee of any
portion of the Collateral Property or any person acting through or under any
lessee or otherwise arising under or as a consequence of any Lease; Borrower
shall not have any obligation to any Indemnified Party hereunder to the extent
that it is finally judicially determined that such Indemnified Liabilities arise
from the gross negligence, illegal acts, fraud or willful misconduct of such
Indemnified Party. If any Indemnified Party becomes involved in any action,
proceeding or investigation in connection with any transaction or matter
referred to or contemplated in this Agreement, Borrower shall periodically
reimburse any Indemnified Party upon demand therefor in an amount equal to its
reasonable legal and other expenses (including the costs of any investigation
and preparation) incurred in connection therewith. To the extent that the
undertaking to indemnify and hold harmless set forth in the preceding sentence
may be unenforceable because it violates any law or public policy, Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by any Indemnified Party. Any amounts payable to any
Indemnified Party by reason of the application of this paragraph shall become
immediately due and payable and shall bear interest at the Default Rate from the
date loss or damage is sustained by any Indemnified Party until paid. The
obligations and liabilities of Borrower under this Section 6.16 shall survive
the Term and the exercise by Lender of any of its rights or remedies under the
Loan Documents, including the acquisition of any Collateral Property by
foreclosure or a conveyance in lieu of foreclosure. As used in this Section
6.16, the term "Collateral Property" includes any property that was at any time
subject to the Lien of the Mortgage.
6.17 Third Party Reports. Within thirty (30) days after any request by
Lender, Borrower shall deliver to Lender and pay for (or reimburse Lender for
cost of) any reports of
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third parties (e.g., engineers or environmental consultants) requested by Lender
as to the Collateral Property the Net Operating Income for which has declined by
ten percent (10%) or more since the date hereof.
6.18 Year 2000 Compliance. Borrower acknowledges awareness of the
potential effect of the problem generally known as "Year 2000 computer-related
dysfunction" ("Year 2000"). Borrower represents that to the best of Borrower's
knowledge, all computers and computer-dependant systems of Borrower, are, or
will be, on or before December 20, 1999, able to function notwithstanding Year
2000. Borrower will promptly notify Lender in the event Borrower discovers or
determines that any of the above-referenced computers will not be Year 2000
compliant prior to December 20, 1999. Borrower hereby covenants and agrees that
it will promptly commence and diligently prosecute the remediation of any such
Year 2000 dysfunction.
6.19 Intentionally Deleted.
6.20 Performance by Borrower. Borrower shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document executed and delivered by, or applicable to, Borrower, and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower without the prior written consent of Lender.
6.21 Secondary Market Transaction Master Estoppel. (A) Prior to the
contemplated Secondary Market Transaction, Borrower and WALP shall provide to
Lender a master estoppel letter ("Master Estoppel") in form and substance
satisfactory to Lender stating, without limitation, that as of the date of the
Master Estoppel, the information contained in each of the Tenant estoppel
letters delivered to Lender on or prior to the date of the closing of the Loan
("Closing Estoppels") is true and accurate in all material respects, and to the
extent any information in the Closing Estoppels is not accurate as of the date
of the Master Estoppel, then such Master Estoppel shall include a schedule of
exceptions to the accuracy of the Closing Estoppels, and (B) Borrower covenants
that commencing immediately, Borrower shall use commercially reasonable efforts
to provide to Lender an executed tenant estoppel letter, which shall be in form
and substance satisfactory to Lender, from (a) each Anchor Tenant, (b) each
Tenant paying base rent in an amount equal to or exceeding five percent (5%) of
the Operating Income from the applicable Collateral Property occupied by such
Tenant and (c) disregarding the area leased by those Tenants described in
clauses (a) and (b), Tenants Lessees of not less than seventy-five percent (75%)
of the remaining gross leasable area of each Collateral Property. In the event
that Borrower and WALP are required to provide the Lender a Master Estoppel
pursuant to subsection (A) of this Section 6.21, WALP agrees to execute
simultaneously with the execution of the Master Estoppel a limited recourse
guaranty for the benefit of Lender guaranteeing that, in the event that any of
the information provided in the Master Estoppel is materially false or
misleading at the time the Master Estoppel is provided to Lender, WALP shall
indemnify and hold Lender harmless from any and all losses incurred by Lender in
connection with such misrepresentations made by WALP. To the extent tenant
estoppel letters are subsequently delivered to Lender in connection with a
Secondary Market Transaction as set forth
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in subsection (B) hereof, WALP and Borrower shall be released from the Master
Estoppel limited recourse guaranty.
6.22 Intentionally Deleted.
VII NEGATIVE COVENANTS
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Lien of the Mortgage encumbering the Collateral Property in accordance with the
terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:
7.1 Management Agreement. Without Lender's prior consent: (i) surrender,
terminate, cancel, extend or renew the Management Agreement (other than an
extension or renewal on the same terms as the expiring Management Agreement,
with only such modifications as do not require consent of Lender or any
Applicable Rating Agency hereunder) or otherwise replace the Manager or enter
into any other management agreement (except pursuant to Section 6.13.2); (ii)
reduce or consent to the reduction of the term of the Management Agreement;
(iii) increase or consent to the increase of the amount of any charges under the
Management Agreement; (iv) otherwise modify, change, supplement, alter or amend
in any material respect, or waive or release in any material respect any of its
rights and remedies under, the Management Agreement; or (v) suffer or permit the
occurrence and continuance of a default beyond any applicable cure period under
the Management Agreement (or any successor management agreement) if such default
permits the Manager to terminate the Management Agreement (or such successor
management agreement);
7.2 Liens. Without Lender's prior consent, create, incur, assume, permit
or suffer to exist any mechanic's, materialmen's or other Lien (other than an
inchoate mechanic's lien the amount of which is not yet due and payable) on any
portion of the Collateral Property or legal or beneficial ownership interest in
Borrower, except Permitted Encumbrances, unless such Lien is bonded or
discharged within thirty (30) days after Borrower first receives notice of such
Lien; provided, however, that the existence of liens resulting from mechanics or
materialmen hired by a Tenant shall not constitute a Default or Event of Default
hereunder so long as the Borrower is diligently taking all commercially
reasonable action to enforce the obligation of such Tenant to cause such lien to
be removed;
7.3 Dissolution. Dissolve, terminate, liquidate, merge with or consolidate
into another Person;
7.4 Change In Business or Operation of Property. Enter into any line of
business other than the ownership and operation of the Collateral Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business or otherwise cease to operate the Collateral
Property as a retail property or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to the
Collateral Property);
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7.5 Debt Cancellation. Cancel or otherwise forgive or release any claim or
debt owed to Borrower by any Person, except in the ordinary course of Borrower's
business in its reasonable judgment and in a manner consistent with the
operation of first class retail properties;
7.6 Assets. Purchase or own any property other than the Collateral
Property and other property intended to be subject to the lien of the Mortgage;
7.7 Transfers. Without the prior written consent of Lender which will not
be unreasonably withheld or delayed, neither Borrower nor any other Person
having an ownership or beneficial interest, direct or indirect, in Borrower or
the general partner or managing member of Borrower shall (a) directly or
indirectly sell, transfer, convey, mortgage, pledge, or assign the Collateral
Property, any part thereof or any interest therein (including any ownership
interest in Borrower or such general partner or managing member (a "Transfer"),
(b) further encumber, alienate, grant a Lien or grant any other interest in the
Collateral Property or any part thereof (including any ownership interest in
Borrower and such general partner or managing member), whether voluntarily or
involuntarily or (c) enter into any easement or other agreement granting rights
in or restricting the use or development of the Collateral Property which may
have a material adverse effect on the Collateral Property.
(a) Notwithstanding the foregoing prohibition on Transfers, the
Lender shall grant a consent to the Transfer by Borrower of its interest in the
Collateral Property and the assumption of the Loan by the transferee upon
reasonable satisfaction of the following conditions:
(i) No Default or Event of Default shall have occurred or be
continuing;
(ii) Borrower shall deliver to Lender any documents reasonably
required by Lender to evidence the assumption of this Agreement, the Note,
the Mortgages and the other Loan Documents by the proposed transferee,
subject to the provisions of Section 11.1 of this Agreement;
(iii) Borrower shall pay all of Lender's reasonable costs and
expenses incurred in connection with the Lender's consent and approval of
the Transfer in accordance with Section 6.15;
(iv) Borrower shall deliver to Lender a Rating Comfort Letter;
(v) Borrower shall deliver an non-consolidation opinion with
regard to the proposed transferee and its partners or members, as the case
may be, in form and substance reasonably satisfactory to Lender;
(vi) The proposed transferee must be a Special Purpose Entity
and comply with the representations and covenants contained in Sections
5.1.1 and 5.1.39 of this Agreement; and
(vii) Such other conditions as Lender shall determine in its
reasonable discretion to be in the interest of Lender, including, without
limitation, Lender's approval
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of the creditworthiness, reputation and qualifications of the proposed
transferee with respect to the Loan and the Collateral Property.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon the Transfer of the Collateral Property or any
part thereof without Lender's consent. This provision shall apply to any
Transfer of the Collateral Property regardless of whether voluntary or not, or
whether or not Lender has consented to any previous Transfer of the Collateral
Property.
(b) Provided no Default or Event of Default has occurred and is
continuing under this Agreement or the other Loan Documents, the prior written
consent of the Lender and the approval of the Applicable Rating Agencies shall
not be required for the following Transfers provided that any reasonable costs
and expenses incurred by the Lender in reviewing any such proposed Transfer
shall be paid by Borrower, regardless of whether such consent or approval is
given by Lender:
(i) Any Transfer of any interest in Borrower between and among
that Borrower's partners or members to Affiliates of Borrower and
Borrower's partners or members;
(ii) Any Transfer of interests in any of Borrower's partners
or members (between and among the partners and members);
(iii) Any Transfer by devise or descent or by operation of law
upon the death of a partner of Borrower; or
(iv) Any Transfers of limited partnership or membership
interests in Borrower up to an aggregate of fifty percent (50%) of such
interests; provided, however that
(A) Lender must receive at least sixty (60) days prior
written notice of any proposed Transfer pursuant
to this subsection;
(B) Westfield America Limited Partnership or an
approved general partner (collectively,
"Westfield") must retain at least fifty percent
(50%) ownership interest in the Borrower and
Westfield must, following any such Transfer,
retain control of the Borrower and the day to day
operations of the Collateral Property;
(C) Lender shall have received evidence satisfactory
to it that the Borrower and its partners or
members, as the case may be, following such
transfer, remain Special Purpose Entities in
accordance with the standards of the Applicable
Rating Agencies; and
(D) If requested by Lender, Lender shall have received
a non-consolidation opinion with regard to the
proposed transferee and
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its partners or members, as the case may be, in
form and substance satisfactory to Lender.
(c) Notwithstanding the foregoing restrictions on Transfers, nothing
contained in this Agreement or the other Loan Documents shall in any way
restrict or prohibit, nor shall any notice to Lender or consent of Lender be
required in connection with, (i) the transfer or issuance of any securities or
interests in Westfield America, Inc. ("WEA"), (ii) the merger or consolidation
of WEA (iii) the transfer or issuance of any securities or interests in
Westfield America Limited Partnership ("WALP") or (iv) the merger or
consolidation of WALP. With regard to the events set forth in subsections (iii)
and (iv) hereof, to the extent that such transfers, issuance of securities or
interests, merger or consolidation of WALP result in a change of ownership or
control in WALP, the Borrower must be owned and controlled by an entity that
provides the same expertise as WALP in conducting business of the nature
currently conducted by WALP. Prior to completing any action with respect to WALP
pursuant to subsections (iii) and (iv) hereof that will result in a change in
control of WALP, the Borrower must deliver to Lender a Rating Comfort Letter and
a non-consolidation opinion with regard to the proposed transferee and its
partners or members, as the case may be, in form and substance satisfactory to
Lender, provided that no Rating Comfort Letter or non-consolidation opinion
shall be required in connection with subsection (i) or (ii) hereof.
7.8 Debt. Create, incur or assume any indebtedness other than (i) the
Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses and Approved
Leasing Expenses and (iii) other trade debt incurred in the ordinary course of
business relating to the ownership and operation of the Collateral Property
which other trade debt does not exceed, at any time, a maximum aggregate amount
of $500,000.00, and such trade debt is paid within sixty (60) days of the date
incurred (other than amounts being disputed in good faith);
7.9 Assignment of Rights. Without Lender's prior consent, attempt to
assign Borrower's rights or interest under any Loan Document in contravention of
any Loan Document;
7.10 Principal Place of Business. Change its principal place of business
without first giving Lender thirty (30) days' prior written notice;
7.11 Corporate Organization. Make any change, amendment or modification to
the organizational documents of Borrower, or take any other action, if such
change, amendment, modification or action could result in (x) Borrower not being
a Special Purpose Bankruptcy Remote Entity or (y) the term of Borrower or
Borrower Representative being shortened; or
7.12 ERISA.
(a) Borrower shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an "employee
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benefit plan" as defined in Section 3(3) of ERISA, which is subject to Title I
of ERISA, or a "governmental plan" within the meaning of Section 3(3) of ERISA;
(B) Borrower is not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (C) one or more of
the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each
outstanding class of equity interests in Borrower are held by
"benefit plan investors" within the meaning of 29
C.F.R.ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29
C.F.R.ss.2510.3-101(c) or (e).
7.13 No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Collateral Property with (a) any other real
property constituting a tax lot separate from the Collateral Property, or (b)
any portion of the Collateral Property which may be deemed to constitute
personal property, or any other procedure whereby the Lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to the Collateral Property.
7.14 Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or any of the partners
of Borrower except in the ordinary course of business and on terms which are
fully disclosed to Lender in advance and are no less favorable to Borrower or
such Affiliate than would be obtained in a comparable arm's-length transaction
with an unrelated third party. Lender hereby acknowledges that it has reviewed
and approved the Master Development Framework Agreement by and between Westfield
America, Inc. (formerly known as CenterMark Properties, Inc.), a Missouri
corporation and Westfield Corporation, Inc., a Delaware corporation, dated as of
July 1, 1996 and amended on May 21, 1997 and the Management Agreement.
VIII INSURANCE.
8.1.1 Coverage. Borrower, at its sole cost, for the mutual benefit
of Borrower and Lender, shall obtain and maintain during the Term the following
policies of insurance with respect to the Collateral Property:
(a) Property insurance insuring against loss or damage by standard,
"all-risk" perils, which shall (i) be in an amount equal to the greatest of (A)
the then full replacement cost of the Collateral Property without deduction for
physical depreciation, (B) the unpaid Principal, and (C) such amount as is
necessary so that the insurer would not deem Borrower a co-insurer under such
policies, (ii) have deductibles or self insured retentions no greater than
$10,000 (or, in the case of earthquake insurance, five percent (5%) of the total
insured values at risk), (iii) be paid annually in advance and (iv) contain an
"agreed amounts" and a "Replacement Cost Endorsement" with a waiver of
depreciation.
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(b) Flood insurance if any part of the Collateral Property is
located in an area identified by the Federal Emergency Management Agency as an
area having special flood hazards in an amount to be determined by Lender.
(c) Commercial general public liability insurance, including broad
form property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate per location for any policy year;
together with at least $50,000,000 excess and/or umbrella liability insurance
for any and all claims, including all legal liability imposed upon Borrower and
all court costs and attorneys' fees incurred in connection with the ownership,
operation and maintenance of the Collateral Property.
(d) Rental loss and/or business interruption insurance in an amount
equal to the greater of (i) the estimated Rents for the next succeeding 18-month
period. The amount of such insurance shall be increased from time to time during
the Term as and when the estimated or actual Rents increase.
(e) Insurance against loss or damage from (i) leakage of sprinkler
systems and (ii) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and Equipment, pressure vessels or similar apparatus
now or hereafter installed in any of the Improvements (without exclusion for
explosions), in an amount at least equal to $2,000,000.
(f) Worker's compensation insurance with respect to any employees of
Borrower, as required by any Legal Requirement.
(g) During any period of repair or restoration, builder's "all-risk"
insurance in an amount equal to not less than the full insurable value of the
Collateral Property, against such risks (including fire and extended coverage
and collapse of the Improvements to agreed limits) as Lender may request, in
form and substance acceptable to Lender.
(h) Ordinance or Law Coverage to compensate for the diminished value
of the Collateral Property, the cost of demolition and the increased cost of
construction in an amount satisfactory to Lender.
(i) Such other insurance (including earthquake insurance and
windstorm insurance) as may from time to time be reasonably required by Lender
in order to protect its interests and as is otherwise commercially reasonable.
8.1.2 Policies.
(a) All policies of insurance (the "Policies") required pursuant to
Section 8.1.1 (other than earthquake coverage) shall (i) be issued by companies
approved by Lender and licensed to do business in the State, with a claims
paying ability rating of "AA" or better by S&P and a rating of A:VII or better
in the current Best's Insurance Reports ("Approved Insurer"); (ii) name Lender
and its successors and/or assigns as their interest may appear as the mortgagee
(in the case of property insurance) or an additional insured (in the case of
liability insurance); (iii) contain (in the case of property insurance) a
Non-Contributory Standard Lender Clause and a Lender's Loss Payable Endorsement,
or their equivalents, naming
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Lender as the person to which all payments made by such insurance company shall
be paid; (iv) contain a waiver of subrogation against Lender, (v) be delivered
to Lender (provided that copies may be delivered in lieu of originals) together
with an insurance certificate; (vi) contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest, including
endorsements providing that neither the Borrower, Lender nor any other party
shall be a co-insurer under the Policies and that Lender shall receive at least
30 days' prior written notice of any modification, reduction or cancellation of
any of the Policies; and (vii) be satisfactory in form and substance to Lender
and approved by Lender as to amounts, form, risk coverage, deductibles, loss
payees and insureds. Each Borrower shall pay the premiums for the Policies
required to be maintained by it hereunder (the "Insurance Premiums") as the same
become due and payable and furnish to Lender evidence of the renewal of each of
the Policies together with (unless such Insurance Premiums have been paid by
Lender pursuant to Section 4.3) receipts for or-other evidence of the payment of
the Insurance Premiums reasonably satisfactory to Lender. If Borrower does not
furnish such evidence and receipts at least thirty (30) days prior to the
expiration of any expiring Policy, then Lender may, but shall not be obligated
to, procure such insurance and pay the Insurance Premiums therefor, and Borrower
shall reimburse Lender for the cost of such Insurance Premiums promptly on
demand, with interest accruing at the Default Rate. Borrower shall deliver to
Lender a copy of each Policy (and an insurance certificate pertaining thereto)
required to be maintained by it hereunder within ninety (90) days after its
effective date. Within ninety (90) days after request by Lender, Borrower shall
obtain such increases in the amounts of coverage required hereunder as may be
reasonably requested by Lender, taking into consideration changes in the value
of money over time, changes in liability laws, changes in prudent customs and
practices, and such coverage as is commercially available.
8.2 Casualty.
8.2.1 Notice; Restoration. If the Collateral Property is damaged or
destroyed, in whole or in part, by fire or other casualty (a "Casualty"),
Borrower shall give prompt notice thereof to Lender. Following the occurrence of
a Casualty, Borrower, regardless of whether insurance proceeds are available,
shall promptly proceed to restore, repair, replace or rebuild the Collateral
Property in accordance with Legal Requirements to be of at least equal value and
of substantially the same character as prior to such damage or destruction.
8.2.2 Settlement of Proceeds. In the event of a Casualty covered by
any of the Policies (an "Insured Casualty") where the loss does not exceed
$1,000,000, the Borrower may settle and adjust any claim without the consent of
Lender; provided such adjustment is carried out in a competent and timely
manner; and Borrower is hereby authorized to collect and receipt for the
insurance proceeds (the "Proceeds"). In the event of an Insured Casualty where
the loss equals or exceeds $1,000,000, Lender may settle and adjust any claim
without the consent of Borrower and agree with the insurer(s) on the amount to
be paid on the loss, and the Proceeds shall be due and payable solely to Lender
and held by Lender in the Casualty/Condemnation Fund and disbursed in accordance
herewith. The expenses incurred by Lender in the adjustment and collection of
the Proceeds shall become part of the Debt and shall be reimbursed by the
Borrower to Lender upon demand.
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8.3 Condemnation.
8.3.1 Notice; Restoration. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding affecting the Collateral Property (a "Condemnation") and shall
deliver to Lender copies of any and all papers served in connection with such
Condemnation. Following the occurrence of a Condemnation, the Borrower,
regardless of whether an Award is available, shall promptly proceed to restore,
repair, replace or rebuild the Collateral Property in accordance with all Legal
Requirements to the extent practicable to be of at least equal value and of
substantially the same character as prior to such Condemnation.
8.3.2 Collection of Award. Lender is hereby irrevocably appointed as
Borrower's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment in respect of a Condemnation in
excess of $1,000,000.00 (an "Award") and to make any compromise or settlement in
connection with such Condemnation. Notwithstanding any Condemnation (or any
transfer made in lieu of or in anticipation of such Condemnation), Borrower
shall continue to pay the Debt at the time and in the manner provided for in the
Loan Documents, and the Debt shall not be reduced unless and until any Award
shall have been actually received and applied by Lender to expenses of
collecting the Award and to discharge of the Debt. Lender shall not be limited
to the interest paid on the Award by the condemning authority but shall be
entitled to receive out of the Award interest at the Applicable Interest Rate.
If the Collateral Property is sold, through foreclosure or otherwise, prior to
the receipt by Lender of such Award, Lender shall have the right, whether or not
a deficiency judgment on the Note shall be recoverable or shall have been
sought, recovered or denied, to receive all or a portion of the Award sufficient
to pay the Debt. Borrower shall cause any Award that is payable to Borrower to
be paid directly to Lender. Lender shall hold such Award in the
Casualty/Condemnation Fund and disburse such Award in accordance with the terms
hereof.
8.4 Application of Proceeds or Award.
8.4.1 Application to Restoration. In the event of an Insured
Casualty or Condemnation with respect to the Collateral Property where (i) the
loss is in an aggregate amount less than 25% of the Principal amount of the
Loan, (ii) in the reasonable judgment of Lender, the Collateral Property can be
restored within six (6) months, and prior to the Anticipated Repayment Date and
the expiration of the business interruption insurance with respect thereto, to
an economic unit not less valuable and not less useful than the same was prior
to the Insured Casualty or Condemnation, and after such restoration will
adequately secure the unpaid Principal, and (iii) no Event of Default shall have
occurred and be then continuing, then the Proceeds or the Award, as the case may
be (after reimbursement of any expenses incurred by Lender), shall be applied to
reimburse the Borrower for the cost of restoring, repairing, replacing or
rebuilding the Collateral Property (the "Restoration"), in the manner set forth
herein. The Borrower shall commence and diligently prosecute such Restoration;
provided that (x) Borrower shall pay (and if required by Lender, Borrower shall
deposit with Lender in advance) all costs of such Restoration in excess of the
net amount of the Proceeds or the Award made available pursuant to the terms
hereof; and (y) Lender shall have received evidence reasonably satisfactory to
it that during the period of the Restoration, the Rents (including all Proceeds
from business
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interruption insurance required pursuant to Section 8.1.1) from the Collateral
Property will be sufficient to satisfy all of Borrower's Obligations.
8.4.2 Application to Debt. Except as provided in Section 8.4.1, the
Proceeds and any Award in excess of $1,000,000.00 may, at the option of Lender
in its sole discretion, be applied to the payment of the Debt as set forth in
Section 3.2.2, or applied to reimburse Borrower for the cost of any Restoration,
in the manner set forth in Section 8.4.3. Any such application to the prepayment
of the Loan shall be without any prepayment consideration or penalty, unless the
Debt or any portion thereof is accelerated prior to, or within one year after,
the date the Proceeds are received from the insurance company or the Award is
received from the condemning authority, as the case may be, in which event the
Borrower shall pay to Lender an additional amount equal to the Yield Maintenance
Premium, if any, that may be required with respect to the amount of the Proceeds
or Award applied to the Debt.
8.4.3 Procedure for Application to Restoration. If Borrower is
entitled to reimbursement out of the Proceeds or an Award held by Lender, such
Proceeds or Award shall be disbursed from time to time from the
Casualty/Condemnation Fund upon Lender being furnished with (i) evidence
satisfactory to it of the estimated cost of completion of the Restoration, (ii)
funds or, at Lender's option, assurances satisfactory to Lender that such funds
are available sufficient, in addition to the Proceeds or Award, to complete the
proposed Restoration, (iii) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as Lender may
reasonably require and approve, and (iv) all plans and specifications for such
Restoration, such plans and specifications to be approved by Lender prior to
commencement of any work. No payment made prior to the final completion of the
Restoration shall exceed ninety percent (90%) of the value of the work performed
from time to time; funds other than the Proceeds or Award shall be disbursed
prior to disbursement of such Proceeds or Award; and at all times, the
undisbursed balance of such Proceeds or Award remaining in the hands of Lender,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of the Borrower for that purpose, shall
be at least sufficient in the reasonable judgment of Lender to pay for the cost
of completion of the Restoration, free and clear of all Liens or claims for
Lien. Any surplus that remains out of the Proceeds held by Lender after payment
of such costs of Restoration shall be paid to the Borrower. Any surplus that
remains out of the Award received by Lender after payment of such costs of
Restoration shall, in the sole and absolute discretion of Lender, be retained by
Lender and applied to payment of the Debt or returned to the Borrower.
8.4.4 Anchor Lease; REA. If Lender shall have the right or option
hereunder to apply Proceeds or an Award to payment of the Debt, but under any
controlling provision in any "anchor" Lease or REA such Proceeds or Awards are
required to be applied to Restoration of the Collateral Property, then,
notwithstanding anything to the contrary in this Article 8, such Proceeds or
Award shall be applied to Restoration in accordance with such "anchor" Lease or
REA, subject to such conditions and procedures as Lender may impose which are
not inconsistent with the terms of such "anchor" Lease or REA.
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IX DEFAULTS
9.1 Events of Default. An "Event of Default" shall exist with respect to
the Loan upon the occurrence of any of the following events:
(a) any portion of the Debt is not paid when due;
(b) Borrower shall fail to pay when due any deposit into any Fund;
(c) any of the Taxes applicable to the Collateral Property are not
paid when due (other than Taxes for which funds have been deposited with Lender
pursuant to Section 4.3), subject to Borrower's right to contest Taxes in
accordance with Section 6.2;
(d) the Policies with respect to the Collateral Property are not
delivered to Lender within ninety (90) days after their respective applicable
effective dates or within ten days after written demand from Lender, whichever
is later, or such Policies are not kept in full force and effect;
(e) a Transfer other than a Transfer permitted pursuant to Section
7.7 occurs with respect to the Collateral Property, any interest in Borrower or
an interest in Borrower Representative of Borrower;
(f) any representation or warranty made by Borrower or in any Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by Borrower in connection with any
Loan Document, shall be false or misleading in any material respect as of the
date the representation or warranty was made;
(g) Borrower or Borrower's Borrower Representative shall make an
assignment for the benefit of creditors, or shall generally not be paying its
debts as they become due;
(h) a receiver, liquidator or trustee shall be appointed for
Borrower or such Borrower's Borrower Representative, or Borrower or Borrower's
Borrower Representative shall be adjudicated a bankrupt or insolvent; or any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower or Borrower's Borrower
Representative, as the case may be; or any proceeding for the dissolution or
liquidation of Borrower or Borrower's Borrower Representative shall be
instituted; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower or Borrower's
Borrower Representative, as the case may be, only upon the same not being
discharged, stayed or dismissed within sixty (60) days;
(i) Borrower breaches any negative covenant contained in Sections
7.3, 7.4, 7.6, 7.7, 7.8, 7.10 or 7.11 or any affirmative covenant contained in
Section 6.14;
(j) Borrower shall be in default under any other mortgage or
security agreement covering any part of the Collateral Property whether it be
superior or junior in Lien to
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the Mortgage, and such default shall continue after the expiration of any
applicable notice and grace period provided therein;
(k) except as permitted hereunder, Borrower shall commence any
alteration, improvement, demolition or removal of any of the Improvements
constituting part of Borrower's Collateral Property without the prior consent of
Lender;
(l) an Event of Default as defined or described in any other Loan
Document occurs; or any other event shall occur or condition shall exist, if the
effect of such event or condition is to accelerate or to permit Lender to
accelerate the maturity of the Debt;
(m) Borrower shall be in default under any term, covenant or
provision set forth herein or in any other Loan Document which specifically
contains a notice requirement or grace period and such notice has been given and
such grace period has expired;
(n) any of the assumptions contained in the Insolvency Opinion or an
Additional Insolvency Opinion were not true and correct as of the date of such
opinion or thereafter became untrue or incorrect and Borrower fails to deliver
to Lender, within twenty (20) days after Borrower first becomes aware that any
such assumption is not true or is incorrect, a new substantive non-consolidation
opinion from the same counsel (or other counsel acceptable to Lender and the
Applicable Rating Agencies) which omits all such untrue or incorrect assumptions
and is otherwise in the same form as the Insolvency Opinion or the Additional
Insolvency Opinion, as applicable (other than for changes approved by Lender and
the Applicable Rating Agencies);
(o) Intentionally Deleted;
(p) Intentionally Deleted;
(q) Borrower shall permit any event to occur that would cause any
REA to terminate without notice or action by any party thereto or would entitle
any party to terminate any REA and the term thereof by giving notice to
Borrower; or any REA shall be surrendered, terminated or canceled for any reason
or under any circumstance whatsoever; or any term of any REA shall be modified
or supplemented without Lender's consent; or Borrower shall fail, within ten
(10) Business Days after demand by Lender, to exercise its option to renew or
extend the term of any REA or shall fail or neglect to pursue diligently all
actions necessary to exercise such renewal rights pursuant to such REA; or
(r) Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement or any other Loan Document not
specified in this Section 9.1, for ten (10) days after notice to Borrower from
Lender, in the case of any Default which can be cured by the payment of a sum of
money, or for thirty (30) days after notice from Lender in the case of any other
Default; provided, however, that if such non-monetary Default is susceptible of
cure but cannot reasonably be cured within such 30-day period, and Borrower
shall have commenced to cure such Default within such 30-day period and
thereafter diligently and expeditiously proceeds to cure the same, such 30-day
period shall be extended for an additional period of time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed 90 days.
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9.2 Remedies.
9.2.1 Acceleration. Upon the occurrence of an Event of Default with
respect to the Loan (other than an Event of Default described in paragraph (g)
or (h) of Section 9.1) and at any time and from time to time thereafter, in
addition to any other rights or remedies available to it pursuant to the Loan
Documents or at law or in equity, Lender may take such action, without notice or
demand, that Lender deems advisable to protect and enforce its rights against
Borrower and in and to any and the Collateral Property, and upon any Event of
Default described in paragraph (g) or (h) of Section 9.1, the Debt (including
unpaid interest, Default Rate interest, Late Payment Charges, Yield Maintenance
Premium and any other amounts owing by Borrower) shall immediately and
automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained in any
Loan Document to the contrary notwithstanding.
9.2.2 Remedies Cumulative. Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Borrower under the Loan Documents or at law
or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth in the Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is continuing, (i) to the
extent permitted by applicable law, Lender is not subject to any "one action" or
"election of remedies" law or rule, and (ii) all Liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against the Collateral Property,
the Mortgage has been foreclosed, the Collateral Property has been sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full.
9.2.3 Severance. Lender shall have the right from time to time to
sever the Note and the other Loan Documents into one or more separate notes,
mortgages and other security documents in such denominations as Lender shall
determine in its sole discretion for purposes of evidencing and enforcing its
rights and remedies. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and
execute all documents necessary or desirable to effect such severance, Borrower
ratifying all that such attorney shall do by virtue thereof.
9.2.4 Delay. No delay or omission to exercise any remedy, right,
power accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender shall impair any such remedy, right or power hereunder or
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be
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deemed expedient. A waiver of one Default or Event of Default shall not be
construed to be a waiver of any subsequent Default or Event of Default or to
impair any remedy, right or power consequent thereon. Notwithstanding any other
provision of this Agreement, to the extent permitted by applicable law, Lender
reserves the right to seek a deficiency judgment or preserve a deficiency claim,
in connection with the foreclosure of the Mortgage, to the extent necessary to
foreclose on the Rents, the Funds or any other collateral that constitutes
security for the same obligation.
9.2.5 Lender's Right to Perform. If Borrower fails to perform any
covenant or obligation contained herein and such failure shall continue for a
period of (5) five Business Days after Borrower's receipt of written notice
thereof from Lender, without in any way limiting Lender's right to exercise any
of its rights as provided hereunder or under any of the other Loan Documents,
Lender may, but shall have no obligation to, perform, or cause performance of,
such covenant or obligation, and the expenses of Lender incurred in connection
therewith shall be payable by Borrower to Lender upon demand and if not paid
shall be added to the Debt and shall bear interest thereafter at the Default
Rate. Notwithstanding the foregoing, Lender shall have no obligation to send
notice to Borrower of such failure.
X SPECIAL PROVISIONS
10.1 Sale of Note and Secondary Market Transaction.
10.1.1 Cooperation. At Lender's request (to the extent not already
required to be provided by Borrower under this Agreement), Borrower and WALP
shall cooperate with Lender to enable Lender to satisfy the market standards to
which Lender customarily adheres or which may be reasonably required in the
marketplace or by the Applicable Rating Agencies in connection with one or more
sales or assignments of the Note or participations therein or securitizations
(including any FASIT) of rated single or multi-class securities (the
"Securities") secured by or evidencing ownership interests in the Note and the
Mortgage (each such sale, assignment, participation and/or securitization, a
"Secondary Market Transaction"). Borrower shall not be required to incur any
out-of-pocket expense to comply with the provisions of this Section 10.1.1
(unless Lender agrees to reimburse Borrower therefor). In furtherance of the
foregoing, Borrower and WALP shall, at the request of Lender in connection with
any Secondary Market Transaction, and so long as the Loan is still outstanding:
(a) (i) provide updates of financial and other information with
respect to the Collateral Property, Borrower and its Affiliates, Manager and any
Tenants of the Collateral Property, (ii) provide updated business plans and
budgets relating to the Collateral Property and (iii) perform or permit or cause
to be performed or permitted such site inspection, appraisals, surveys, market
studies, environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), engineering reports and other due diligence investigations of the
Collateral Property, as may be reasonably requested from time to time by Lender
or the Applicable Rating Agencies or as may be necessary or appropriate in
connection with a Secondary Market Transaction or Exchange Act requirements (the
items provided to Lender pursuant to this paragraph (a) being called the
"Provided Information"), together, if customary, with appropriate verification
of and/or consents to the Provided Information through letters of auditors or
opinions of counsel of independent attorneys acceptable to Lender and the
Applicable Rating Agencies;
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(b) use reasonable efforts to cause counsel to render opinions as to
non-consolidation, fraudulent conveyance, true sale and true contribution and
any other opinion customary in securitization transactions with respect to the
Collateral Property, Borrower and its respective Affiliates, which counsel and
opinions shall be reasonably satisfactory to Lender and the Applicable Rating
Agencies;
(c) provide current certificates of good standing and qualification
with respect to Borrower and WALP from appropriate Governmental Authorities; and
(d) execute such amendments to the Loan Documents and Borrower's
organizational documents as may be requested by Lender or the Applicable Rating
Agencies or otherwise to effect a Secondary Market Transaction, provided that
nothing contained in this subsection (d) shall result in an economic change in
the transaction or impose any material legal obligations on Borrower or restrict
Borrower in any material way;
(e) assist Lender in the event Lender requires the severance of the
Note or any other Loan Document in order to adjust its security interest in the
Collateral Property to enhance its position in the context of a Secondary Market
Transaction, provided that such severance of the Note or other applicable
adjustment in the security of the Loan pursuant to a Secondary Market
Transaction shall be completed at the sole cost of the Lender;
(f) deliver to Lender and/or any Applicable Rating Agency, (a) one
or more Officer's Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of the
Loan Closing in all relevant jurisdictions or, if such representations are no
longer accurate, certifying as to what modifications to the representations
would be required to make such representations accurate, and (b) certificates of
the relevant Governmental Authorities in all relevant jurisdictions indicating
the good standing and qualification of Borrower and it's Borrower Representative
as of the date of the Secondary Market Transaction;
(g) make such other representations and warranties as of the closing
date of the Secondary Market Transaction with respect to the Collateral
Property, Borrower, WALP, and the Loan Documents as are customarily provided in
securitization transactions and as may be reasonably requested by the holder of
the Note or the Rating Agencies and consistent with the facts covered by such
representations and warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents;
(h) participate in any meeting reasonably requested by the Lender,
such meeting to be attended by senior management of Borrower and/or WALP; and
(i) obtain ratings of the Securities from two (2) or more Rating
Agencies.
10.1.2 Use of Information. Borrower understands that certain of the
Provided Information and the Required Records may be included in disclosure
documents in connection with a Secondary Market Transaction, including a
prospectus or private placement memorandum (each, a "Disclosure Document") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
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provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers or other parties relating
to the Secondary Market Transaction. In the event that the Disclosure Document
is required to be revised, Borrower shall cooperate with Lender in updating the
Provided Information or Required Records for inclusion or summary in the
Disclosure Document or for other use reasonably required in connection with a
Secondary Market Transaction by providing all current information pertaining to
Borrower, and the Collateral Property necessary to keep the Disclosure Document
accurate and complete in all material respects with respect to such matters.
Such disclosure may include the opinion or judgment of Lender or Servicer
concerning the Provided Information or other matters disclosed.
10.1.3 Borrower's Obligations Regarding Disclosure Documents. In
connection with a Disclosure Document, Borrower shall:
(a) if requested by Lender, certify in writing that Borrower has
carefully examined those portions of such Disclosure Document, pertaining to
Borrower, the Collateral Property, the Manager and the Loan, including
applicable portions of the sections entitled "Special Considerations",
"Description of the Mortgages", "Description of the Mortgage Loans and Mortgaged
Property", "The Manager," "The Borrower" and "Certain Legal Aspects of the
Mortgage Loan," and such portions (and portions of any other sections reasonably
requested and pertaining to Borrower, the Collateral Property, the Manager or
the Loan) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading;
(b) indemnify (i) any underwriter, syndicate member or placement
agent (collectively, the "Underwriters") retained by Lender or its issuing
company affiliate (the "Issuer") in connection with a Secondary Market
Transaction, (ii) Lender and (iii) the Issuer that is named in the Disclosure
Document or registration statement relating to a Secondary Market Transaction
(the "Registration Statement"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"UBS Group"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the "Underwriter Group") for any losses,
claims, damages or liabilities (the "Liabilities") to which Lender, the UBS
Group or the Underwriter Group may become subject (including reimbursing all of
them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue statement of any material fact contained in any
of the Required Records or in any of the applicable portions of such sections of
the Disclosure Document applicable to Borrower, Manager, the Collateral Property
or the Loan, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated in the applicable
portions of such sections or necessary in order to make the statements in the
applicable portions of such sections in light of the circumstances under which
they were made, not misleading, provided, however, that Borrower shall not be
required to indemnify Lender for any Liabilities relating to untrue statements
or omissions or inadequacies of disclosure which (i) Borrower identified to
Lender in writing at the time of Borrower's examination of such Disclosure
Document or (ii) are set forth in a report prepared by a third party not
Affiliated with Borrower; and
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(c) reimburse any member of the UBS Group for any legal or other
expenses reasonably incurred by such member in connection with investigating or
defending the Liabilities.
Borrowers' Liability under clause (a) or (b) above shall be limited to
Liabilities arising out of or based upon any such untrue statement or omission
made therein in reliance upon and in conformity with information furnished to
Lender by or on behalf of Borrower in connection with the preparation of those
portions of the Disclosure Document pertaining to Borrower, Manager, the
Collateral Property or the Loan or in connection with the underwriting of the
debt including financial statements of Borrower, operating statements, rent
rolls and other Required Records, environmental site assessment reports and
property condition reports with respect to the Collateral Property. The
foregoing indemnity will be in addition to any liability which Borrower may
otherwise have. Lender shall give Borrower a copy of any Disclosure Document
that is to be subject to the foregoing indemnification obligations a reasonable
amount of time prior to its delivery to potential investors pursuant to an
offering.
10.1.4 Borrowers Indemnity Regarding Filings. In connection with
filings under the Exchange Act, Borrower shall (i) indemnify Lender, the UBS
Group and the Underwriter Group for any Liabilities to which Lender, the UBS
Group or the Underwriter Group may become subject insofar as the Liabilities
arise out of or are based upon the omission or alleged omission to state in the
Provided Information or Required Records a material fact required to be stated
in the Provided Information or Required Records in order to make the statements
in the Provided Information or Required Records, in light of the circumstances
under which they were made not misleading and (ii) reimburse Lender, the UBS
Group or the Underwriter Group for any legal or other expenses reasonably
incurred by Lender, UBS Group or the Underwriter Group in connection with
defending or investigating the Liabilities.
10.1.5 Indemnification Procedure. Promptly after receipt by an
indemnified party under Section 10.1.3 or 10.1.4 of notice of the commencement
of any action for which a claim for indemnification is to be made against
Borrower, such indemnified party shall notify Borrower in writing of such
commencement, but the omission to so notify the Borrower will not relieve
Borrower from any liability that it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to Borrower. In the
event that any action is brought against any indemnified party, and it notifies
Borrower of the commencement thereof, Borrower will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice of commencement, to assume the
defense thereof with counsel satisfactory to such indemnified party in its sole
discretion. After notice from Borrower to such indemnified party under this
Section 10.1.5, Borrower shall not be responsible for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
if the defendants in any such action include both Borrower and an indemnified
party, and any indemnified party shall have reasonably concluded that there are
any legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to Borrower, then the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Borrower shall not be
liable for the expenses of more than one
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separate counsel unless there are legal defenses available to it that are
different from or additional to those available to another indemnified party.
10.1.6 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 10.1.3 or 10.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 10.1.3
or 10.1.4, Borrower shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
the UBS Group's and Borrower's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and each
Borrower hereby agree that it may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
XI MISCELLANEOUS
11.1 Exculpation.
(a) Subject to the qualifications below, Lender shall not enforce
the liability and obligation of Borrower to perform and observe the obligations
contained in the Loan Documents by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate
action or proceeding to enable Lender to enforce and realize upon its interest
and rights under the Loan Documents, or in the Collateral Property, the Rents or
any other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Collateral Property, in the Rents and in any other
collateral given to Lender, and Lender shall not sue for, seek or demand any
deficiency judgment against Borrower in any such action or proceeding under or
by reason of or under or in connection with any Loan Document. The provisions of
this section shall not, however, (i) constitute a waiver, release or impairment
of any obligation evidenced or secured by any Loan Document; (ii) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Mortgage; (iii) affect the validity or
enforceability of any of the Loan Documents or any guaranty made in connection
with the Loan or any of the rights and remedies of Lender thereunder, (iv)
impair the right of Lender to obtain the appointment of a receiver, (v) impair
the enforcement of the Assignment of Leases; (vi) constitute a prohibition
against Lender to commence any other appropriate action or proceeding in order
for Lender to fully realize the security granted by the Mortgage or to exercise
its remedies against the Collateral Property; or (vii) constitute a waiver of
the right of Lender to enforce the liability and obligation of Borrower, by
money judgment or otherwise, to the extent of any loss, damage, cost, expense,
liability, claim or other obligation incurred by Lender (including attorneys'
fees and costs reasonably incurred) arising out of or in connection
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with the following: (a) fraud or intentional misrepresentation by Borrower or
any guarantor in connection with the Loan; (b) the gross negligence or willful
misconduct of Borrower; (c) the breach of any representation, warranty, covenant
or indemnification in any Loan Document concerning Environmental Laws or
Hazardous Substances, including Sections 5.1.32 and 6.10, and clauses (viii)
through (xi) of Section 6.16; (d) physical waste or after an Event of Default,
the removal or disposal of any portion of the Collateral Property; (e) the
misapplication or conversion by Borrower of (x) any Proceeds paid by reason of
any Insured Casualty, (y) any Award received in connection with a Condemnation,
or (z) any Rents, refunds of Taxes or Other Charges or Funds (i.e., use of Rents
or refunds of Taxes or Other Charges or Funds to make distributions or payments
to members/partners/shareholders of Borrower during the continuance of an Event
of Default); (f) failure to pay charges for labor or materials or other charges
that can create Liens on any portion of the Collateral Property unless such
charges are the subject of a bona fide dispute in which the Borrower is
contesting the amount or validity thereof, (g) any security deposits collected
with respect to the Collateral Property which are not delivered to Lender upon a
foreclosure of the Mortgage or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the terms and conditions
of any of the Leases prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof; and (h) Borrower's
indemnifications of Lender set forth in Sections 10.1.3 and 10.1.4.
(b) Notwithstanding anything to the contrary in this Agreement or
any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt or to require that all collateral shall continue to secure all of the
Debt in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrower in the event that (1) Borrower or any Person owning an
interest (directly or indirectly) in Borrower commences any action, suit, claim,
arbitration, governmental investigation or other proceeding (x) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to Borrower, or seeking to adjudicate
Borrower bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to Borrower or Borrower's debts, or (y) seeking appointment of a
receiver (other than Borrower seeking the appointment of a receiver during the
pendency of a foreclosure action against Borrower commenced by Lender), trustee,
custodian or other similar official for Borrower or for all or substantially all
of Borrower's assets or (2) Borrower ever ceases to be a Special Purpose Entity.
11.2 Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document (a "notice") shall be given
in writing and shall be effective for all purposes if hand delivered or sent (i)
by (a) certified or registered United States mail, postage prepaid, or (ii) by
(A) expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, and (B) by telecopier (with
answer back acknowledged), in any case addressed as follows (or to such other
address or Person as a party shall designate from time to time by any party
hereto, as the case may be, in a written notice to the other parties hereto in
the manner provided for in this Section):
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If to Lender: UBS Principal Finance LLC
299 Park Avenue
New York, New York 10171
Attention: Douglas Renfield-Miller
Facsimile No. (212) 821-5720
with a copy to: Cadwalader, Wickersham & Taft
227 West Trade Street, Suite 2400
Charlotte, North Carolina 28202
Attention: James P. Carroll, Esq.
Facsimile No. (704) 348-5200
If to Borrower: c/o Westfield Corporation, Inc.
11601 Wilshire Boulevard, Suite 1200
Los Angeles, California 90025-1748
Attention: Mark Stefanek
Facsimile No. (310) 478-3987
With a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills, Esq.
Facsimile No. (212) 909-6836
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
11.2.1 Borrower's Representative.
(a) Each Borrower's Representative shall notify Lender of the names
of its officers and employees authorized to request and take other actions on
behalf of Borrower (each a "Responsible Officer") and shall provide Lender with
a specimen signature of each such officer or employee. Lender shall be entitled
to rely conclusively on a Responsible Officer's authority to give and receive
notices and take other all other actions of any kind on behalf of Borrower or
any of them until Lender receives written notice to the contrary. Lender shall
have no duty to verify the authenticity of the signature appearing on any
notice.
(b) BORROWER DOES HEREBY DESIGNATE AND APPOINT CT CORPORATION SYSTEM
AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, AS ITS AUTHORIZED AGENT TO
ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO
BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
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DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE
DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN
NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
11.3 Brokers and Financial Advisors. Borrower hereby represents that it
has dealt with no financial advisors, brokers, underwriters, placement agents,
agents or finders in connection with the Loan. Borrower and Lender shall
indemnify and hold the other harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person that such Person acted on behalf of the indemnifying
party in connection with the transactions contemplated herein. The provisions of
this Section 11.3 shall survive the expiration and termination of this Agreement
and the repayment of the Debt.
11.4 Retention of Servicer. Lender reserves the right to retain the
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, any Pooling and Servicing Agreement or similar agreement entered into
as a result of a Secondary Market Transaction, the Cash Management Agreement or
otherwise, together with such other powers as are reasonably incidental thereto.
Borrower shall pay any reasonable fees and expenses of the Servicer in
connection with a release of the Collateral Property, assumption or modification
of the Loan, enforcement of the Loan Documents or any other action taken by
Servicer hereunder on behalf of Lender.
11.5 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as any of the Debt is unpaid unless a longer period is expressly set
forth herein or in the other Loan Documents. Borrower's covenants and agreements
in this Agreement shall inure to the benefit of the respective legal
representatives, successors and assigns of Lender.
11.6 Lender's Discretion. Whenever pursuant to this Agreement or any other
Loan Document, Lender exercises any right given to it to approve or disapprove,
or any arrangement or term is to be satisfactory to Lender, the decision of
Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
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11.7 Governing Law; Venue.
(a) THIS AGREEMENT WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN
THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO
WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND PROCEDURES RELATING TO ENFORCEMENT
OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE COLLATERAL PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT
AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO ss. 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY FEDERAL OR
STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO ss. 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING.
11.8 Modification; Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for the purpose,
for which given. Except as otherwise expressly provided herein, no notice to or
demand on Borrower shall entitle Borrower to any other or future notice or
demand in the same, similar or other circumstances.
11.9 Delay Not a Waiver. Neither any failure nor any delay on the part of
Lender in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising
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any right, power, remedy or privilege hereunder, or under any other Loan
Document, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
any Loan Document, Lender shall not be deemed to have waived any right either to
require prompt payment when due of all other amounts due under the Loan
Documents, or to declare an Event of Default for failure to effect prompt
payment of any such other amount.
11.10 TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING
IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER.
11.11 Heading. The Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
11.12 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.13 Preferences. To the extent Borrower makes a payment to Lender, or
Lender receives proceeds of any collateral, which is in whole or part
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Debt or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender. This provision
shall survive the expiration or termination of this Agreement and the repayment
of the Debt.
11.14 Waiver of Notice. Borrower shall not be entitled to any notices of
any nature whatsoever from Lender except with respect to matters for which this
Agreement or any other Loan Document specifically and expressly provides for the
giving of notice by Lender to Borrower and except with respect to matters for
which Borrower is not, pursuant to applicable Legal Requirements, permitted to
waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which no Loan
Document specifically and expressly provides for the giving of notice by Lender
to Borrower.
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11.15 Remedies of Borrower. In the event that a claim or adjudication is
made that Lender or its agent, including Servicer, has acted unreasonably or
unreasonably delayed acting in any case where by law or under any Loan Document,
Lender or such agent, as the case may be, has an obligation to act reasonably or
promptly, Borrower agrees that neither Lender nor its agents, including
Servicer, shall be liable for any monetary damages, and Borrower's sole remedy
shall be to commence an action seeking injunctive relief or declaratory
judgment. Any action or proceeding to determines whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
Borrower specifically waives any claim against Lender and its agents, including
Servicer, with respect to actions taken by Lender or its agents on Borrower's
behalf pursuant to Section 9.2.5.
11.16 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents.
11.17 Offsets, Counterclaims and Defenses.
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents, including Servicer. Any assignee of Lender's interest in
and to the Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses that are unrelated to the Loan Documents which
Borrower may otherwise have against any assignor of such documents, and no such
unrelated offset, counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon such
documents, and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.
11.18 Publicity. All news releases, publicity or advertising by Borrower
or its Affiliates through any media intended to mach the general public, which
refers to the Loan Documents, the Loan, Lender, any member of the UBS Group, a
Loan purchaser, the Servicer or the trustee in a Secondary Market Transaction,
shall be subject to the prior written approval of Lender.
11.19 No Usury. Borrower and Lender intend at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 11.19 shall
control every other agreement in the Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Debt, or if Lender's
exercise of the option to accelerate the maturity of the Loan or any prepayment
by Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Borrower's and Lender's express intent
that all excess amounts theretofore collected by Lender shall be credited
against the unpaid Principal and all other Debt (or, if the Debt has been or
would thereby be paid in full, refunded to the Borrower, and the provisions of
the Loan Documents immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of the execution of any
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new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for thereunder. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Debt does not
exceed the maximum lawful rate from time to time in effect and applicable to the
Debt for so long as the Debt is outstanding. Notwithstanding anything to the
contrary contained in any Loan Document, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
11.20 Conflict; Construction of Documents. In the event of any conflict
between the provisions of this Agreement and any of the other Loan Documents,
the provisions of this Agreement shall control. The parties hereto acknowledge
that each is represented by separate counsel in connection with the negotiation
and drafting of the Loan Documents and that the Loan Documents shall not be
subject to the principle of construing their meaning against the party that
drafted them.
11.21 No Joint Venture or Partnership; No Third Party Beneficiaries. (a)
Borrower and Lender intend that the relationships created hereunder and under
the other Loan Documents be solely that of borrower and lender. Nothing herein
or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Collateral Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
11.22 Yield Maintenance Premium. Borrower acknowledges that Lender intends
to enter into a Secondary Market Transaction which may result in various classes
of Securities with different coupon rates. Borrower also acknowledges that (i)
the proceeds of any partial prepayment of Principal may be utilized to retire
Securities bearing a coupon rate lower than the Interest Rate, (ii) that
following such prepayment the remaining outstanding Securities may bear a
weighted average coupon rate in excess of the Interest Rate and (iii) that,
absent the Yield Maintenance Premium payable hereunder in connection with such
prepayment, Lender will not receive the benefits intended to be conferred by the
Loan Documents. For these reasons, and to induce Lender to make the Loan,
Borrower expressly waives any right or privilege to prepay the Loan except as
may be specifically permitted herein and agrees that, except as expressly
provided for herein, any prepayments, whether voluntary or involuntary, will be
accompanied by
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the Yield Maintenance Premium. Such Yield Maintenance Premium shall be required
whether payment is made by Borrower, by a Person on behalf of Borrower, or by
the purchaser at any foreclosure sale, and may be included in any bid by Lender
at such sale. Borrower further acknowledges that (A) it is a knowledgeable real
estate developer and/or investor; (B) it fully understands the effect of the
provisions of this Section 11.22, as well the other provisions of the Loan
Documents; (C) the making of the Loan by Lender at the Applicable Interest Rate
and other terms set forth in the Loan Documents are sufficient consideration for
Borrower's obligation to pay a Yield Maintenance Premium (if required); and (D)
Lender would not make the Loan on the terms set forth herein without the
inclusion of such provisions. Borrower also acknowledges that the provisions of
this Agreement limiting the right of prepayment and providing for the payment of
the Yield Maintenance Premium and other charges specified herein were
independently negotiated and bargained for, and constitute a specific material
part of the consideration given by Borrower to Lender for the making of the
Loan.
11.23 Assignment. The Loan, the Note, the Loan Documents and all Lender's
rights, title, obligations and interests therein may be assigned by Lender at
any time in its sole discretion whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise. Upon such assignment, all
references to Lender in this Loan Agreement and in any Loan Document shall be
deemed to refer to such assignee or successor in interest and such assignee or
successor in interest shall thereafter stand in the place of Lender; provided,
however that the original named Lender herein shall not be released of its
obligations in respect of Advances which Lender is thereafter required to make
hereunder. Borrower may not assign its rights, interests or obligations under
this Loan Agreement or under any of the Loan Documents except as expressly
permitted hereunder.
11.24 Intentionally Deleted.
11.25 Intentionally Deleted.
[SIGNATURE PAGES IMMEDIATELY FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
EAGLE ROCK PLAZA LLC,
a Delaware limited liability company
By: Eagle Rock Manager LLC,
a Delaware limited liability company, its
managing member
By: Westfield America Limited Partnership,
a Delaware limited partnership,
its sole member
By: Westfield America, Inc.,
a Missouri corporation,
its general partner
By: /s/ Irv Hepner
-----------------
Name: IRV HEPNER
Title: SECRETARY
<PAGE>
LENDER:
UBS PRINCIPAL FINANCE LLC, a Delaware limited
liability company
By: /s/ John Cutting
------------------------------------------
Name: John Cutting
Title: Executive Director
By: /s/ Brian Harris
------------------------------------------
Name: Brian Harris
Title: Executive Director
<PAGE>
Exhibit A
Form of Notice To Tenants
[BORROWER'S NAME AND ADDRESS]
_____________, 2000
[Name and Address of Tenant]
Re: Lease of Store at
(the "Center")
Ladies and Gentlemen:
The undersigned is the Owner of the Center and the landlord under
your lease of a store at the Center (your "Lease").
By this letter, you are hereby directed (1) to make all checks, in
payment of rent and other sums due to the landlord under your Lease, payable to
the order of [applicable Agent], and (2) to deliver such checks or otherwise
make such payments to the following address:
[Name and Address of Agent]
The foregoing direction is irrevocable, except with the written
consent of our mortgagee, UBS Principal Finance LLC (or its successors or
assigns), notwithstanding any future contrary request or direction from the
undersigned or any other person (other than UBS Principal Finance LLC (or its
successors or assigns)). Thank you for your cooperation.
Very truly yours,
[BORROWER]
By: ________________________________________
Name: _______________________________
Title: ______________________________
A - 1
<PAGE>
Exhibit B
Form of Subordination, Nondisturbance and Attornment Agreement
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Non-Disturbance and Attornment Agreement (this Agreement), made as of
___________, 199_, by and between , a limited
liability company organized under the laws of Delaware and having an address at
(the Lender) and _________________, a
_________________, having an address at _______________________ (the Tenant);
WITNESSETH:
WHEREAS, by the lease (as the same may be amended from time to time, the
Lease) dated _________, 19__, between _______________ (the Landlord), as
landlord, and Tenant, as tenant, the Landlord leased to Tenant a certain portion
of the building known as and located at __________________, being more fully
described in said Lease (the Premises);
WHEREAS, the Landlord has executed and delivered to the Lender a mortgage
note in the original principal amount of ____________ ($____________) Dollars,
which note is secured by, among other things, a mortgage or deed of trust (which
mortgage or deed of trust, and all amendments, renewals, increases,
modifications, replacements, substitutions, extensions, spreaders, restatements
and consolidations thereof and all re-advances thereunder and additions thereto
is referred to as the Mortgage) encumbering certain land being more particularly
described in Schedule A attached hereto (the Land), together with the buildings
and other improvements located or to be located thereon (such buildings and
other improvements and the Land, collectively, the Mortgaged Property)
including, without limitation, the Premises.
NOW, THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
1. The Lease, as the same may hereafter be modified, amended or
extended, is and shall be subject and subordinate in each and every respect to
the Mortgage, to all renewals,
B - 1
<PAGE>
modifications, replacements and extensions thereof, to all terms, conditions and
provisions thereof and to each and every advance hertofore made or hereafter
made under the Mortgage.
2. The Lender agrees that if any action or proceeding is commenced
by the Lender for the foreclosure of the Mortgage or the sale of the Mortgaged
Property, the Tenant shall not be named as a party therein (unless required by
law), and the sale of the Mortgaged Property in any such action or proceeding
and the exercise by the Lender of any of its other rights under the Mortgage, or
under the note secured by the Mortgage, shall be made subject to all rights of
the Tenant under the Lease, provided that at the time of the commencement of any
such action or proceeding and at the time of any such sale or exercise of any
such other rights, the Tenant shall not be in default under any of the terms,
covenants or conditions of the Lease or of this Agreement on the Tenant's part
to be observed or performed.
3. The Tenant shall concurrently give the Lender copies of all
notices and other communications given by the Tenant to the Landlord relating to
(i) defaults or alleged defaults on the part of the Landlord or the Tenant under
the Lease, (ii) any violations of any ordinances, statues, laws, rules, codes
regulations or requirements of any governmental agency, and (iii) any assignment
or subletting of all or any portion of the Premises.
4. In the event of any act or omission by the Landlord which would
give the Tenant the right, either immediately or after the lapse of a period of
time, to terminate the Lease, or to claim a partial or total eviction, the
Tenant will not exercise any such right (i) until it has sent written notice of
such act or omission to the Lender as provided herein, and (ii) unless the
Lender shall have failed within sixty (60) days after receipt of such notice to
cure such default or, if such default is not reasonably susceptible of cure
within such sixty (60) days, the Lender shall not have commenced the cure of
such default within sixty (60) days of receipt of such notice and thereafter
diligently pursued such action.
5. In the event that the interest of the Landlord is transferred by
reason of, or assigned in lieu of foreclosure or other proceedings for
enforcement of the Mortgage, then, subject to the provisions of this Agreement,
the Lease shall nevertheless continue in full force and effect and, upon the
written request of the Lender, the Tenant shall attorn to the Lender and shall
recognize the Lender as its landlord. Although the foregoing provision shall be
self-operative, in order to confirm such attornment, upon the request of the
Lender, the Tenant shall execute and deliver to the Lender (i) an agreement of
attornment in form and content reasonably satisfactory to the Lender, at the
Tenant's sole cost and expense, confirming the foregoing attornment and agreeing
to perform all the terms, covenants and conditions of the Lease on the Tenant's
part to be performed for the benefit of such Lender with the same force and
effect as if such Lender were the Landlord originally named in this Lease or
(ii) a new lease with the
B - 2
<PAGE>
Lender, as landlord, for the remaining term of the Lease and otherwise on the
same terms and conditions and with the same options, if any, then remaining.
Nothing herein contained shall be construed however, to obligate the Lender to
cure any default by the Landlord under the Lease occurring prior to any date on
which the Lender shall succeed to the rights of the Landlord, it being expressly
agreed that under no circumstances shall the Lender be obligated to remedy any
such default.
6. If the Lender shall succeed to the interest of the Landlord, the
Lender shall have no personal liability as successor to the Landlord, and the
Tenant shall look only to the estate and property of the Lender in the Mortgaged
Property or the proceeds thereof for the satisfaction of the Tenant's remedies
for the collection of a judgement (or other judicial process) requiring the
payment or money in the event of any default by the Lender as landlord under the
Lease. In addition, the Lender as holder of the Mortgage or as landlord under
the Lease if it succeeds to that position, shall in no event (i) be liable to
the Tenant for any act or omission of any prior landlord, (ii) be subject to any
offset or defense which the Tenant might have against any prior landlord, (iii)
be liable to the Tenant for any liability or obligation of any prior landlord
occurring prior to the date that the Lender or any subsequent owner acquires
title to the Premises, or (iv) be liable to the Tenant for any security or other
deposits given to secure the performance of the Tenant's obligations under the
Lease, except to the extent that the Lender shall have acknowledged actual
receipt of such security or other deposits in writing. No other property or
assets of the Lender shall be subject to levy, execution or other enforcement
procedure for the satisfaction of the Tenant's remedies under or with respect to
the Lease, the relationship of the landlord and the tenant thereunder or the
Tenant's use or occupancy of the Premises.
7. All notices and other communications hereunder shall be sent by
certified or registered mail (postage prepaid, return receipt requested) to the
Lender at the address set forth above, Attention: _________, or to the Tenant at
the address set forth in the Lease, or to such other address or person as may be
specified in a notice sent in accordance with the provisions of this Section 7,
and shall be deemed given when received at the addresses specified above.
8. No prepayment of rent or additional rent due under the Lease of
more than one month in advance shall be binding upon the Lender, as holder of
the Mortgage or as landlord under the Lease if the Lender succeeds to that
position, unless consented to by the Lender, and from and after the date hereof,
no amendment, modification, surrender or cancellation of the Lease shall be
binding upon the Lender, as holder of the Mortgage or as landlord under the
Lease if the Lender succeeds to that position, unless such amendment,
modification, surrender or cancellation is done in compliance with the terms of
the Mortgage.
B - 3
<PAGE>
9. This Agreement shall apply to, bind and inure to the benefit of
the parties hereto and their respective successors and assigns. As used herein,
the term Tenant shall mean and include the present tenant under the Lease, any
permitted subtenant under the Lease, any permitted assignee of the Lease and any
successor of any of them. The term Lender as used herein shall include the
holder of the Mortgage, the successors and assigns of the Lender, and any
person, party or entity which shall become the owner of the Mortgaged Property
by reason of a foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or other proceedings for enforcement of the
Mortgage or otherwise. The term Landlord as used herein shall mean and include
the present landlord under the Lease and such landlord's predecessors and
successors in interest under the Lease.
10. This Agreement may not be modified in any manner or terminated
except by an instrument in writing executed by the parties hereto.
[11. This Agreement satisfies the condition to the subordination of
the Lease to the Mortgage set forth in Section _____ of the Lease with respect
to the execution and delivery of ____.]
12. This Agreement shall be governed by and construed in accordance
with the laws of the State of ____________.
13. Both the Tenant and the Lender hereby irrevocably waive all
right to trial by jury in any action, proceeding or counterclaim arising out of
or relating to the Lease or this Agreement.
B - 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
By:
--------------------------------
Name:
Title:
[TENANT]
By:
--------------------------------
Name:
Title:
B - 5
<PAGE>
EXHIBIT C-1
Form of Manager Consent and Subordination
(Manager other than Westfield)
CONSENT AND SUBORDINATION OF MANAGER
----------
UBS Principal Finance
299 Park Avenue
New York, NY 10171
Ladies and Gentlemen:
Reference is made to (i) that certain Management Agreement (the
"Management Agreement"), dated as of _______________, between
______________________ (the "Borrower") and the undersigned (the "Manager") with
respect to the property known as __________________ and located in the City of
_____________ County, _________ (the "Property"), and (ii) that certain Loan
Agreement (the "Loan Agreement") dated as of ______________, 199_, between the
Borrower and (together with its successors and assigns, the
"Lender"). Any capitalized terms used herein but not defined herein shall have
the same meanings as are ascribed to them in the Loan Agreement.
The Manager acknowledges and understands that delivery of this letter to
you is a condition to the Lender making a certain loan to the Borrower pursuant
to the Loan Agreement in the original principal amount of up to $___________
(the "Loan").
The Borrower and the Manager hereby agree as follows:
1. The Management Agreement is and shall be subject and subordinate in all
respects to (i) the Mortgage (and to the lien of the Mortgage), (ii) the Loan
Documents, and (iii) any and all modifications, amendments, renewals and/or
substitutions of the Mortgage and/or any of the other Loan Documents. This
paragraph 1 shall be self-operative and no further instrument of
C-1-1
<PAGE>
subordination shall be required. If requested, however, the Borrower and/or the
Manager shall execute and deliver such further instruments as the Lender may
deem reasonably necessary to effectuate this subordination.
2. If there shall have occurred and be continuing an Event of Default and
the Lender shall have obtained (i) title to the Property (or any portion
thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise and/or (ii) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee, the Manager
shall, if and to the extent requested in writing by the Lender, continue
performance under the Management Agreement in accordance with the terms thereof
so long as the Manager is paid compensation thereafter accruing under the
Management Agreement. The Borrower and the Manager understand, however, that
nothing contained herein, in the Mortgage or in any of the other Loan Documents
shall be construed to obligate the Lender to perform or discharge any of the
Borrower's obligations, duties or liabilities under the Management Agreement.
3. Upon the occurrence of any default by the Borrower under the terms of
the Management Agreement, the Manager shall, promptly upon becoming aware
thereof, provide the Lender with notice in writing thereof, and after receipt of
said notice, the Lender shall have the same time period within which to cure
said default as the Borrower has under the Management Agreement although the
Borrower and the Manager understand that the Lender shall not have any
obligation to do so. Notwithstanding the foregoing, the failure by the Manager
to notify the Lender of a default under the Management Agreement shall not be
deemed to constitute a waiver by the Manager of such default. Furthermore, the
Borrower and the Manager agree that the Lender may terminate the Management
Agreement (i) in accordance with Section of the Loan Agreement or in the event
of the Manager's gross negligence, malfeasance or willful misconduct(1), or (ii)
by giving five days' notice to the Manager upon the Lender (or a successor
owner, as the case may be) obtaining (A) title to the Property (or any portion
thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise, and/or (B) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee. If the Lender
elects to terminate the Management Agreement in accordance with this Paragraph
3, the Borrower and the Manager understand and agree that the Manager shall look
solely to the Borrower for any and all fees, charges or other sums payable to
the Manager under the Management Agreement. If the Management Agreement shall be
so terminated by the Lender, the Manager agrees to cooperate with the Lender to
ensure a smooth transition to the new property manager.
- ----------
(1) The Management Agreement must permit the Borrower to terminate the
Management Agreement in the event of the Manager's gross negligence,
malfeasance or willful misconduct.
C-1-2
<PAGE>
4. The Manager hereby confirms that (i) the term of the Management
Agreement shall expire on or before the Anticipated Prepayment Date, and (ii) if
the Debt has not been repaid in full on or before the Anticipated Prepayment
Date, the term of the Management Agreement may only be renewed or extended
beyond the Anticipated Prepayment Date with the prior written approval of the
Servicer.(2)
5. This letter shall inure to the benefit of the Lender and its successors
and assigns, including the trustee in a Secondary Market Transaction. In the
event of any inconsistency or conflict with the provisions of this letter and
the provisions of the Management Agreement, the provisions of this letter shall
control.
6. The Manager agrees that it shall not change, amend, modify or terminate
the Management Agreement without the Lender's prior written approval in each
instance, which approval may be given or denied by the Lender in its sole
discretion. If the Manager does so amend, modify or terminate the Management
Agreement without the Lender's prior written approval, such amendment,
modification or termination shall be void ab initio.
7. This letter shall be governed by, and construed in accordance with the
law of the State of New York.
8. Without limiting the generality of any other provisions contained
herein or in the other Loan Documents, no failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of the Lender provided
herein and in the other Loan Documents are cumulative and are in addition to,
and are not exclusive of, any rights or remedies provided by law or in equity.
9. The Manager represents and warrants to the Lender that as of the date
hereof (i) the Management Agreement is in full force and effect and has not been
amended, modified, assigned, terminated or supplemented, (ii) the Manager is not
in default under the provisions of the Management Agreement and there is no
condition which, with the giving of notice and/or the lapse of time, would
constitute such a default, and (iii) to the best of Manager's knowledge, the
Borrower is not in default under the provisions of the Management Agreement and
there is no condition which, with the giving of notice and/or the lapse of time,
would constitute such a default.
- ----------
(2) The Management Agreement must expire on or before the Anticipated
Prepayment Date and may not be renewed or extended without the prior
written approval of the Servicer.
C-1-3
<PAGE>
10. This letter may not be amended, modified, terminated or supplemented
without the written approval of each of the Manager, the Borrower and the
Lender.
Very truly yours,
[MANAGER]
By: ________________________________
Name:
Title:
AGREED AND CONSENTED
TO AS OF _______________, 199_
[BORROWER]
By: ______________________, its _____________
By: ___________________________
Name:
Title:
C-1-4
<PAGE>
Exhibit C-2
MANAGER'S CONSENT AND SUBORDINATION
OF MANAGEMENT AGREEMENT
THIS MANAGER'S CONSENT AND SUBORDINATION OF MANAGEMENT AGREEMENT
(this "Agreement"), dated as of , is executed by the undersigned,
WESTFIELD MANAGEMENT COMPANY, a Delaware general partnership ("Manager"), as an
inducement to UBS Principal Finance LLC, a Delaware limited liability company
(together with its successors and assigns, the "Lender"), to make a loan to
, a Delaware limited liability company ("Borrower") in a
principal amount not to exceed $16,840,000.00 (the "Loan") pursuant to that
certain Loan Agreement dated as of the date hereof (the "Loan Agreement"), in
connection with various properties, including the property owned by
(the "Property").
1. Definitions. All capitalized terms not defined herein shall have
the meanings ascribed thereto in the Loan Agreement.
2. Manager's Representations. Manager warrants and represents to
Lender, as of the date hereof, that the following are true and correct:
(a) That Manager has agreed to act as manager of the Property
pursuant to that certain management agreement, between Borrower and Manager,
which agreement is described on Exhibit A attached hereto and made a part
hereof, and has not been amended, modified or supplemented except as set forth
on said Exhibit A (the "Management Agreement").
(b) That the entire agreement between Manager and Borrower for the
management of the Property is evidenced by the Management Agreement.
(c) That the Management Agreement constitutes the valid and binding
agreement of Manager, is enforceable in accordance with its terms, and Manager
has full authority under all state or local laws and regulations, to perform all
of its obligations under said Management Agreement.
(d) That neither Borrower nor Manager is in default in the
performance of any of its obligations under the Management Agreement.
(e) That Manager has received and reviewed a copy of the Loan
Agreement and the Cash Management Agreement.
3. Manager's Agreements. Manager hereby consents to and agrees to
each and every one of the following covenants and agreements for the benefit of
Lender and as a condition to Lender's making the Loan:
(a) No Termination of Management Agreement. Manager shall not
terminate the Management Agreement without first obtaining Lender's written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed.
C-2-1
<PAGE>
Notwithstanding the foregoing, Manager shall have the right to terminate the
Management Agreement upon default by Borrower with respect to non-payment of the
management fee due thereunder by giving Lender thirty (30) days' prior written
notice of such termination. In the event Lender shall cure such non-payment
default in the aforesaid thirty (30)-day period, then any such termination
notice shall be of no further force or effect.
(b) Subordination of Management Agreement to Lien of Mortgages. Any
and all liens, rights and interests (whether choate or inchoate and including,
without limitation, all mechanics' and materialmen's liens under applicable law)
owned, claimed or held, or to be owned, claimed or held, by Manager in and to
the Property, other than rights of Manager to receive payment of the basic
management fee and all other amounts payable under the Management Agreement for
periods prior to the termination thereof, are and shall be, and are hereby made,
in all respects subordinate and inferior to the liens and security interests
created or to be created for the benefit of Lender, its successors and assigns,
and securing the repayment of the Debt and including, without limitation, those
created under and by virtue of the Mortgage.
(c) Lender's Right to Terminate. Upon the occurrence of a Cash
Management Event, Manager shall, at the request of Lender, continue performance,
subject to Paragraph 3(d) hereof, on behalf of Lender, of all of Manager's
obligations under the terms of the Management Agreement with respect to the
Property, provided that Lender gives Manager the notice provided for in
Paragraph 3(j) hereof and Lender (or Borrower) performs or causes to be
performed the obligations of Borrower to Manager under the Management Agreement
accruing or arising from and after, and with respect to the period commencing
upon, the effective date of such notice. Notwithstanding anything contained in
the Management Agreement to the contrary, Lender, or Borrower at Lender's
direction pursuant to the Loan Documents, shall have the right to terminate the
Management Agreement upon, or at any time after, Lender or any third party
acquires the Property, whether by foreclosure, deed-in-lieu of foreclosure or
otherwise, by giving Manager thirty (30) days' prior written notice of such
termination, in which event Manager shall resign as manager of the Property
effective upon the end of such thirty (30)-day period. Manager agrees not to
look to Lender for payment of any accrued but unpaid fees relating to the
Property accruing from and after the effective date of such termination.
(d) Cooperation with Management Consultant. If, pursuant to the Loan
Agreement, Borrower retains a Management Consultant, Manager shall cooperate
with the Management Consultant to enable the Management Consultant to perform
its responsibilities as described in the Loan Agreement.
(e) No Amendments to Management Agreement. Manager will not amend or
modify the Management Agreement in any manner which would (i) materially and
adversely affect the management, operation or value of the Property, or (ii)
increase the base management fee payable thereunder, without the prior written
consent of Lender which consent shall not be unreasonably withheld, delayed or
conditioned. In the event Manager fails to secure such approval, the Management
Agreement shall, for the
C-2-2
<PAGE>
purposes of Manager's obligations to Lender pursuant to this Agreement,
including Manager's obligation aforesaid to continue performance thereunder for
Lender's benefit pursuant to the terms of this Agreement, be deemed not to have
been modified by such amendment.
(f) Delivery of Rent Roll and Service Contracts. Within twenty (20)
Business Days after Lender's request therefor, but not more than once in any
calendar quarter, and only to the extent not furnished by Borrower. Manager
shall furnish to Lender a current rent roll of all Tenants of the Property,
including a list of which Tenants are in default under their respective leases,
and a schedule of all other entities with whom Manager has entered into leases,
contracts or other agreements relating to the Property, together with copies of
all such leases, contracts or agreements.
(g) Further Assurances. Manager further agrees, without cost to
Manager, to (i) execute such affidavits and certificates as Lender shall
reasonably require to further evidence the agreements herein contained, (ii) on
request from Lender, and only to the extent not furnished by Borrower, furnish
Lender with copies of such information as Borrower is entitled to receive under
the Manager Agreement, and (iii) at reasonable times, and upon reasonable
advance notice, cooperate with Lender's representative or agent in any
inspection of the Property.
(h) Assignment of Rents and Leases. Manager acknowledges that, in
connection with the Loan, Borrower has executed and delivered to Lender an
Assignment of Leases and Rents, dated as of the date hereof, assigning to
Lender, among other things, all of Borrower's right, title and interest in and
to all of the Leases, including any of Borrower's rights in the security
deposits thereunder (to the extent permitted by applicable law). Manager hereby
agrees that as of the date hereof, Manager shall henceforth deliver to the
Lockbox Account, and cause all Tenants under Leases to deliver to the Lockbox
Account, for application in accordance with the terms and conditions of the Loan
Agreement, the Cash Management Agreement and the other Loan Documents, all Rents
and other proceeds received after the date hereof from any and all Tenants or
other parties occupying or using any portion of the Property.
(i) No Joint Venture. Lender has no obligation to Manager with
respect to the Debt and Manager shall not be a third party beneficiary with
respect to any of Lender's obligations to Borrower set forth in the Loan
Documents. The relationship of Lender to Borrower is one of a creditor to a
debtor, and Lender is not a joint venturer or partner of Borrower.
(j) Lender Not Obligated Under Management Agreement. Manager further
agrees that, except as hereinafter set forth, nothing herein shall impose upon
Lender any obligation for payment or performance in favor of Manager. In the
event that Lender notifies Manager in writing of the occurrence of a Cash
Management Event and that Lender has elected to assert the rights of Borrower
under the Management Agreement, Lender shall pay Manager the sums due Manager
under the terms of the Management Agreement (subject to and in accordance with
the terms of the Management Agreement and this Agreement) for the period
commencing on the effective date of
C-2-3
<PAGE>
Lender's notice to Manager and ending on the expiration date or earlier
termination of the Management Agreement.
(k) Lender's Reliance on Representations. Manager has executed this
Agreement for the purpose of inducing the Lender to make the Loan in accordance
with the Loan Agreement and with full knowledge that Lender shall rely upon the
representations, warranties and agreements herein contained when making the
Loan, and that but for this instrument and the representations, warranties and
agreements herein contained, the Lender would not take such actions.
(l) Governed by Loan Documents. Manager agrees that until such time
as the Debt has been repaid in full, the terms and provisions of this Agreement
and the Note, the Loan Agreement and the other Loan Documents shall be superior
to the terms and provisions of the Management Agreement with respect to the
payment of any management fees thereunder (other than with respect to payment of
management fees; and other amounts payable under the Management Agreement for
any periods prior to the termination thereof) and termination of the Management
Agreement, and to the extent there are any inconsistencies between the
Management Agreement and this Agreement and the Loan Documents with respect to
such terms and provisions, the terms, provisions and conditions in this
Agreement and the Loan Documents shall govern in all respects.
4. Borrower Consent. Borrower has joined herein to evidence its
consent to all the agreements of Manager contained in this Agreement.
5. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
6. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
collectively constitute but one and the same instrument.
7. Assignment. Lender shall have the right to transfer, sell and
assign its interest in this Agreement to any Person. All references to "Lender"
hereunder shall be deemed to include the successors and assigns of Lender.
8. Notices. Any notice, election, request, communication or demand
which is required or permitted to be given or served hereunder shall be in
writing and shall be given or served by hand delivery against receipt, by any
nationally recognized overnight courier service providing evidence of the date
of delivery or by certified mail return receipt requested, postage prepaid,
addressed to
C-2-4
<PAGE>
If to Lender: UBS Principal Finance LLC
299 Park Avenue
New York, New York 10171
Attention: Douglas Renfield-Miller
Facsimile No. (212) 821-5720
with a copy to: Cadwalader, Wickersham & Taft
227 West Trade Street, Suite 2400
Charlotte, North Carolina 28202
Attention: James P. Carroll, Esq.
Facsimile No. (704) 348-5200
If to Borrower: c/o Westfield Corporation, Inc.
11601 Wilshire Boulevard, Suite 1200
Los Angeles, California 90025-1748
Attention: Mark Stefanek
Facsimile No. (310) 478-3987
With a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills, Esq.
Facsimile No. (212) 909-6836
Any such notice or demand given hereunder shall be effective upon delivery or
three (3) days after mailing aforesaid. All notices, elections, requests,
communications and demands required or permitted hereunder shall be in the
English language.
9. Non-Recourse. Anything contained in this Agreement to the
contrary notwithstanding (except as provided below), Lender's recourse with
respect to any claims arising under or in connection with this Agreement shall
be limited solely to the interest of Manager in the Management Agreement, and
none of (i) Manager or any of its Affiliates, (ii) any Persons who presently or
in the future own any direct ownership interest in Manager or any successor of
Manager (each, a "Direct Beneficial Owner") or any affiliate thereof, (iii) any
Person owning, directly or indirectly, any legal or beneficial interest in
Manager or any Direct Beneficial Owner of any Affiliate thereof, or (iv) any
partner, principal, officer, controlling person, beneficiary, trustee, advisor,
shareholder, employee, agent, nominee, Affiliate or director of any Person
described in clauses (i) through (iii) above shall be personally liable for the
performance of any obligation thereunder or the payment of any amount due
hereunder; provided, however, that the foregoing limitation on the personal
liability of the Persons described in clauses (i) through (iv) above shall not
impair the validity of this Agreement or the right of Lender to enforce any of
its rights or remedies hereunder or under any of the other Loan Documents upon
the occurrence of a Cash Management Event as provided in this Agreement. Nothing
contained herein shall release, impair or otherwise affect any right, remedy or
recourse Lender may have against Manager or Borrower with respect to (a) any
fraud or bad faith or any material and intentional misrepresentation by Manager
or its Affiliates made in connection with the transactions contemplated hereby,
(b) bad
C-2-5
<PAGE>
faith waste by Manager, (c) any misapplication of Rents following and during the
continuance of a Cash Management Event, or (d) any misapplication of proceeds of
any insurance policies required to be maintained by Borrower or Manager.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
C-2-6
<PAGE>
Schedule 1
Monthly Replacement Deposit
NONE
Schedule 1 - 1
<PAGE>
Schedule 2
Monthly Rollover Deposit
MONTHLY ROLLOVER DEPOSIT
SHALL BE AS SET FORTH IN SECTION 4.5.1
OF THE LOAN AGREEMENT
Schedule 2 - 1
<PAGE>
Schedule 3
Exceptions to Borrower Representations
NONE
Schedule 3 - 1
<PAGE>
Schedule 4
Contracts
EXHIBIT BEGINS ON NEXT PAGE
Schedule 4 - 1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Contract # Contractor Type of Contract Commencement Date Termination Date Contract Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 PSC Security Services 01-Jun-98 31-May-00 $362,268/yr
- ------------------------------------------------------------------------------------------------------------------------------------
21-99-06 HaulAway Rubbish Trash Removal 01-Jun-99 31-May-00 $13,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
21-99-07 CST Environmental Asbestos Abate space 239 24-May-99 31-Jul-99 $18,875.00
- ------------------------------------------------------------------------------------------------------------------------------------
21-99-11 Merchants Maintenance/Housekeeping 01-Jul-99 30-Jun-01 $138,000 per yr.
- ------------------------------------------------------------------------------------------------------------------------------------
21-99-12 SC Property Services Sweeping 01-Jul-99 30-Jun-01 $20,400 per yr.
- ------------------------------------------------------------------------------------------------------------------------------------
21-99-14 Centerscpes Landscaping 15-Sep-99 30-Sep-01 $23,880.00 per yr.
- ------------------------------------------------------------------------------------------------------------------------------------
21-99-22 Reyco Construction Main Entrance Veneer Renovation 27-Dec-99 28-Feb-00 $14,700.00
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 5
Ownership of Borrower
EXHIBIT BEGINS ON FOLLOWING PAGE
Schedule 5 - 1
<PAGE>
SCHEDULE 5
Proposed WEA UPREIT Structure
Westfield Shoppingtown Eagle Rock
[FLOWCHART SHOWING PROPOSED OWNERSHIP STRUCTURE]
<PAGE>
EXHIBIT 11.1
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARE PRICE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARES
OUTSTANDING OUTSTANDING
-------------- ---------------
<S> <C> <C> <C> <C>
Average share price for year ended December 31,
1999 (1) $14.39
BASIC
COMMON SHARES OUTSTANDING:
As of January 1, 1998 73,338 365 73,337
Issued on May 13, 1999 7 233 5
Issued on September 17, 1999 1 106 1
---------------
73,343
Net income $54,299
Less dividends on preferred shares:
Series A $8,513
Series B 2,610
Series C 6,375
Series C-1 2,125
Series C-2 2,125
Series D 10,625
Series D-1 2,125
Series E 2,762 (37,260)
--------------- ===============
Net income allocable to common shares $17,039
===============
Basic earnings per share amount $0.23
===============
DILUTED
COMMON SHARES OUTSTANDING: 73,343
1996 WARRANTS:
As of January 1, 1999 6,246
Series A Preferred Shares (5,871)
---------------
Excess 1996 Warrants (a) 375
---------------
Per Share Price
Average Market Price (b) $14.39
Exercise Price (c) $16.01
Common equivalent shares ((b-c)/a)*b 365 0
1997 WARRANTS:
As of January 1, 1999 2,090
Series B Preferred Shares (1,800)
---------------
Excess 1997 Warrants (d) 290
---------------
Per Share Price
Average Market Price (b) $14.39
Exercise Price (e) $15.00
Common equivalent shares ((b-e)/d)*b 365 0
</TABLE>
<PAGE>
EXHIBIT 11.1 (CONTINUED)
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARE PRICE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
DAYS AVERAGE SHARES
OUTSTANDING OUTSTANDING
-------------- ---------------
<S> <C> <C> <C> <C>
1998 SUBSCRIPTION AGREEMENT:
Subscription agreement amount 465,000
Exchange Rate 0.6535 303,878(g)
Per Share Price
Average Market Price (b) 14.39
Common equivalent shares (g*.05)/(b*.95) 1,111 365 1,111
INVESTOR UNIT RIGHTS:
Units Issued 12/9/98 978 365 978
Units Issued 1/1/99 1,186 365 1,186
---------------
Common equivalent shares 2,164
---------------
Weighted average common and common equivalent shares 76,619
===============
Net income $54,299
Add net income allocable to investor unit rights 300
Less net income allocable to preferred shares (37,260)
---------------
Net income allocable to common shares $17,339
===============
Diluted earnings per share amount $0.23
===============
</TABLE>
Note - The Company's preferred shares were not included in the earnings per
share calculation as their effect is anitdilutive.
(1) The share price used for the EPS calculation is based on the average daily
closing market price of the Company's common stock as reported by the New York
Stock Exchange.
<PAGE>
EXHIBIT 11.2
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE PRICE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARES
OUTSTANDING OUTSTANDING
-------------- ---------------
<S> <C> <C> <C> <C>
Average share price for year ended December 31,
1998(1) $17.44
BASIC
COMMON SHARES OUTSTANDING:
- ---------------------------
As of January 1, 1998 73,329 365 73,330
Issued on May 13, 1998 7 233 4
Issued on September 17, 1998 1 106 -
---------------
73,334
Net income Less dividends on preferred shares: $106,188
Series A $8,337
Series B 2,556
Series C 2,480
Series C-1 53
Series C-2 12
Series D 4,134
Series D-1 47 (17,619)
--------------- ---------------
Net income allocable to common shares $88,569
===============
Basic earnings per share amount $1.21
===============
DILUTED
COMMON SHARES OUTSTANDING: 73,334
1996 WARRANTS:
As of January 1, 1998 6,246
Series A Preferred Shares (5,871)
---------------
Excess 1996 Warrants (a) 375
===============
Per Share Price
Average Market Price (b) $17.44
Exercise Price (c) $16.01
Common equivalent shares ((b-c)/a)*b 365 31
1997 WARRANTS:
As of January 1, 1998 2,090
Series B Preferred Shares (1,800)
---------------
Excess 1997 Warrants (d) 290
===============
Per Share Price
Average Market Price (b) $17.44
Exercise Price (e) $15.00
Common equivalent shares ((b-e)/d)*b 365 41
</TABLE>
<PAGE>
EXHIBIT 11.2 (CONTINUED)
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE PRICE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARES
OUTSTANDING OUTSTANDING
--------------- ---------------
<S> <C> <C> <C> <C>
1998 SUBSCRIPTION AGREEMENT:
Subscription agreement amount 465,000
Exchange rate 0.6475 301,088 (g)
Per Share Price
Average market price (f) $17.19
Common equivalent shares (g*.05)/(f*.95) 921,856 196 495
---------------
Weighted average common and common
equivalent shares 73,901
===============
Net income $106,188
Less net income allocable to preferred shares (17,619)
---------------
Net income allocable to common shares $88,569
===============
Diluted earnings per share amount $1.20
===============
</TABLE>
Note - The Company's preferred shares and Investor Unit Rights were not included
in the earnings per share calculation as their effect is antidilutive.
(1) The share price used for the EPS calculation is based on the average daily
closing market price of the Company's common stock as reported by the New York
Stock Exchange.
<PAGE>
EXHIBIT 11.3
<TABLE>
<CAPTION>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE PRICE AND PER SHARE AMOUNTS)
WEIGHTED
DAYS AVERAGE SHARES
OUTSTANDING OUTSTANDING
-------------- ---------------
<S> <C> <C> <C> <C>
Average share price for year ended December 31,
1997(1) $17.00
BASIC
COMMON SHARES OUTSTANDING:
As of January 1, 1997 59,929 365 52,930
Shares issued 5/21/97 20,400 225 12,575
---------------
65,505
===============
Net income $46,865
Less dividends on preferred share's
Series A $9,885
Series B 1,543 (11,428)
----------------- ---------------
Net income allocable to common shares $35,437
===============
Basic earnings per share amount $0.54
===============
DILUTED
COMMON SHARES OUTSTANDING: 65,505
1996 WARRANTS:
As of January 1, 1997 6,246
Series A Preferred Shares (5,871)
---------------
Excess 1996 Warrants (a) 375
===============
Per Share Price
Average Market Price (b) $17.00
Exercise Price (c) $16.01
Common equivalent shares (b-c)/a)*b 365 22
1997 WARRANTS:
As of May 21, 1997 2,090
Series B Preferred Shares (1,800)
---------------
Excess 1997 Warrants (d) 290
===============
Per Share Price
Average Market Price (e) $17.00
Exercise Price (f) $15.00
Common equivalent shares (e-f)/d*e 225 21
</TABLE>
<PAGE>
EXHIBIT 11.3 (CONTINUED)
<TABLE>
<CAPTION>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE PRICE AND PER SHARE AMOUNTS)
WEIGHTED
AVERAGE
DAYS SHARES
OUTSTANDING OUTSTANDING
-------------- ---------------
<S> <C> <C>
Weighted average common and common equivalent
shares 65,548
===============
Net income $46,865
Less net income allocable to preferred shares (11,428)
---------------
Net income allocable to common shares $35,437
===============
Diluted earnings per share amount $0.54
===============
</TABLE>
Note - The preferred shares were not included in the earnings per share
calculation as their effect is antidilutive.
(1) The share price used for the EPS calculations is based on the closing market
price as reported by the New York Stock Exchange on December 31, 1997, since the
average market price of the Company's stock was not available prior to the
Company's IPO in May 1997.
<PAGE>
EXHIBIT 12
<TABLE>
<CAPTION>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Income before income taxes $ 54,299 $106,188 $ 46,865 $ 24,696 $ 21,846
Add: Minority interest in consolidated real estate
affiliates 4,068 4,257 2,478 1,063 -
Equity in income of unconsolidated real
estate affiliates (9,259) (5,949) (3,887) (3,707) (4,412)
Distributions from unconsolidated real estate
affiliates 8,004 9,812 10,013 11,430 17,611
Interest expense 184,496 106,852 57,472 40,233 27,916
Less: Gain on sale of investments, net (1,971) (53,895) - - -
------------- ------------- ------------- ------------- --------------
Total earnings available to cover fixed charges $239,637 $167,265 $112,941 $ 73,715 $ 62,961
============= ============= ============= ============= ==============
Total fixed charges-interest expensed and
capitalized $186,811 $108,410 $ 58,876 $ 41,736 $ 27,968
Total preferred stock dividends 37,260 17,619 11,428 4,264 3
------------- ------------- ------------- ------------- --------------
Total combined fixed charges and preferred stock
dividends $224,071 $126,029 $ 70,304 $ 46,000 $ 27,971
============= ============= ============= ============= ==============
Ratio of earnings to fixed charges 1.28x 1.54x 1.92x 1.77x 2.25x
============= ============= ============= ============= ==============
Ratio of earnings to fixed charges and preferred
stock dividends 1.07x 1.33x 1.61x 1.60x 2.25x
============= ============= ============= ============= ==============
Supplemental disclosure of ratio of funds from
operations (FFO) to fixed charges:
FFO $177,023 $140,839 $111,271 $ 75,842 $ 65,792
Interest expense 184,496 106,852 57,472 40,233 27,916
------------- ------------- ------------- ------------- --------------
Adjusted FFO available to cover fixed charges $361,519 $247,691 $168,743 $116,075 $ 93,708
============= ============= ============= ============= ==============
Total fixed charges-interest expense $186,811 $108,410 $ 58,876 $ 41,736 $ 27,968
Total preferred stock dividends 37,260 17,619 11,428 4,264 3
------------- ------------- ------------- ------------- --------------
Total combined fixed charges and preferred
stock dividends $224,071 $126,029 $ 70,304 $ 46,000 $ 27,971
============= ============= ============= ============= ==============
Ratio of FFO to fixed charges 1.94x 2.28x 2.87x 2.78x 3.35x
============= ============= ============= ============= ==============
Ratio of FFO to fixed charges and preferred
stock dividends 1.61x 1.97x 2.40x 2.52x 3.35x
============= ============= ============= ============= ==============
</TABLE>
<PAGE>
EXHIBIT 21
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIST OF SUBSIDIARIES OF THE COMPANY
PLACE OF INCORPORATION OF
LEGAL NAME OF SUBSIDIARY ORGANIZATION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Anita Associates California Limited Partnership
Annapolis Land LLC Delaware Limited Liability Company
Annapolis Mall Limited Partnership Maryland Limited Partnership
Annapolis Mall LLC Delaware Limited Liability Company
Annapolis Manager LLC Delaware Limited Liability Company
Annapolis Shoppingtown LLC Delaware Limited Liability Company
Capital Mall Company Washington Limited Partnership
Capital Mall Land LLC Delaware Limited Liability Company
Capital Shopping Center LLC Delaware Limited Liability Company
Capital Shopping Center, Inc. Delaware Corporation
CMF, Inc. Delaware Corporation
Connecticut Post Mall LLC Delaware Limited Liability Company
Connecticut Post Mall No. 2 LLC Delaware Limited Liability Company
Crestwood Plaza, Inc. Delaware Corporation
Downtown Plaza LLC Delaware Limited Liability Company
E.W.H. Escondido Associates, L.P. Delaware Limited Partnership
Eagle Rock Manager LLC Delaware Limited Liability Company
Eagle Rock Plaza LLC Delaware Limited Liability Company
Eagle Rock Properties, Inc. Delaware Corporation
Eastland Manager LLC Delaware Limited Liability Company
Eastland Shopping Center LLC Delaware Limited Liability Company
Enfield Square LLC Delaware Limited Liability Company
Enfield Square, Inc. Delaware Corporation
FH Financing LLC Delaware Limited Liability Company
Fox Hills Mall LLC Delaware Limited Liability Company
Fox Hills Mall, Inc. Delaware Corporation
Hahn UPI California Limited Partnership
Horton Land LLC Delaware Limited Liability Company
Horton Plaza LLC Delaware Limited Liability Company
Horton Plaza, Inc. Delaware Corporation
Independence Mall Associates Limited Partnership North Carolina Limited Partnership
MBM Associates - New California Limited Partnership
Meriden Square Partnership Connecticut General Partnership
Meriden Square #1 LLC Delaware Limited Liability Company
Meriden Square #2 LLC Delaware Limited Liability Company
Mid Rivers Land LLC Delaware Limited Liability Company
Mid Rivers Limited Partnership Missouri Limited Partnership
Mid Rivers Mall LLC Delaware Limited Liability Company
Mid Rivers Office Development I, Inc. Delaware Corporation
Mid Rivers, Inc. Delaware Corporation
Mission Valley Center LLC Delaware Limited Liability Company
Mission Valley Finance Corporation Delaware Corporation
Mission Valley Partnership California Limited Partnership
Montgomery Mall Borrower LLC Delaware Limited Liability Company
Montgomery Mall Limited Partnership Maryland Limited Partnership
Montgomery Mall of Maryland LLC Delaware Limited Liability Company
Montgomery Mall Properties, Inc. Delaware Corporation
</TABLE>
<PAGE>
EXHIBIT 21
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIST OF SUBSIDIARIES OF THE COMPANY (CONTINUED)
PLACE OF INCORPORATION OF
LEGAL NAME OF SUBSIDIARY ORGANIZATION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
North County Fair LLC Delaware Limited Liability Company
Northwest Plaza LLC Delaware Limited Liability Company
Northwest Plaza, Inc. Delaware Corporation
Oakridge Mall LLC Delaware Limited Liability Company
Oakridge Mall, Inc. Delaware Corporation
Owensmouth Office Associates, Ltd. California Limited Partnership
Parkway Plaza LLC Delaware Limited Liability Company
Parkway Plaza, Inc. Delaware Corporation
Plaza Bonita LLC Delaware Limited Liability Company
Plaza Bonita, Inc. Delaware Corporation
Plaza Camino Real California Limited Partnership
Plaza Camino Real LLC Delaware Limited Liability Company
Plaza West Covina LLC Delaware Limited Liability Company
Plaza West Covina, Inc. Delaware Corporation
Promenade LLC Delaware Limited Liability Company
Residential Rentals and Investments, Inc. Connecticut Corporation
Santa Anita Fashion Park LLC Delaware Limited Liability Company
Solano Mall LLC Delaware Limited Liability Company
South County Center LLC Delaware Limited Liability Company
South County Post Office LLC Delaware Limited Liability Company
South County Properties, Inc. Delaware Corporation
South Shore Mall LLC Delaware Limited Liability Company
South Shore Manager LLC Delaware Limited Liability Company
The Connecticut Post Limited Partnership Connecticut Limited Partnership
Topanga Center, Inc. Delaware Corporation
Topanga Plaza LLC Delaware Limited Liability Company
Trumbull Department Stores, Inc. Delaware Corporation
Trumbull Mall LLC Delaware Limited Liability Company
Trumbull Shoppnig Center #1 LLC Delaware Limited Liability Company
Trumbull Shoppnig Center #2 LLC Delaware Limited Liability Company
University Towne Centre LLC Delaware Limited Liability Company
UPI Associates California General Partnership
V F Mall LLC Delaware Limited Liability Company
Valley Fair UTC LLC Delaware Limited Liability Company
Vancouver Mall Washington General Partnership
Vancouver Mall LLC Delaware Limited Liability Company
WAP HC, Inc. Delaware Corporation
WEA Crestwood Plaza LLC Delaware Limited Liability Company
WEA CT Houses LLC Delaware Limited Liability Company
WEA Meriden Square LLC Delaware Limited Liability Company
WEA Meriden Square No. 2 LLC Delaware Limited Liability Company
WEA Meriden Square No. 3 LLC Delaware Limited Liability Company
WEA Meriden Square, Inc. Delaware Corporation
WEA North County Fair LLC Delaware Limited Liability Company
WEA NY Houses LLC Delaware Limited Liability Company
WEA Palm Desert LLC Delaware Limited Liability Company
WEA Valley Fair LLC Delaware Limited Liability Company
WEA Valley Fair UTC LLC Delaware Limited Liability Company
</TABLE>
<PAGE>
EXHIBIT 21
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIST OF SUBSIDIARIES OF THE COMPANY (CONTINUED)
PLACE OF INCORPORATION OF
LEGAL NAME OF SUBSIDIARY ORGANIZATION
- ----------------------------------------------------------------- --- -----------------------------------------------
<S> <C>
West County Center LLC Delaware Limited Liability Company
West Park Mall LLC Delaware Limited Liability Company
West Park Mall, Inc. Delaware Corporation
West Park Partners, L.P. Missouri Limited Partnership
West Park Shopping Center, Inc. Delaware Corporation
West Valley LLC Delaware Limited Liability Company
West Valley Partnership California Limited Partnership
Westfield America G.P., Inc. Delaware Corporation
Westfield America Investor L.P. Delaware Limited Partnership
Westfield America Limited Partnership Delaware Limited Partnership
Westfield America M.S., Inc. Delaware Corporation
Westfield America Meriden Square, Inc. Delaware Corporation
Westfield America of Annapolis, Inc. Delaware Corporation
Westfield America of Bonita, Inc. Delaware Corporation
Westfield America of Missouri, Inc. Delaware Corporation
Westfield America of Vancouver, Inc. Delaware Corporation
Westfield America of West Covina, Inc. Delaware Corporation
Westfield America, Inc. Missouri Corporation
Westfield America-Wheaton, Inc. Delaware Corporation
Westfield Independence LLC Delaware Limited Liability Company
Westfield Independence Mall Limited Partnership Delaware Limited Partnership
Westfield Independence Mall Limited Partnership No. 2 Delaware Limited Partnership
Westfield Management, Inc. California Corporation
Westfield Mission Valley Corporation Delaware Corporation
Westfield Subsidiary REIT 1, Inc. Maryland Corporation
Westfield Subsidiary REIT 2, Inc. Maryland Corporation
Westland Milford Properties, Inc. Delaware Corporation
Westland Partners, Inc. Delaware Corporation
Westland Properties, Inc. Delaware Corporation
Westland Shopping Center, L.P. California Limited Partnership
Westland South Shore Mall L.P. California Limited Partnership
Westland Town Center LLC Delaware Limited Liability Company
Wheaton Plaza No. 1 LLC Delaware Limited Liability Company
Wheaton Plaza Regional Shopping Center LLP Maryland Limited Liability Partnership
WPI Meriden Square, Inc. Delaware Corporation
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements on
Form S-3 (Nos. 333-31658, 333-52977, 333-68809, 333-79667, 333-85805, 333-93165
and 333-93163) and in the related Prospectuses of Westfield America, Inc.,
formerly CenterMark Properties, Inc., of our report dated January 26, 2000, with
respect to the consolidated financial statements and schedule of Westfield
America, Inc. included in the Annual Report (Form 10-K) for the year ended
December 31, 1999 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
March 29, 2000
Los Angeles, California
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Know All Persons By These Presents, that each person whose
signature appears below constitutes and appoints Peter S. Lowy, Mark A. Stefanek
and Irv Hepner, and each of them, with full power to act without the others, his
true and lawful attorneys-in fact and agents, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K of Westfield America, Inc.
for the year ended December 31, 1999 (the "Annual Report"), and to file the
same, with all exhibits thereto, and to sign any amendments to the Annual Report
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power
of Attorney on this 28th day of March 2000.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K,
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1999 JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<CASH> 46,452 51,092 39,308
<SECURITIES> 0 0 0
<RECEIVABLES> 54,998 53,725 36,411
<ALLOWANCES> (7,336) (8,400) (8,912)
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 0 0
<PP&E> 3,444,804 3,643,770 1,793,327
<DEPRECIATION> (444,831) (340,727) (236,220)
<TOTAL-ASSETS> 3,603,661 3,820,639 1,969,630
<CURRENT-LIABILITIES> 0 0 0
<BONDS> 2,392,137 2,641,015 1,107,425
0 0 0
482,000 396,000 121,000
<COMMON> 733 731 731
<OTHER-SE> 538,107 624,388 648,649
<TOTAL-LIABILITY-AND-EQUITY> 3,603,661 3,820,639 1,969,630
<SALES> 0 0 0
<TOTAL-REVENUES> 503,778 328,465 216,808
<CGS> 0 0 0
<TOTAL-COSTS> 290,135 188,208 123,092
<OTHER-EXPENSES> 4,068 4,257 2,478
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 184,496 106,852 57,472
<INCOME-PRETAX> 54,299 106,188 46,865
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 52,328 53,293 48,865
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 1,971 53,895 0
<CHANGES> 0 0 0
<NET-INCOME> 54,299 106,188 46,865
<EPS-BASIC> 0.23 1.21 0.54
<EPS-DILUTED> 0.23 1.20 0.54
</TABLE>
