Document:

Exhibit 10.5

	
 
    

 

 

LOAN AND SECURITY AGREEMENT

 

 

Dated as of August 18, 2010

 

 

between

 

 

THE ENTITIES SET FORTH ON SCHEDULE 1
 ATTACHED HERETO,
 collectively, as Borrower

 

 

and

 

 

TOWSON VF L.L.C.,
 as Maryland Owner

 

 

and

 

 

VORNADO FINANCE II L.P.,
  as Lender

 

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    
	
ARTICLE I
    
	
 
    
	
DEFINITIONS; PRINCIPLES OF   CONSTRUCTION
    
	
 
    
	
Section 1.1
    	
Definitions
    	
1
    
	
Section 1.2
    	
Principles   of Construction
    	
36
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
GENERAL TERMS
    
	
 
    
	
Section 2.1
    	
Loan
    	
37
    
	
Section 2.2
    	
Interest
    	
38
    
	
Section 2.3
    	
Prepayments
    	
44
    
	
Section 2.4
    	
Defeasance
    	
45
    
	
Section 2.5
    	
Release   of Property
    	
50
    
	
Section 2.6
    	
Substitution   of Properties
    	
57
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
CASH MANAGEMENT
    
	
 
    
	
Section 3.1
    	
Accounts
    	
64
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
REPRESENTATIONS AND   WARRANTIES
    
	
 
    
	
Section 4.1
    	
Borrower   Representations
    	
70
    
	
Section 4.2
    	
Survival   of Representations
    	
85
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    
	
BORROWER COVENANTS
    
	
 
    
	
Section 5.1
    	
Affirmative   Covenants
    	
86
    
	
Section 5.2
    	
Negative   Covenants
    	
103
    

 

i

 

	
ARTICLE VI
    
	
 
    
	
INSURANCE; CASUALTY;   CONDEMNATION; RESTORATION
    
	
 
    
	
Section 6.1
    	
Insurance   Coverage
    	
107
    
	
Section 6.2
    	
Condemnation   and Insurance Proceeds
    	
113
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    
	
IMPOSITIONS, OTHER   CHARGES, LIENS AND OTHER ITEMS
    
	
 
    
	
Section 7.1
    	
Borrower   and Maryland Owner to Pay Impositions and Other Charges
    	
118
    
	
Section 7.2
    	
No   Liens
    	
118
    
	
Section 7.3
    	
Contest
    	
119
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
 
    
	
TRANSFERS, INDEBTEDNESS   AND SUBORDINATE LIENS
    
	
 
    
	
Section 8.1
    	
Restrictions   on Transfers
    	
120
    
	
Section 8.2
    	
Sale   of Building Equipment
    	
120
    
	
Section 8.3
    	
Immaterial   Transfers and Easements, etc.
    	
120
    
	
Section 8.4
    	
Indebtedness
    	
121
    
	
Section 8.5
    	
Permitted   Owner Interest Transfers
    	
121
    
	
Section 8.6
    	
Permitted   Encumbrances
    	
124
    
	
Section 8.7
    	
Deliveries   to Lender
    	
124
    
	
Section 8.8
    	
Leases
    	
125
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    
	
 
    
	
INTENTIONALLY OMITTED
    
	
 
    
	
ARTICLE X
    
	
 
    
	
MAINTENANCE OF PROPERTIES;   ALTERATIONS
    
	
 
    
	
Section 10.1
    	
Maintenance   of Properties
    	
129
    
	
Section 10.2
    	
Conditions   to Alteration
    	
129
    
	
Section 10.3
    	
Costs   of Alteration
    	
130
    
	
 
    	
 
    	
 
    
	
ARTICLE XI
    
	
 
    
	
BOOKS AND RECORDS,   FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
    
	
 
    
	
Section 11.1
    	
Books   and Records
    	
133
    

 

ii

 

	
Section 11.2
    	
Financial   Statements
    	
133
    
	
 
    	
 
    	
 
    
	
ARTICLE XII
    
	
 
    
	
INTENTIONALLY OMITTED
    
	
 
    
	
ARTICLE XIII
    
	
 
    
	
SERVICER
    
	
 
    
	
Section 13.1
    	
Retention   of Servicer
    	
135
    
	
 
    	
 
    	
 
    
	
ARTICLE XIV
    
	
 
    
	
ARTICLE XV
    
	
 
    
	
ASSIGNMENTS
    
	
 
    
	
Section 15.1
    	
Assignments
    	
136
    
	
Section 15.2
    	
Limitation   on Costs
    	
136
    
	
 
    	
 
    	
 
    
	
ARTICLE XVI
    
	
 
    
	
RESERVE ACCOUNTS
    
	
 
    
	
Section 16.1
    	
Tax   Reserve Account
    	
136
    
	
Section 16.2
    	
Insurance   Reserve Account
    	
137
    
	
Section 16.3
    	
Replacements   and Replacement Reserve
    	
138
    
	
Section 16.4
    	
Ground   Lease Reserve Fund
    	
142
    
	
Section 16.5
    	
Intentionally   Omitted
    	
143
    
	
Section 16.6
    	
Reserve   Accounts, Generally
    	
143
    
	
Section 16.7
    	
Guaranty   of Reserve Accounts
    	
143
    
	
Section 16.8
    	
Letters   of Credit
    	
144
    
	
Section 16.9
    	
Excess   Cash Flow Reserve Account
    	
146
    
	
Section 16.10
    	
TI   and Leasing Reserve Account
    	
146
    
	
Section 16.11
    	
Required   Remediation Funds
    	
146
    
	
 
    	
 
    	
 
    
	
ARTICLE XVII
    
	
 
    
	
DEFAULTS
    
	
 
    
	
Section 17.1
    	
Event   of Default
    	
147
    
	
Section 17.2
    	
Remedies
    	
152
    
	
Section 17.3
    	
Remedies   Cumulative; Waivers
    	
153
    
	
Section 17.4
    	
Costs   of Collection
    	
153
    

 

iii

 

	
ARTICLE XVIII
    
	
 
    
	
SPECIAL PROVISIONS
    
	
 
    
	
Section 18.1
    	
Exculpation
    	
154
    
	
 
    	
 
    	
 
    
	
ARTICLE XIX
    
	
 
    
	
MISCELLANEOUS
    
	
 
    
	
Section 19.1
    	
Survival
    	
157
    
	
Section 19.2
    	
Lender’s   Discretion
    	
157
    
	
Section 19.3
    	
Governing   Law
    	
158
    
	
Section 19.4
    	
Modification,   Waiver in Writing
    	
159
    
	
Section 19.5
    	
Delay   Not a Waiver
    	
159
    
	
Section 19.6
    	
Notices
    	
159
    
	
Section 19.7
    	
TRIAL   BY JURY
    	
161
    
	
Section 19.8
    	
Headings
    	
162
    
	
Section 19.9
    	
Severability
    	
162
    
	
Section 19.10
    	
Preferences
    	
162
    
	
Section 19.11
    	
Waiver   of Notice
    	
162
    
	
Section 19.12
    	
Expenses;   Indemnity
    	
163
    
	
Section 19.13
    	
Exhibits   and Schedules Incorporated
    	
165
    
	
Section 19.14
    	
Offsets,   Counterclaims and Defenses
    	
165
    
	
Section 19.15
    	
Liability   of Assignees of Lender
    	
165
    
	
Section 19.16
    	
No   Joint Venture or Partnership; No Third Party Beneficiaries
    	
166
    
	
Section 19.17
    	
Publicity
    	
166
    
	
Section 19.18
    	
Waiver   of Counterclaim and Other Actions
    	
166
    
	
Section 19.19
    	
Conflict;   Construction of Documents; Reliance
    	
166
    
	
Section 19.20
    	
Prior   Agreements
    	
167
    
	
Section 19.21
    	
Counterparts
    	
167
    
	
Section 19.22
    	
Cross-Default;   Cross-Collateralization; Waiver of Marshalling of Assets
    	
167
    
	
Section 19.23
    	
Borrower   Agent
    	
168
    

 

	
Schedule   1- Individual Borrowers
    
	
Schedule   1.1.1 – Allocated Loan Amounts
    
	
Schedule   2 - Marlton Condemnation
    
	
Schedule   2.2.3 – Amortization Schedule
    
	
Schedule   3.1.9 – Form of Tenant Notification Letter
    
	
Schedule   4.1.1 – Borrower Organizational Structure Chart
    
	
Schedule   4.1.12 – Financial Data
    
	
Schedule   4.1.13 – Condemnation Schedule
    
	
Schedule   4.1.23 – Missing Licenses and/or Permits
    
	
Schedule   4.1.24 – Flood Zone Properties
    
	
Schedule   4.1.29(h) – Environmental Issues
    
	
Schedule   4.1.37 – Collective Bargaining Agreements
    

 

iv

 

	
Schedule   4.1.40 – Tax Payer Identification Numbers
    
	
Schedule   4.1.43 – Ground Leases
    
	
Schedule   4.1.44 – REOA’s
    
	
Schedule   5.1.4 – Wal-Mart Parcel
    
	
Schedule   5.1.17 – Form of Tenant Estoppel Letter
    
	
Schedule   5.1.22 – O&M Program
    
	
Schedule   5.1.27 – Required Repairs
    
	
Schedule   8.8.2 – Standard Form of Lease
    
	
Schedule   8.8.9 – Non Disturbance Agreement
    
	
Schedule   11.2.1 – Form of Quarterly Report
    
	
Schedule   11.2.3 – Form of Rent Roll
    
	
Schedule   16.3 – Rentable square feet of each Individual Property
    
	
Schedule   16.10 – TI and Leasing Costs
    
	
Schedule   16.11.1 – Required Remediation
    
	
Schedule   18.1.2 – Liens
    

 

v

 

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT, dated as of this 18th day of August, 2010 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), by and among VORNADO FINANCE II, L.P., a Delaware limited partnership, having an address at c/o Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019 (together with its successors and assigns, “Lender”), THE ENTITIES SET FORTH ON SCHEDULE 1 ATTACHED HERETO, each having an address at c/o Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019 (each, an “Individual Borrower” and, collectively, “Borrower”), and TOWSON VF L.L.C. a Maryland limited liability company, having an address at c/o Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019 (“Maryland Owner”).

 

W I T N E S S E T H:

 

WHEREAS, Borrower desires to obtain the Loan (as herein defined) from Lender; and

 

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the terms of this Agreement and the other Loan Documents (as herein defined).

 

WHEREAS, it is a condition to the making of the Loan to Borrower that Maryland Owner enter into the Maryland Guaranty Agreement (as herein defined) to guaranty the payment of the Loan by Maryland Individual Borrower (as herein defined), and that Maryland Owner secure its obligations under the Maryland Guaranty Agreement by executing and delivering the Security Instrument (as herein defined) encumbering the Maryland Individual Property (as herein defined).

 

NOW, THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, the parties hereto hereby covenant, agree, represent and warrant as follows:

 

ARTICLE I

 

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1                                    Definitions.  For all purposes of this Agreement, except as otherwise expressly required or unless the context clearly indicates a contrary intent:

 

“Account Collateral” shall have the meaning set forth in Section 3.1.4.

 

“Acceptable Counterparty” shall mean any counterparty to the Rate Cap or any Replacement Rate Cap that has and shall maintain, until the expiration of the applicable Rate Cap or Replacement Rate Cap, a credit rating of not less than A+ from S&P and Fitch.

 

 

“Additional Non-Consolidation Opinion” shall have the meaning set forth in Section 4.1.29(b).

 

“Additional Trust Fund Expenses” shall mean (a) any interest payable to the Servicer, any special servicer or any trustee in connection with the Loan pursuant to an Approved Servicing Agreement in respect of advances made by any of the foregoing; (b) all compensation payable to any special servicer under an Approved Servicing Agreement in connection with servicing the Loan when it is a specially serviced loan or its administration of any of the Properties foreclosed upon; and (c) except for the regular monthly fee payable to the Servicer and the Trustee, any other reasonable out-of-pocket cost, fee or expense of the trust fund administering the Loan pursuant to an Approved Servicing Agreement (including, but not limited to, any costs or expenses of any kind to be paid by Servicer or Trustee in connection with the Lockbox Agreement, any costs and expenses in connection with appraisals of the Properties (or any updates to any appraisals) and/or property inspections conducted by the Servicer and/or special servicer, reimbursements to the trustee thereof, the Servicer, any special servicer, any certificate administrator thereunder and related Persons of each of the foregoing pursuant to an Approved Servicing Agreement and indemnification to Persons entitled thereto and the cost of opinions of counsel, if any, required to be obtained pursuant to an Approved Servicing Agreement in connection with servicing the Loan and administration of the trust fund).  Further, for clarity, (i) any cost or expense which, pursuant to the Approved Servicing Agreement, is to be borne by the Trustee, Servicer or Special Servicer “at its own expense” or words of similar import and is not reimbursable as an advance or otherwise by the trust fund under such Approved Servicing Agreement, including, without limitation, fidelity bonds and errors and omissions policies, shall not be an Additional Trust Fund Expense and (ii) any losses or enforcement costs arising out of the failure of the issuer or obligor under any investment administered by the Servicer, any special servicer or any trustee pursuant to an Approved Servicing Agreement to make any payment in respect of such investment or otherwise to fail to perform any obligation required in respect of such investment shall not be Additional Trust Fund Expenses.

 

“Affiliate” shall mean, 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 Wells Fargo Bank, National Association, a national banking association, or any successor Eligible Institution acting as Agent under the Cash Management Agreement.

 

“Agreement” shall have the meaning set forth in introductory paragraph hereof.

 

“Allentown Individual Borrower” shall mean Two Guys From Harrison Holding Company, L.P., together with its successors and permitted assigns.

 

“Allocated Loan Amount” shall mean the portion of the Loan allocated to each Individual Property, as set forth on Schedule 1.1.1, as such amounts may be reduced pursuant to Section 2.3.2, Section 2.4.2, Section 2.5.4, Section 2.5.5, Section 6.2.3, Section 6.2.5(b) or any other section of this Agreement that expressly provides for the reduction thereof.

 

2

 

“ALTA” shall mean American Land Title Association, or any successor thereto.

 

“Alteration” shall have the meaning set forth in Section 10.2.

 

“Alteration Deficiency” shall have the meaning set forth in Section 10.3(a).

 

“Alteration Deficiency Guaranty” shall have the meaning set forth in Section 10.3(a).

 

“Annual Budget” shall mean the operating budget for the Properties prepared by Borrower, Maryland Owner and/or Manager, on Borrower’s and Maryland Owner’s behalf, pursuant to the Management Agreement, for the applicable Fiscal Year or other period setting forth, in reasonable detail, Borrower’s, Maryland Owner’s or Manager’s, as applicable, good faith estimates of the anticipated results of operations of each Individual Property, including revenues from all sources, all Operating Expenses, Management Fees, Manager Lease Fees and Capital Expenditures.

 

“Approved Annual Budget” shall have the meaning set forth in Section 11.2.4.

 

“Approved Bank” shall mean a domestic bank (or the U.S. agency or branch of a foreign bank) or other financial institution which has a minimum long-term unsecured debt rating of at least “A-” by S&P and the equivalent thereof from Fitch (if rated by Fitch) and a minimum short term unsecured debt rating of at least “A-1” by S&P and the equivalent thereof from Fitch (if rated by Fitch).

 

“Approved Servicing Agreement” means the Trust and Servicing Agreement entered into on August 18, 2010, among Wells Fargo Bank, National Association, as servicer,  Wells Fargo Bank, National Association, as special servicer, and Deutsche Bank National Trust Company, as trustee, and any modifications, supplements or amendments thereto or replacements thereof approved by Borrower.

 

“Architect” shall mean an architect, engineer or construction consultant selected by Borrower or Maryland Owner which is licensed to practice in the State in which an applicable Individual Property is located and has at least five (5) years of relevant experience, and which may be an employee of Manager or an Affiliate thereof.

 

“Assignment of Leases” shall mean (a) with respect to each Individual Property (other than the Maryland Individual Property), that certain first priority Assignment of Leases and Rents and Security Deposits, dated as of the date hereof, from the related Individual Borrower, as assignor, to Lender, as assignee, assigning to Lender all of such Individual Borrower’s interest in and to the Leases, Rents and Security Deposits of the applicable Individual Property as security for the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, and (b) with respect to the Maryland Individual Property, that certain first priority Indemnity Assignment of Leases and Rents and Security Deposits, dated as of the date hereof, from Maryland Owner, as assignor, to Lender, as assignee, assigning to Lender all of Maryland Owner’s interest in and to the Leases, Rents and Security Deposits of the Maryland Individual Property as security for the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

3

 

“Assignment of Management Agreement” shall mean that certain Assignment Consent and Subordination of Management Agreement dated as of the date hereof among Lender, Borrower, Maryland Owner and Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Bankruptcy Action” shall mean with respect to any Person (a) such Person filing a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (b) an Affiliate, officer, trustee, director, or representative which controls, directly or indirectly, such Person files, or joins in the filing of, an involuntary petition against such Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition against such Person from any Person; (c) such Person files or joins in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition from any Person or colludes to effect any involuntary petition; (d) any Affiliate, officer, trustee, director, or representative which controls such Person files or joins in an application for the appointment of a custodian, receiver, trustee, or examiner for such Person or any portion of any Individual Property; or (e) such Person makes a general assignment for the benefit of creditors, or admits, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due.

 

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights.

 

“Borrower” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and permitted assigns.

 

“Borrower Agent” shall have the meaning set forth in Section 19.23.

 

“Borrower’s Knowledge” shall mean, with respect to Borrower and Maryland Owner, the actual and current knowledge of the Senior Vice President-Acquisition and Capital Markets for VOP (as of the date hereof being Cliff Broser) and the Executive Vice President of Retail Division of VOP (as of the date hereof being Sandeep Mathrani).

 

“Bottom Up Guaranty” shall mean those certain Guaranties made and entered into as of the date hereof and as of November 15, 2007 (the latter of which the parties acknowledge and agree may be delivered within ten (10) days after the Closing Date and upon such delivery shall be accepted by Lender), by the parties identified on Exhibit A thereto, for the benefit of Lender and such other similar guarantees as Lender may accept from time to time (which Lender agrees to consider in good faith at Borrower’s request).  For clarity, Lender expressly acknowledges and agrees that (i) any default by a guarantor under a Bottom Up Guaranty shall not be a Default or Event of Default hereunder and (ii) in no event shall a Bottom Up Guaranty extend to any Defeased Notes.  Upon the acceptance by Lender of any Bottom Up Guaranty other than those specifically described above, Borrower shall pay Lender a $5,000 processing fee.

 

4

 

“Breakage Costs” shall have the meaning set forth in Section 2.2.11(d).

 

“Building Equipment” shall have the meaning set forth in the Security Instrument.

 

“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which national banks in New York, New York or the place of business of any trustee, servicer or special servicer under an Approved Servicing Agreement is not open for business, except that when used with respect to the determination of LIBOR, “Business Day” shall be a day on which commercial banks are open for international business (including dealings in U.S. Dollar deposits) in London, England.

 

“Capital Expenditures” shall mean any amount incurred in respect of capital items which in accordance with GAAP would not be included in Borrower’s annual financial statements for an applicable period as an operating expense of the Properties and is not reasonably expected by Borrower to be a regularly recurring expense of the Properties.

 

“Capped LIBOR Rate” shall mean seven percent (7%).

 

“Captive Insurance Company” shall have the meaning set forth in Section 6.1.2.

 

“Cash” shall mean the legal tender of the United States of America.

 

“Cash and Cash Equivalents” shall mean any one or a combination of the following:  (a) Cash, and (b) U.S. Securities.

 

“Cash Management Account” shall have the meaning set forth in Section 3.1.2 hereof.

 

“Cash Management Agency Agreement” shall mean that certain Cash Management Agency Agreement, dated as of the date hereof, by and among VOP, Borrower and Maryland Owner.

 

“Cash Management Agreement” shall mean that certain Cash Management Agreement, dated as of the date hereof, by and among Borrower, Maryland Owner, Agent and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Cash Sweep Event” shall mean the occurrence of:

 

(a)                                 an Event of Default;

 

(b)                                 any Bankruptcy Action of any Individual Borrower or Maryland Owner; or

 

(c)                                  a DSCR Event.

 

“Cash Sweep Event Cure” shall mean, (a) if the Cash Sweep Event is caused solely by the occurrence and continuance of a DSCR Event, the achievement of a Debt Service

 

5

 

Coverage Ratio of 1.20 to 1.00 or greater for two (2) consecutive calendar quarters based upon the trailing four (4) calendar quarter period immediately preceding the Determination Date; provided that, a Cash Sweep Event Cure shall also be deemed to have occurred (a) with respect to a Cash Sweep Event caused by a DSCR Event, if Borrower (i) prior to the Lockout Expiration Date delivers to Lender a Letter of Credit or collateral in the form of Cash and Cash Equivalents or makes a prepayment of the Floating Rate Component of the Loan subject to and in accordance with the terms of this Agreement or (ii) on or after the Lockout Expiration Date, makes a prepayment of the Loan, in each case in an amount that, if paid or applied to reduce the outstanding principal amount of the Loan, would cause the Debt Service Coverage Ratio to be not less than 1.20 to 1.00; (b) with respect to a Cash Sweep Event that is caused by the occurrence and continuance of an Event of Default, such Event of Default has been cured in accordance with the terms of this Agreement and the other Loan Documents or (c) with respect to a Cash Sweep Event that is caused by the occurrence and continuance of a Bankruptcy Action of any Individual Borrower or Maryland Owner, such Bankruptcy Action has terminated without a liquidation, restructuring or dissolution of such Individual Borrower or Maryland Owner; provided, however, that such Cash Sweep Event Cure set forth in this definition shall be subject to the following conditions, (i) no other Event of Default shall have occurred and be continuing under this Agreement or any of the other Loan Documents and (ii) Borrower and Maryland Owner shall have paid all of Lender’s reasonable actual costs and expenses incurred in connection with such cure, including reasonable out-of-pocket attorney’s fees and disbursements.

 

“Cash Sweep Period” shall mean each period commencing on the occurrence of a Cash Sweep Event and continuing until the earlier of (a) the occurrence of a Cash Sweep Event Cure and (b) the payment in full of all principal and interest on the Loan and all other amounts payable under the Loan Documents in accordance with the terms and provisions of the Loan Documents.

 

“Casualty Amount” shall mean fifteen percent (15%) of the applicable Allocated Loan Amount with respect to an affected Individual Property.

 

“Closing Date” shall mean the date of this Agreement set forth in the first paragraph hereof.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be further amended from time to time, and any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

 

“Collateral Accounts” shall mean, collectively, the Lockbox Account, the Cash Management Account and the Reserve Accounts.

 

“Collateral Assignment of Interest Rate Cap” shall mean that certain Collateral Assignment of Interest Rate Cap Agreement, dated as of the date hereof, executed by Borrower Agent in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Component” shall mean, individually, any one of Component A-1, Component A-2-FX, Component A-2-FL, Component B, Component C and Component D.

 

6

 

“Components” shall mean, collectively, Component A-1, Component A-2-FX, Component A-2-FL, Component B, Component C and Component D.

 

“Contest Threshold” shall have the meaning set forth in Section 7.3.

 

“Contribution Agreement” shall mean that certain Contribution Agreement, dated as of the date hereof, by and among each Individual Borrower and Maryland Owner, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Control” shall mean (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise (subject to the first sentence of Section 8.5(a)), or (b) the ownership, direct or indirect, of more than fifty percent (50%) of the voting securities of such Person.  The terms Controlled, Controlling and Common Control shall have correlative meanings.

 

“Debt” shall mean, with respect to any Person at any time, (a) indebtedness or liability of such Person for borrowed money whether or not evidenced by bonds, debentures, notes or other instruments, or for the deferred purchase price of property or services; (b) obligations of such Person as lessee under leases which should have been or should be, in accordance with GAAP, recorded as capital leases; (c) current liabilities of such Person in respect of unfunded vested benefits under plans covered by Title IV of ERISA; (d) obligations otherwise described in this definition of “Debt” issued for, or liabilities incurred on the account of, such Person; (e) obligations or liabilities of such Person arising under letters of credit, credit facilities or other acceptance facilities; (f) obligations of such Person under any guaranties or other agreement to become secondarily liable for any obligation of any other Person, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or otherwise to assure a creditor against loss; (g) obligations of such Person secured by any Lien (excluding Liens for Impositions or Other Charges which are not yet delinquent by more than thirty (30) days) on any property of such Person, whether or not the obligations have been assumed by such Person; or (h) obligations of such Person under any interest rate or currency exchange agreement.

 

“Debt Service” shall mean, with respect to any particular period of time, scheduled principal and interest payments due under the Note (or any Undefeased Note as applicable, but excluding any Defeased Note).

 

“Debt Service Reserve Account” shall have the meaning set forth in Section 3.1.3.

 

“Debt Service Coverage Ratio” as of any date of calculation, shall mean a ratio, as reasonably determined by Lender for the applicable period, in which:

 

(a)                                 the numerator is the Net Operating Income, as stated on Borrower’s four (4) most recent quarterly financial statements delivered to Lender pursuant to Section 11.2.1, for the twelve (12) calendar month period ending on the last day

 

7

 

of the calendar quarter immediately prior to the Determination Date in question; and

 

(b)                                 the denominator is the aggregate amount of principal and interest actually due and payable in accordance with the Note (or any Undefeased Note as applicable, but excluding any Defeased Note) for the immediately preceding twelve (12) calendar month period ending on the last day of the calendar quarter immediately prior to the Determination Date in question, as adjusted to reflect any prepayments or Defeasance Events made or occurring during such period pursuant to the terms and provisions of this Agreement; provided that, if Borrower shall have delivered to Lender a Letter of Credit or cash collateral pursuant to any provision of this Agreement, then (except to the extent the same shall have been returned to Borrower pursuant to this Agreement) the amount of interest and principal to be calculated pursuant to the above provisions of this clause (b) shall be calculated based on the excess of the outstanding principal amount of the Loan less the sum of the face amount of such Letters of Credit and/or the amount of such cash collateral.

 

“Default” shall mean the occurrence of any event hereunder or under any of the other Loan Documents which, but for the giving of notice or passage of time, or both, would be an Event of Default.

 

“Default Rate” with respect to each Component of the Note, a rate per annum equal to the lesser of (a) the Maximum Legal Rate and (b) three percent (3%) above the Fixed Interest Rate or Floating Interest Rate otherwise applicable to such Component.

 

“Defeasance Collateral” shall mean the Total Defeasance Collateral or the Partial Defeasance Collateral, as the context may require.

 

“Defeasance Collateral Account” shall have the meaning set forth in Section 2.4.3.

 

“Defeasance Date” shall mean the Total Defeasance Date or the Partial Defeasance Date, as the context may require.

 

“Defeasance Event” shall mean the Total Defeasance Event or the Partial Defeasance Event, as the context may require.

 

“Defeasance Security Agreement” shall have the meaning set forth in Section 2.5.1(c).

 

“Defeased Note” shall have the meaning set forth in Section 2.4.2(d).

 

“Defect” shall have the meaning set forth in Section 5.1.26.

 

“Deficiency” shall have the meaning set forth in Section 6.2.4(b)(ii).

 

8

 

“Determination Date” shall mean the date that is forty-five (45) days following the end of each calendar quarter occurring during the term of the Loan.

 

“DSCR Event” shall mean, as of any Determination Date, the Debt Service Coverage Ratio is less than 1.10 to 1.00 for two (2) consecutive calendar quarters based upon the trailing four (4) calendar quarter period immediately preceding such Determination Date.

 

“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. §9.10(b), having in either case a combined capital and surplus of at least Fifty Million and No/100 Dollars ($50,000,000.00) 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 depository institution or trust company insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial paper of which are rated at least “A-1” by S&P and the equivalent thereof from Fitch (if rated by Fitch) in the case of accounts in which funds are held for thirty (30) days or less (or, in the case of accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least “AA-” by S&P and the equivalent thereof from Fitch (if rated by Fitch)).

 

“Environmental Claim” shall mean any claim, action, investigation or written notice by any Person alleging potential liability (including potential liability for investigatory costs, cleanup costs, natural resource damages, property damages, personal injuries or penalties) arising out of, based upon or resulting from (a) the presence, threatened presence, release or threatened release into the environment of any Hazardous Materials from or at any Individual Property, or (b) the violation, or alleged violation, of any Environmental Law relating to any Individual Property.

 

“Environmental Indemnity Agreement” shall mean that certain Environmental Indemnity Agreement, dated as of the date hereof, by and among Borrower, Maryland Owner, VOP and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Environmental Law” shall mean any federal, state or local statute, regulation or ordinance or any judicial or administrative decree or decision, whether now existing or hereafter enacted, promulgated or issued, with respect to the protection of human health as it relates to any Hazardous Materials, or the environment, Microbial Matter, drinking water, groundwater, wetlands, landfills, open dumps, storage tanks, underground storage tanks, solid waste, waste water, storm water run-off, waste emissions or wells.  Without limiting the generality of the foregoing, the term shall encompass each of the following statutes, and regulations promulgated thereunder, and amendments and successors to such statutes and regulations, as may be enacted

 

9

 

and promulgated from time to time:  (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified in scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. § 9601 et seq.); (b) the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.); (c) the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.); (d) the Toxic Substances Control Act (15 U.S.C. § 2061 et seq.); (e) the Clean Water Act (33 U.S.C. § 1251 et seq.); (f) the Clean Air Act (42 U.S.C. § 7401 et seq.); (g) the Safe Drinking Water Act (21 U.S.C. § 349; 42 U.S.C. § 201 and § 300f et seq.); (h) the National Environmental Policy Act of 1969 (42 U.S.C. § 4321); (i) the Superfund Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); and (j) Title III of the Superfund Amendment and Reauthorization Act (40 U.S.C. § 1101 et seq.).

 

“ERISA” shall mean the United States Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and the rulings issued thereunder.

 

“ESA” shall have the meaning set forth in Section 4.1.29(j).

 

“Event of Default” shall have the meaning set forth in Section 17.1(a).

 

“Excess Cash Flow” shall have the meaning set forth in the Cash Management Agreement.

 

“Excess Cash Flow Reserve Account” shall have the meaning set forth in Section 3.1.3.

 

“Excess Cash Flow Reserve Amount” shall have the meaning set forth in Section 16.9.1 hereof.

 

“Exculpated Parties” shall have the meaning set forth in Section 18.1.1.

 

“Excusable Delay” shall mean a delay solely due to acts of God, governmental restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable control of Borrower and/or Maryland Owner, but Borrower’s and/or Maryland Owner’s lack of funds in and of itself shall not be deemed a cause beyond the control of Borrower and/or Maryland Owner, as the case may be.

 

“Extraordinary Expenses” shall mean such extraordinary operating expenses and/or capital expenses not set forth in the Approved Annual Budget as are approved by Lender (such approval not to be unreasonably withheld, conditioned or delayed).

 

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the term of the Loan or the portion of any such twelve (12) month period falling within the term of the Loan in the event that such twelve (12) month period occurs partially before or after, or partially during, the term of the Loan.

 

10

 

“Fitch” shall mean Fitch Ratings, Inc.

 

“Fixed Interest Rate” shall mean a rate of: (a) 2.9804% per annum as to Component A-1; (b) 4.0143% per annum as to Component A-2-FX; (c) 4.7517% per annum as to Component B; (d) 5.2911% per annum as to Component C; and (e) 6.3663% per annum as to Component D.

 

“Fixed Rate Component” shall mean, individually or collectively as the context requires, each of Component A-1, Component A-2-FX, Component B, Component C and Component D.

 

“Floating Interest Rate” shall mean the sum of (i)  LIBOR plus (ii) the LIBOR Margin.

 

“Floating Rate Component” shall mean Component A-2-FL.

 

“Floating Rate Determination Date” shall mean with respect to any Interest Accrual Period with respect to the Floating Rate Component, the date that is two (2) Business Days prior to the beginning of such Interest Accrual Period.

 

“GAAP” shall mean the accounting principles generally accepted in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession, to the extent such principles are applicable to the facts and circumstances on the date of determination and as amended, except where such amendment would materially affect a right or obligation of Borrower hereunder.

 

“Governmental Authority” shall mean any court, board, agency, commission, office or other authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

 

“Ground Lease” shall mean each of the ground leases set forth on Schedule 4.1.43 attached hereto, as modified by any agreements executed by any of the Ground Lessors in favor of Lender in connection with the Loan.  For clarity, any ground lease entered into between two or more Individual Borrowers  or Maryland Owner shall not be a Ground Lease.

 

“Ground Lease Guaranty” shall mean that certain Guaranty executed and delivered by Guarantor in connection with the Loan to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Ground Lease Property” shall mean, collectively, the Individual Property located at 7000 Hadley Road, South Plainfield, New Jersey 07080 and the Individual Property located at 51 Route 17 North, East Rutherford, New Jersey 07073.  For clarity, any property

 

11

 

subject to a ground lease entered into between two or more Individual Borrowers  or Maryland Owner shall not be Ground Lease Property.

 

“Ground Lease Reserve Account” shall have the meaning set forth in Section 3.1.3 hereof.

 

“Ground Lease Reserve Amount” shall have the meaning set forth in Section 16.4.1 hereof.

 

“Ground Lessor” and “Ground Lessors” shall mean, individually or collectively, as the context requires, (i) Northern Star, LLC and (ii) Honeywell International, Inc. together with their respective successors and assigns, and shall not include Borrower or Maryland Owner.

 

“Ground Rent” shall mean all rents (including both base and additional rent) and other charges due under the Ground Leases.

 

“Ground Tenant” and “Ground Tenants” shall mean, individually or collectively, as the context requires, VNO 700 Hadley Road LLC, a Delaware limited liability company and VNO Paterson Plank Road LLC, a Delaware limited liability company.

 

“Guaranteed Obligations” shall mean, as of any date of determination, the aggregate amount of any unfunded obligations under the Reserve Guaranty and the Alteration Deficiency Guaranty, if any.

 

“Guarantor” shall mean VOP, provided that a Guarantor Rating Period has not occurred and is continuing with respect to VOP, or a Replacement Guarantor.

 

“Guarantor Rating Period” shall mean any period commencing at such time as the rating of Guarantor’s long-term unsecured debt obligations shall fail to be rated at least Investment Grade and continuing until such time, if ever, as the rating of Guarantor’s long-term unsecured debt obligations shall be rated at least Investment Grade on any Determination Date by S&P and its equivalent by each of the other Rating Agencies for a period of two (2) consecutive full calendar quarters.

 

“Guaranty” shall mean, collectively, the Recourse Carveout Guaranty, the Ground Lease Guaranty, the Reserve Guaranty, if any, and the Alteration Deficiency Guaranty, if any.

 

“Guaranty Excess” shall have the meaning set forth in Section 16.8.4.

 

“Hazardous Materials” shall mean each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined, determined or identified as hazardous or toxic under any Environmental Law.  Without limiting the generality of the foregoing, the term shall mean and include:

 

(a)                                 “hazardous substances” as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendment

 

12

 

and Reauthorization Act of 1986, or Title III of the Superfund Amendment and Reauthorization Act, each as amended, and regulations promulgated thereunder; excluding, however, common maintenance and cleaning products regularly found at properties with a standard of operation and maintenance comparable to the Properties;

 

(b)                                 “hazardous waste” and “regulated substances” as defined in the Resource Conservation and Recovery Act of 1976, as amended, and regulations promulgated thereunder;

 

(c)                                  “hazardous materials” as defined in the Hazardous Materials Transportation Act, as amended, and regulations promulgated thereunder; and

 

(d)                                 “chemical substance or mixture” as defined in the Toxic Substances Control Act, as amended, and regulations promulgated thereunder.

 

“Impositions” shall mean all taxes (including all ad valorem, sales (including those imposed on lease rentals), use, single business, gross receipts, value added, intangible transaction, privilege or license or similar taxes), business improvement district charges, governmental assessments (including all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not commenced or completed within the term of this Agreement), water, sewer or other rents and charges, excises, levies, fees (including license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of any Individual Property and/or any Rents (including all interest and penalties thereon), which at any time prior to, during or in respect of the term hereof may be assessed or imposed on or in respect of or be a Lien upon (a) Borrower and/or Maryland Owner (including all income, franchise, single business or other taxes imposed on Borrower and/or Maryland Owner for the privilege of doing business in the jurisdiction in which each Individual Property is located), (b) any of the Properties, or any other collateral delivered or pledged to Lender in connection with the Loan, or any part thereof, or any Rents therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with the Properties or the leasing or use of all or any part thereof (other than obligations of Tenants under Leases).  Nothing contained in this Agreement shall be construed to require Borrower to pay any tax, assessment, levy or charge earlier than when due, or imposed on (i) any tenant occupying any portion of any of the Properties, (ii) any third party manager of any of the Properties, including Manager, or (iii) Lender in the nature of a capital levy, estate, inheritance, succession, income or net revenue tax.

 

“Improvements” shall have the meaning set forth in the Security Instrument.

 

“Indebtedness” shall mean, at any given time, the Principal Amount, together with all accrued and unpaid interest thereon and all other obligations and liabilities due or to become due to Lender pursuant hereto, under the Note or in accordance with the other Loan Documents and all other amounts, sums and expenses paid by or payable to Lender hereunder or pursuant to the Note or the other Loan Documents.

 

13

 

“Indemnified Parties” shall have the meaning set forth in Section 19.12(b).

 

“Independent” shall mean a Person who:  (a) does not have any direct financial interest or any material indirect financial interest in Borrower or Maryland Owner or in any Affiliate of Borrower or Maryland Owner, (b) is not connected with Borrower or Maryland Owner or any Affiliate of Borrower or Maryland Owner as an officer, employee, promoter, underwriter, trustee, partner, member, manager, creditor or supplier (other than as a result of such Person providing services or supplies to Borrower or Maryland Owner or any Affiliate of Borrower or Maryland Owner) director, supplier, customer or person performing similar functions, and (c) is not a member of the immediate family of a Person defined in (a) or (b) above.

 

“Independent Accountant” shall mean a firm of nationally recognized, certified public accountants which is Independent and which is selected by Borrower and reasonably acceptable to Lender, it being agreed by Lender that Deloitte & Touche LLP and any of the other co-called “Big Four” accounting firms (including any successor entity thereto) are each hereby approved by Lender as an Independent Accountant.

 

“Independent Member” shall mean an individual who has prior experience as an independent director, independent manager or independent member with at least three (3) years of employment experience and who is provided by CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, Lord Securities Corporation or, if none of those companies is then providing professional Independent Members, independent managers or independent directors another nationally-recognized company approved by Lender, which approval shall not be unreasonably withheld, conditioned or delayed, in each case that is not an Affiliate of Borrower or Maryland Owner and that provides professional Independent Members, independent managers or independent directors and other corporate services in the ordinary course of its business, and which individual is duly appointed as an Independent Member and is not, and has never been, and will not while serving as an Independent Member be, any of the following:

 

(a)                                 a member, partner, equityholder, manager, director, officer or employee of Borrower, Maryland Owner, Guarantor, any equityholder that is required hereby to be a special purpose entity, or any of their respective equityholders or Affiliates (other than as an Independent Member of Borrower, Maryland Owner  or an Affiliate of Borrower or Maryland Owner that is not in the direct chain of ownership of Borrower or Maryland Owner and that is required by a creditor to be a single purpose bankruptcy remote entity,  provided that such Independent Member is employed by a company that routinely provides professional Independent Members, independent managers or  independent directors in the ordinary course of its business);

 

(b)                                 a creditor, supplier or service provider (including provider of professional services) to Borrower, Maryland Owner, Guarantor or any equityholder that is a special purpose entity, or any of their respective equityholders or Affiliates (other than a nationally-recognized company that routinely provides professional Independent Members, independent manager or independent directors and other

 

14

 

corporate services to Borrower, Maryland Owner, Guarantor or any of their respective Affiliates in the ordinary course of its business);

 

(c)                                  a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or

 

(d)                                 a Person that controls (whether directly, indirectly or otherwise) any of the Person identified in subparagraphs (a), (b) or (c) above.

 

A natural person who otherwise satisfies the foregoing definition other than subparagraph (a) by reason of being an Independent Member of a single purpose entity affiliated with Borrower or Maryland Owner shall be qualified to serve as an Independent Member of a corporation or limited liability company serving as the special purpose member or general partner, as applicable, of the Borrower or Maryland Owner as required hereby, provided that the fees that such individual earns from serving as an Independent Member of affiliates of Borrower or Maryland Owner in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year.

 

For purposes of this paragraph, a “single purpose entity” is an entity, whose organizational documents contain restrictions on its activities and impose requirements intended to preserve such entity’s separateness that are substantially similar to the Single Purpose Entity provisions of this Agreement.

 

“Individual Borrower” shall mean each Borrower set forth on Schedule 1 attached hereto, together with its successors and permitted assigns.

 

“Individual Material Adverse Effect” shall mean any event or condition that has a material adverse effect, in each case, taken as a whole on (a) any Individual Property, (b) the use, operation, or value of such Individual Property, (c) the business, profits, operations or financial condition of the applicable Individual Borrower and/or Maryland Owner, or (d) the ability of such Individual Borrower and/or Maryland Owner to repay the principal and interest of the Loan as it becomes due or to satisfy any of such Individual Borrower’s and/or Maryland Owner’s obligations under the Loan Documents.

 

“Individual Property” shall mean each parcel of real property, the Improvements thereon and all personal property owned (or leased pursuant to any of the Ground Leases) by an Individual Borrower or Maryland Owner and encumbered by a Security Instrument, together with all rights pertaining to such property and Improvements, as more particularly described in the granting clauses of the related Security Instrument and referred to therein as the “Property”.

 

“Insurance Requirements” shall mean, collectively, (a) all material terms of any insurance policy required pursuant to this Agreement and (b) all material regulations and then current standards applicable to or affecting any Individual Property or any part thereof or any use or condition thereof, which may, at any time, be recommended by the Board of Fire Underwriters, if any, having jurisdiction over any Individual Property, or such other body exercising similar functions.

 

15

 

“Insurance Reserve Account” shall have the meaning set forth in Section 3.1.3.

 

“Insurance Reserve Amount” shall have the meaning set forth in Section 16.2.1.

 

“Intangible” shall have the meaning set forth in the Security Instrument.

 

“Interest Accrual Period” shall mean, (a) with respect to each Fixed Rate Component, a period from and including the tenth (10th) day of each calendar month during the term of the Loan and ending on and including the ninth (9th) day of the immediately succeeding calendar month and (b) with respect to the Floating Rate Component, a period from and including the thirteenth (13th) day of each calendar month during the term of the Loan and ending on and including the twelfth (12th) day of the immediately succeeding calendar month.

 

“Investment Grade” shall mean, with respect to any Person, that the long-term unsecured debt obligations of such Person are rated at least “BBB-” by S&P and its equivalent by Fitch.

 

“Late Payment Charge” shall have the meaning set forth in Section 2.2.7.

 

“Lease” shall mean any lease, sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted by Borrower or Maryland Owner a possessory interest in, or right to use or occupy all or any portion of any space in any Individual Property, and every modification, amendment or other agreement entered into or assumed by Borrower or Maryland Owner relating to such lease, sublease, subsublease, or other agreement entered into in connection with such lease, sublease, subsublease, or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto pursuant to any of the foregoing.

 

“Lease Modification” shall have the meaning set forth in Section 8.8.1.

 

“Legal Requirements” shall mean all present and future laws, statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules, regulations and requirements, and irrespective of the nature of the work to be done, of every Governmental Authority including, without limitation, Environmental Laws and all covenants, restrictions and conditions now or hereafter of record which may be applicable to Borrower or Maryland Owner or to each Individual Property and the Improvements and the Building Equipment thereon, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or reconstruction of each Individual Property and the Improvements and the Building Equipment thereon including, without limitation, building and zoning codes and ordinances and laws relating to handicapped accessibility.

 

“Lender” shall have the meaning set forth in the first paragraph of this Agreement.

 

“Letter of Credit” or “Letters of Credit” shall mean one or more irrevocable, unconditional, transferable, clean sight draft letters of credit, in favor of Lender and entitling Lender to draw thereon in New York, New York (or at a location outside of New York, New

 

16

 

York provided that such Letter of Credit is capable of being drawn upon by facsimile presentation), based solely on a statement executed by an officer or authorized signatory of Lender and issued by an Approved Bank.  If at any time (a) the institution issuing any such Letter of Credit shall cease to be an Approved Bank or (b) the Letter of Credit is due to expire prior to the sixtieth (60th) day after the Stated Maturity Date (the “LC Expiration Date”), Lender shall have the right immediately to draw down the same in full and hold the proceeds thereof in accordance with the provisions of this Agreement, unless Borrower shall deliver a replacement Letter of Credit from an Approved Bank within (i) as to (a) above, twenty (20) days after Lender delivers written notice to Borrower that the institution issuing the Letter of Credit has ceased to be an Approved Bank or (ii) as to (b) above, at least twenty (20) days prior to the expiration date of said Letter of Credit.  Borrower shall not have or be permitted to have any liability or other obligations under any reimbursement agreement with respect to any Letter of Credit or otherwise in connection with reimbursement to the Approved Bank for draws on such Letter of Credit.

 

“LIBOR” means the per annum rate calculated by Lender, as set forth below:

 

(a)                                 with respect to each Interest Accrual Period with respect to the Floating Rate Component, LIBOR is the per annum rate (rounded upward, if necessary, to the next nearest 1/1,000th of one percent (1%)) for deposits in U.S. Dollars, for a one-month period, that appears on Reuters Screen LIBOR01 Page (or the successor to the Reuters Screen LIBOR01 Page) as the London Interbank Offering Rate as of 11:00 a.m., London time, on the Floating Rate Determination Date; or

 

(b)                                 with respect to a Floating Rate Determination Date on which such rate does not appear on the Reuters Screen LIBOR01 Page, the arithmetic mean (rounded upward, if necessary, to the next nearest 1/1,000th of one percent (1%)) of the offered quotations of rates obtained by the Servicer from four major banks in the London interbank market for deposits in U.S. Dollars for a one-month period to prime banks in the London interbank market as of 11:00 a.m., London time, on such Floating Rate Determination Date and in an amount that is representative for a single transaction in the relevant market at the relevant time.  If fewer than two such quotations are so provided, the per annum rate which Lender determines to be the arithmetic mean (rounded upward, if necessary, to the next nearest 1/1,000th of one percent (1%)) of the offered quotations of rates which major banks in New York selected by Lender are quoting at 11:00 a.m., New York time, on such Floating Rate Determination Date in U.S. Dollars to leading European banks for a period equal to the applicable Interest Accrual Period with respect to the Floating Rate Component in amounts of at least One Million and No/100 Dollars ($1,000,000.00).

 

(c)                                  LIBOR shall be adjusted automatically as of the effective date of any change in the Reserve Percentage to an amount equal to the quotient of (i) LIBOR applicable to the Interest Accrual Period with respect to the Floating Rate Component divided by (ii) a percentage equal to one hundred percent (100%) minus the Reserve Percentage applicable to such date.

 

17

 

(d)                                 Notwithstanding anything to the contrary set forth herein, in no event shall LIBOR ever be less than one percent (1%).

 

“LIBOR Margin” shall mean 1.3608%.

 

“License(s)” shall have the meaning set forth in Section 4.1.23.

 

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance or charge on or affecting Borrower or Maryland Owner, any Individual Property, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and the filing of mechanic’s, materialmen’s and other similar liens and encumbrances but not liens arising by operation of law for which no filing has been made (e.g., an inchoate mechanic’s lien).

 

“Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement in the aggregate amount of the Components.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument, the Assignment of Leases, the Assignment of Management Agreement, the Lockbox Agreement, the Cash Management Agreement, the Guaranty, the Maryland Guaranty Agreement, the Contribution Agreement,  the Environmental Indemnity Agreement, the Collateral Assignment of Interest Rate Cap and all other documents (excluding the Bottom Up Guaranty) executed and/or delivered by Borrower, Maryland Owner and/or Guarantor in connection with the Loan including any certifications or representations delivered by or on behalf of Borrower, Maryland Owner, any Affiliate of Borrower or Maryland Owner, Manager, or any Affiliate of Manager.

 

“Loan Purchase Agreement” means that certain mortgage loan purchase and sale agreement, dated as of the date hereof, by and between Lender and Purchaser, as amended or modified from time to time.

 

“Lockbox Account” shall have the meaning set forth in Section 3.1.1 hereof.

 

“Lockbox Agreement” shall mean that certain Deposit Account Control Agreement, dated as of the date hereof, by and among Borrower, Maryland Owner, Lockbox Bank and Deutsche Bank National Trust Company, as trustee for the holders of Vornado DP LLC Trust 2010, Commercial Mortgage Pass-Through Certificates, Series 2010-VNO, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Lockbox Bank” shall mean Bank of America, N.A., a national banking association, or any successor Eligible Institution acting as bank under the Lockbox Agreement.

 

“Lockout Expiration Date” shall have the meaning set forth in Section 2.3.1 hereof.

 

18

 

“Losses” shall have the meaning set forth in Section 18.1.2.

 

“Management Agreement” shall mean that certain Management Agreement, effective as of the Closing Date, entered into by and among each Individual Borrower, Maryland Owner and Manager, pursuant to which Manager is to provide management and other services with respect to each Individual Property.

 

“Management Fees” shall mean an amount equal to the property management fees payable to Manager pursuant to the terms of the Management Agreement for base management services.

 

“Manager” shall mean Vornado Retail Manager LLC, a Delaware limited liability company.

 

“Manager Lease Fees” shall mean the fees for leasing space at the property payable to Manager pursuant to the terms of the Management Agreement.

 

“Marlton Condemnation Proceeds” shall mean any and all compensation, awards, proceeds, damages, claims, causes and rights of action and payments made to Borrower and/or Maryland Owner in connection with the Taking of the portion of the Marlton, NJ property as indicated on Schedule 2.

 

“Maryland Individual Borrower” shall mean Towson II VF L.L.C., a Delaware limited liability company, together with its successors and permitted assigns.

 

“Maryland Individual Property” shall mean the Individual Property located at 801 Goucher Boulevard, Baltimore, Maryland.

 

“Maryland Guaranty Agreement” shall mean that certain Indemnity Guaranty, dated as of the Closing Date, delivered by Maryland Owner to Lender to secure the full and prompt payment and performance of the obligations and liabilities of Maryland Individual Borrower under the Note and the other Loan Documents, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Maryland Owner” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and permitted assigns.

 

“Massachusetts Individual Borrower” shall mean collectively Springfield VF LLC and Chicopee Holding L.L.C. and their respective successors and permitted assigns.

 

“Material Adverse Effect” shall mean any event or condition that has a material adverse effect, in each case, taken as a whole on (a) the Properties, (b) the use, operation, or value of the Properties, (c) the business, profits, operations or financial condition of Borrower and Maryland Owner, or (d) the ability of Borrower to repay the principal and interest of the Loan as it becomes due or to satisfy any of Borrower’s and/or Maryland Owner’s obligations under the Loan Documents.

 

19

 

“Material Alteration” shall mean any Alteration which, when aggregated with all related Alterations (other than decorative work such as painting, wall papering and carpeting and the replacement of fixtures, furnishings and equipment to the extent being of a routine and recurring nature) constituting a single project, involves (i) an estimated cost exceeding five percent (5%) of the Loan Amount on an aggregate basis for all of the Properties or (ii) Five Million and No/100 Dollars ($5,000,000.00) with respect to any one Individual Property with respect to any Alteration or related Alterations (including the Alteration in question) then being undertaken at the Properties or the applicable Individual Property, in the case of each of clauses (i) and (ii) without taking into account Alterations required by Law or any Lease.

 

“Material Business Terms” shall have the meaning set forth in Section 8.8.1.

 

“Maturity Date” shall mean 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 acceleration or otherwise.

 

“Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

 

“Microbial Matter” shall mean fungi or bacterial matter which reproduces through the release of spores or the splitting of cells, including, but not limited to, mold, mildew and viruses, whether or not such microbial matter is living.

 

“Monetary Default” shall mean a Default (a) in an obligation to pay money hereunder or under any Loan Document or (b) arising pursuant to Section 17.1(a)(6) or (7).

 

“Monthly Debt Service Payment Amount” shall mean, with respect to any Payment Date, an amount equal to the sum of (a) the aggregate amount of interest which has accrued on each Fixed Rate Component calculated at the Fixed Interest Rate, (b) the amount of interest which has accrued on the Floating Rate Component at the Floating Interest Rate and (c) the amount of principal payable on such Payment Date based on the amortization schedule attached hereto as Schedule 2.2.3 and made a part hereof, as such schedule may be amended from time to time in accordance with the last sentence of the definition of Scheduled Defeasance Payments.

 

“Monthly Ground Lease Reserve Amount” shall have the meaning set forth in Section 16.4.1.

 

“Monthly Insurance Reserve Amount” shall have the meaning set forth in Section 16.2.1.

 

“Monthly Replacement Reserve Amount” shall have the meaning set forth in Section 16.3.1.

 

20

 

“Monthly Tax Reserve Amount” shall have the meaning set forth in Section 16.1.1.

 

“Net Operating Income” shall mean the amount obtained by subtracting Operating Expenses from Operating Income.

 

“Net Worth” means, as of a given date, (a) a Person’s total assets as of such date (exclusive of the Properties or any other collateral) less (b) a Person’s total liabilities as of such date (exclusive of the Loan), determined in accordance with GAAP, but based upon the appraised value of its properties, or with respect to those properties not appraised within the prior twelve (12) months at the time of such determination, the then current value of such properties, as reasonably estimated by such Person.

 

“New Lease” shall have the meaning set forth in Section 8.8.1.

 

“Non-Consolidation Opinion” shall mean that certain bankruptcy non-consolidation opinion letter dated the date hereof delivered by Edwards, Angell, Palmer & Dodge LLP (or any other law firm reasonably acceptable to Lender) in connection with the Loan.

 

“Non-Disturbance Agreement” shall have the meaning set forth in Section 8.8.9.

 

“Note” shall mean that certain Promissory Note of even date herewith in the principal amount of Six Hundred Sixty Million and No/100 Dollars ($660,000,000.00), made by Borrower in favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, including any Undefeased Note that may exist from time to time, but excluding any Defeased Note.

 

“O&M Program” shall mean the operations and maintenance program with respect to asbestos at each applicable Individual Property attached hereto as Schedule 5.1.22.

 

“Obligations” shall have the meaning set forth in the recitals of the Security Instrument.

 

“Officer’s Certificate” shall mean a certificate executed by an authorized signatory of Borrower that is familiar with the financial condition of Borrower and Maryland Owner and the operation of the Properties, as the act of Borrower and Maryland Owner and not of such authorized signatory, who shall have no personal liability in connection therewith.

 

“Operating Expenses” shall mean, for any period, without duplication, all expenses actually paid or payable by Borrower and Maryland Owner during such period in connection with the operation, management, maintenance, repair and use of the Properties, determined on an accrual basis, and, except to the extent otherwise provided in this definition, in accordance with GAAP.  Operating Expenses specifically shall include (a) all operating expenses incurred in the period in question based on quarterly financial statements delivered to Lender in accordance with Article XI, (b) property management fees in an amount equal to the greater of (i) the actual management fees or (ii) two percent (2%) of Rents for such period, (c) administrative, payroll, security and general expenses for the Properties (but excluding any Rents in the nature of Tenant reimbursements), (d) the cost of utilities, inventories and fixed

 

21

 

asset supplies consumed in the operation of the Properties, (e) a reasonable reserve for uncollectible accounts, (f) costs and fees of Independent professionals (including, without limitation, legal, accounting, consultants and other professional expenses), technical consultants, operational experts (including quality assurance inspectors) or other third parties retained to perform services required or permitted hereunder, (g) cost of attendance by employees at training and manpower development programs, (h) association dues, (i) computer processing charges, (j) operational equipment and other lease payments as reasonably approved by Lender,  (k) taxes and other Impositions, other than income taxes or other Impositions in the nature of income taxes, (l) insurance premiums and (m) Ground Rent.  Notwithstanding the foregoing, Operating Expenses shall not include (i) depreciation or amortization, (ii) income taxes or other Impositions in the nature of income taxes, (iii) any expenses (including legal, accounting and other professional fees, expenses and disbursements) incurred in connection with the making of the Loan or the sale, exchange, transfer, financing or refinancing of all or any portion of the Properties or in connection with the recovery of Proceeds which are applied to prepay the Note, (iv) any other expenses which in accordance with GAAP should be capitalized, (v) Debt Service, (vi) any capital expenditures or any item of expense which would otherwise be considered within Operating Expenses pursuant to the provisions above but which is paid directly by any Tenant, (vii) deposits required to be made to the Reserve Accounts established pursuant to Article XVI, (viii) any expenses paid for with funds from any of the Reserve Accounts established pursuant to Article XVI, (ix) leasing commissions including all Manager Lease Fees, (x) tenant improvements and allowances and other reletting costs actually paid, (xi) any item of expense which would otherwise be considered with Operating Expenses pursuant to the provisions above, but which is paid directly by any Tenant and (xii) any other extraordinary or non-recurring expenses.

 

“Operating Expenses Reserve Account” shall have the meaning set forth in Section 3.1.3(i).

 

“Operating Income” shall mean, for any period, all revenues of Borrower and Maryland Owner during such period from the use, ownership or operation of the Properties as follows:

 

(a)                                 all amounts payable to Borrower and/or Maryland Owner by any Person as Rent and other amounts under Leases, license agreements, occupancy agreements, concession agreements or other agreements relating to the Properties, provided that with respect to all scheduled Rent increases in connection with existing Leases and Rent on account of new Leases that, in each case, commence payment within the twelve (12) month period immediately preceding the Determination Date, the Rent amount used in determining Operating Income for such twelve (12) month period shall include the amount of such Rent increases and/or new Rents as if such Rent increases and/or new Rents were paid at all times during such twelve (12) month period;

 

(b)                                 business interruption or rent insurance proceeds allocable to the applicable calculation period; and

 

22

 

(c)                                  all other amounts which in accordance with GAAP are or would be included in Borrower’s and Maryland Owner’s annual financial statements as operating income attributable to the Properties.

 

Notwithstanding the foregoing, Operating Income shall not include (i) any Proceeds (other than business interruption or rent insurance proceeds and only to the extent allocable to the applicable calculation period), (ii) any proceeds resulting from the Transfer of all or any portion of the Properties, (iii) any item of income otherwise included in Operating Income but paid directly by any Tenant to a Person other than Borrower or  Maryland Owner as an offset or deduction against Rent payable by such Tenant, provided such item of income is for payment of an item of expense (such as payments for utilities paid directly to a utility company) and such expense is otherwise excluded from the definition of Operating Expenses pursuant to clause “(vi)” of the definition thereof, (iv) security deposits received from Tenants until forfeited or applied, (v) any termination fees paid under any Lease in connection with the termination thereof (except to the extent applied on a pro-rata basis over the non-terminable portion of the Lease term) and (vi) interest income.  Except to the extent otherwise required in this definition, Operating Income shall be calculated on the accrual basis of accounting and in accordance with GAAP.

 

“Opinion of Counsel” shall mean an Opinion of Counsel of a law firm selected by Borrower and reasonably acceptable to Lender.

 

“Other Charges” shall mean maintenance charges, impositions other than Impositions, and any other charges, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Individual Property, now or hereafter levied or assessed or imposed against any Individual Property or any part thereof by any Governmental Authority, other than those required to be paid by a Tenant pursuant to its respective Lease.

 

“Other Permitted Release” shall have the meaning set forth in Section 2.5.4.

 

“Otherwise Rated Insurer” shall have the meaning set forth in Section 6.1.2(a).

 

“Partial Defeasance Collateral” shall mean U.S. Securities that provide payments (a) on or prior to, but as close as possible to, the Business Day immediately preceding each Payment Date after the Defeasance Date and up to and including the Lockout Expiration Date or anytime thereafter as specified by Borrower on or prior to the Defeasance Date, and which shall include for payment on such specified date the portion of the principal amount of the Loan under the Defeased Note being defeased due on such specified date, and (b) in amounts equal to or greater than the Scheduled Defeasance Payments relating to each such Payment Date.

 

“Partial Defeasance Date” shall have the meaning set forth in Section 2.4.2(a).

 

“Partial Defeasance Event” shall have the meaning set forth in Section 2.4.2.

 

“Payment Date” shall mean, with respect to each Component, the tenth (10th) calendar day of each calendar month and if such day is not a Business Day, then the Business

 

23

 

Day immediately succeeding such day, commencing on September 10, 2010 and continuing to and including the Maturity Date.

 

“Permitted Debt” shall mean, collectively, (a) the Note and the other obligations, indebtedness and liabilities specifically provided for in any Loan Document and secured by this Agreement, the Security Instrument and the other Loan Documents, (b) trade payables incurred in the ordinary course of each Individual Borrower’s and Maryland Owner’s business, not secured by Liens on any Individual Property (other than liens being properly contested in accordance with the provisions of this Agreement or the Security Instrument or Liens for amounts not yet due and payable), not to exceed five percent (5%) of the applicable Allocated Loan Amount at any one time outstanding with respect to the Individual Property owned by each such Individual Borrower or Maryland Owner, payable by or on behalf of such Individual Borrower or Maryland Owner for or in respect of the operation of the Individual Property owned by such Individual Borrower or Maryland Owner in the ordinary course of operating any Individual Borrower’s or Maryland Owner’s business, provided that (but subject to the remaining terms of this definition) each such amount shall be paid within sixty (60) days following the date on which each such amount is billed, and (c) amounts due under any equipment leases (treated as capital leases under GAAP), provided that, at all times during the term of the Loan, the aggregate amount outstanding under the equipment leases and clause (b) hereunder shall not exceed five percent (5%) of the applicable Allocated Loan Amount at any one time outstanding with respect to the Individual Property owned by each such Individual Borrower or Maryland Owner, payable by or on behalf of such Individual Borrower or Maryland Owner for or in respect of the operation of the Individual Property owned by such Individual Borrower or Maryland Owner in the ordinary course of operating any Individual Borrower’s or Maryland Owner’s business.  Nothing contained herein shall be deemed to require any Individual Borrower or Maryland Owner to pay any amount described above, so long as such Individual Borrower or Maryland Owner is in good faith, and by proper legal proceedings at the appropriate time, diligently contesting the validity, amount or application thereof, provided that in each case, at the time of the commencement of any such action or proceeding, and during the pendency of such action or proceeding (i) adequate reserves with respect thereto are maintained on the books of such Individual Borrower or Maryland Owner in accordance with GAAP and (ii) such contest operates to suspend collection or enforcement, as the case may be, of the contested amount and such contest is maintained and prosecuted continuously and with diligence.  Notwithstanding anything set forth herein, in no event shall Borrower or Maryland Owner be permitted under this provision to enter into a note (other than the Note and the other Loan Documents) or other instrument for borrowed money.

 

“Permitted Encumbrances” shall mean, collectively, (a) any Lien and security interest created or permitted by the Loan Documents, (b) any Lien, encumbrances and other matters disclosed in the Title Policy, (c) any Lien, if any, for Impositions, or for Other Charges, in either case which are not yet due or delinquent or are the subject of a permitted contest pursuant to Section 7.3, (d) statutory liens for labor or materials filed against any Individual Property that are the subject of a permitted contest pursuant to Section 7.3, (e) any Lien arising after the date hereof in connection with the actions permitted to be taken by Borrower or Maryland Owner in accordance with the provisions of Section 8.3, (f) any Lien filed against equipment leased pursuant to equipment leases permitted hereunder, (g) the Leases, (h) the

 

24

 

Ground Leases, (i) the REOAs and (j) such other title and survey exceptions as Lender has approved or may approve 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 any Servicer, the trustee under any Securitization 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 Monthly Payment Date following the date of acquiring such investment and meeting one of the appropriate standards set forth below:

 

(a)                                 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 (a) must (i) have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change, (ii) if rated by S&P, not have an “r” highlighter affixed to their rating, (iii) if such investments have a variable rate of interest, have an interest rate tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (iv) not be subject to liquidation prior to their maturity;

 

(b)                                 Federal Housing Administration debentures;

 

(c)                                  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 (c) must (i) have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change, (ii) if rated by S&P, not have an “r” highlighter affixed to their rating, (iii) if such investments have a variable rate of interest, have an interest rate tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (iv) not be subject to liquidation prior to their maturity;

 

(d)                                 federal funds, unsecured certificates of deposit, time deposits, bankers’ acceptances and repurchase agreements with maturities of not more than 365 days of any bank, the short term obligations of which at all times are rated in the

 

25

 

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 certificates); provided, however, that the investments described in this clause (d) must (i) have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change, (ii) if rated by S&P, not have an “r” highlighter affixed to their rating, (iii) if such investments have a variable rate of interest, have an interest rate tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (iv)  not be subject to liquidation prior to their maturity;

 

(e)                                  fully Federal Deposit Insurance Corporation-insured demand and time deposits in, or certificates of deposit of, or bankers’ acceptances issued by, 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 certificates); provided, however, that the investments described in this clause (e) must (i) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (ii) if rated by S&P, not have a “r” highlighter affixed to their rating, (iii) if such investments have a variable rate of interest, have an interest rate tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (iv) not be subject to liquidation prior to their maturity;

 

(f)                                   debt obligations with maturities of not more than three hundred sixty-five (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 investments 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 certificates) in its highest long-term unsecured debt rating category; provided, however, that the investments described in this clause (f) must (i) have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change, (ii) if rated by S&P, not have an “r” highlighter affixed to their rating, (iii) if such investments have a variable rate of interest, have an interest rate tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (iv) not be subject to liquidation prior to their maturity;

 

(g)                                  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 three hundred sixty-five (365) days and that at all times is rated by each Rating

 

26

 

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 certificates) in its highest short-term unsecured debt rating; provided, however, that the investments described in this clause (g) must (i) have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change, (ii) if rated by S&P, not have a “r” highlighter affixed to their rating, (iii) if such investments have a variable rate of interest, have an interest rate tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (iv) not be subject to liquidation prior to their maturity;

 

(h)                                 units of taxable money market funds, which funds are regulated investment companies, seek to maintain a constant net asset value per share and have the highest rating 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 certificates) for money market funds; and

 

(i)                                     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 certificates 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 one hundred twenty percent (120%) of the yield to maturity at par of such underlying investment.

 

“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, 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.

 

“Physical Conditions Report” shall mean with respect to each Individual Property those certain Property Condition Reports prepared by Certified Environments, Inc. in connection with the origination of the Loan.

 

“Plan” shall have the meaning set forth in Section 4.1.10(a).

 

“Prescribed Laws” shall mean, collectively, (a) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act), (b) Executive Order No. 13224 on

 

27

 

Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”), (c) the International Emergency Economic Power Act, 50 U.S.C. § 1701 et seq., and (d) all other Legal Requirements relating to money laundering or terrorism.

 

“Primary Servicer” shall have the meaning set forth in Section 13.1.

 

“Principal Amount” shall have the meaning set forth in the Note.

 

“Proceeds” shall have the meaning set forth in Section 6.2.2.

 

“Proceeds Reserve Account” shall have the meaning set forth in Section 3.1.3.

 

“Prohibited Person” means any Person:  (i) listed in the Annex to, or otherwise subject to the provisions of, the Executive Order, (ii) that is named as a “specifically designated national (SDN)” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website (http://www.treas.gov.ofac/t11sdn.pdf) or at any replacement website or other replacement official publication of such list or that is named on any other Governmental Authority list issued post September 11, 2001, (iii) acting, directly or indirectly, in contravention of any AML Law or terrorist organizations or narcotics traffickers, including those Persons that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Financial Action Task Force on Money Laundering, U.S. Office of Foreign Assets Control, U.S. Securities and Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, all as may be amended or superseded from time to time or (iv) that is owned or Controlled by, or acting for or on behalf of, any Person described in clause (i), (ii) or (iii) above.

 

“Properties” shall mean, collectively, each and every Individual Property which is subject to the terms of this Agreement.

 

“Purchaser” means Vornado DP LLC, together with its successors or assigns.

 

“Qualified Manager” shall mean (a) an Affiliate of Borrower, (b) a reputable and experienced management company not subject to any Bankruptcy Action which manages multiple properties having an aggregate minimum of net rentable square feet of retail space equal to the lesser of (i) 7,500,000 square feet and (ii) eighty percent (80%) of the total square feet of the Properties subject to the lien of the Security Instrument as of the date any such management company is being engaged to manage any Individual Property, and which management company shall have at least ten (10) years of experience managing such properties similar in size, scope, use and value as any applicable Individual Property, or (c) any Person, with respect to which Borrower shall have obtained a Rating Agency Confirmation/Notification as to such new management company.

 

“Rate Cap” shall mean an interest rate cap entered into with an Acceptable Counterparty with (a) a notional amount equal to the then outstanding principal balance of the Floating Rate Component, (b) a term of not less than two (2) years and (c) a LIBOR strike price not greater than the Capped LIBOR Rate.  Furthermore, the Rate Cap shall provide for (A) the

 

28

 

calculation of interest, (B) the determination of the interest rate, (C) an Interest Accrual Period with respect to the Floating Rate Component and (D) the distribution of payments thereunder to comply, in each case, to the requirements with respect to such provisions set forth herein.

 

“Rating Agencies” shall mean each of S&P and Fitch.

 

“Rating Agency Confirmation/Notification”  shall mean, with respect to any matter, (i) with respect to S&P, confirmation in writing by S&P that a proposed action, failure to act or other specified event will not in and of itself result in the downgrade, withdrawal or qualification of the then-current rating assigned to any Securities (if then rated by S&P); provided that a written waiver or acknowledgment from S&P indicating its decision not to review the matter for which the Rating Agency Confirmation/Notification is sought shall be deemed to satisfy the requirement for the Rating Agency Confirmation/Notification from S&P with respect to such matter and (ii) with respect to Fitch, delivery of written notice of such action, condition or event to Fitch at the same time the Rating Agency Confirmation/Notification is requested from S&P.

 

“Recourse Carveout Guaranty” shall mean that certain Recourse Carveout Guaranty executed and delivered by Guarantor in connection with the Loan to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Related Entities” shall have the meaning set forth in Section 8.5(e).

 

“Related Party” and “Related Parties” shall have the meaning set forth in Section 4.1.29(a).

 

“Release Amount” shall mean, in connection with the release of any Individual Property from the Lien of the Security Instrument (or, in lieu of such release, the assignment of the Security Instrument encumbering any Individual Property), (a) one hundred five percent (105%) of the original Allocated Loan Amount of the applicable Individual Property, which, when taken together with the Release Amount of each Individual Property previously released from the Lien of the Security Instrument (or, with respect to which Individual Property, Lender previously assigned the applicable Security Instrument), is less than or equal to twenty-five percent (25%) of the original Principal Amount and (b) thereafter one hundred fifteen percent (115%) of the original Allocated Loan Amount (provided that, in each case, the Release Amount shall not be greater than the amount of the Indebtedness outstanding on the date the applicable Individual Property is released from the Lien of the Security Instrument (or, in lieu of such release, the applicable Security Instrument is assigned)) in accordance with the terms of this Agreement and the other Loan Documents.

 

“Rent Roll” shall have the meaning set forth in Section 4.1.27.

 

“Rents” shall mean all rents, rent equivalents, moneys payable as damages or in lieu of rent or rent equivalents, royalties, income, receivables, receipts, revenues, deposits (including, without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or Maryland Owner from any and all sources

 

29

 

arising from or attributable to each Individual Property and Proceeds, if any, from business interruption or other loss of income insurance; provided that “Rents” shall not include (a) any damages, judgments, settlement proceeds or amounts of any kind paid to Borrower and/or Maryland Owner in connection with the Stop & Shop Litigation or (b) the Marlton Condemnation Proceeds.

 

“REOA” shall mean each of those agreements more particularly set forth on Schedule 4.1.44 attached hereto.

 

“Replacement Guarantor” shall mean a guarantor for whom Lender shall have received evidence reasonably acceptable to Lender that such proposed guarantor and each of such guarantor’s principals and all other entities which may be owned or Controlled, directly or indirectly by such guarantor’s principals (a) has never been convicted of a felony; (b) is not a Prohibited Person, (c) has not been party to any bankruptcy proceedings, voluntary or involuntary, made an assignment for the benefit of creditors or taken advantage as a debtor of any insolvency act, or any similar act for the benefit of debtors; and (d) has a Net Worth of at least Two Hundred Fifty Million and No/100 Dollars ($250,000,000.00) and total assets valued at not less than Six Hundred Fifty Million and No/100 Dollars ($650,000,000.00).

 

“Replacement Rate Cap” shall mean an interest rate cap in a form substantially similar to the Rate Cap entered into in connection with the closing of the Loan or as may otherwise be approved by the Rating Agencies (provided that in no event shall the Replacement Rate Cap require the counterparty to deposit collateral and/or obtain a replacement rate cap if such counterparty is no longer an Acceptable Counterparty) from an Acceptable Counterparty with (a) a notional amount equal to the then outstanding principal balance of the Floating Rate Component, (b) a term of not less than two (2) years and (c) a LIBOR strike price not greater than the Capped LIBOR Rate.

 

“Replacement Reserve Account” shall have the meaning set forth in Section 3.1.3.

 

“Replacement Reserve Amount” shall have the meaning set forth in Section 16.3.1.

 

“Required Remediation” shall have the meaning set forth in Section 16.11.1.

 

“Required Remediation Amount” shall have the meaning set forth in Section 16.11.1.

 

“Required Remediation Deposit Amount” shall have the meaning set forth in Section 16.7.

 

“Required Remediation Reserve Account” shall have the meaning set forth in Section 3.1.3.

 

“Required Repairs” shall have the meaning set forth in Section 5.1.27.

 

30

 

“Reserve Accounts” shall mean, collectively, the Tax Reserve Account, the Insurance Reserve Account, the Excess Cash Flow Reserve Account, the Operating Expenses Reserve Account, the Debt Service Reserve Account, the Ground Rent Reserve Account, the Replacement Reserve Account, the Proceeds Reserve Account, Required Remediation Reserve Account, the TI and Leasing Reserve Account and any other escrow fund established by the Loan Documents.

 

“Reserve Guaranty” shall mean any Reserve Guaranty, executed and delivered by Guarantor in favor of Lender which guarantees some or all of Borrower’s obligations under Section 16.1, Section 16.2, Section 16.3, Section 16.4, Section 16.10, and Section 16.11, as more particularly set forth in Section 16.7 (as such Reserve Guaranty may be amended, supplemented, restated, replaced or otherwise modified from time to time).

 

“Reserve Percentage” shall mean, with respect to any day of any Interest Accrual Period with respect to the Floating Rate Component, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirement (including basic, supplemental, emergency, special and marginal reserves) generally applicable to financial institutions regulated by the Federal Reserve Board in respect of “Eurocurrency liabilities” (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on the Loan is determined), whether or not Lender has any Eurocurrency liabilities or such requirement otherwise in fact applies to Lender.  LIBOR shall be adjusted automatically as of the effective date of each change in the Reserve Percentage.  As of the date hereof, the Reserve Percentage is zero, however, there can be no assurance as to what such amount may be in the future.  Notwithstanding anything contained herein to the contrary, the Reserve Percentage shall be deemed to be zero for so long as the Loan is held in a securitization trust such as Vornado DP LLC Trust 2010.

 

“Retainage Release Threshold” shall have the meaning set forth in Section 6.2.5(a).

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc., or any successor thereto.

 

“Scheduled Defeasance Payments” shall mean (a) in the case of a defeasance in full, scheduled payments of interest on and principal of the Fixed Rate Components of the Loan (less, for clarity, any previously defeased portion thereof) for each Payment Date occurring after the defeasance date and up to and including the Payment Date selected by the Borrowers from and after (and including) the Lockout Expiration Date (including the outstanding principal balance of the Fixed Rate Components of the Loan as of such Payment Date so selected) and (b) in the case of a partial defeasance, with respect to the principal portion of each Fixed Rate Component being defeased, scheduled payments of interest on and principal of such principal portion for each Payment Date occurring after the defeasance date and up to and including the Payment Date selected by the Borrowers from and after (and including) the Lockout Expiration Date (including the outstanding principal balance of such principal portion as of such Payment Date so selected).  In the case of a partial defeasance, for purposes of clause (b) of the preceding sentence, the scheduled payments of principal on each Payment Date in respect of the principal

 

31

 

portion being defeased will be equal to the product of (i) the amount of principal payable on such Payment Date based on the amortization schedule attached to the Loan Agreement (as the same shall have been amended in connection with any prior defeasance in accordance with the immediately following sentence) multiplied by (ii) a fraction, the numerator of which is such principal portion being defeased as of the defeasance date and the denominator of which is the principal amount of the Loan as of the defeasance date (for clarity, excluding any portion of the Loan previously defeased).  Such amortization schedule will be amended in connection with such partial defeasance by deducting from the scheduled principal payment to be made on each Payment Date pursuant to such schedule (as the same may have been previously amended in connection with a prior partial defeasance) the scheduled payments of principal on such Payment Date in respect of the Defeased Note for such partial defeasance, as determined in accordance with the immediately preceding sentence.

 

“Securities” shall mean any certificates, notes or other securities issued in connection with a Securitization

 

“Securities Account” shall have the meaning ascribed thereto in Section 8-501(a) of the UCC.

 

“Securitization” shall mean one or more private or public securitizations of rated single- or multi-class securities secured by or evidencing ownership interests in all or any portion of the Loan and the Loan Documents or a pool of assets that include the Loan and the Loan Documents.

 

“Security Instrument” shall mean (a) with respect to each Individual Property (other than the Maryland Individual Property), that certain first priority Mortgage and Security Agreement or Open Ended Mortgage and Security Agreement, dated as of the Closing Date, executed and delivered by the related Individual Borrower to (or for the benefit of) Lender, as security for the Loan and encumbering the related Individual Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, and (b) with respect to the Maryland Individual Property, that certain first priority Indemnity Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement, dated as of the Closing Date, executed and delivered by Maryland Owner to (or for the benefit of) Lender, as security for inter alia, the obligations and liabilities of Maryland Owner under the Maryland Guaranty Agreement and encumbering the Maryland Individual Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Servicer” shall mean such Person designated in writing with an address for such Person by Lender, in its sole discretion, to act as Lender’s agent hereunder with such powers as are specifically delegated to the Servicer by Lender, whether pursuant to the terms of this Agreement or otherwise, together with such other powers as are reasonably incidental thereto.

 

“Single Purpose Entity” shall mean an entity in all material respects meeting all of the requirements of Section 5.1.4 of this Agreement (but in the case of an entity other than Borrower and/or Maryland Owner, substituting the name of such entity for the term “Borrower” or “Maryland Owner” throughout Section 5.1.4 (other than subparagraphs (1) through (3))

 

32

 

thereof for purposes of determining whether such entity meets such requirements) and any other requirements intended to preserve the separateness of Borrower and Maryland Owner.

 

“Standard Form of Lease” shall have the meaning set forth in Section 8.8.2(a).

 

“State” shall mean, with respect to an Individual Property, the state or commonwealth in which such Individual Property or any part thereof is located.

 

“Stated Maturity Date” shall mean the Payment Date occurring in September, 2020.

 

“Static LIBOR Rate” shall have the meaning set forth in Section 2.2.2(b).

 

“Stop & Shop Litigation” shall mean certain litigation against Stop & Shop pending in the United States District Court for the District of New Jersey regarding the reallocation of additional annual rent from Stop & Shop because of the expiration of the East Brunswick, Jersey City, Middletown, Union and Woodbridge leases to which the additional rent was previously allocated.

 

“Substituted Borrower” shall mean the Individual Borrower owning the Substituted Property.

 

“Substituted Property” shall have the meaning set forth in Section 2.6 hereof.

 

“Substitute Property” shall have the meaning set forth in Section 2.6 hereof.

 

“Substitute Property Borrower” shall have the meaning set forth in Section 2.6(f) hereof.

 

“Substitute Property Fixture Filing” shall have the meaning set forth in Section 2.6(o) hereof.

 

“Substitute Property Lien Documents” shall have the meaning set forth in Section 2.6(o) hereof.

 

“Substitution Effective Date” shall have the meaning set forth in Section 2.6.2 hereof.

 

“Successor Borrower” shall have the meaning set forth in Section 2.4.4.

 

“Survey” shall mean a survey of the Individual Property in question prepared by Bock & Clark, or a surveyor licensed in the State and satisfactory to Lender and the company or companies issuing the Title Policy, and containing either a certification of such surveyor or a certification of visual update from such surveyor, in either case reasonably satisfactory to Lender.

 

“Taking” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or

 

33

 

eminent domain, of all or any part of any Individual Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting any Individual Property or any part thereof.

 

“Tax Reserve Account” shall have the meaning set forth in Section 3.1.3.

 

“Tax Reserve Amount” shall have the meaning set forth in Section 16.1.1.

 

“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any portion of any Individual Property, other than Manager and its employees, agents and assigns.

 

“Tenant Instruction Letter” shall mean the letter of instruction to a Tenant under a Lease in the form of Exhibit A attached to the Cash Management Agreement.

 

“Terrorism Losses” shall be those types of losses which result from perils of terrorism and acts of terrorism (a) as are currently “certified” under TRIPRA or (b) as are not currently “certified” under TRIPRA, in each case whether or not TRIPRA is in effect, excluding losses for nuclear, biological, radiological or chemical acts.

 

“Terrorism Premium Limit” shall mean an annual Insurance Premium equal to $0.05 per $100 of insurable value of the Properties or any Individual Property, as applicable, provided such amount shall be reduced from time to time on a pro rata basis concurrently with the release (or assignment) of the Lien of the Security Instrument on any Individual Property, based on the rentable square feet of the Properties or any Individual Property, as applicable, as shown on Schedule 16.3 relative to the aggregate rentable square feet of the Properties, determined as the sum of each Individual Property’s rentable square feet as shown on Schedule 16.3.

 

“Threshold Amount” shall mean an amount equal to (i) Five Million and No/100 Dollars ($5,000,000) with respect to any Individual Property or (ii) five percent (5%) of the Loan Amount for all of the Properties.

 

“TI and Leasing Reserve  Amount” shall have the meaning set forth in Section 16.10.1.

 

“TI and Leasing Costs” shall have the meaning set forth in Section 16.10.1.

 

“TI and Leasing Reserve Account” shall have the meaning set forth in Section 3.1.3(j).

 

“Title Company” shall mean, collectively, Stewart Title Guaranty Company, Stewart Title Insurance Company, Fidelity National Title Insurance Company, Chicago Title Insurance Company, First American Title Insurance Company of New York, National Land Tenure Company, LLC, and Commonwealth Land Title Insurance Company.

 

“Title Policy” shall mean an ALTA mortgagee title insurance policy in a form acceptable to Lender (or, if any Individual Property is in a State which does not permit the issuance of such ALTA policy, such form as shall be permitted in such State and acceptable to

 

34

 

Lender) issued by the Title Company on the date hereof with respect to each Individual Property and insuring the lien of the Security Instrument.

 

“Total Defeasance Collateral” shall mean U.S. Securities that provide payments (a) on or prior to, but as close as possible to, the Business Day immediately preceding each Payment Date after the Defeasance Date and up to and including the Lockout Expiration Date and any time thereafter as specified by Borrower on or prior to the Defeasance Date and which shall include for payment on such specified date the aggregate principal amount of the Fixed Rate Components due on such specified date, and (b) in amounts equal to or greater than the Scheduled Defeasance Payments relating to each such Payment Date.

 

“Total Defeasance Date” shall have the meaning set forth in Section 2.4.1(a).

 

“Total Defeasance Event” shall have the meaning set forth in Section 2.4.1.

 

“Total Insured Value” shall have the meaning set forth in Section 6.1.1(a).

 

“Total Loss” shall mean (a) a casualty, damage or destruction of any Individual Property which, in the reasonable judgment of Lender, (i) involves a loss of more than forty percent (40%) of the lesser of (A) the fair market value of such Individual Property or (B) the Allocated Loan Amount for such Individual Property, or (ii) results in the cancellation of leases comprising more than forty percent (40%) of the rentable area of an Individual Property, and in either case with respect to which Borrower is not required under the Leases to apply Proceeds to the restoration of such Individual Property; or (b) a permanent Taking which, in the reasonable judgment of Lender, (i) involves an actual or constructive loss of more than forty percent (40%) of the lesser of (A) the fair market value of an Individual Property or (B) the Allocated Loan Amount for such Individual Property, (ii) renders untenantable more than forty percent (40%) of the rentable area of an Individual Property or (iii) materially and adversely impairs access to and egress from an Individual Property; or (c) a casualty, damage, destruction or Taking that affects so much of an Individual Property such that it would be impracticable, in Lender’s reasonable discretion, even after restoration, to operate such Individual Property as an economically viable whole.

 

“Transfer” shall mean to, directly or indirectly, sell, assign, convey, mortgage, transfer, pledge, hypothecate, encumber, grant a security interest in, exchange or otherwise dispose of any beneficial interest or grant any option or warrant with respect thereto, or where used as a noun, a direct or indirect sale, assignment, conveyance, transfer, pledge or other disposition of any beneficial interest by any means whatsoever whether voluntary, involuntary, by operation of law or otherwise.

 

“Transferee” shall mean the Person to whom a Transfer is being effected.

 

“TRIPRA” shall mean the Terrorism Risk Insurance Program Reauthorization Act of 2007 or another similar federal statute which provides that the federal government reinsures not less than fifty percent (50%) of any claims made under an insurance policy insuring against acts of terrorism (or such lower percentage of claims acceptable to the applicable holder in its reasonable discretion).

 

35

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State.

 

“Undefeased Note” shall have the meaning set forth in Section 2.4.2(d) hereof.

 

“U.S. Securities” shall mean obligations or securities not subject to prepayment, call or early redemption which are (a) obligations of, or obligations fully guaranteed as to timely payment by, the United States of America or (b) obligations of any agency or instrumentality of the United States of America that qualify as “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, in each case, that are sufficient for Lender to obtain a Rating Agency Confirmation/Notification.

 

“VOP” shall mean Vornado Realty L.P., a Delaware limited partnership, and its permitted successors by merger, consolidation or transfer of all or substantially all of the assets of VOP, subject to any terms, covenants and/or conditions of this Agreement.

 

“VRT” shall mean Vornado Realty Trust, a Maryland real estate investment trust, and its permitted successors by merger, consolidation or transfer of all or substantially all of the assets of VRT, subject to any terms, covenants and/or conditions of this Agreement.

 

“VRT Transfers” shall have the meaning set forth in Section 8.5.

 

“Wal-Mart Parcel” shall mean that certain parcel of real property located in Allentown, Pennsylvania owned by Allentown Individual Borrower and leased to Wal-Mart Stores, Inc. pursuant to the Wal-Mart Lease, as more particularly described on Schedule 5.1.4 hereto and the improvement located thereon.

 

“Wal-Mart Lease” shall mean that certain Ground Lease dated as of May 11, 1994 between Allentown Individual Borrower, as lessor, and Wal-Mart Stores, Inc., as lessee, as amended, supplemented, renewed, restated and otherwise modified through the date hereof, pursuant to which Wal-Mart Stores, Inc. ground leases the Wal-Mart Parcel from Allentown Individual Borrower.

 

“Work” shall have the meaning set forth in Section 6.2.4(a).

 

“Yield Maintenance Premium” shall mean, with respect to each Fixed Rate Component outstanding at the time of such calculation, the amount (if any) which, when added to the aggregate outstanding principal amount of such Fixed Rate Component (or any portion thereof evidenced by any Undefeased Note as applicable, but excluding any Defeased Note) attributable to such Fixed Rate Component will be sufficient to purchase U.S. Securities providing the required Scheduled Defeasance Payments.

 

Section 1.2                                    Principles of Construction.  All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP.  When used herein, the term “financial statements” shall include the notes and schedules thereto.  Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the definitions given them in this Agreement when used in any other Loan Document or in any

 

36

 

certificate or other document made or delivered pursuant thereto unless otherwise specified.  All uses of the word “including” shall mean including, without limitation unless the context shall indicate otherwise.  Unless otherwise specified, the words hereof, herein and hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.  Any reference in this Agreement or in any other Loan Document to any Loan Document shall be deemed to include references to such documents as the same may hereafter be amended, modified, supplemented, extended, consolidated, replaced and/or restated from time to time (and, in the case of any note or other instrument, to any instrument issued in substitution therefor).

 

ARTICLE II

 

GENERAL TERMS

 

Section 2.1                                    Loan.

 

2.1.1                     The Loan.  Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.

 

2.1.2                     Components of the Note.  For the purpose of computing interest payable from time to time on the principal amount of the Loan and certain other computations set forth herein, the principal balance of the Loan shall be comprised of Components A1, A2-FX, A2-FL, B, C and D.  The principal amount of the Components shall be as follows:

 

	
 
    	
COMPONENT
    	
 
    	
PRINCIPAL AMOUNT
    	
 
    	
 
    
	
 
    	
A1
    	
 
    	
$
    	
140,000,000
    	
 
    	
 
    
	
 
    	
A2-FX
    	
 
    	
$
    	
304,300,000
    	
 
    	
 
    
	
 
    	
A2-FL
    	
 
    	
$
    	
60,000,000
    	
 
    	
 
    
	
 
    	
B
    	
 
    	
$
    	
38,700,000
    	
 
    	
 
    
	
 
    	
C
    	
 
    	
$
    	
57,000,000
    	
 
    	
 
    
	
 
    	
D
    	
 
    	
$
    	
60,000,000
    	
 
    	
 
    

 

2.1.3                     Disbursement to Borrower. Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.  Borrower acknowledges and agrees that the full proceeds of the Loan have been disbursed by Lender to Borrower on the Closing Date.

 

2.1.4                     The Note, Security Instrument and Loan Documents.  The Loan shall be evidenced by the Note and secured by the Security Instrument, the Assignment of Leases, this Agreement and the other Loan Documents.

 

2.1.5                     Use of Proceeds.  Borrower shall use the proceeds of the Loan to (a) pay all past due Operating Expenses, if any, in respect of the Properties as of the Closing Date, (b)

 

37

 

make deposits into the Reserve Accounts on the Closing Date in the amounts provided herein, (c) pay Additional Trust Fund Expenses due and payable on the Closing Date, (d) pay costs and expenses incurred in connection with the closing of the Loan and (e) distribute the balance, if any, to Borrower (which may, in turn, distribute the same to its owners).

 

Section 2.2                                    Interest.

 

2.2.1                     Interest Generally.  Interest on each Fixed Rate Component of the Note shall accrue throughout the term of the Loan at the Fixed Interest Rate and interest on the Floating Rate Component of the Note shall accrue throughout the term of the Loan at the Floating Interest Rate, subject in each case to Section 2.2.6.

 

2.2.2                     Interest Calculation.

 

(a)                                 Interest on the outstanding principal balance of each Fixed Rate Component of the Loan shall accrue and be paid on the basis of a three hundred and sixty (360) day year consisting of twelve (12) months of thirty (30) days each.  Interest on the Floating Rate Component of the Loan shall accrue and be paid on the basis of a three hundred and sixty (360) day year and the actual number of days in each Interest Accrual Period with respect to the Floating Rate Component.  The amount of interest payable on each Payment Date with respect to any Component will be equal to the interest that is scheduled to accrue on such Component during the related Interest Accrual Period, subject to any adjustments as set forth herein, computed using the balance as of the immediately preceding Payment Date, after giving effect to any principal payments received on such Payment Date.  The total interest accrued under the Loan shall be the sum of the interest accrued on each of the Components.

 

(b)                                 In the event that Lender shall have determined in its good faith reasonable discretion (which determination shall be conclusive and binding upon Borrower absent manifest error) that by reason of circumstances affecting the interbank eurodollar market, adequate and reasonable means do not exist for ascertaining LIBOR, then Lender shall forthwith give notice by telephone of such determination, confirmed in writing, to Borrower at least two (2) days prior to the last day of the related Interest Accrual Period with respect to the Floating Rate Component.  If such notice is given, LIBOR commencing with the first (1st) day of the next succeeding Interest Accrual Period with respect to the Floating Rate Component, shall be LIBOR in effect for the most recent Interest Accrual Period (the “Static LIBOR Rate”).  If, pursuant to the terms of this Agreement, interest on the Floating Rate Component is to be calculated at the Static LIBOR Rate and Lender shall determine in its good faith reasonable discretion (which determination shall be conclusive and binding upon Borrower absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, Lender shall give notice thereof to Borrower, and the Static LIBOR Rate shall convert to LIBOR effective on the first day of the next succeeding Interest Accrual Period with respect to the Floating Rate Component.  Notwithstanding any provision of this Agreement to the contrary, in no event shall Borrower have the right to elect to convert from LIBOR to the Static LIBOR Rate.

 

2.2.3                     Monthly Debt Service Payments.  Borrower shall pay to Lender:

 

38

 

(a)                                 On September 10, 2010, an amount equal to the sum of (i) interest only on the outstanding principal balance of each Fixed Rate Component of the Loan from the Closing Date up to and including September 9, 2010 and (ii) interest only on the outstanding principal balance of the Floating Rate Component of the Loan from the Closing Date up to and including September 12, 2010; and

 

(b)                                 On each Payment Date thereafter commencing on October 10, 2010 up to and including the Maturity Date, principal and interest in an amount equal to the Monthly Debt Service Payment Amount.  The principal component of the Monthly Debt Service Payment Amount shall be applied as follows:

 

(i)                                     first, to the reduction of the outstanding principal balance of Component A-1, until reduced to zero,

 

(ii)                                  second, to the reduction of the outstanding principal balance of Component A-2-FX and Component A-2-FL, pro rata and pari passu, based on the outstanding principal balance of each such Component, until reduced to zero,

 

(iii)                               third, to the reduction of the outstanding principal balance of Component B until reduced to zero,

 

(iv)                              fourth, to the reduction of the outstanding principal balance of Component C until reduced to zero, and

 

(v)                                 fifth, to the reduction of the outstanding principal balance of Component D until reduced to zero.

 

(c)                                  Notwithstanding the provisions of the foregoing Section 2.2.3(a), if at any time Lender notifies Borrower that a “Cross-Over Date” has occurred in connection with any Securitization of the Loan, the principal portion of the Monthly Debt Service Payment Amount shall be applied as follows:

 

(i)                                     first, to the reduction of the outstanding principal balance of Component A-1, Component A-2-FX and Component A-2-FL, pro rata and pari passu, based on the unpaid principal balance for each such Component, until reduced to zero,

 

(ii)                                  second, to the reduction of the outstanding principal balance of Component B, until reduced to zero,

 

(iii)                               third, to the reduction of the outstanding principal balance of Component C, until reduced to zero, and

 

(iv)                              fourth, to the reduction of the outstanding principal balance of Component D, until reduced to zero.

 

2.2.4                     Payments Generally.  For purposes of making payments hereunder, but not for purposes of calculating any Interest Accrual Period, if the day on which such payment is due

 

39

 

is not a Business Day, then amounts due on such date shall be due on the immediately succeeding Business Day.  On the Maturity Date, interest on the outstanding principal balance of each Fixed Rate Component of the Note shall be payable at the Fixed Interest Rate or the Default Rate applicable to each Fixed Rate Component and interest on the outstanding principal balance of the Floating Rate Component of the Note shall be payable at the Floating Interest Rate or the Default Rate applicable to the Floating Rate Component, as the case may be, through and including the end of the applicable Interest Accrual Period.  All amounts due pursuant to this Agreement and the other Loan Documents shall be payable without setoff, counterclaim, defense (except for the defense of prior payment or performance) or any other deduction whatsoever.

 

2.2.5                     Payment on Maturity Date.  Borrower shall pay to Lender on the Maturity Date the outstanding principal balance of the Loan, all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Security Instrument and the other Loan Documents.

 

2.2.6                     Payments after Default.  Upon the occurrence and during the continuance of an Event of Default, interest on the outstanding principal balance of the Loan and, to the extent permitted by law, overdue interest and other amounts due in respect of the Loan shall accrue at the Default Rate, calculated from the date such payment was due without regard to any grace or cure periods contained herein, if any.  Any and all payments and other sums received by Lender hereunder during the continuance of an Event of Default may be applied to the Indebtedness in such order and priority as Lender shall determine in its sole discretion, including without limitation, alternating applications thereof between interest and principal.  Interest at the Default Rate shall be computed from the occurrence of the Event of Default until the actual receipt and collection of the Indebtedness (or that portion thereof that is then due).  To the extent permitted by applicable law, interest at the Default Rate shall be added to the Indebtedness, shall itself accrue interest at the same rate as the Loan and shall be secured by the Security Instrument.  This paragraph shall not be construed as an agreement or privilege to extend the date of the payment of the Indebtedness, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default.  Notwithstanding anything contained herein to the contrary, upon the occurrence and during the continuance of any Event of Default, any payment of principal from whatever source may be applied by Lender among the Components in Lender’s sole discretion.

 

2.2.7                     Late Payment Charge.  If any principal, interest or any other sums due under the Loan Documents (other than the outstanding Principal Amount due and payable on the Maturity Date) is not paid by Borrower within three (3) Business Days of the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of three percent (3%) of such unpaid sum and the Maximum Legal Rate multiplied by such unpaid sum (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.  Any such amount shall be secured by the Security Instrument and the other Loan Documents to the extent permitted by applicable law.

 

2.2.8                     Usury Savings.  This Agreement and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a

 

40

 

 

result of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due under the Note at a rate in excess of the Maximum Legal Rate, then the Fixed Interest Rate, the Floating Interest Rate, the Static Libor Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due under the Note.  All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under 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 Loan does not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

 

2.2.9                     Method and Place of Payment.  Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not later than 2:00 p.m., New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender’s office or as otherwise directed by Lender, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

 

2.2.10              Additional Trust Fund Expenses.  Borrower shall pay to Lender, or reimburse Lender for, any Additional Trust Fund Expenses arising with respect to the related trust fund; provided, however, that Borrower shall not be liable to pay for Additional Trust Fund Expenses (i) to the extent they result from the gross negligence, bad faith or willful misconduct of Lender, Servicer, any special servicer, trustee or certificate administrator or (ii) in any circumstance in which an Event of Default is not continuing and such Additional Trust Fund Expenses were incurred by or on behalf of the related trust fund in the performance or attempted performance of an obligation of the Borrower prior to the expiration of any notice and/or grace period that the Borrower is afforded with respect to such obligation pursuant to the terms of this Agreement or any other Loan Document, unless Lender is permitted hereunder or thereunder to perform such obligation prior to the expiration of any such notice and/or cure period.  Notwithstanding the foregoing or anything herein to the contrary, Borrower shall be required to pay taxes payable from the assets of any trust fund and any tax related expenses only to the extent the taxes and tax related expenses are otherwise taxes and tax related expenses that Borrower, Maryland Owner and Guarantor are expressly required to pay under the Loan Documents or by law.  Notwithstanding anything contained herein to the contrary, Borrower shall only be obligated to pay any amounts described in clause (a) of the definition of Additional Trust Fund Expenses if and to the extent such interest exceeds the sum of the Default Rate interest and Late Charges payable hereunder in respect of the event giving rise to the related advances.

 

2.2.11              Additional Payment Provisions.

 

(a)                                 If at any time after the date hereof, Lender reasonably determines that, due to the adoption or modification of any Legal Requirement regarding taxation, Lender’s required levels of reserves, deposits, Federal Deposit Insurance Corporation insurance or capital

 

41

 

(including any allocation of capital requirements or conditions), or similar requirements, or any interpretation or administration thereof by any Governmental Authority or compliance of Lender with any of such requirements, has or would have the effect of (a) increasing Lender’s after tax costs relating to the Floating Rate Component, or (b) reducing the after tax yield or rate of return of Lender on the Floating Rate Component, to a level below that which Lender could have achieved but for the adoption or modification of any such Legal Requirements.  Borrower shall, within thirty (30) days of any request by Lender, pay to Lender such additional amounts as (in Lender’s sole judgment, after good faith and reasonable computation) will compensate Lender for such increase in costs or reduction in yield or rate of return of Lender.  No failure by Lender to immediately demand payment of any additional amounts payable hereunder shall constitute a waiver of Lender’s right to demand payment of such amounts at any subsequent time.

 

(b)                                 If any requirement of law or any change therein or in the interpretation or application thereof, shall hereafter make it unlawful for Lender to make or maintain the Floating Rate Component with the Floating Interest Rate being based on LIBOR as contemplated hereunder, (i) the obligation of Lender hereunder to make such Floating Rate Component of the Loan based on LIBOR or to convert the Floating Rate Component from the Static LIBOR Rate to the LIBOR Rate shall be canceled forthwith and (ii) the Floating Rate shall be converted automatically to a loan bearing interest at the Static LIBOR Rate on the next succeeding Payment Date or within such earlier period as required by law.  Borrower hereby agrees promptly to pay Lender, upon demand, any additional amounts necessary to compensate Lender for any reasonable, third party out-of-pocket costs (other than taxes) incurred by Lender in making any conversion in accordance with this Agreement, including, without limitation, any interest or fees payable by Lender to lenders of funds obtained by it in order to make or maintain the Floating Rate Component hereunder.  If Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.11(b), Lender shall provide Borrower with not less than ninety (90) days written notice specifying in reasonable detail the event by reason of which it has become so entitled and the additional amount required to fully compensate Lender for such additional costs.  Lender’s notice of such costs, as certified to Borrower, shall be conclusive absent manifest error.  Lender acknowledges and agrees that, as of the date hereof, no conditions exist that would permit the cancellation of Lender’s obligations to make the Floating Rate Component of the Loan  based on LIBOR or to convert the Floating Rate Component from LIBOR Rate to the Static LIBOR Rate under this Section 2.2.11(b).

 

(c)                                  In the event that (i) the Loan is no longer held in a securitization trust and (ii) any change in any requirement of law or in the interpretation or application thereof, or compliance by Lender with any request or directive (whether or not having the force of law) hereafter issued from any central bank or other Governmental Authority:

 

(i)                                     shall hereafter impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of Lender which is not otherwise included in the determination of the Floating Interest Rate hereunder,

 

42

 

(ii)                                  shall hereafter have the effect of reducing the rate of return on Lender’s capital with respect to the Floating Rate Component as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration Lender’s policies with respect to capital adequacy) by any amount reasonably deemed by Lender to be material; or

 

(iii)                               shall hereafter impose on Lender any other condition and the result of any of the foregoing is to increase the cost to Lender of making, renewing or maintaining the Floating Rate Component or to reduce any amount receivable hereunder with respect to the Floating Rate Component;

 

then, in any such case (but not with respect to taxes), Borrower shall promptly pay Lender, upon demand, any additional amounts necessary to compensate Lender for such additional cost or reduced amount receivable which Lender deems to be material as determined by Lender.  If Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.11(c), Lender shall provide Borrower with not less than sixty (60) days written notice specifying in reasonable detail the event by reason of which it has become so entitled and the additional amount required to fully compensate Lender for such additional cost or reduced amount.  A certificate as to any additional costs or amounts payable pursuant to the foregoing sentence submitted by Lender to Borrower shall be conclusive in the absence of manifest error.  This provision shall survive payment of the Indebtedness and the satisfaction of all other obligations of Borrower under this Agreement and the Loan Documents.

 

(d)                                 Borrower agrees to indemnify Lender and to hold Lender harmless from any loss or expense (other than consequential or punitive damages or taxes) which Lender sustains or incurs as a consequence of (i) any default by Borrower in payment of the principal of or interest on the Floating Rate Component, including, without limitation, any such loss or expense arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Floating Rate Component hereunder, (ii) any prepayment (whether voluntary or mandatory) of the Floating Rate Component that did not include all interest which had accrued (or would have accrued) at the Floating Interest Rate through the end of the related Interest Accrual Period with respect to the Floating Rate Component, including, without limitation, such loss or expense arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Floating Rate Component hereunder, and (iii) the conversion (for any reason whatsoever, whether voluntary or involuntary) of the Floating Interest Rate to the Static LIBOR Rate with respect to any portion of the outstanding principal amount of the Floating Rate Component then bearing interest at the Floating Interest Rate on a date other than the Payment Date immediately following the last day of an Interest Accrual Period with respect to the Floating Rate Component, including, without limitation, such loss or expenses arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Floating Rate Component hereunder (the amounts referred to in clauses (i), (ii) and (iii) are herein referred to collectively as the “Breakage Costs”).  This provision shall survive payment of the Note in full and the satisfaction of all other obligations of Borrower under this Agreement and the other Loan Documents.

 

43

 

Section 2.3                                    Prepayments.

 

2.3.1                     Voluntary Prepayments.  Except as otherwise provided in this Agreement, Borrower shall not have the right to prepay any Fixed Rate Component in whole or in part prior to the Stated Maturity Date.  Borrower may prepay the Floating Rate Component, in whole or in part at any time without payment of the Yield Maintenance Premium or other penalty or premium, provided that (a) no Event of Default has occurred and is continuing at the time of any such prepayment; (b) Borrower gives Lender not less than ten (10) days’ notice (or such shorter period of time if permitted by Lender in its reasonable discretion) specifying a date on which such prepayment is to occur (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment); and (c) Borrower pays Lender, in addition to the outstanding principal amount of the Floating Rate Component of the Loan to be prepaid, all interest which would have accrued on the amount of the Floating Rate Component of the Loan to be paid through and including the last day of the Interest Accrual Period with respect to the Floating Rate Component related to the Payment Date next occurring following the date of such prepayment.  Any such prepayment received by Lender on a date other than a Payment Date shall be held by Agent in an interest bearing money-market account (and the interest shall accrue for the benefit of Borrower) as collateral security for the Loan and shall be applied to the Floating Rate Component on the next Payment Date.  On the Payment Date occurring in March, 2020 (the “Lockout Expiration Date”) and on any Business Day thereafter, Borrower may, at its option and upon eight (8) Business Days’ prior written notice to Lender (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment), prepay the Fixed Rate Components in whole or in part without payment of the Yield Maintenance Premium or other penalty or premium.  If Borrower prepays any Fixed Rate Component of the Loan on a date other than a Payment Date, Borrower shall pay Lender, in addition to the Indebtedness, all interest which would have accrued on the amount of such Fixed Rate Component through but excluding the Payment Date next occurring following the date of such prepayment.  Any prepayment received by Lender on a date other than a Payment Date shall be held by Agent in an interest bearing money-market account (and the interest shall accrue for the benefit of Borrower) as collateral security for the Loan and shall be applied to the applicable Component on the next Payment Date to the extent otherwise required.

 

2.3.2                     Mandatory Prepayments.  On each Payment Date immediately following the date on which Borrower or Lender actually receives any Proceeds, and it has been determined that Lender is not obligated to and Lender does not, in fact, make such Proceeds available to Borrower for the restoration of the applicable Individual Property, then, subject to Section 6.2.5(b), Borrower shall prepay the outstanding principal balance of the Loan in an amount equal to one hundred percent (100%) of such Proceeds, using such Proceeds, and such amount prepaid by Borrower shall result in a corresponding reduction of the Allocated Loan Amount of the applicable Individual Property.  No Yield Maintenance Premium or other penalty or premium shall be due in connection with any prepayment made pursuant to this Section 2.3.2.

 

44

 

2.3.3                     Prepayments After Default.  If, after the occurrence and during the continuance of an Event of Default, payment of all or any part of the Indebtedness is tendered by Borrower and accepted by Lender or otherwise recovered by Lender, such tender or recovery shall be deemed a voluntary prepayment by Borrower in violation of the prohibition against prepayment set forth in Section 2.3.1 and, to the extent that the same would, if a prepayment, be prohibited under Section 2.3.1, Borrower shall pay, in addition to the Indebtedness, an amount equal to the greater of (a) one percent (1%) of the then outstanding principal amount of the Loan to be prepaid or satisfied (excluding the Floating Rate Component and excluding any Defeased Notes), or (b) the Yield Maintenance Premium in respect of each Fixed Rate Component outstanding at the time of such prepayment (excluding any portion thereof evidenced by a Defeased Note).

 

2.3.4                     Application of Principal Payments to Components.  All prepayments of principal in connection with permitted prepayments of the Floating Rate Component of the Loan made pursuant to and in accordance with Section 2.3.1 of this Agreement shall be applied to the Floating Rate Component.  All other prepayments of principal, in whole or in part, voluntary or involuntary, shall be applied as follows:

 

(a)                                 first, to the reduction of the outstanding principal balance of Component A-1, Component A-2-FX and Component A-2-FL, pro rata and pari passu, based on the unpaid principal balance for each such Component, until reduced to zero,

 

(b)                                 second, to the reduction of the outstanding principal balance of Component B until reduced to zero,

 

(c)                                  third, to the reduction of the outstanding principal balance of Component C until reduced to zero, and

 

(d)                                 fourth, to the reduction of the outstanding principal balance of Component D until reduced to zero.

 

Section 2.4                                    Defeasance. Provided no Event of Default shall have occurred and be continuing, Borrower shall have the right at any time after the Closing Date and prior to the Lockout Expiration Date to voluntarily defease all or any portion of the Fixed Rate Components of the Loan in sequential order (i.e., first, Component A-1 until defeased in full, then Component A-2-FX, until defeased in full, then Component B until defeased in full, then Component C until defeased in full and finally Component D, until defeased in full) by and upon satisfaction of the following conditions (such event being a “Defeasance Event”):

 

2.4.1                     Conditions to Total Defeasance.  Provided Lender shall not have elected to accelerate the Loan during the continuance of an Event of Default, Borrower shall have the right at any time to voluntarily defease the entire balance of the Fixed Rate Components of the Loan without premium, Yield Maintenance Premium or penalty and obtain a release of the Lien of the Security Instrument by providing Lender with the Total Defeasance Collateral (herein, a “Total Defeasance Event”), subject to the satisfaction of the following conditions precedent:

 

(a)                                 Except as otherwise set forth herein, Borrower shall have delivered to Lender all documentary deliveries required pursuant to this Section 2.4.1 at least fifteen (15)

 

45

 

days prior to the requested effective date of such proposed Total Defeasance Event (except as Lender may in its reasonable discretion shorten such period) and shall specify a date (the “Total Defeasance Date”) on which the Total Defeasance Event is to occur (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment);

 

(b)                                 Borrower shall pay to Lender (i) all payments of principal and interest due on the Loan to and including the Total Defeasance Date and (ii) all other sums, then due on such Total Defeasance Date under the Note, this Agreement, the Security Instrument and the other Loan Documents;

 

(c)                                  Borrower shall deposit the Total Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of Section 2.4.3 hereof;

 

(d)                                 Borrower shall execute and deliver to Lender a Defeasance Security Agreement in respect of the Defeasance Collateral Account and the Total Defeasance Collateral;

 

(e)                                  in connection with the Defeasance Event, Borrower shall deliver to Lender (i) an Opinion of Counsel for Borrower that is reasonably satisfactory to Lender opining that (A) Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Total Defeasance Collateral and (B) that the Total Defeasance Event pursuant to this Section 2.4.1 does not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code and will not cause a federal income tax to be imposed on any Securitization vehicle and (ii) a non-consolidation opinion with respect to the Successor Borrower;

 

(f)                                   Borrower shall deliver to Lender a Rating Agency Confirmation/Notification as to the Total Defeasance Collateral and the documents to be entered into in connection with the Total Defeasance Event;

 

(g)                                  On or prior to the Total Defeasance Date, Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.4.1 have been satisfied;

 

(h)                                 Borrower shall deliver a certificate of a “big four” or other public accounting firm reasonably acceptable to Lender certifying that the Total Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments;

 

(i)                                     Borrower shall deliver such other certificates, opinions, documents and instruments as Lender may reasonably request, to the extent such delivery would be required by a reasonably prudent lender defeasing mortgage loans for securitization similar to the Loan, provided that Borrower shall not be required to deliver any certificate, opinion, document or instrument that would increase Borrower’s and/or Maryland Owner’s obligations or liabilities under this Agreement or any other Loan Document;

 

46

 

(j)                                    Borrower shall pay or have paid in full the outstanding principal balance of the Floating Rate Component;

 

(k)                                 In connection with a Total Defeasance Event, Borrower shall pay to Lender a defeasance and release fee in an amount equal to $35,000; and

 

(l)                                     Borrower shall pay all reasonable out-of-pocket costs and expenses of Lender incurred in connection with the Total Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and fees and expenses of the Rating Agencies.

 

2.4.2                     Conditions to Partial Defeasance.  Provided Lender shall not have elected to accelerate the Loan during the continuance of an Event of Default and Borrower shall have paid in full the Floating Rate Component, Borrower shall have the right at any time to voluntarily defease a portion of the Fixed Rate Components of the Loan without Yield Maintenance Premium or penalty and obtain a release of the Lien of the Security Instrument as to any Individual Property by providing Lender with the Partial Defeasance Collateral (herein, a “Partial Defeasance Event”), subject to the satisfaction of the following conditions precedent:

 

(a)                                 Except as otherwise set forth herein, Borrower shall have delivered to Lender all documentary deliveries required pursuant to this Section 2.4.2 at least eight (8) Business Days prior to the requested effective date of such proposed Partial Defeasance Event (except as Lender may in its reasonable discretion shorten such period) and shall specify a date (the “Partial Defeasance Date”) on which the Partial Defeasance Event is to occur (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment);

 

(b)                                 Borrower shall pay to Lender (i) all payments of principal and interest due on the Loan to and including the Partial Defeasance Date and (ii) all other sums, then due on such Partial Defeasance Date under the Note, this Agreement, the Security Instrument and the other Loan Documents;

 

(c)                                  Borrower shall deposit the Partial Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of Section 2.4.3 hereof;

 

(d)                                 Borrower shall prepare all necessary documents to modify this Agreement and to amend and restate the Note and issue substitute notes, having an aggregate principal balance equal to the Release Amount for the subject Individual Property or Properties proposed to be released in connection with such Partial Defeasance Event or such greater amount as Borrower may elect (including pursuant to Section 2.4.2(i)) (collectively, the “Defeased Note”), and the other notes having a principal balance equal to the excess of (i) the original principal amount of the Loan, over (ii) the amount of the Defeased Note and any prior Defeased Note issued (collectively, the “Undefeased Note”).  The Defeased Note and Undefeased Note shall have identical terms as the Note except for the principal balance and the stated maturity date and except as necessary to reflect the different size of the allocable portions of the Components comprising such Notes by reason of the sequential defeasance provided for under the last

 

47

 

sentence of Section 2.5.4(a).  The Defeased Note and the Undefeased Note shall not be cross defaulted or cross collateralized.  A Defeased Note may not be the subject of any further defeasance (but may be prepaid on the same terms as the Fixed Component of the Undefeased Note);

 

(e)                                  Borrower shall execute and deliver to Lender a Defeasance Security Agreement in respect of the Defeasance Collateral Account and the Partial Defeasance Collateral;

 

(f)                                   Borrower shall deliver to Lender (i) an Opinion of Counsel for Borrower that is reasonably satisfactory to Lender opining that (A) Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Partial Defeasance Collateral and (B) that the Partial Defeasance Event pursuant to this Section 2.4.2 does not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code and will not cause any federal income tax to be imposed on any Securitization vehicle and (ii) a non-consolidation opinion with respect to the Successor Borrower;

 

(g)                                  Borrower shall deliver to Lender a Rating Agency Confirmation/Notification as to the Partial Defeasance Collateral and the documents to be entered into in connection with the Partial Defeasance Event;

 

(h)                                 on or prior to the Partial Defeasance Date, Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.4.2 have been satisfied;

 

(i)                                     after giving effect to the release of any Individual Property in connection with a Partial Defeasance Event (including the amount of the Loan prepaid in this Section 2.4.2 above for the release of any Individual Property in connection with a Partial Defeasance Event), the Debt Service Coverage Ratio for the Loan for the Properties (excluding the released Individual Property) shall not be less than the Debt Service Coverage Ratio of the Properties immediately prior to giving effect to such release; provided that, for clarity, in order to meet the Debt Service Coverage Ratio test set forth herein, Borrower may defease a portion of the Loan in excess of the Release Amounts of the affected Individual Property (and the Allocated Loan Amount with respect to the remaining Properties shall be reduced proportionately by the amount of such excess);

 

(j)                                    Borrower shall deliver a certificate of a “big four” or other public accounting firm reasonably acceptable to Lender certifying that the Partial Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments;

 

(k)                                 Borrower shall deliver such other certificates, opinions, documents and instruments as Lender may reasonably request, to the extent such delivery would be required by a reasonably prudent lender defeasing mortgage loans for securitization similar to the Loan, provided that Borrower shall not be required to deliver any certificate, opinion, document or instrument that would increase Borrower’s and/or Maryland Owner’s obligations or liabilities under this Agreement or any other Loan Document;

 

48

 

(l)                                     In connection with each Partial Defeasance Event, Borrower shall pay to Lender a defeasance and release fee in an amount equal to $15,000; and

 

(m)                             Borrower shall pay all reasonable out-of-pocket costs and expenses of Lender incurred in connection with the Partial Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and fees and expenses of the Rating Agencies.

 

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 (a) Total Defeasance Collateral or the applicable Partial Defeasance Collateral, and (b) cash from interest and principal paid on the Total Defeasance Collateral or the applicable 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 Agent on each Payment Date and applied in accordance with the terms of this Agreement.  Following the payment of all Scheduled Defeasance Payments, any cash from interest and principal paid on the Total Defeasance Collateral or Partial Defeasance Collateral in excess of the amounts necessary to pay the Scheduled Defeasance Payments shall be paid to Borrower or, if there is a Successor Borrower, to Successor Borrower.  Borrower shall cause the Eligible Institution at which the Total Defeasance Collateral or Partial Defeasance Collateral is deposited to enter into an agreement with Borrower or Successor Borrower, as applicable, 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 or Partial Defeasance Collateral in accordance with this Agreement.  Borrower or Successor Borrower, as applicable, shall be the owner of the Defeasance Collateral Account and shall report all income accrued on Total Defeasance Collateral or Partial Defeasance Collateral for federal, state and local income tax purposes in its income tax return.  Borrower shall pay 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.  At Borrower’s election, different Defeasance Collateral Accounts may be established for each defeasance consummated pursuant to this Agreement.

 

2.4.4                     Successor Borrower.  In connection with a Defeasance Event under this Section 2.4, Borrower shall, if required by the Rating Agencies or if Borrower elects to do so, establish or designate a successor entity (the “Successor Borrower”) which shall be a single purpose bankruptcy remote entity and which shall be approved by S&P (which may be evidenced by the Rating Agency Confirmation/Notification).  Any such Successor Borrower may, at Borrower’s option, be an Affiliate of Borrower unless the Rating Agencies shall require otherwise.  Borrower shall transfer and assign all obligations, rights and duties under and to the Note (in connection with a Total Defeasance Event) and under the  Defeased Note (in connection with a Partial Defeasance Event), 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 (in connection with a Total Defeasance Event) and under the  Defeased Note (in connection with a Partial Defeasance Event) and the Defeasance Security Agreement and Borrower shall be relieved of its obligations under such documents and, in connection with a Partial Defeasance Event, the related Individual Borrower in respect of the

 

49

 

released Individual Property (and, if applicable, the Maryland Owner) shall also be released from all of its (or their) obligations under the other Loan Documents.  Borrower shall pay all reasonable, out-of-pocket costs and expenses incurred by Lender, including Lender’s reasonable attorney’s fees and expenses, incurred in connection therewith.  A different Successor Borrower may be established for each defeasance consummated pursuant to this Agreement.

 

Section 2.5                                    Release of Property.  Except as set forth in this Section 2.5 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 Security Instrument.

 

2.5.1                     Release or Assignment on Total Defeasance.  The provisions of this Section 2.5.1 shall be applicable only with respect to a Total Defeasance.

 

(a)                                 If Borrower has elected to defease the Fixed Rate Components of the Loan in their entirety, to pay in full the Floating Rate Component and the requirements of Section 2.4 and this Section 2.5 have been satisfied, the Properties shall be released from the Lien of the Security Instrument (unless Borrower elects for an assignment in accordance with Section 2.5.1(c)) and the U.S. Securities constituting the Total Defeasance Collateral, pledged pursuant to the Defeasance Security Agreement, shall be the sole source of collateral securing the Note, and Guarantor shall be released of all of the Guaranteed Obligations and all obligations under the Recourse Carveout Guaranty and the Ground Lease Guaranty and each guarantor under a Bottom Up Guaranty shall be released of its obligations thereunder.

 

(b)                                 In connection with the release of the Security Instrument, Borrower shall submit to Lender, not less than fifteen (15) days prior to the Total Defeasance Date (or such shorter period of time as may be permitted by Lender in its reasonable discretion), releases of Lien (and related Loan Documents) for the Properties for execution by Lender.  Such releases shall be in a form appropriate for each jurisdiction in which each of the Properties are located and that would be reasonably satisfactory to a prudent lender.  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.  In connection with such Total Defeasance of the Fixed Rate Components of the Loan and payment in full of the Floating Rate Component of the Loan, Lender shall deliver to Borrower (A) a payoff letter in customary form and (B) promptly after the completion of the Total Defeasance Event, (I) all original insurance policies relating to the Properties which may be held by or on behalf of Lender, (II) any amounts held in escrow or in any Reserve Account pursuant to the Loan Documents or otherwise, (III) any other collateral that may have been delivered to Lender in connection with the Loan, (IV) the original Note (or a lost note affidavit in lieu thereof), and (V) a termination of any guaranties delivered to Lender in connection with the Loan (except to the extent that any portion of such guaranties are expressly intended to survive pursuant to the terms thereof), duly executed by Lender.

 

(c)                                  If Borrower advises Lender that it desires to effectuate a Total Defeasance Event in a manner which will permit the assignment of all or any portion of the Note and any Security Instrument to one or more new lenders providing all or a portion of the Total

 

50

 

 

Defeasance Collateral, Borrower and Lender shall cooperate to effect such proposed assignments in the following manner:  Lender shall assign the Note (or any part or portion thereof) and any Security Instrument (or any part or portion thereof) designated by Borrower, each without recourse, covenant or warranty of any nature, express or implied (except as to the outstanding principal balance of the Loan and that Lender holds the Note and Security Instrument and has the authority to effect the assignment), to such new lenders designated by Borrower (other than Borrower or a nominee of Borrower) and Lender shall execute, upon Borrower’s reasonable request, in recordable form any document or instrument reasonably acceptable to Lender that may be necessary to split, divide, sever or componentize any Note and/or Security Instrument, provided that Borrower (i) has executed and delivered to such new lenders one or more new notes corresponding to the Security Instrument (or portion thereof) being assigned to be secured by the Total Defeasance Collateral pursuant to the security agreement between Borrower and such new lender (the “Defeasance Security Agreement”) (such new notes to have the same term, interest rate, unpaid principal balance and all other material terms and conditions of the Note (or the portion thereof being assigned)), which new notes, together with the Defeasance Security Agreement and the rights of such new lenders in and to the Total Defeasance Collateral, shall be assigned by such new lenders to Lender simultaneously with the assignment of the Note (or portion thereof) and the Security Instrument (or portion thereof) by Lender, and (ii) has complied with all other provisions of Section 2.4 and this Section 2.5 to the extent not inconsistent with this subsection 2.5.1(c).  In addition, any such assignment shall be conditioned on the following: (A) payment by Borrower of (I) the reasonable out-of-pocket expenses of Lender incurred in connection therewith; and (II) Lender’s reasonable attorneys’ fees for the preparation, delivery and performance of such an assignment and for the consideration of Borrower’s request; (B) such an assignment is not then prohibited by any federal, state or local law, rule, regulation, order or by any other governmental authority; provided that, if such prohibition exists, Lender shall take all reasonable efforts, at Borrower’s expense, to effectuate the intent of this Section 2.5.1(c) consistent with then applicable Law; (C) such assignment and the actions described above in Lender’s good faith determination do not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code, and will not cause any federal income tax to be imposed on the Securitization as a result of such assignment and the Total Defeasance Event and Lender is permitted to obtain an opinion confirming such result; and (D) Borrower shall provide such other opinions, items, information and documents which a prudent lender would reasonably require to effectuate such assignment.  Borrower shall be responsible for all mortgage recording taxes, recording fees and other charges payable in connection with any such assignment.  Lender agrees that the assignment of the Note and the Security Instrument to the new lenders and the assignment of the new note, the Total Defeasance Collateral and the Defeasance Security Agreement by the new lender to Lender shall be accomplished by an escrow closing conducted through an escrow agent reasonably satisfactory to Lender and pursuant to an escrow agreement reasonably satisfactory to Lender in form and substance.  Notwithstanding the foregoing, Lender reserves the right to impose different requirements or procedures on such an assignment of the Note and the Security Instrument to the extent (but only to the extent) necessary to accommodate any Legal Requirements enacted or interpreted in a new manner subsequent to the date hereof at the time of such Total Defeasance Event if and to the extent a reasonably prudent Lender would impose such requirements or procedures.

 

51

 

2.5.2                     Release or Assignment on Payment in Full.  If Borrower shall pay or cause to be paid the outstanding principal balance of, and unpaid interest on, and all other sums due under, the Note, this Agreement and the other Loan Documents in accordance with the terms and provisions thereof, at the request of Borrower, Lender shall (a) assign and/or sever the Note and any Security Instrument into two (2) or more separate loans and/or security instruments and assign, the Security Instrument (or any portion thereof if the Security Instrument has been severed)  and all of the other Loan Documents to any Person designated by Borrower, which assignment and severance documents shall be in recordable form (but without representation or warranty by, or recourse to, Lender, except that Lender shall represent that such assignment(s) has been duly authorized and that Lender has not assigned or encumbered the Security Instrument or the other Loan Documents), (b) deliver to or as directed by Borrower the originally executed Note and all originally executed other notes which may have been consolidated, amended and/or restated in connection with the execution of the Note or, with respect to any note where the original has been lost, destroyed or mutilated, a lost note affidavit for the benefit of the assignee, lender and the title insurance company insuring the Security Instrument, as assigned, in form sufficient to permit such title insurance company to insure the lien of the Security Instrument as assigned to and held by the assignee without exception for any matter relating to the lost, destroyed or mutilated note; provided such affidavit shall not include an indemnity from Lender, (c) execute and deliver an allonge with respect to the Note and any other note(s) as described in the preceding paragraph  (b) above without recourse, covenant or warranty of any nature, express or implied (except as to the outstanding principal balance of the Loan and that Lender holds the Note and Security Instrument and has the authority to execute and deliver the allonge), (d) deliver the original executed Security Instrument or a certified copy of record, if available, and (e) execute and deliver such other instruments of conveyance, assignment, termination, severance and release (including appropriate UCC-3 termination statements) in recordable form as may reasonably be requested by Borrower to evidence such assignment and/or severance.  All reasonable out-of-pocket and costs and expenses incurred by Lender as a result of the foregoing shall be paid by Borrower.  In connection with any assignment of the Note and Security Instrument by Lender pursuant to this Section 2.5.2, Borrower shall pay to Lender an assignment fee in an amount equal to $3,000.  Concurrently with the payment to Lender of the outstanding principal balance of, and unpaid interest on, and all other sums due under, the Note, this Agreement and the other Loan Documents, and whether or not Borrower shall request an assignment as set forth in this Section 2.5.2, Lender shall deliver to Borrower (i) a payoff letter in customary form, (ii) all original insurance policies relating to the Properties which may be held by or on behalf of Lender, (iii) any amounts held in escrow or in any reserve account pursuant to the Loan Documents or otherwise, (iv) the original note (or a lost note affidavit in lieu thereof), (v) any other collateral that may have been delivered to Lender in connection with the Loan, and (vi) a termination of any guaranties delivered to Lender in connection with the Loan (except to the extent that any portion of such guaranties are expressly intended to survive pursuant to the terms thereof), duly executed by Lender.

 

2.5.3                     Release or Assignment on Partial Defeasance.  The provisions of this Section 2.5.3 shall be applicable only with respect to a Partial Defeasance.

 

(a)                                 If Borrower has elected to make a partial defeasance and the requirements of Section 2.4.2 have been satisfied, any applicable Individual Property shall be released from the lien of the Security Instrument (unless Borrower elects for an assignment in accordance with

 

52

 

Section 2.5.3(b)).  In connection with the release of the Security Instrument, Borrower shall submit to Lender, not less than eight (8) Business Days prior to the Partial Defeasance Date (or such shorter period of time as may be permitted by Lender in its reasonable discretion), a release of Lien (and related Loan Documents) for the Individual Property for execution by Lender.  Such release shall be in a form appropriate in the jurisdiction in which any applicable Individual Property is located and that would be reasonably satisfactory to a prudent lender.  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.  In connection with such Partial Defeasance, Lender shall deliver to Borrower (i) a payoff letter in customary form and (ii) promptly after the completion of the Partial Defeasance Event, (A) all original insurance policies relating to the applicable Individual Property which may be held by or on behalf of Lender, (B) any amounts (or allocable portion of any amounts) held in escrow or in any Reserve Account pursuant to the Loan Documents or otherwise (in whole or in part) in respect of the applicable Individual Property, and (C) any other collateral that may have been delivered to Lender in connection with the applicable Individual Property, duly executed by Lender.

 

(b)                                 If Borrower has elected to make a partial defeasance and the requirements of Section 2.4.2 have been satisfied, in lieu of the release of the Individual Property in accordance with Section 2.5.3(a), if Borrower advises Lender that it desires to effectuate a Partial Defeasance Event in a manner which will permit the assignment of a portion of the Note and any Security Instrument to one or more new lenders providing all or a portion of the Partial Defeasance Collateral, Borrower and Lender shall cooperate to effect such proposed assignments in the following manner:  Lender shall assign the applicable portion of the Note and any Security Instrument (or any part or portion thereof) designated by Borrower, each without recourse, covenant or warranty of any nature, express or implied (except as to the outstanding principal balance of the Loan and that Lender holds the Note and Security Instrument and has the authority to effect the assignment), to such new lenders designated by Borrower (other than Borrower or a nominee of Borrower) and Lender shall execute, upon Borrower’s reasonable request, in recordable form any document or instrument reasonably acceptable to Lender that may be necessary to split, divide, sever or componentize the Note and/or Security Instrument, provided that Borrower (i) has executed and delivered to such new lenders one or more new notes corresponding to the Defeasance Security Instrument (or portion thereof) being assigned to be secured by the Partial Defeasance Collateral pursuant to the Defeasance Security Agreement between Borrower and such new lender (such new notes to have the same term, interest rate, unpaid principal balance and all other material terms and conditions of the portion of the Note being assigned)), which new notes, together with the Defeasance Security Agreement and the rights of such new lenders in and to the Partial Defeasance Collateral, shall be assigned by such new lenders to Lender simultaneously with the assignment of the portion of the Note and the Security Instrument (or portion thereof) by Lender, and (ii) has complied with all other provisions of Section 2.4 and this Section 2.5 to the extent not inconsistent with this subsection 2.5.3(b).  In addition, any such assignment shall be conditioned on the following: (A) payment by Borrower of (I) the reasonable out-of-pocket expenses of Lender incurred in connection therewith; and (II) Lender’s reasonable attorneys’ fees for the preparation, delivery and performance of such an assignment and for the consideration of Borrower’s request; (B) such an assignment is not then prohibited by any federal, state or local law, rule, regulation, order or by

 

53

 

any other governmental authority; provided that, if such prohibition exists, Lender shall take all reasonable efforts, at Borrower’s expense, to effectuate the intent of this Section 2.5.3(b) consistent with then applicable Law; (C) such assignment and the actions described above in Lender’s good faith determination do not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code, and will not cause any federal income tax to be imposed on the Securitization as a result of such assignment and the Partial Defeasance Event; and (D) Borrower shall provide such other opinions, items, information and documents which a prudent lender would reasonably require to effectuate such assignment.  Borrower shall be responsible for all mortgage recording taxes, recording fees and other charges payable in connection with any such assignment.  Lender agrees that the assignment of a portion of the Note and the Security Instrument to the new lenders and the assignment of the new note, the Partial Defeasance Collateral and the Defeasance Security Agreement by the new lender to Lender shall be accomplished by an escrow closing conducted through an escrow agent reasonably satisfactory to Lender and pursuant to an escrow agreement reasonably satisfactory to Lender in form and substance.  Notwithstanding the foregoing, Lender reserves the right to impose different requirements or procedures on such an assignment of a portion of the Note and the Security Instrument to the extent (but only to the extent) necessary to accommodate any Legal Requirements enacted or interpreted in a new manner subsequent to the date hereof at the time of such Partial Defeasance Event if a reasonably prudent Lender would impose such requirements or procedures.

 

(c)                                  All reasonable out of pocket costs and expenses incurred by Lender pursuant to this Section 2.5.3 shall be paid by Borrower (in addition to the fee described in Section 2.4.2(l).

 

2.5.4                     Release or Assignment With Respect to the Floating Rate Component.  The provisions of this Section 2.5.4 shall be applicable only with respect to a permitted release in connection with a prepayment of the Floating Rate Component of the Loan in whole or in part.

 

(a)                                 Subject to the satisfaction in full of the requirements set forth in Section 2.3.1 and this Section 2.5.4, Borrower may obtain the release of an Individual Property or Individual Properties from the Lien of the Security Instrument (unless Borrower elects for an assignment in accordance with Section 2.5.4(b)), without the payment of the Yield Maintenance Premium or other prepayment penalty and without the requirement that Borrower effect a Partial Defeasance Event, for one or more Individual Properties with an aggregate Release Amount that is less than or equal to Sixty Million and No/100 Dollars ($60,000,000.00) (an “Other Permitted Release”).  After giving effect to the release of any Individual Property in connection with an Other Permitted Release, the Debt Service Coverage Ratio for the Loan for the Properties (excluding the released Individual Property or Individual Properties) shall not be less than the Debt Service Coverage Ratio of the Properties immediately prior to giving effect to such release; and provided further that, for clarity, in order to meet the Debt Service Coverage Ratio test set forth herein, Borrower may prepay a portion of the Loan in excess of the Release Amounts of the affected Individual Property (and the Allocated Loan Amount with respect to the remaining Properties shall be reduced proportionately by the amount of such excess); provided, however, that no such prepayment of the Floating Rate Component shall, in the aggregate with all other prepayments of the Floating Rate Component pursuant to this Section 2.5.4 exceed Sixty Million and No/100 Dollars ($60,000,000.00).  Borrower shall pay to Lender on the

 

54

 

requested date of any such Other Permitted Release the Release Amount for the applicable Individual Property or Individual Properties. All of the Release Amount paid in connection with any Other Permitted Release shall be applied to the outstanding principal balance and accrued interest of the Floating Rate Component.  For clarity, Borrower may obtain the release of an Individual Property from the lien of the Security Instrument in part by prepayment under this Section 2.5.4 (to the extent of the balance of the Sixty Million and No/100 Dollars ($60,000,000.00) amount) and in remaining part by means of a Partial Defeasance Event (with respect to the excess of the Release Amount over the portion prepaid under this Section 2.5.4) and the provisions of Section 2.4.2, Section 2.5.3 and this Section 2.5.4 shall be construed accordingly. Concurrently with the effectiveness of the release of the Lien of the Security Instrument on such Individual Property, the related Individual Borrower (and, if applicable, Maryland Owner) shall be released of all of its (or their) obligations and liabilities under the Loan Documents (other than those obligations and liabilities expressly stated to survive payment in full of the Indebtedness).  In addition, in connection with any prepayment under this Section 2.5.4, Lender shall release the Lien on a portion of the Rate Cap or Replacement Rate Cap, as applicable, equal to the amount of the Loan prepaid hereunder, and Lender shall cooperate with Borrower in executing any documents or  taking any actions reasonably required by Borrower to effectuate the release of such Lien.

 

(b)                                 In connection with such a release of the Security Instrument, Borrower shall submit to Lender, not less than eight (8) Business Days prior to the requested date for such Other Permitted Release (or such shorter period of time as may be permitted by Lender in its reasonable discretion), a release of Lien (and related Loan Documents) for the Individual Property for execution by Lender.  Such release shall be in a form appropriate in the jurisdiction in which any applicable Individual Property is located and that would be reasonably satisfactory to a prudent lender.  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.  In connection with such prepayment, Lender shall deliver to Borrower promptly after the completion of the release, (A) all original insurance policies relating to the applicable Individual Property which may be held by or on behalf of Lender, (B) any amounts (or allocable portion of any amounts) held in escrow or in any Reserve Account pursuant to the Loan Documents or otherwise (in whole or in part) in respect of the applicable Individual Property, and (C) any other collateral that may have been delivered to Lender in connection with the applicable Individual Property, duly executed by Lender.

 

(c)                                  If Borrower has elected to make an Other Permitted Release and the requirements of Section 2.5.4(a) have been satisfied, in lieu of the release of the Individual Property in accordance with Section 2.5.4(b), if Borrower advises Lender that it desires to effectuate an Other Permitted Release in a manner which will permit the assignment of any portion of the Note and any Security Instrument to one or more new lenders, Borrower and Lender shall cooperate to effect such proposed assignments in the following manner:  Lender shall assign the applicable portion of the Note and any Security Instrument (or any part or portion thereof) designated by Borrower, each without recourse, covenant or warranty of any nature, express or implied (except as to the outstanding principal balance of the Loan and that Lender holds the Note and Security Instrument and has the authority to effect the assignment), to

 

55

 

such new lenders designated by Borrower (other than Borrower or a nominee of Borrower) and Lender shall execute, upon Borrower’s reasonable request, in recordable form any document or instrument reasonably acceptable to Lender that may be necessary to split, divide, sever or componentize the Note and/or Security Instrument, provided that Borrower (i) has executed and delivered to such new lenders one or more new notes corresponding to the Security Instrument (or portion thereof) being assigned to be secured by the applicable Individual Property, and (ii) has complied with all other provisions of this Section 2.5.4 to the extent not inconsistent with this subsection 2.5.4(c).  In addition, any such assignment shall be conditioned on the following: (A) payment by Borrower of (I) the reasonable out-of-pocket expenses of Lender incurred in connection therewith; and (II) Lender’s reasonable attorneys’ fees for the preparation, delivery and performance of such an assignment and for the consideration of Borrower’s request; (B) such an assignment is not then prohibited by any federal, state or local law, rule, regulation, order or by any other governmental authority; provided that, if such prohibition exists, Lender shall take all reasonable efforts, at Borrower’s expense, to effectuate the intent of this Section 2.5.4(c) consistent with then applicable Law; (C) such assignment and the actions described above in Lender’s good faith determination do not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code, and will not cause any federal income tax to be imposed on the Securitization as a result of such assignment and the Other Permitted Release; and (D) Borrower shall provide such other opinions, items, information and documents which a prudent lender would reasonably require to effectuate such assignment.  Borrower shall be responsible for all mortgage recording taxes, recording fees and other charges payable in connection with any such assignment.  Lender agrees that the assignment of a portion of the Note and the Security Instrument to the new lenders shall be accomplished by an escrow closing conducted through an escrow agent reasonably satisfactory to Lender and pursuant to an escrow agreement reasonably satisfactory to Lender in form and substance.  Notwithstanding the foregoing, Lender reserves the right to impose different requirements or procedures on such an assignment of a portion of the Note and the Security Instrument to the extent (but only to the extent) necessary to accommodate any Legal Requirements enacted or interpreted in a new manner subsequent to the date hereof at the time of such Other Permitted Release if a reasonably prudent Lender would impose such requirements or procedures.

 

(d)                                 All reasonable out of pocket costs and expenses incurred by Lender pursuant to this Section 2.5.4 shall be paid by Borrower.

 

(e)                                  In connection with each prepayment of the Floating Rate Component which results in the release of one or more Individual Properties, Borrower shall pay to Lender a release fee in an amount equal to $7,000.

 

2.5.5                     Release or Assignment of an Individual Property  In connection with any prepayment permitted in Section 2.3.1, Borrower or Maryland Owner, as applicable, may, at its option, effectuate the release or assignment of the Lien of the Security Instrument with respect to any Individual Property by way of payment of the Release Amount in respect of such Individual Property and all accrued but unpaid interest with respect thereto and all other amounts then due and payable under the Loan Documents, all in accordance and subject to the applicable terms and conditions of Section 2.5.2 and 2.5.3(a), (b) and (c).

 

56

 

2.5.6                     Release Amounts.  For the purpose of calculating the Release Amount of an Individual Property, a partial defeasance of the Loan or partial prepayment of the Loan, pursuant to, and in accordance with, Section 2.4.2 or Section 2.5.4, respectively, shall reduce the Allocated Loan Amount of any Individual Property being released to zero, and an amount equal to the excess of (a) the principal amount prepaid or being defeased in connection with such release (including any scheduled amortization, curtailment or other prepayment in accordance with the terms of this Agreement) over (b) the Allocated Loan Amount of such Individual Property or Properties being released, shall reduce the Allocated Loan Amounts of all other Properties subject to the Liens of the Security Instrument at the time of such prepayment pro rata.

 

Section 2.6                                    Substitution of Properties.  Borrower or Maryland Owner may obtain the release of one or more Individual Properties from the Lien of the Security Instrument thereon and the release of Borrower’s and/or Maryland Owner’s obligations under the Loan Documents with respect to such Individual Property (other than those expressly stated to survive) (each such Individual Property, a “Substituted Property”), by substituting therefor one or more properties (such properties, individually and collectively as the context requires, a “Substitute Property”), upon the satisfaction of each of the following conditions:

 

(a)                                 After giving effect to the proposed substitution, no Event of Default shall exist and be continuing on the date that Borrower and/or Maryland Owner request the substitution;

 

(b)                                 Borrower shall have delivered to Lender all documentary deliveries required pursuant to this Section 2.6 at least twenty (20) days prior to the requested effective date of such proposed substitution (except as Lender may in its reasonable discretion shorten such period);

 

(c)                                  The Allocated Loan Amount on the Closing Date of the Substituted Property, when taken together with the Allocated Loan Amounts on the Closing Date of all other Substituted Properties substituted pursuant to this Section 2.6, does not exceed fifteen percent (15%) of the original Principal Amount in the aggregate;

 

(d)                                 Lender shall have received an Officer’s Certificate that each of the representations and warranties contained in this Agreement and the other Loan Documents with respect to the Substituted Property and Substitute Property Borrower shall be true and correct in all material respects with respect to the Substitute Property Borrower and the Substitute Property as of the applicable Substitution Effective Date (as herein defined);

 

(e)                                  The Substitute Property shall not have suffered a Casualty or Condemnation which has not been fully restored;

 

(f)                                   The entity owning the Substitute Property (the “Substitute Property Borrower”) shall have indefeasible fee or ground leasehold title to the Substitute Property free and clear of any lien or other encumbrance except for Permitted Encumbrances and easements, restrictive covenants and other title exceptions and except to the extent that the failure with

 

57

 

respect hereto would not reasonably be expected to result in an Individual Material Adverse Effect with respect to such Substitute Property;

 

(g)                                  Either (i) the Substituted Property shall be conveyed or (ii) the ownership interests in the Substituted Borrower owning such Substituted Property shall be Transferred, in either case, to a Person other than Borrower or Maryland Owner;

 

(h)                                 After giving effect to the proposed substitution, the Debt Service Coverage Ratio for the Properties (including the Substitute Property and excluding the Substituted Property) then remaining subject to the Liens of the Security Instrument (including the Substitute Property) shall be equal to or greater than the Debt Service Coverage Ratio immediately prior to such substitution;

 

(i)                                     Borrower shall have obtained and delivered to Lender a Rating Agency Confirmation/Notification with respect to such proposed substitution;

 

(j)                                    Substitute Property Borrower shall either be a Borrower or Maryland Owner or a newly formed Single Purpose Entity, one hundred percent (100%) of the membership interests of which are owned directly or indirectly by VOP and/or VRT except to the extent such other owners are permitted transferees;

 

(k)                                 Lender shall have received such certified charter documents, good standing certificates, qualifications to do business, resolutions and consents for the Substitute Property Borrower in connection with the substitution as would be required by a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan;

 

(l)                                     The Substitute Property shall be operated as retail shopping center;

 

(m)                             Borrower and Maryland Owner (unless the Substituted Property is owned by Borrower or Maryland Owner, respectively) and Substitute Property Borrower shall have executed, acknowledged and delivered to Lender a joinder agreement whereby Substitute Property Borrower covenants and agrees to assume and be bound by all of the terms and provisions of this Agreement and the other Loan Documents as if it were an original signatory thereto and whereby Borrower, Maryland Owner and Substitute Property Borrower acknowledge that the Substitute Property is an Individual Property for all purposes under, and is otherwise in all respects subject to, the Loan Documents;

 

(n)                                 Borrower shall have caused Guarantor to execute and deliver to Lender a ratification and confirmation of the Guaranty and the Environmental Indemnity;

 

(o)                                 Substitute Property Borrower shall have executed (as appropriate), acknowledged (as appropriate) and delivered to Lender with respect to Substitute Property Borrower and the Substitute Property (i) a mortgage, deed of trust, deed to secure debt or other applicable security instrument and an assignment of leases and rents, in each case, in form appropriate for recording in the jurisdiction in which the Substitute Property is located and otherwise in both form and substance materially the same as the counterparts of such documents executed and delivered in connection with the closing of the Loan with respect to Individual Properties located in the same State in which the Substitute Property is located (or, if the

 

58

 

Substitute Property is located in a State other than those in which the Substitute Property is located, subject to such modifications as are necessary to reflect the laws of such State as shall be recommended by the counsel admitted to practice in such State and delivering the opinion as to the enforceability of such documents required pursuant to subsection (z) below) (collectively, the “Substitute Property Lien Documents”), which Substitute Property Lien Documents shall secure all amounts evidenced by the Note; provided that, in the event that the jurisdiction which the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of indebtedness for the purpose of determining the of amount such tax payable, the principal amount secured by such Substitute Lien Documents shall be equal to one hundred twenty five percent (125%) of the applicable Substitute Allocated Loan Amount, (ii) a letter countersigned by a title insurance company acknowledging receipt of the Substitute Lien Documents and agreeing to record or file, as applicable, or cause to be recorded or filed, as applicable, the Substitute Lien Documents as directed, so as to effectively create upon such recording and filing valid and enforceable first priority Liens upon the Substitute Property in favor of Lender (or such other trustee as may be desired under local law), subject only to Permitted Encumbrances, and (iii) (A) a UCC Financing Statement in form appropriate for recording in the jurisdiction in which the Substitute Property is located and otherwise effective to perfect the first priority security interest (subject to Permitted Encumbrances) of Lender in the Fixtures (as such term is defined in the Substitute Property Lien Documents) created by the Substitute Property Lien Documents (the “Substitute Property Fixture Filing”), and (B) either (I) a UCC Financing Statement in form appropriate for filing in the jurisdiction in which the Substitute Property Borrower is organized and otherwise effective to perfect the first priority security interest (subject to Permitted Encumbrances and any other Liens permitted hereunder or under any other Loan Document) of Lender in the personal property that are encumbered by the Security Instrument and all other assets of Substitute Property Borrower created by the Substitute Property Lien Documents and the other Loan Documents or (II) a UCC-3 Amendment in form appropriate for recording in the State of Delaware amending the UCC Financing Statement filed in the State of Delaware at the closing of the Loan and adding the Substitute Property Borrower as a debtor (and, in either case, together with an executed authorization to file materially in the form provided to Lender at the closing of the Loan);

 

(p)                                 Lender shall have received such other modifications and amendments to this Agreement, the other Loan Documents and the Leases as would be requested by a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan in order to reflect and effect the substitution and to protect and preserve the Liens and security interests of Lender in and to the Properties and the Substitute Property; provided that, Lender may not request any modifications or amendments that would increase Borrower’s and/or Maryland Owner’s obligations or liabilities under this Agreement or any other Loan Document;

 

(q)                                 Lender shall have received such lien, credit, bankruptcy, litigation and judgment searches with respect to the Substitute Property, the Substitute Property Borrower, any former owner and/or operator of the Substitute Property as would be required by, and acceptable to, a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan;

 

(r)                                    Lender shall have received (i) a “tie-in” or similar endorsement to each Title Policy evidencing the substitution of the Substitute Property for the Substituted Property (to

 

59

 

the extent such endorsements are available in the related jurisdictions), (ii) a Title Policy (or a marked, signed and re-dated commitment to issue such Title Policy, effective as a pro forma Title Policy) dated as of the Substitution Effective Date insuring the Lien of the applicable Substitute Property Lien Documents encumbering the Substitute Property, issued by one of the title insurance companies that issued the Title Policy at the closing of the Loan, which Title Policy shall (A) provide coverage in the amount of the applicable Substitute Allocated Loan Amount or, if the “tie-in” or similar endorsement described above is not available in the related jurisdiction, in an amount equal to one hundred twenty-five percent (125%) of the applicable Substitute Allocated Loan Amount, (B) insure Lender that the applicable Substitute Property Lien Documents create a valid first lien on the fee or leasehold estate, as applicable, of the Substitute Property, free and clear of all exceptions from coverage other than Permitted Encumbrances, any other Liens permitted hereunder or any of the other Loan Documents and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (C) contain such endorsements and affirmative coverages as are similar to those contained in the Title Policy issued at the closing of the Loan with respect to the Substitute Property to the extent then available in the relevant jurisdiction, and (D) name Lender and its successors and assigns as the insured, and (iii) copies of paid receipts or other evidence as would be acceptable to a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan confirming that all premiums in respect of such endorsements and Title Policy have been fully paid;

 

(s)                                   Lender shall have received (i) an endorsement to the Title Policy referenced in subsection (r) above insuring that the Substitute Property constitutes a separate tax lot or (ii) if the endorsement referenced in clause (i) above is not obtainable, then either (A) a letter from the appropriate Governmental Authority stating that the Substitute Property constitutes a separate tax lot or (B) copies of tax assessments from the appropriate taxing authority demonstrating that the Substitute Property constitutes a separate tax lot;

 

(t)                                    Lender shall have received a Survey for each Substitute Property; provided that, Borrower may deliver existing surveys for the Substitute Property to the extent acceptable to the title insurance company issuing the Title Policy for the Substitute Property, so long as such title insurance company issues the related title policy without survey exceptions;

 

(u)                                 Lender shall have received valid certificates of insurance evidencing insurance coverage with respect to the Substitute Property, which insurance coverage (including to the extent such insurance is required of the Properties by Section 6.1.1 of the Loans Agreement any required flood, earthquake and/or coastal windstorm insurance) and the insurance companies providing such coverage shall be in compliance with the requirements of Section 6.1 hereof, together with evidence of the payment of all premiums then due for such insurance;

 

(v)                                 Lender shall have received a Phase I environmental report and a physical condition report relating to the Substitute Property that would be acceptable to a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan;

 

(w)                               Lender shall have received a zoning report certifying that the Substitute Property and its use comply in all material respects with all applicable building laws and zoning ordinances or constitute a legal non-conforming use or structure thereunder, which zoning report

 

60

 

 

shall be (i) prepared by a nationally recognized zoning review consultant, (ii) in form and substance substantially similar to the zoning reports delivered at the closing of the Loan, and (iii) certified to Lender and its successors and assigns;

 

(x)                                 If the Substitute Property is located in the State of California or a seismic area designated as Zone 3 or 4, Lender shall have received a PML study and a seismic report which would be acceptable to a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan and, if such study and report are so acceptable, Borrower shall have obtained such earthquake insurance with respect to the Substitute Property as would be acceptable to a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan;

 

(y)                                 Lender shall have received the following opinions of Borrower’s counsel:  (i) an opinion or opinions of counsel admitted to practice under the laws of the State in which the Substitute Property is located opining as to such matters with respect to the Substitute Property Lien Documents, the Substitute Property Fixture Filing and the Substitute Property Borrower and with similar qualifications and assumptions as the local law opinions with respect to the Properties and Borrower delivered at the closing of the Loan, which opinions and the counsel issuing the same would be acceptable to a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan, (ii) unless the Substitute Property Borrower is a Borrower or Maryland Owner, an opinion or opinions of counsel admitted in New York and Delaware opining as to such matters with respect to the Substitute Property Borrower and the documents and instruments delivered with respect to the substitution and with similar qualifications and assumptions as the opinions with respect to the Properties and Borrower delivered at the closing of the Loan, which opinions and the counsel issuing the same would be acceptable to a reasonably prudent lender originating commercial mortgage loans for securitization similar to the Loan, (iii) so-called “Special Delaware” opinions with respect to the Substitute Property Borrower and the Substitute Property Operator issued by counsel admitted to practice in Delaware and with such qualifications and assumptions as the “Special Delaware” opinions with respect to Borrower and Operator delivered at the closing of the Loan, which opinions and counsel issuing the same shall otherwise be acceptable to the Rating Agencies, and (iv) an Opinion of Counsel acceptable to Lender and the Rating Agencies that the substitution does not constitute a “significant modification” of the Loan under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code or otherwise cause a federal income tax to be imposed on any securitization vehicle;

 

(z)                                  Borrower shall have caused all Impositions relating to the Substitute Property to be paid if then due, unless being contested, subject to and in accordance with the requirements hereof;

 

(aa)                          Borrower shall have made such additional deposits to the Reserve Funds in respect of the Substitute Property in connection with the substitution as are required to effect the ground rents, insurance, replacements and taxes that are applicable to such Substitute Property;

 

(bb)                          Lender shall have received with respect to the Substitute Property, to the extent available, as applicable, (i) annual operating statements for the three (3) years

 

61

 

immediately prior to the Substitution Effective Date (as herein defined), (ii) financial statements for the most current completed Fiscal Year in accordance with the requirements of Section 11.2 hereof, which financial statements shall be accompanied by an Officer’s Certificate in the form required pursuant to Section 11.2.1, (iii) a current operating statement, (iv) an Annual Budget for the Substitute Property and (v) an Officer’s Certificate certifying that each of the foregoing presents fairly the financial condition and the results of operations of the Substitute Property Borrower and the Substitute Property;

 

(cc)                            Lender shall have received such other information and further approvals, opinions, documents, instruments and information in connection with the substitution as the Rating Agencies may require;

 

(dd)                          Borrower or Maryland Owner shall submit to Lender all non-monetary and non-collateral deliveries required to be made to effect a release.  In addition, Borrower or Maryland Owner will have delivered to Lender an Officer’s Certificate certifying that such documentation (i) will effect such release in accordance with the terms of this Agreement, and (ii) will not impair or otherwise adversely affect the Liens of the Lender under the Loan Documents not being released (or as to the parties to the Loan Documents and the Properties subject to the Loan Documents not being released);

 

(ee)                            Borrower shall have paid or reimbursed Lender for all reasonable out-of-pocket costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) as a result of the substitution and Borrower or Maryland Owner shall have paid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution.  Borrower shall have paid all reasonable out-of-pocket costs and expenses and fees of the Rating Agencies incurred in connection with the substitution;

 

(ff)                              Lender shall have received with respect to the Substitute Property an appraisal prepared not more than three (3) months prior to the substitution of the Substitute Property (i) executed and delivered to Lender by a qualified Independent MAI appraiser, (ii) addressed to Lender and its successors and assigns and (iii) which satisfies the requirements of Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date of such calculation, with respect to such appraisal and the appraiser making such appraisal) evidencing that the appraised value of the Substitute Property is equal to or greater than the appraised value of the Substituted Property as of the Closing Date (as shown on Schedule 1.1.1);

 

(gg)                            Upon the substitution of any Individual Property pursuant to and in accordance with this Section 2.6 Borrower shall pay to Lender a substitution fee in the amount $20,000; and

 

(hh)                          If the Substitute Property Borrower has leasehold title to the Substitute Property, Lender shall have received (i) a copy of the related ground lease, together with an Officer’s Certificate certifying that such ground lease is true, accurate and complete, and (ii) a ground lessor estoppel certificate in form and substance substantially similar to the ground lessor estoppel certificate delivered at the closing of the Loan with such additions and modifications

 

62

 

thereto as may be needed for the ground lease to comply with Rating Agency requirements and criteria.  Such ground lease and the terms and provisions thereof shall meet Rating Agency requirements.

 

2.6.2                     Effectiveness of Substitution.

 

(a)                                 Upon the satisfaction of the foregoing conditions precedent, (i) Lender shall effect the release of the Substituted Property from the Lien of the Loan Documents (or to the extent so requested by Borrower, assign the Lien, or any portion hereof, to a new lender), (ii) the Substitute Property shall be deemed to be an Individual Property for all purposes under this Agreement and the other Loan Documents, (iii) the Substitute Property Borrower shall be deemed to be a Borrower for all purposes under this Agreement and the other Loan Documents, (iv) the Allocated Loan Amount of the Substitute Property shall be equal to the Allocated Loan Amount of the Substituted Property (as it may have been adjusted pursuant to the terms hereof) (and, if there is more than one Substitute Property, the Allocated Loan Amount of the Substituted Property shall be allocable to each such Substitute Property on a pro rata basis according to the appraised value thereof) and (v) the related Individual Borrower (and, if applicable, Maryland Owner) shall be released of all of its obligations and liabilities under the Loan Documents (other than those obligations and liabilities expressly stated to survive payment in full of the Indebtedness) (such date, the “Substitution Effective Date”).

 

(b)                                 If Borrower advises Lender that it desires to effectuate a Substitution in a manner which will permit the assignment of a portion of the Note and any Security Instrument to one or more new lenders in connection with the Substituted Property, Borrower and Lender shall cooperate to effect such proposed assignments in the following manner:  Lender shall assign the applicable portion of the Note and any Security Instrument (or any part or portion thereof) designated by Borrower, each without recourse, covenant or warranty of any nature, express or implied (except as to the outstanding principal balance of the Loan and that Lender holds the Note and Security Instrument and has the authority to effect the assignment), to such new lenders designated by Borrower (other than Borrower or a nominee of Borrower) and Lender shall execute, upon Borrower’s reasonable request, in recordable form any document or instrument reasonably acceptable to Lender that may be necessary to split, divide, sever or componentize the Note and/or Security Instrument, provided that Borrower has complied with all other provisions of this Section 2.6.  Each of Borrower and Maryland Owner agree and acknowledge that there shall be no reduction in the principal balance of the Loan as a result of any such assignment of any portion of the Note and, as a precondition to any such assignment pursuant to this Section 6.2(b), Borrower shall execute any document or instrument that may be reasonably required by Lender to reflect such principal balance of the Loan (including, without limitation, a replacement promissory note); provided that Borrower shall not be required to execute any document or instrument that would increase its obligations or liabilities under any of the Loan Documents.  In addition, any such assignment shall be conditioned on the following: (i) payment by Borrower of (A) the reasonable out-of-pocket expenses of Lender incurred in connection therewith; and (B) Lender’s reasonable attorneys’ fees for the preparation, delivery and performance of such an assignment and for the consideration of Borrower’s request; (ii) such an assignment is not then prohibited by any federal, state or local law, rule, regulation, order or by any other governmental authority; provided that, if such prohibition exists, Lender shall take all reasonable efforts, at Borrower’s expense, to effectuate the intent of this Section 2.6.2(b) consistent with then

 

63

 

applicable Law; (iii) such assignment and the actions described above in Lender’s good faith determination do not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code, and will not cause any federal income tax to be imposed on the Securitization as a result of such assignment and substitution; and (iv) Borrower shall provide such other opinions, items, information and documents which a prudent lender would reasonably require to effectuate such assignment.  Borrower shall be responsible for all mortgage recording taxes, recording fees and other charges payable in connection with any such assignment. Lender agrees that the assignment of a portion of the Note and the Security Instrument to the new lenders shall be accomplished by an escrow closing conducted through an escrow agent reasonably satisfactory to Lender and pursuant to an escrow agreement reasonably satisfactory to Lender in form and substance.  Notwithstanding the foregoing, Lender reserves the right to impose different requirements or procedures on such an assignment of a portion of the Note and the Security Instrument to the extent (but only to the extent) necessary to accommodate any Legal Requirements enacted or interpreted in a new manner subsequent to the date hereof at the time of such Substitution if a reasonably prudent Lender would impose such requirements or procedures.

 

ARTICLE III

 

CASH MANAGEMENT

 

Section 3.1                                    Accounts.

 

3.1.1                     Lockbox Account.

 

(a)                                 During the term of the Loan, Borrower and Maryland Owner shall establish and maintain an account (the “Lockbox Account”) with respect to each Individual Property with Lockbox Bank in trust for the benefit of Lender, which Lockbox Account shall be under the sole dominion and control of Lender.  The Lockbox Account shall be entitled “Hackensack VF L.L.C., as Borrower Agent, and Deutsche Bank National Trust Company, as trustee for the holders of Vornado DP LLC Trust 2010, Commercial Mortgage Pass-Through Certificates, Series 2010-VNO, as Lender, pursuant to the Loan and Security Agreement dated as of August 18, 2010 — Lockbox Account”.  Each of Borrower and Maryland Owner hereby grants to Lender a first-priority security interest in each Lockbox Account and all deposits at any time contained therein and the proceeds thereof and will take all actions necessary to maintain in favor of Lender a perfected first priority security interest in the Lockbox Account, including, without limitation, filing UCC-1 Financing Statements and continuations thereof, provided that neither Borrower nor Maryland Owner shall be required to take any action that will increase its liabilities or obligations hereunder or under any of the other Loan Documents.  Lender and Servicer shall have the sole right to make withdrawals from the Lockbox Account and all costs and expenses for establishing and maintaining the Lockbox Account shall be paid by Borrower and Maryland Owner.  All monies now or hereafter deposited into the Lockbox Account shall be deemed additional security for the Indebtedness.

 

(b)                                 Each of Borrower and Maryland Owner shall, or shall cause Manager to, deliver Tenant Instruction Letters to all tenants under Leases on or prior to the Closing Date to deliver all Rents payable thereunder directly to the Lockbox Account.  Each of Borrower and Maryland Owner shall, and shall cause Manager to, deposit all amounts received by Borrower,

 

64

 

Maryland Owner or Manager constituting Rents into the Lockbox Account within one (1) Business Day after receipt thereof.  Borrower shall obtain from Lockbox Bank its agreement to transfer to the Cash Management Account in immediately available funds by wire transfer or via the ACH System all amounts constituting available funds on deposit in the Lockbox Account once every Business Day throughout the term of the Loan.  Notwithstanding the foregoing, Borrower may elect to have all or some of the monies that, pursuant to the above provisions of this Section 3.1.1, are to be deposited into the Lockbox Account instead deposited directly into the Cash Management Account and to such extent the Lockbox Account shall not be required and the Cash Management Agreement shall be amended to reflect this.

 

(c)                                  The Lockbox Account shall not be commingled with other monies held by Borrower, Maryland Owner, Manager or Lockbox Bank.

 

(d)                                 Neither Borrower nor Maryland Owner shall further pledge, assign or grant any security interest in the Lockbox Account or the monies deposited therein or permit any lien or encumbrance 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.

 

(e)                                  Each of Borrower and Maryland Owner shall indemnify Lender and Lockbox Bank and hold Lender and Lockbox Bank harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including reasonable attorneys fees and disbursements) arising from or in any way connected with the Lockbox Account and/or the Lockbox Agreement (unless arising from the gross negligence, fraud, bad faith, recklessness or willful misconduct of Lender or such Lockbox Bank, or any of their respective employee, agents, Affiliates or bailees, as applicable) or the performance of the obligations for which the Lockbox Account were established.

 

3.1.2                     Cash Management Account.

 

(a)                                 During the term of the Loan, Borrower and Maryland Owner shall establish and maintain a segregated Eligible Account (the “Cash Management Account”) to be held by Agent in trust and for the benefit of Lender, which Cash Management Account shall be under the sole dominion and control of Lender.  The Cash Management Account shall be entitled “Hackensack VF L.L.C., as Borrower Agent, and Wells Fargo Bank, National Association, as servicer, pursuant to the Loan and Security Agreement dated as of August 18, 2010 — Cash Management Account”.  Each of Borrower and Maryland Owner hereby grants to Lender a first priority security interest in the Cash Management Account and all deposits at any time contained therein and the proceeds thereof and will take all actions necessary to maintain in favor of Lender a perfected first priority security interest in the Cash Management Account, including, without limitation, filing UCC-1 Financing Statements and continuations thereof, provided that neither Borrower nor Maryland Owner shall be required to take any action that will increase its liabilities or obligations hereunder or under any of the other Loan Documents.  Neither Borrower nor Maryland Owner will in any way alter or modify the Cash Management Account without Lender’s prior consent and will notify Lender of the account number thereof.  Lender and Servicer shall have the sole right to make withdrawals from the Cash Management Account in accordance with the terms and provisions of this Agreement and the Cash Management

 

65

 

Agreement, and all reasonable out-of-pocket costs and expenses for establishing and maintaining the Cash Management Account shall be paid by Borrower and Maryland Owner.

 

(b)                                 The insufficiency of funds on deposit in the Cash Management Account shall not relieve Borrower from the obligation to make any payments, as and when due pursuant to this Agreement and the other Loan Documents, and such obligations shall be separate and independent, and not conditioned on any event or circumstance whatsoever.

 

(c)                                  All funds on deposit in the Cash Management Account following the occurrence and during the continuance of an Event of Default may be applied by Lender to the Indebtedness in such order and priority as Lender shall determine.

 

(d)                                 Each of Borrower and Maryland Owner hereby agrees that Lender may modify the Cash Management Agreement for the purpose of establishing (if such establishment would be deemed reasonably prudent by a lender originating commercial mortgage loans for securitizations similar to the Loan) additional sub-accounts in connection with any payments otherwise required under this Agreement or the other Loan Documents, provided that Lender shall provide written advance notice thereof to Borrower and Maryland Owner and such establishment shall not result in greater costs to Borrower or Maryland Owner or increase any obligation or liability of Borrower or Maryland Owner hereunder in any material respect.

 

3.1.3                     Reserve Accounts.  The Reserve Accounts shall be established pursuant to and in accordance with Section 2.1 of the Cash Management Agreement and shall be maintained and administered by Agent subject to and in accordance with the Cash Management Agreement.  The Reserve Accounts may be ledger or book entry sub-accounts and need not be actual sub-accounts.  The Reserve Accounts are as follows:

 

(a)                                 an account for the retention of the Tax Reserve Amount (the “Tax Reserve Account”), to be applied in accordance with Section 16.1 of this Agreement;

 

(b)                                 an account for the retention of the Insurance Reserve Amount (the “Insurance Reserve Account”), to be applied in accordance with Section 16.2 of this Agreement;

 

(c)                                  an account for the retention of the Replacement Reserve Amount (the “Replacement Reserve Account”), to be applied in accordance with Section 16.3 of this Agreement;

 

(d)                                 an account for the retention of the Ground Lease Reserve Amount (the “Ground Lease Reserve Account”), to be applied in accordance with Section 16.4 of this Agreement;

 

(e)                                  an account for the retention of Excess Cash Flow distributed (the “Excess Cash Flow Reserve Account”), to be deposited and applied in accordance with Section 16.9 of this Agreement;

 

(f)                                   intentionally omitted;

 

66

 

(g)                                  an account for the retention of Proceeds (the “Proceeds Reserve Account”), to be deposited and applied in accordance with Section 6.2 of this Agreement;

 

(h)                                 an account for the retention of funds required for the payment of Debt Service and any other amounts due and owing under this Agreement and the other Loan Documents (the “Debt Service Reserve Account”);

 

(i)                                     an account for the retention of funds, during the continuance of a Cash Sweep Period, required for the payment of Operating Expenses and Capital Expenditures pursuant to an Approved Annual Budget and Extraordinary Expenses(the “Operating Expenses Reserve Account”);

 

(j)                                    an account for the retention of the TI and Leasing Amount (the “TI and Leasing Reserve Account”), to be applied in accordance with Section 16.10 of this Agreement; and

 

(k)                                 an account for the retention of the Required Remediation Amount (the “Required Remediation Reserve Account”), to be applied in accordance with Section 16.11 of this Agreement.

 

3.1.4                     Pledge of Account Collateral.

 

(a)                                 To secure the full and punctual payment and performance of the Obligations, each of Borrower and Maryland Owner hereby collaterally assigns, grants a security interest in and pledges to Lender, to the extent not prohibited by applicable law, a first priority continuing security interest in and to the following property of Borrower and/or Maryland Owner, whether now owned or existing or hereafter acquired or arising and regardless of where located (all of the same, collectively, the “Account Collateral”):

 

(i)                                     the Collateral Accounts and all cash, checks, drafts, securities entitlements, certificates, instruments and other property, including, without limitation, all deposits and/or wire transfers, from time to time deposited or held in, credited to or made to the Lockbox Account, the Cash Management Account and/or the Reserve Accounts;

 

(ii)                                  any and all amounts invested in Permitted Investments;

 

(iii)                               all interest, dividends, cash, instruments, securities, entitlements and other property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing or purchased with funds from the Collateral Accounts (excluding distributions made to parent entities subject to and in accordance with this Agreement); and

 

(iv)                              to the extent not covered by sub-paragraphs (i), (ii) or (iii) above, all proceeds (as defined under the UCC) (excluding distributions made to parent entities subject to and in accordance with this Agreement) of any or all of the foregoing.

 

67

 

(b)                                 In addition to the rights and remedies herein set forth, Lender shall have all of the rights and remedies with respect to the Account Collateral available to a secured party at law or in equity, including, without limitation, the rights of a secured party under the UCC, as if such rights and remedies were fully set forth herein.

 

(c)                                  This Agreement shall constitute a security agreement for purposes of the  UCC and other applicable law. Upon payment in full of the Indebtedness, this security interest shall automatically terminate without further notice from any party and Borrower shall be entitled to the return, upon request, of such of the Account Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof or the Cash Management Agreement, and Agent and/or Lender shall promptly execute such instruments and documents, and take such actions, as may be reasonably requested by Borrower, Manager and/or Maryland Owner to evidence such termination and the release of such security interest.

 

3.1.5                     Payments Received under the Cash Management Agreement.  Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, and provided no Event of Default has occurred and is continuing, Borrower’s obligations with respect to the payment of the Monthly Debt Service Payment Amount and Borrower’s and Maryland Owner’s obligations with respect to amounts required to be deposited into the Reserve Accounts, if any, shall be deemed satisfied to the extent sufficient amounts are deposited in the Cash Management Account to satisfy such obligations pursuant to the Cash Management Agreement on the dates each such payment is required, regardless of whether any of such amounts are so applied by Lender.

 

3.1.6                     Eligible Accounts.  Each of the Collateral Accounts shall be an Eligible Account and shall be subject to such applicable laws, and such applicable regulations of the Board of Governors of the Federal Reserve System and of any other banking or Governmental Authority, as may now or hereafter be in effect.  As long as no Event of Default shall have occurred and be continuing, income and interest accruing on the Cash Management Account or the Reserve Accounts or any investments held in such accounts shall be periodically added to the principal amount of such account and shall be held, disbursed and applied in accordance with the provisions of this Agreement and the Cash Management Agreement.  Borrower shall be the beneficial owner of the Collateral Accounts for federal income tax purposes and shall report all income earned from such accounts.

 

3.1.7                     Account Collateral and Remedies.

 

(a)                                 Subject to Section 3.1.2(c), upon the occurrence and during the continuance of an Event of Default, without additional notice from Lender to Borrower all funds transferred to Lender from the Cash Management Account pursuant to the Cash Management Agreement may be applied by Lender to the Indebtedness  in such order and priority as Lender shall determine in its sole and absolute discretion, including, but not limited to, liquidating and transferring any amounts then invested in Permitted Investments to the Collateral Accounts to which they relate, or reinvest such amounts in other Permitted Investments, as Lender may determine in its sole discretion is necessary to perfect or protect any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce Lender’s rights and

 

68

 

remedies hereunder with respect to any Account Collateral or to preserve the value of the Account Collateral.

 

(b)                                 Upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably constitutes and appoints Lender as Borrower’s true and lawful attorney in fact, with full power of substitution, to execute, acknowledge and deliver any instruments and to exercise and enforce every right, power, remedy, option and privilege of Borrower with respect to the Account Collateral, and do in the name, place and stead of Borrower, all such acts, things and deeds for and on behalf of and in the name of Borrower, which Borrower could or might do or which Lender may deem necessary or desirable to more fully vest in Lender the rights and remedies provided for herein and to accomplish the purposes of this Agreement.  The foregoing power of attorney is irrevocable and coupled with an interest.  Upon the occurrence and during the continuance of an Event of Default, Lender may perform or cause performance of any such agreement, and any reasonable out-of-pocket expenses of Lender incurred in connection therewith shall be paid by Borrower as provided in Section 5.1.9.

 

(c)                                  Borrower hereby expressly waives, to the fullest extent permitted by law, presentment, demand, protest or any notice of any kind in connection with the Account Collateral.  Borrower acknowledges and agrees that ten (10) days’ prior written notice of the time and place of any public sale of the Account Collateral or any other intended disposition thereof shall be reasonable and sufficient notice to Borrower within the meaning of the UCC.

 

3.1.8                     Transfers and Other Liens.  Borrower agrees that it will not (a) sell or otherwise dispose of any of the Account Collateral or (b) create or permit to exist any Lien upon or with respect to all or any of the Account Collateral, except for the Lien granted to Lender under this Agreement, any Permitted Encumbrance or any other Liens permitted by this Agreement or any other Loan Document.

 

3.1.9                     Intentionally Omitted.

 

3.1.10              Reasonable Care.  Beyond the exercise of reasonable care in the custody thereof or as otherwise expressly provided in this Agreement or the other Loan Documents, Lender shall have no duty as to any funds in its possession or control as agent therefor or bailee thereof or any income thereon or the preservation of rights against any Person or otherwise with respect thereto.  Lender shall be deemed to have exercised reasonable care in the custody and preservation of amounts on deposit in the Reserve Accounts in its possession if the amounts on deposit in the Reserve Accounts are accorded treatment substantially equal to that which Lender accords its own property, it being understood that Lender shall not be liable or responsible for any loss or damage to any amounts on deposit in the Reserve Accounts, or for any diminution in value thereof, by reason of the act or omission of Lender, its Affiliates, agents, employees or bailees, except to the extent that such loss or damage results from Lender’s or such Affiliates’, agents’, employees’ or bailees’ gross negligence, bad faith, fraud or willful or reckless misconduct.  In no event shall Lender be liable either directly or indirectly for losses or delays resulting from any event which may be the basis of an Excusable Delay, computer malfunctions, interruption of communication facilities, labor difficulties or other causes beyond Lender’s reasonable control or for indirect, special or consequential damages except to the extent of Lender’s or its Affiliates’, agents’, employees’ or bailees’ gross negligence, bad faith, fraud or

 

69

 

willful or reckless misconduct; provided that Lender shall take commercially reasonable steps to mitigate any such losses or delays.

 

3.1.11              Lender’s Liability.

 

(a)                                 Lender shall be responsible for the performance only of such duties with respect to the Reserve Accounts as are specifically set forth in this Section 3.1 or elsewhere in the Loan Documents, and no other duty shall be implied from any provision hereof.  Lender shall not be under any obligation or duty to perform any act with respect to the Reserve Accounts which would cause it to incur any expense or liability or to institute or defend any suit in respect hereof, or to advance any of its own monies.

 

(b)                                 Lender shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper, document or signature believed by it in good faith to be genuine, and, in so acting, it may be assumed that any person purporting to give any of the foregoing in connection with the provisions hereof has been duly authorized to do so.  Lender may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder and in good faith in accordance therewith.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1                                    Borrower Representations.  Each of Borrower and Maryland Owner represents and warrants as of the Closing Date that:

 

4.1.1                     Organization.

 

(a)                                 Each Individual Borrower is either a limited liability company or a limited partnership, in each case formed under the laws of the State that is listed opposite the name of such Individual Borrower on Schedule 1 hereof, and Maryland Owner is a limited liability company formed under the laws of the State of Maryland.  Each Individual Borrower and Maryland Owner has been duly formed and is validly existing and in good standing pursuant to the laws of the State of its formation with requisite power and authority to own its properties and to transact the businesses in which it is now engaged.

 

(b)                                 Guarantor is a Delaware limited partnership and has been duly formed and is validly existing and in good standing pursuant to the laws of the State of Delaware with requisite power and authority to own its properties and to transact the businesses in which it is now engaged.

 

(c)                                  Each Individual Borrower, Maryland Owner and Guarantor has each 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, businesses and operations except, solely in the case of Guarantor, where the failure to be so qualified would not reasonably be expected to have an Individual Material Adverse Effect.  Borrower, Maryland Owner and Guarantor each possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it

 

70

 

 

to own and/or lease its properties and to transact the businesses in which it is now engaged, except, where the failure to so possess the same would not reasonably be expected to have an Individual Material Adverse Effect.

 

(d)                                 The organizational structure of Borrower and Maryland Owner is accurately depicted by the schematic diagram attached hereto as Schedule 4.1.1 in all material respects.

 

(e)                                  Neither Borrower nor Maryland Owner shall change its name or jurisdiction of formation unless it shall have given Lender thirty (30) days prior written notice of any such change and shall have taken all steps reasonably requested by Lender to grant, perfect, protect and/or preserve the security interest granted hereunder to Lender.

 

4.1.2                     Proceedings.  Borrower, Maryland Owner and Guarantor has full power to and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents.  This Agreement and the other Loan Documents have been duly executed and delivered by, or on behalf of, each Individual Borrower, Maryland Owner and Guarantor, as applicable, and constitute legal, valid and binding obligations of each Individual Borrower, Maryland Owner and Guarantor, as applicable, enforceable against each Individual Borrower, Maryland Owner and Guarantor, as applicable, in accordance with their respective terms, subject only to applicable bankruptcy, insolvency, moratorium and similar laws affecting rights of creditors generally, and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

 

4.1.3                     No Conflicts.  The execution, delivery and performance of this Agreement and the other Loan Documents by each Individual Borrower, Maryland Owner and Guarantor, as applicable, 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, charge or encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of Borrower, Maryland Owner or Guarantor, as applicable, pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, partnership agreement or other agreement or instrument to which Borrower, Maryland Owner or Guarantor is a party or by which any of Borrower’s, Maryland Owner’s or Guarantor’s property or assets is subject (unless consents from all applicable parties thereto have been obtained), nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority, in each case, which conflict, breach, default or violation would reasonably be expected to result in an Individual Material Adverse Effect, and any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by each Individual Borrower, Maryland Owner or Guarantor of this Agreement or any other Loan Documents (and the failure of which to obtain would reasonably be expected to have an Individual Material Adverse Effect) has been obtained and is in full force and effect.

 

4.1.4                     Litigation.  Except as disclosed in writing (which may include email) to Lender prior to date of this Agreement, to the best of Borrower’s Knowledge, there are no arbitration proceedings, governmental investigations, actions, suits or proceedings, at law or in equity, or by or before any Governmental Authority which are now pending or, to Borrower’s

 

71

 

Knowledge, threatened against or affecting Borrower, Maryland Owner or any Individual Property which would reasonably be expected to have an Individual Material Adverse Effect.  Neither the actions, suits, proceedings and/or investigations disclosed in writing to Lender prior to date of this Agreement, nor any actions, suits, proceedings and/or investigations pending or threatened against or affecting Guarantor (excluding any such actions, suits, proceedings and/or investigations against or affecting Guarantor which are covered by insurance), if determined against Borrower, Maryland Owner, Guarantor or any Individual Property, would reasonably be expected to result in an Individual Material Adverse Effect.

 

4.1.5                     Agreements.  Neither Borrower nor Maryland Owner is a party to any agreement or instrument or subject to any restriction which would reasonably be expected to have an Individual Material Adverse Effect.  Neither Borrower nor Maryland Owner is in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party or by which it or its Individual Property is bound, which default would reasonably be expected to have an Individual Material Adverse Effect.  Neither Borrower nor Maryland Owner has any material financial obligation (contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it or its Individual Property is otherwise bound, other than (a) obligations incurred in the ordinary course of the operation of the Properties (including the Leases), (b) obligations under the Loan Documents, (c) obligations disclosed in Maryland Owner’s financial statements or (d) obligations which, if not met, would not reasonably be expected to result in an Individual Material Adverse Effect.

 

4.1.6                     Title.  Each Individual Borrower (other than Maryland Individual Borrower) and Maryland Owner has good, marketable and insurable fee simple title to the real property (or, with respect to the Ground Lease Property, good, marketable and insurable title to the  leasehold estate) comprising part of its Individual Property and good title to the balance of its Individual Property, free and clear of all Liens whatsoever except the Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan Documents and the Liens created by the Loan Documents.  Each Security Instrument, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (a) a valid, perfected first priority lien on the applicable Individual Property, subject only to Permitted Encumbrances and the Liens created by the Loan Documents and (b) perfected security interests in and to, and perfected collateral assignments of, all personalty (including the Leases), all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan Documents and the Liens created by the Loan Documents.  There are no claims for payment for work, labor or materials affecting the Properties which are due and unpaid under the contracts pursuant to which such work or labor was performed or materials provided which are or may become a Lien prior to, or of equal priority with, the Liens created by the Loan Documents other than Permitted Encumbrances.  Each of Borrower and Maryland Owner represents and warrants that none of the Permitted Encumbrances will materially and adversely affect (1) the ability of Borrower and/or Maryland Owner to pay any of its obligations to any Person as and when due, or (2) the use or operation of any Individual Property as of the Closing Date and thereafter.  Borrower shall preserve its right, title and interest in and to each of the Properties for so long as the Note remains outstanding and will warrant and defend same and

 

72

 

the validity and priority of the Lien hereof from and against any and all claims whatsoever other than the Permitted Encumbrances.

 

4.1.7                     No Bankruptcy Filing.  None of Borrower, Maryland Owner nor Guarantor currently intends either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property, and neither Borrower nor Maryland Owner has any knowledge of any Person having filed or intending to file any such petition against it or against Guarantor.

 

4.1.8                     Full and Accurate Disclosure.  No statement of fact made by Borrower or Maryland Owner in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading in light of the circumstances in which such statements were made (except that the foregoing shall be qualified by Borrower’s Knowledge with respect to such statements of fact that are specifically qualified as being made to Borrower’s or Maryland Owner’s knowledge).  There is no fact presently known to Borrower and/or Maryland Owner which has not been disclosed which could reasonably be expected to have a Material Adverse Effect.

 

4.1.9                     All Property.  Each Individual Property constitutes all of the real property, personal property, equipment and fixtures currently (a) owned or leased by the applicable Individual Borrower (other than Maryland Individual Borrower) and Maryland Owner or (b) used by or on behalf of each Individual Borrower (other than Maryland Individual Borrower) and/or Maryland Owner in the operation of the business located on each Individual Property, other than items owned or leased by any Tenants, Manager or each Individual Borrower’s and/or Maryland Owner’s contractors.

 

4.1.10              ERISA.

 

(a)                                 Except as would not reasonably be expected to have a Material Adverse Effect, neither Borrower nor Maryland Owner maintains an employee benefit plan as defined by Section 3(3) of ERISA, which is subject to Title IV of ERISA, and neither Borrower nor Maryland Owner (1) has any knowledge of any material liability which has been incurred or is expected to be incurred by Borrower and/or Maryland Owner which is or remains unsatisfied for any taxes or penalties with respect to any “employee benefit plan,” within the meaning of Section 3(3) of ERISA, or any “plan,” within the meaning of Section 4975(e)(1) of the Code or any other benefit plan (other than a multiemployer plan) maintained, contributed to, or required to be contributed to by Borrower and/or Maryland Owner or by any entity that is under common control with Borrower and/or Maryland Owner within the meaning of ERISA Section 4001(a)(14) (a “Plan”) or any plan that would be a Plan but for the fact that it is a multiemployer plan within the meaning of ERISA Section 3(37); and (2) has made and shall continue to make when due all required contributions to all such Plans, if any.  Except as would not reasonably be expected to have a Material Adverse Effect, each such Plan has been and will be administered in compliance with its terms and the applicable provisions of ERISA, the Code, and any other applicable federal or state law; and no action shall be taken or fail to be taken that would result in the disqualification or loss of tax exempt status of any such Plan intended to be qualified and/or tax exempt.

 

73

 

(b)                                 Neither Borrower nor Maryland Owner is an employee benefit plan, as defined in Section 3(3) of ERISA, subject to Title I of ERISA, none of the assets of Borrower and/or Maryland Owner constitutes or will constitute plan assets of one or more such plans within the meaning of 29 C.F.R. Section 2510.3 101 and neither Borrower nor Maryland Owner is a governmental plan within the meaning of Section 3(32) of ERISA and transactions by or with Borrower and/or Maryland Owner 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 Agreement.

 

(c)                                  Except as would not reasonably be expected to have a Material Adverse Effect, with respect to any multiemployer plan to which Borrower and/or Maryland Owner or any entity that is under common control with Borrower and/or Maryland Owner within the meaning of ERISA Section 4001(a)(14) is or has been obligated to contribute, neither Borrower, Maryland Owner nor any such entity has incurred any material liability under ERISA Section 515 or ERISA Title IV which is or remains unsatisfied.

 

4.1.11              Compliance.  Borrower, Maryland Owner and each Individual Property and the use thereof comply in all material respects with all applicable Legal Requirements except where failure to comply would not reasonably be expected to have an Individual Material Adverse Effect, including, without limitation, building and zoning ordinances and codes and Prescribed Laws.  To the best of Borrower’s Knowledge, neither Borrower nor Maryland Owner is in default or in violation of any order, writ, injunction, decree or demand of any Governmental Authority which would reasonably be expected to have an Individual Material Adverse Effect.  To the best of Borrower’s Knowledge, there has not been committed by Borrower and/or Maryland Owner any act or omission affording the federal government or any other Governmental Authority the right of forfeiture as against any Individual Property or any part thereof or any monies paid in performance of Borrower’s and/or Maryland Owner’s obligations under any of the Loan Documents which would reasonably be expected to have an Individual Material Adverse Effect.  On the Closing Date, the Improvements at each Individual Property were in material compliance with applicable law, except where the failure to so comply would not reasonably be expected to result in an Individual Material Adverse Effect.

 

4.1.12              Financial Information.  The financial data specified in Schedule 4.1.12 (including, without limitation, the statements of operation and cash flows), which have been delivered by or on behalf of Borrower and/or Maryland Owner to Lender in respect of the Properties (a) are true, complete and correct in all material respects, (b) fairly represent the financial condition of each Individual Property as of the date of such reports, and (c) to the extent prepared or audited by an independent certified public accounting firm, have been prepared in accordance with GAAP throughout the periods covered, except as disclosed therein.  Neither Borrower nor Maryland Owner has any contingent liabilities, liabilities for taxes, unusual forward or long term commitments or unrealized or anticipated losses from any unfavorable commitments that in each case are known to Borrower and/or Maryland Owner and would reasonably be expected to have a Material Adverse Effect.  Since the date of such financial statements, there has been no material adverse change in the financial condition, operations or business of Borrower and/or Maryland Owner from that set forth in said financial statements.

 

74

 

4.1.13              Condemnation.  Other than as described on Schedule 4.1.13 hereto, no Condemnation has been commenced or, to Borrower’s Knowledge, is contemplated with respect to all or any portion of any Individual Property or for the relocation of roadways providing access to any Individual Property.

 

4.1.14              Federal Reserve Regulations.  None of the proceeds of the Loan will be used by Borrower or Maryland Owner for the purpose of purchasing or carrying any “margin stock” as defined in Regulation U, Regulation X or Regulation T in violation of such regulation or for the purpose of reducing or retiring any Indebtedness which was originally incurred so that Borrower or Maryland Owner could purchase or carry “margin stock” or for any other purpose which might constitute this transaction a “purpose credit” within the meaning of Regulation U or Regulation X in violation of such regulation.  As of the Closing Date, neither Borrower nor Maryland Owner owns any “margin stock.”

 

4.1.15              Utilities and Public Access.  Each Individual Property has rights of access to public ways and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service such Individual Property for its intended uses.  All utilities necessary for the existing use of each Individual Property are located either in the public right-of-way abutting such Individual Property (which are connected so as to serve such Individual Property) or in recorded easements serving such Individual Property and such easements are set forth in and insured by the Title Policy.  All roads necessary for the use of each Individual Property for its current purposes have been completed and, if necessary, dedicated to public use.

 

4.1.16              Not a Foreign Person.  Neither Borrower nor Maryland Owner is a foreign person within the meaning of § 1445(f)(3) of the Code.

 

4.1.17              Separate Lots.  Each Individual Property is comprised of one (1) or more contiguous parcels which constitute a separate tax lot or lots and does not constitute or include a portion of any other tax lot not a part of such Individual Property.

 

4.1.18              Assessments.  To the best of Borrower’s Knowledge, other than assessments for the applicable business improvement district (if any) in which an Individual Property is situated (which assessments are not yet due, payable or delinquent) there are no pending or proposed special or other assessments for public improvements or otherwise affecting any Individual Property, nor are there any contemplated improvements to any Individual Property that may result in such special or other assessments that would have an Individual Material Adverse Effect.

 

4.1.19              Enforceability.  The Loan Documents are not subject to any existing right of rescission, set off, counterclaim or defense by Borrower, Maryland Owner or Guarantor, including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable (subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting rights of creditors generally, and subject as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing), and neither Borrower, Maryland Owner nor Guarantor has asserted any right of rescission, set off, counterclaim or defense with respect thereto.

 

75

 

4.1.20              No Prior Assignment.  There are no prior sales, transfers, pledges, hypothecations or assignments of the Leases or any portion of the Rents due and payable or to become due and payable which are presently outstanding following the funding of the Loan, other than those being terminated or assigned to Lender concurrently herewith.

 

4.1.21              Insurance.  Borrower and Maryland Owner have obtained or caused to be obtained  and have delivered to Lender certificates of insurance, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement.  Neither Borrower nor Maryland Owner has, and to the best of Borrower’s Knowledge no Person has, done by act or omission anything which would impair the coverage of any such policy.

 

4.1.22              Use of Property.  Each Individual Property is used exclusively for office, restaurant and/or retail purposes and other appurtenant and related uses which uses are specified in the Leases.

 

4.1.23              Certificate of Occupancy; Licenses.  To the best of Borrower’s Knowledge and except as specifically set forth on Schedule 4.1.23, all certifications, permits, licenses and approvals, including without limitation, certificates of completion and occupancy permits required of Borrower and/or Maryland Owner for the legal use, occupancy and operation of each Individual Property as a retail shopping center (collectively, the “Licenses”), have been obtained and are in full force and effect, except for those (including those specified in the last sentence of this Section 4.1.23) the failure of which to obtain and maintain in full force and effect would not reasonably be expected to have an Individual Material Adverse Effect.  Borrower (other than Maryland Individual Borrower) and Maryland Owner shall keep and maintain all Licenses necessary for the operation of each Individual Property as a retail shopping center, except where failure to maintain a License would not reasonably be expected to have an Individual Material Adverse Effect.  Except as otherwise specifically set forth on Schedule 4.1.23, the use being made of each Individual Property is in conformity with the certificate or certificates of occupancy issued for such Individual Property except where such failure would not reasonably be expected to have an Individual Material Adverse Effect.

 

4.1.24              Flood Zone.  Other than as set forth on Schedule 4.1.24 hereto, none of the Improvements on any Individual Property are located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards.

 

4.1.25              Physical Condition.  To the best of Borrower’s Knowledge and except as would not reasonably be likely to have an Individual Material Adverse Effect or as expressly disclosed in the Physical Conditions Report, each Individual 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; to the best of Borrower’s Knowledge and except as disclosed in the Physical Conditions Report, there exists no structural or other material defects or damages in or to any Individual Property, whether latent or otherwise, and neither Borrower nor Maryland Owner has received any written notice from any insurance company or bonding company of any defects or inadequacies in any Individual Property, or any part thereof, which would adversely affect the insurability of the same or cause

 

76

 

the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.

 

4.1.26              Boundaries.  To the best of Borrower’s Knowledge and in reliance on, and except as otherwise specifically disclosed in, the Survey, all of the Improvements lie wholly within the boundaries and building restriction lines of such Individual Property, and no improvements on adjoining properties encroach upon any Individual Property, and no easements or other encumbrances upon any Individual Property encroach upon any of the Improvements, in each case, so as to have an Individual Material Adverse Effect, except those which are insured against by the Title Policy.

 

4.1.27              Leases.

 

(a)                                 Borrower and Maryland Owner have heretofore delivered to Lender true and complete copies of all Leases and any and all amendments or modifications thereof.  Except as otherwise expressly disclosed on the Rent Roll or the Tenant estoppel certificates delivered to Lender in connection with the closing of the Loan, to Borrower’s Knowledge, Borrower (other than Maryland Individual Borrower), Maryland Owner or their respective predecessors have complied with and performed all of its or their material construction, improvement and alteration obligations with respect to the Properties required as of the date hereof and any other obligations under the Leases that are required as of the date hereof have either been complied with or the failure to comply with the same does not and would not reasonably be expected to have a Material Adverse Effect.

 

(b)                                 The Properties are not subject to any Leases other than the Leases described in the rent roll certified and delivered to Lender as of the Closing Date (the “Rent Roll”) and other than any sublease or license granted by any Tenant (or sub-tenant) under a Lease.  The Rent Roll is true, complete and correct in all material respects as of the date set forth therein.  Except as otherwise set forth on the Rent Roll, no Person has any possessory interest in any Individual Property or right to occupy the same except under and pursuant to the provisions of the Leases or any sublease or license granted by any Tenant (or sub-tenant) under a Lease.  The current Leases are in full force and effect and to Borrower’s Knowledge, there are no defaults that would reasonably be expected to have a Material Adverse Effect thereunder by either party (other than as expressly disclosed on the Rent Roll, Schedule 16.10 hereof or the Tenant estoppel certificates delivered to Lender in connection with the closing of the Loan) and there are no conditions that, with the passage of time or the giving of notice, or both, would constitute defaults that would reasonably be expected to have a Material Adverse Effect thereunder (other than as expressly disclosed on the Rent Roll, Schedule 16.10 or the Tenant estoppel certificates delivered to Lender in connection with the closing of the Loan).  No Tenant under any Lease has an unexpired right or option pursuant to such Lease or otherwise to purchase all or any part of the property of which the leased premises are a part, other than as expressly disclosed on the Rent Roll or the Tenant estoppel certificates delivered to Lender in connection with the closing of the Loan.  Borrower and Maryland Owner have delivered to Lender prior to the date of this Agreement a true, correct and complete list of all security deposits and the amounts thereof, currently in Borrower’s and/or Maryland Owner’s possession.

 

77

 

4.1.28              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 each Individual Property to an Individual Borrower (except Maryland Individual Borrower) or Maryland Owner have been paid.  All mortgage, mortgage recording, stamp, intangible or other similar taxes 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 Security Instrument, have been paid, or will be paid on the Closing Date, and, under current Legal Requirements, the Security Instrument is enforceable against Borrower and/or Maryland Owner in accordance with its terms by Lender (or any subsequent holder thereof) subject only to applicable bankruptcy, insolvency, moratorium and similar laws affecting rights of creditors generally, and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

 

4.1.29              Single Purpose Entity/Separateness.

 

(a)                                 At  all times since its respective date of formation, each Individual Borrower and Maryland Owner has complied in all material respects with the separateness covenants set forth in its organizational documents, or, if no separateness covenants are set forth therein, it:

 

(i)                                     other than ground leases entered into with another Individual Borrower, has not entered into any contract or agreement with any of its Affiliates, constituents, or owners, or any guarantors of any of its obligations or any Affiliate of any of the foregoing (individually, a “Related Party” and collectively, the “Related Parties”), except upon terms and conditions that are commercially reasonable and substantially similar to those available in an arm’s-length transaction with an unrelated party;

 

(ii)                                  has paid all of its debts and liabilities from its assets;

 

(iii)                               has done or caused to be done all things necessary to observe all organizational formalities applicable to it and to preserve its existence;

 

(iv)                              has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person ;

 

(v)                                 has not had its assets listed as assets on the financial statement of any other Person;

 

(vi)                              has filed its own tax returns (except to the extent that it has been a tax-disregarded entity not required to file tax returns under applicable law) and, if it is a corporation, has not filed a consolidated federal income tax return with any other Person;

 

78

 

(vii)                           has been, and at all times has held itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate or other Related Party);

 

(viii)                        has corrected any known misunderstanding regarding its status as a separate entity;

 

(ix)                              has conducted all of its business and held all of its assets in its own name;

 

(x)                                 has not identified itself or any of its affiliates as a division or part of the other;

 

(xi)                              has maintained and utilized separate stationery, invoices and checks bearing its own name;

 

(xii)                           has not commingled its assets with those of any other Person and has held all of its assets in its own name;

 

(xiii)                        has not guaranteed or become obligated for the debts of any other Person;

 

(xiv)                       has not held itself out as being responsible for the debts or obligations of any other Person;

 

(xv)                          has allocated fairly and reasonably any overhead expenses that have been shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate or Related Party;

 

(xvi)                       has not pledged its assets to secure the obligations of any other Person and no such pledge remains outstanding except in connection with the Loan;

 

(xvii)                    has maintained adequate capital in light of its contemplated business operations;

 

(xviii)                 has maintained a sufficient number of employees in light of its contemplated business operations and has paid the salaries of its own employees from its own funds;

 

(xix)                       has not owned any subsidiary or any equity interest in any other entity;

 

(xx)                          has not incurred any indebtedness that is still outstanding other than Permitted Debt; and

 

(xxi)                       has not had any of its obligations guaranteed by an affiliate, except for guarantees that have been either released or discharged (or that will be

 

79

 

discharged as a result of the closing of the Loan) or guarantees that are expressly contemplated by the Loan Documents.

 

(b)                                 As of the date hereof. each Individual Borrower and Maryland Owner has complied in all material respects with all of the covenants set forth in Section 5.1.4, except to the extent any such covenant in Section 5.1.4 states or implies that it is made from and after the date hereof;

 

(c)                                  All of the assumptions made in the Non-Consolidation Opinion, including, but not limited to, any exhibits attached thereto, are true and correct in all material respects and any assumptions made in any subsequent non-consolidation opinion delivered by counsel selected by Borrower and Maryland Owner and satisfactory to Lender and the Rating Agencies in connection with the Loan Documents (an “Additional Non-Consolidation Opinion”), including, but not limited to, any exhibits attached thereto, will have been and shall be true and correct in all material respects as of the date such Additional Non-Consolidation Opinion is given.  Each of Borrower and Maryland Owner has complied and will continue to comply with all of the assumptions made with respect to it in the Non-Consolidation Opinion to the extent that compliance with such assumptions is in Borrower and/or Maryland Owner’s control.  Each of Borrower and Maryland Owner will comply with all of the assumptions made with respect to it in any Additional Non-Consolidation Opinion to the extent that compliance with such assumptions is in Borrower and/or Maryland Owner’s control.  Each entity other than Borrower and Maryland Owner with respect to which an assumption shall be made in any Additional Non-Consolidation Opinion will comply with all of the assumptions made with respect to in any Additional Non-Consolidation Opinion.

 

(d)                                 Neither Borrower nor Maryland Owner has any judgments or liens of any nature against it except for Permitted Encumbrances.

 

(e)                                  Neither Borrower nor Maryland Owner is involved in any dispute with any taxing authority except those being contested in good faith by appropriate proceedings.

 

(f)                                   Neither Borrower nor Maryland Owner is now, and has ever been, party to any lawsuit, arbitration, summons or legal proceeding that is still pending that resulted in a judgment against it that has not been paid in full.

 

(g)                                  Each of Borrower and Maryland Owner has provided Lender with  financial statements that reflect a fair and accurate view of  each such entity’s financial condition.

 

(h)                                 Each of Borrower and Maryland Owner has obtained a reasonably current Phase I environmental site assessment (the “ESA”) for the Individual Property it owns prepared consistent with ASTM Practice E 1527, and, except as set forth on Schedule 4.1.29(h) attached hereto, the ESA has not identified any recognized environmental conditions that require further investigation or remediation as determined by Borrower or Maryland Owner in its reasonable good faith judgment.

 

(i)                                     Neither Borrower nor Maryland Owner has any material contingent or actual obligations not related to the Individual Property owned by it.

 

80

 

(j)                                    Each amendment and restatement of Borrower’s and/or Maryland Owner’s organizational documents has been accomplished in accordance with, and was permitted by, the relevant provisions of said documents prior to its amendment or restatement from time to time.

 

4.1.30              Management Agreement.  The Management Agreement is in full force and effect and there is no current default thereunder by any party thereto and no event currently exists that, with the passage of time and/or the giving of notice, would constitute a default thereunder which has not otherwise been waived.  Manager is an Affiliate of Borrower and Maryland Owner.

 

4.1.31              Illegal Activity.  No portion of any Individual Property has been or will be purchased with proceeds of any illegal activity.

 

4.1.32              No Change in Facts or Circumstances; Disclosure.  All representations and warranties made by Borrower and/or Maryland Owner in this Agreement or in any other Loan Document are accurate, complete and correct in all material respects (except that the foregoing shall be qualified by Borrower’s Knowledge with respect to such statements of fact that are specifically qualified as being made to Borrower’s or Maryland Owner’s knowledge).

 

4.1.33              Tax Filings.  Each of Borrower and Maryland Owner has filed (or has obtained effective extensions for filing) all federal, state and local tax returns required to be filed and has paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments payable by Borrower and/or Maryland Owner.

 

4.1.34              Solvency/Fraudulent Conveyance.  Neither Borrower nor Maryland Owner has entered into the transactions contemplated by this Agreement or any Loan Document with the actual intent to hinder, delay, or defraud any creditor.  Each of Borrower and Maryland Owner has received reasonably equivalent value in exchange for its obligations under the Loan Documents.  After giving effect to the Loan, the fair saleable value of Borrower’s and Maryland Owner’s assets exceed and will, immediately following the making of the Loan, exceed Borrower’s and Maryland Owner’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities.  The fair saleable value of Borrower’s and Maryland Owner’s assets are and will, immediately following the making of the Loan, be greater than Borrower’s and Maryland Owner’s probable respective liabilities, including the maximum amount of its respective contingent liabilities on its Debts as such Debts become absolute and matured.  Borrower’s and Maryland Owner’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its respective businesses as conducted or as proposed to be conducted and neither any Individual Borrower nor Maryland Owner intends to, nor believes that it will, incur Debt and liabilities (including contingent liabilities and other commitments) beyond its abilities to pay such Debt and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and Maryland Owner and the amounts to be payable on or in respect of its obligations).

 

4.1.35              Investment Company Act.  Neither Borrower nor Maryland Owner is (a) an investment company or a company Controlled by an investment company, within the meaning of the Investment Company Act of 1940, as amended, or (b) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

 

81

 

4.1.36              Accounts.

 

(a)                                 This Agreement, together with the other Loan Documents, create a valid and continuing security interest (as defined in the Uniform Commercial Code of the State of New York) in the Lockbox Account, the Cash Management Account and the Reserve Accounts in favor of Lender, which security interest is prior to all other Liens, other than Permitted Encumbrances and any other Liens permitted under this Agreement or any of the other Loan Documents, and is enforceable as such against creditors of and purchasers from each of Borrower and Maryland Owner.  Other than in connection with the Loan Documents and except for Permitted Encumbrances, neither Borrower nor Maryland Owner has sold, pledged, transferred or otherwise conveyed the Lockbox Account, the Cash Management Account or the Reserve Accounts;

 

(b)                                 Each of the Lockbox Account, the Cash Management Account and the Reserve Accounts constitutes a “deposit account” and/or “securities account” within the meaning of the Uniform Commercial Code of the State of New York.

 

(c)                                  Pursuant and subject to the terms hereof and the other applicable Loan Documents, each of Lockbox Bank and Agent have agreed to comply with all instructions originated by Lender, without further consent by Borrower and/or Maryland Owner, directing disposition of the Lockbox Account and the Cash Management Account and all sums at any time held, deposited or invested therein, together with any interest or other earnings thereon, and all proceeds thereof (including proceeds of sales and other dispositions), whether accounts, general intangibles, chattel paper, deposit accounts, instruments, documents or securities.

 

(d)                                 None of the Lockbox Account, the Cash Management Account and the Reserve Accounts are in the name of any Person other than Borrower and/or Maryland Owner, as applicable, as pledgor, or Lender, as pledgee.  Neither Borrower nor Maryland Owner has consented to Lockbox Bank and/or Agent complying with instructions with respect to any Lockbox Account and Cash Management Account from any Person other than Lender.

 

4.1.37              Labor.  Neither Borrower nor Maryland Owner (a) is involved in or, to the best of Borrower’s Knowledge, threatened with any labor dispute, work stoppage, labor strike, material grievance or litigation relating to labor matters involving any employees or other laborers at the Properties, including, without limitation, violation of any federal, state or local labor, safety or employment laws (domestic or foreign) and/or charges of unfair labor practices or discrimination complaints which would reasonably be expected to have a Material Adverse Effect, (b)  has engaged, nor, to the best of Borrower’s Knowledge, has there been any allegations in any proceeding that Borrower or Maryland Owner has engaged in any unfair labor practices within the meaning of the National Labor Relations Act or the Railway Labor Act, and (c) except as set forth on Schedule 4.1.37, is a party to, or bound by, any collective bargaining agreement or union contract with respect to employees and other laborers at the Properties and no such agreement or contract is currently being negotiated by Borrower, Maryland Owner or any of its Affiliates with respect to the Properties.

 

4.1.38              Brokers.  Neither Borrower, Maryland Owner nor Lender has dealt with any broker or finder with respect to the transactions contemplated by the Loan Documents and

 

82

 

neither party has done any acts, had any negotiations or conversations, or made any agreements or promises which will in any way create or give rise to any obligation or liability for the payment by the other Parties of any brokerage fee, charge, commission or other compensation to any Person with respect to the transactions contemplated by the Loan Documents.  Borrower, Maryland Owner and Lender shall each indemnify and hold harmless the other from and against any loss, liability, cost or expense, including any judgments, attorneys’ fees, or costs of appeal, incurred by the other party and arising out of or relating to any breach or default by the indemnifying party of its representations, warranties and/or agreements set forth in this Section 4.1.38.  The provisions of this Section 4.1.38 shall survive the expiration and termination of this Agreement and the payment of the Indebtedness.

 

4.1.39              No Other Debt.  Neither Borrower nor Maryland Owner has borrowed or received debt financing that has not been heretofore repaid in full, other than the Permitted Debt.

 

4.1.40              Taxpayer Identification Number.  Each Individual Borrower’s and Maryland Owner’s tax payer identification number is set forth on Schedule 4.1.40 hereto.

 

4.1.41              Intentionally Omitted.

 

4.1.42              Intentionally Omitted.

 

4.1.43              Ground Leases.  Except as otherwise set forth in Schedule 4.1.43 attached hereto, each of Borrower and Maryland Owner represents and warrants to Lender as of the Closing Date the following with respect to each Ground Lease:

 

(a)                                 the Ground Lease (or a memorandum of such Ground Lease) has been duly recorded.  The Ground Lease permits the interest of the applicable Individual Borrower to be encumbered by a mortgage, deed of trust, indemnity deed of trust or deed to secure debt (provided that the mortgage, deed of trust, indemnity deed of trust or deed to secure debt, as applicable, is at all times subject and subordinate to the Ground Lease) or the Ground Lessor has approved and consented to the encumbrance of the Ground Lease Property by the applicable Security Instrument.  There have not been amendments or modifications to the terms of the Ground Lease since recordation of the Ground Lease (or a memorandum thereof), with the exception of written instruments which have been recorded.  The Ground Lease may not be terminated, surrendered or amended without the prior written consent of Lender; which such consent, with respect to amendment, shall not be unreasonably withheld, conditioned or delayed; provided that the Individual Borrowers that are tenants under the Ground Lease may exercise renewal rights without Lender’s consent and provided that the Ground Lessor shall not be prevented from exercising its remedies in accordance with the Ground Lease if the obligations of Individual Borrower under the Ground Lease are not performed as provided in the Ground Lease;

 

(b)                                 except for the Permitted Encumbrances and other encumbrances of record, the applicable Individual Borrower’s interest in the related Ground Lease is not subject to any Liens or encumbrances superior to, or of equal priority with, the applicable Security Instrument other than the Ground Lessor’s related fee interest;

 

83

 

(c)                                  the applicable Individual Borrower’s interest in the Ground Lease is assignable without the consent of Ground Lessor to Lender, the purchaser at any foreclosure sale or the transferee under a deed or assignment in lieu of foreclosure in connection with the foreclosure of the Lien of the Security Instrument or transfer of the applicable Individual Borrower’s leasehold estate by deed or assignment in lieu of foreclosure.  Thereafter, subject to certain conditions and restrictions set forth therein, the Ground Lease is further assignable by such transferee and its successors and assigns without the consent of the applicable Ground Lessor;

 

(d)                                 as of the date hereof, the Ground Lease is in full force and effect and to Borrower’s Knowledge no material default has occurred under the Ground Lease that is continuing and there is no existing condition which, but for the passage of time or the giving of notice, could result in a material default under the terms of the Ground Lease;

 

(e)                                  under the terms of the Ground Lease and the Loan Documents, taken together, any related insurance and condemnation proceeds that are paid or awarded to Borrower with respect to the leasehold interest created thereby will be assigned to Lender and Lender shall have the right to,  (subject to the terms of the Loan Documents, either hold and disburse the proceeds for the payment of the costs and expenses for repairing or restoring all or part of the related portion of the Ground Lease Property, as the repair or restoration progresses, or apply the proceeds  to the payment of the outstanding principal balance of the Loan together with any accrued interest thereon;

 

(f)                                   the Ground Lease does not impose any restrictions on subleasing;

 

(g)                                  the Ground Lease requires the Ground Lessor to give notice of any default by the applicable Individual Borrower under the Ground Lease to Lender prior to exercising its remedies thereunder;

 

(h)                                 Lender has the opportunity (including, where necessary, sufficient time to gain possession of the interest of the applicable Individual Borrower under the Ground Lease) to cure any default under such Ground Lease that is curable, after the receipt of notice of the default, before the Ground Lessor thereunder may terminate such Ground Lease;

 

(i)                                     each Ground Lease has a term (including all extensions exercisable at the option of the applicable Individual Borrower) which extends not less than eighteen (18) years beyond the Maturity Date; and

 

(j)                                    each Ground Lease requires the Ground Lessor, upon certain specified conditions being satisfied, to enter into a new lease upon termination (prior to expiration of the term thereof) of such Ground Lease for any reason, including rejection or disaffirmation of the Ground Lease in a bankruptcy proceeding.

 

4.1.44              REOA.

 

(a)                                 An Individual Borrower or Maryland Owner is a party to each REOA, and each REOA is in full force and effect and has not been amended or modified except as disclosed on Schedule 4.1.44 and each of Borrower’s or Maryland Owner’s interest therein has not been

 

84

 

assigned pursuant to any assignment which survives the Closing Date except the assignment to Lender pursuant to the Loan Documents.

 

(b)                                 To Borrower’s Knowledge each REOA is in material compliance with all applicable local, state and federal laws, rules and regulations, except for such non-compliance as would not reasonably be expected to result in an Individual Material Adverse Effect.

 

(c)                                  To Borrower’s Knowledge, neither Borrower nor Maryland Owner nor any other party to any REOA is in default under any REOA and there are no grounds for default thereunder after the giving of the requisite notice thereunder, other than such defaults as would not reasonably be expected to result in an Individual Material Adverse Effect.

 

(d)                                 To Borrower’s Knowledge, no notice of termination or default has been given to Borrower or Maryland Owner with respect to any REOA except for those which have been cured or which would not reasonably be expected to result in an Individual Material Adverse Effect.

 

(e)                                  To the best of Borrower’s Knowledge, the current addresses to which notices are sent to each of Borrower or Maryland Owner or any other party to any REOA are correctly set forth in such REOA or in any amendment, notice or other document provided therewith.

 

(f)                                   To Borrower’s Knowledge, none of the other parties to any REOA (i.e., excluding Borrower and Maryland Owner) has performed any material work pursuant to such REOA, the cost of which such other party is or will be entitled to charge in whole or in part to Borrower or Maryland Owner under the provisions of such REOA.

 

(g)                                  There are no set-offs, claims, counterclaims or defenses being asserted by Borrower, Maryland Owner or, to Borrower’s Knowledge, any other party to any REOA for the enforcement of the obligations under any REOA.

 

(h)                                 To Borrower’s Knowledge, there are no liens capable of being asserted for amounts due under the provisions of any REOA which, if unpaid, may be asserted as a lien prior to the lien of the Security Instrument.

 

(i)                                     To Borrower’s Knowledge, all common charges and other sums due from each of Borrower or Maryland Owner under any REOA, if any, have been paid to the extent they are payable to the date hereof.

 

Section 4.2                                    Survival of Representations.  Borrower agrees that all of the representations and warranties of Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the other Loan Documents shall be deemed given and made as of the Closing Date and survive for so long as any amount remains owing to Lender under this Agreement or any of the other Loan Documents by Borrower, Maryland Owner or Guarantor unless a longer survival period is expressly stated in a Loan Document with respect to a specific representation or warranty, in which case, for such longer period.

 

85

 

ARTICLE V

 

BORROWER COVENANTS

 

Section 5.1                                    Affirmative Covenants.  From the Closing Date and until payment and performance in full of all Obligations, each of Borrower and Maryland Owner hereby covenants and agrees with Lender that:

 

5.1.1                     Performance by Borrower and Maryland Owner.  Each of Borrower and Maryland Owner 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/or Maryland Owner, as applicable, and, except as provided herein or in any other Loan Document, 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 and/or Maryland Owner, as applicable, without the prior written consent of Lender.

 

5.1.2                     Existence; Compliance with Legal Requirements.  Subject to Borrower’s and Maryland Owner’s right of contest pursuant to Section 7.3, Borrower and Maryland Owner shall at all times comply and cause each Individual Property to be in compliance with all Legal Requirements and Prescribed Laws applicable to Borrower, Maryland Owner and each Individual Property and the uses permitted upon each Individual Property except where the failure to so comply would not reasonably be expected to have an Individual Material Adverse Effect.  Borrower and Maryland Owner shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises necessary to comply with all Legal Requirements applicable to it and each Individual Property except where failure to do so would not reasonably be expected to have an Individual Material Adverse Effect.  There shall never be committed by Borrower and/or Maryland Owner, and Borrower and/or Maryland Owner shall not knowingly permit any other Person in occupancy of or involved with the operation or use of any Individual Property to commit, any act or omission affording the federal government or any state or local government the right of forfeiture as against any Individual Property or any material part thereof or any monies paid in performance of Borrower’s and Maryland Owner’s obligations under any of the Loan Documents.  Each of Borrower and Maryland Owner hereby covenants and agrees not to commit, knowingly permit or suffer to exist any act or omission affording such right of forfeiture.  Borrower and Maryland Owner shall at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used in the conduct of its business and shall keep each Individual Property in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, all as more fully set forth in the Security Instrument except where failure to do so would not reasonably be expected to have an Individual Material Adverse Effect.

 

5.1.3                     Litigation.  Borrower and/or Maryland Owner shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower or Maryland Owner which, if determined adversely to Borrower or Maryland Owner, would reasonably be expected to have an Individual Material Adverse Effect.

 

86

 

5.1.4                     Single Purpose Entity.  Each of Borrower and Maryland Owner hereby covenants with Lender that at all times on and after the date hereof and until such time as the Obligations shall be paid and performed in full:

 

(1)                                 each Individual Borrower (other than Maryland Individual Borrower) and Maryland Owner is not engaged in and will not engage in any business and has not owned, does not own and shall not own any asset or property other than (A) the applicable Individual Property, (B) the applicable fee or leasehold interest in the Improvements and (C) incidental personal property necessary or appropriate for the operation of the applicable Individual Property (and, (i) with respect to the Allentown Individual Borrower, the fee interest in the Wal-Mart Parcel and (ii) with respect to the Maryland Owner, the ownership interests in the Maryland Individual Borrower), provided that a ground tenant may acquire the fee interest in the property it ground leases.  Each Person other than an Individual Borrower or Maryland Owner has not owned, does not own and shall not own any asset or property other than the interest in the applicable Individual Borrower or Maryland Owner;

 

(2)                                 Maryland Individual Borrower has not owned any asset or property except for personal property necessary to enter into and perform its obligations under this Agreement or the other Loan Documents;

 

(3)                                 each Individual Borrower’s (except for Maryland Individual Borrower) and Maryland Owner’s purpose is solely to (A) own, hold, lease, operate, finance and manage the applicable Individual Property and incidental personal property necessary or appropriate for the operation thereof, (B) enter into and perform its obligations under the Loan Documents with Lender, (C) Transfer the applicable Individual Property or any incidental personal property necessary or appropriate for the operation, to the extent permitted under the Loan Documents, (D) additionally (i) with respect to the Allentown Individual Borrower, to hold, lease, operate, manage and Transfer the Wal-Mart Parcel and incidental personal property necessary or appropriate for the operation thereof, and act as lessor under the Wal-Mart Lease and (ii) with respect to the Maryland Owner, to acquire and own one hundred percent (100%) of the limited liability interests in the Maryland Individual Borrower and serve as the sole economic member of Maryland Individual Borrower, and (E) transact any and all lawful business that is necessary or incident to accomplish the foregoing clauses (A) through (D). Maryland Individual Borrower’s purpose is solely to enter into and perform its obligations under this Agreement and the other Loan Documents and to transact any and all lawful business that is necessary or incident to accomplish the foregoing.  Each Person’s other than an Individual Borrower or Maryland Owner purpose is solely to (i) acquire and own one hundred percent (100%) of the general partner or limited liability company interests, as applicable, in the applicable Individual Borrower or Maryland Owner, (ii) serve as the member or general partner of such Individual Borrower or Maryland Owner, (iii) Transfer its interest in such Individual Borrower or Maryland Owner to the extent permitted

 

87

 

under the Loan Documents, and (iv) transact any and all lawful business that is necessary or incident to accomplish the foregoing clauses (i) through (iv);

 

(4)                                 neither Borrower nor Maryland Owner has engaged nor shall they engage in any business other than the foregoing subparagraphs (1) through (3) above;

 

(5)                                 except for (i) capital contributions and capital distributions permitted by its organizational documents or (ii) any ground leases entered into with another Individual Borrower, neither Borrower nor Maryland Owner has entered nor shall it enter into any contract or agreement with another Borrower, any constituent party of Borrower or Maryland Owner, any guarantor or indemnitor under any of the Loan Documents or any Affiliate of any such constituent party or guarantor or indemnitor, except upon terms and conditions that are commercially reasonable and substantially similar to those that would be available on an arm’s length basis with third parties other than any such party;

 

(6)                                 Borrower and Maryland Owner have at all times paid, and shall pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due and shall not pay its debts and liabilities from the assets and funds of any other entity, except for payments made pursuant to the Guaranty, the Bottom Up Guaranty or any similar bottom up guaranty;

 

(7)                                 Borrower and Maryland Owner have maintained and shall maintain all of their books, records, financial statements and bank accounts separate from those of its Affiliates and any other Person; provided, however, (A) that Borrower’s and Maryland Owner’s financial position, assets, results of operations and cash flows may be included in a consolidated financial statement of an Affiliate of Borrower or Maryland Owner in accordance with GAAP, so long as (x) any such consolidated financial statement contains a note indicating that Borrower and Maryland Owner and their Affiliates are separate legal entities (or a similar statement is contained in such Affiliate’s Securities and Exchange Commission filings on Form 10-K and it is such Affiliate’s practice to deliver its financial statements together with such filings) and (y) such assets shall also be listed on Borrower’s and Maryland Owner’s own separate balance sheet and (B) all amounts paid to Borrower or Maryland Owner (including, without limitation, all amounts transferred from the Cash Management Account) may be deposited into a centralized cash management account, including, without limitation, the account established pursuant to the Cash Management Agency Agreement (controlled by an Affiliate of Borrower and Maryland Owner as an agent) on behalf of Borrower, Maryland Owner and various other entities that are Affiliates of Borrower and Maryland Owner, as and when received, provided that all amounts deposited into such centralized account for the benefit of Borrower and/or Maryland Owner are clearly segregated, for accounting purposes, from the revenues and expenses of all other Persons;

 

88

 

(8)                                 each of Borrower and Maryland Owner has held and shall hold itself out to the public as a legal entity, separate and distinct from any other entity (including any Affiliate of Borrower or Maryland Owner, any guarantor or indemnitor under any of the Loan Documents or any constituent party of Borrower or Maryland Owner), has corrected and shall correct any known misunderstanding regarding its status as a separate entity, has conducted and shall conduct business in its own name, and has not identified and shall not identify itself or any of its Affiliates as a division or part of the other;

 

(9)                                 each of Borrower and Maryland Owner has maintained and shall 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; provided, however, the foregoing shall not require any other Person to make any additional capital contributions to Borrower or Maryland Owner;

 

(10)                          except with respect to the Cash Management Agency Agreement, neither Borrower nor Maryland Owner has commingled nor shall they commingle their funds and other assets, as applicable, with those of any of its Affiliates or constituent parties, any guarantor or indemnitor under any of the Loan Documents or any other Person, except as contemplated in subparagraph (7) above;

 

(11)                          each of Borrower and Maryland Owner has maintained and shall maintain its assets in such a manner that it shall not be costly or difficult to segregate, ascertain or identify its individual assets from those of any of its Affiliates or constituent parties, any guarantor or indemnitor under any of the Loan Documents or any other Person;

 

(12)                          each of Borrower and Maryland Owner has conducted and shall conduct its business so that the assumptions made with respect to Borrower and Maryland Owner and all other Persons in the Non-Consolidation Opinion shall be true and correct in all material respects;

 

(13)                          neither Borrower nor Maryland Owner has permitted and neither Borrower nor Maryland Owner shall permit any of its Affiliates or constituent parties independent access to its bank accounts, except in connection with property or cash management activities consistent with the terms of the Loan as described in subparagraphs (7) and (10) above;

 

(14)                          each of Borrower and Maryland Owner shall maintain a sufficient number of employees, if any, in light of its contemplated business purpose and have paid and shall pay the salaries of its own employees (if any) from its own funds;

 

(15)                          each of Borrower and Maryland Owner has compensated and shall compensate its consultants and agents from its own funds;

 

89

 

(16)                          each of Borrower and Maryland Owner has allocated and shall allocate fairly and reasonably shared expenses, including for shared office space and for services performed by an employee of an Affiliate;

 

(17)                          except in connection with the Loan, neither Borrower nor Maryland Owner has pledged and shall not pledge any of its assets to secure the obligations of any other Person;

 

(18)                          neither Borrower nor Maryland Owner shall have any obligation to indemnify their officers, directors, members, as the case may be, except to the extent that such obligation is fully subordinated to the Loan and shall not constitute a claim against Borrower or Maryland Owner if cash flow in excess of the amount required to pay the Obligations is insufficient to pay such obligation (but the foregoing shall not preclude a recovery on such claims against insurance in respect thereof);

 

(19)                          each of Borrower and Maryland Owner (A) has maintained and shall maintain records, books of account and (subject to subparagraph (7) above) bank accounts separate and apart from any other Person,  (B) has filed and shall file its own tax returns, if any, as has been or may be required under applicable law, (C) shall not have any obligation to reimburse a member or any of its respective Affiliates for any taxes that such Person may incur as a result of any profits or losses of the Company and (D) has maintained and shall maintain its books, records, resolutions and agreements as official records;

 

(20)                          neither Borrower nor Maryland Owner has made and shall not make any loans or advances to any third party (including any of their Affiliates or constituent parties, any guarantor or indemnitor under any of the Loan Documents or any Affiliate of any such constituent party or guarantor or indemnitor) (provided that Borrower and/or Maryland Owner, from time to time in the ordinary course of business, may agree with Tenants  in Leases of portions of an Individual Property to make certain tenant improvement allowances available to such Tenants), and shall not acquire obligations or securities of its Affiliates or of any of its constituent parties;

 

(21)                          except with respect to the other Individual Borrowers and Maryland Owner in connection with the Loan, neither Borrower nor Maryland Owner has assumed, guaranteed or become obligated for or held themselves out to be responsible for, and neither Borrower nor Maryland Owner shall assume, guarantee, become obligated for or hold itself or its credit out to be responsible for, the debts or obligations of any other Person or the decisions or actions respecting the daily business or affairs of any other Person;

 

(22)                          neither Borrower nor Maryland Owner shall incur, create or assume any Debt other than Permitted Debt;

 

90

 

(23)                          neither Borrower nor Maryland Owner has made nor shall they make or permit to remain outstanding any loan or advance to, or own or acquire any stock or securities of, any Person, except that Borrower and/or Maryland Owner may invest in Permitted Investments and may make any advance required or expressly permitted to be made pursuant to this  Agreement and may permit the same to remain outstanding in accordance with such provisions;

 

(24)                          neither Borrower nor Maryland Owner has formed, acquired or held and shall not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other), except that any Individual Borrower and/or Maryland Owner may own another Individual Borrower;

 

(25)                          each of Borrower and Maryland Owner at all times shall have a limited liability company agreement or limited partnership agreement (as applicable) that has been approved by Lender, it being hereby acknowledged that Lender has approved the current limited liability company agreement or limited partnership agreement (as applicable) of each Individual Borrower and Maryland Owner;

 

(26)                          except as may be permitted under this Agreement or any other Loan Document, neither Borrower nor Maryland Owner shall, to the fullest extent permitted by law, engage in, seek, or consent to its dissolution, winding up, liquidation, consolidation or merger;

 

(27)                          except for Transfers permitted under this Agreement or any other Loan Document, neither Borrower nor Maryland Owner shall engage in, seek or consent to any asset sale or permit any transfer of beneficial interests in itself;

 

(28)                          without the prior, unanimous affirmative vote of at least two (2) Independent Members of Borrower or Maryland Owner or the member or general partner of such entity, as applicable, Borrower and Maryland Owner shall not (A) petition or otherwise institute bankruptcy, reorganization or insolvency proceedings or otherwise seek any relief under the Bankruptcy Code or any laws relating to the relief from debts or the protection of debtors generally, (B) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or other similar official for the benefit of its creditors  or all or any portion of its properties, (C) make any assignment for the benefit of creditors, (D) take any action that might cause it  to become insolvent, or (E) take any action in furtherance of any of the foregoing;

 

(29)                          except for actions taken by agents, including Manager on behalf of Borrower and/or Maryland /Owner, in which such agent identifies itself as an agent of Borrower and/or Maryland Owner, Borrower and Maryland Owner shall have and shall use separate stationery, invoices and checks bearing their own name;

 

91

 

(30)                          unless an Individual Borrower or Maryland Owner has at least two (2) Independent Members, any such Individual Borrower (other than the Massachusetts Individual Borrowers) that is a limited liability company (other than a limited liability company meeting all of the requirements applicable to a single-member limited liability company under the Delaware Limited Liability Company Act (6 Del. C. Section 18-101 et seq.)) or Maryland Owner has and shall only have entities as its members that are Single Purpose Entities. Each of the Massachusetts Individual Borrowers has and shall only have entities as its managing members that are Single Purpose Entities owning at least one half percent (0.5%) of the limited liability company interests in the applicable Massachusetts Individual Borrower;

 

(31)                          unless an Individual Borrower has at least two (2) Independent Members, any such Individual Borrower that is a limited partnership has and shall only have entities acting as its general partners that is a Single Purpose Entity;

 

(32)                          neither Borrower nor Maryland Owner shall buy or hold evidence of indebtedness issued by any other Person (other than cash, cash equivalents or investment-grade securities and Permitted Investments); and

 

(33)                          each Borrower and Maryland Owner shall comply with all organizational formalities necessary to maintain its separate existence.

 

Notwithstanding anything herein to the contrary, the execution and delivery of any Loan Document (including for this purpose, the Bottom Up Guaranty) by Borrower or an Affiliate thereof or Maryland Owner or an Affiliate thereof, and the performance by such Person of its obligations thereunder, shall not constitute a violation of this Section 5.1.4 or any other provisions of the Loan Documents.

 

5.1.5                     Consents.  The managing member, general partner or board of managers of Borrower and/or Maryland Owner may not take any action requiring the unanimous affirmative vote of one hundred percent (100%) of the members, the partners or the members of the board of managers of such Borrower or Maryland Owner unless all of the members, partners or members of the board of managers, including the Independent Members, as applicable, shall have participated in such vote.  An affirmative vote of one hundred (100%) of the members, partners or members of the board of managers of Borrower and/or Maryland Owner shall be required to file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings or authorize Borrower and/or Maryland Owner to do so.  Furthermore, Borrower’s and Maryland Owner’s organization documents shall expressly state that for so long as the Loan is outstanding and Borrower is the obligor under the Note, neither Borrower nor Maryland Owner shall be permitted to (1) dissolve, liquidate, consolidate, merge or sell all or substantially all of its assets other than in connection with the repayment of the Loan or except as permitted hereunder or (2) engage in any  business activity other than as set forth in subparagraphs (1) through (3) of Section 5.1.4, as applicable, and such restrictions shall not be modified or violated for so long as the Loan is outstanding.

 

92

 

5.1.6                     Access to Property.  Borrower and/or Maryland Owner shall permit agents, representatives and employees of Lender and the Rating Agencies, at no out-of-pocket expense to Borrower or Maryland Owner, to inspect each Individual Property or any part thereof during normal business hours on Business Days upon reasonable advance notice (which may be given telephonically or by e-mail).

 

5.1.7                     Notice of Default.  Borrower and/or Maryland Owner shall promptly advise Lender (a) of any event or condition that has or would reasonably be expected to have an Individual Material Adverse Effect of which Borrower and/or Maryland Owner has knowledge and (b) of the occurrence of any Default or Event of Default of which Borrower and/or Maryland Owner has knowledge.

 

5.1.8                     Cooperate in Legal Proceedings.  Borrower and/or Maryland Owner shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which would reasonably be expected to have an Individual Material Adverse Effect and, in connection therewith, permit Lender, at its election and its own expense, to participate in any such proceedings which would reasonably be expected to have an Individual Material Adverse Effect, other than those proceedings where Borrower and Lender are adverse parties.

 

5.1.9                     Perform Loan Documents.  Borrower and/or Maryland Owner shall observe, perform and satisfy all the terms, provisions, covenants and conditions of, and shall pay when due all costs, fees and expenses to the extent required, under the Loan Documents executed and delivered by, or applicable to, Borrower and/or Maryland Owner.

 

5.1.10              Insurance.

 

(a)                                 Borrower and/or Maryland Owner shall cooperate with Lender in obtaining for Lender (to the extent that this Agreement provides that such Proceeds are to be paid to Lender) the benefits of any Proceeds lawfully or equitably payable in connection with any Individual Property, and Lender shall be reimbursed for any reasonable out-of-pocket expenses incurred in connection therewith (including reasonable attorneys’ fees and disbursements) out of such Proceeds.

 

(b)                                 Borrower and/or Maryland Owner shall comply with all Insurance Requirements and shall not bring or keep or permit to be brought or kept any article upon any Individual Property or cause or permit any condition to exist thereon which would be prohibited by any Insurance Requirement, or would invalidate insurance coverage required hereunder to be maintained by Borrower and Maryland Owner on or with respect to any part of any Individual Property pursuant to Section 6.1.

 

5.1.11              Further Assurances.

 

(a)                                 Borrower and/or Maryland Owner shall execute and acknowledge (or cause to be executed and acknowledged), and deliver to Lender, all documents, and take all actions, reasonably required by Lender from time to time in order to confirm the rights created or intended to be created under this Agreement and the other Loan Documents and any security interest created or purported to be created thereunder, to protect the validity, priority and

 

93

 

enforceability of this Agreement and the other Loan Documents, to subject to the Loan Documents any property of Borrower and/or Maryland Owner intended by the terms of any one or more of the Loan Documents to be encumbered by the Loan Documents, or otherwise carry out the purposes of the Loan Documents and the transactions contemplated thereunder, provided that the foregoing shall not impose any additional material liability or obligations on, nor materially reduce the rights or remedies of, Borrower, Maryland Owner or Guarantor.

 

(b)                                 In addition, Borrower and/or Maryland Owner shall, at Borrower’s and/or Maryland Owner’s sole cost and expense (except as provided in Section 5.1.11(a)), and without making any so-called “bring down representations”:

 

(i)                                     execute and deliver, from time to time, such further instruments (including, without limitation, delivery of any financing statements under the UCC) as may be reasonably requested by Lender to confirm the Lien of the Security Instrument on any Property, Building Equipment or any Intangible;

 

(ii)                                  execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts as shall be reasonably necessary to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Obligations, as Lender may reasonably require; and

 

(iii)                               do and execute all and such further lawful and reasonable acts, conveyances and assurances for the carrying out of the terms and conditions of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.

 

5.1.12              Wal-Mart Parcel.  Borrower and Maryland Owner agree and acknowledge that all covenants, obligations, representations, warranties and indemnities set forth in this Agreement and all of the other Loan Documents relating in any way to the ownership and/or operation of the Properties shall apply to the Wal-Mart Parcel as if the Wal-Mart Parcel was an Individual Property hereunder; provided that the foregoing shall not prohibit the Transfer of the Wal-Mart Parcel to the Tenant under, and in accordance with, the Wal-Mart Lease or to any Person, including to an Affiliate of Borrower, on commercially reasonable terms and conditions.

 

5.1.13              Operation.  Borrower and/or Maryland Owner shall (a) promptly perform and/or observe and shall use commercially reasonable efforts to cause Manager to perform and/or observe in all material respects all of the covenants and agreements 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; (b) promptly notify Lender of any “event of default” under the Management Agreement of which it is aware; and (c) promptly deliver, and shall use commercially reasonable efforts to cause Manager to deliver, to Lender, if Manager is not an Affiliate of Borrower and/or Maryland Owner, a copy of each financial statement, capital expenditures plan, property improvement plan and any other notice, report and estimate received by it under the Management Agreement.

 

94

 

5.1.14              Business and Operations.  Borrower (except Maryland Individual Borrower) and/or Maryland Owner shall continue to engage in the businesses presently conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of each Individual Property.  Each Individual Borrower (except Maryland Individual Borrower) and/or Maryland Owner shall qualify to do business and shall remain in good standing under the laws of the State in which its Individual Property is located and as and to the extent required for the ownership, maintenance, management and operation thereof.

 

5.1.15              Title to the Property.  Each Individual Borrower (except Maryland Individual Borrower) and/or Maryland Owner shall warrant and defend (a) its fee or leasehold title to the Individual Property owned or leased by it and the Improvements and every part thereof, subject only to Liens permitted hereunder or under any of the other Loan Documents (including Permitted Encumbrances) and (b) the validity and priority of the Liens of the Security Instrument, the Assignment of Leases and this Agreement on each Individual Property, subject only to Liens permitted hereunder or under any of the other Loan Documents (including Permitted Encumbrances), in each case against the claims of all Persons whomsoever.  Borrower (except Maryland Individual Borrower) and/or Maryland Owner shall reimburse Lender for any reasonable out-of-pocket losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by Lender if an interest in any Individual Property, other than as permitted hereunder or under any of the other Loan Documents (including Permitted Encumbrances), is claimed by another Person.

 

5.1.16              Intentionally Omitted.

 

5.1.17              Estoppel Statement.

 

(a)                                 Borrower and/or Maryland Owner shall, from time to time, upon thirty (30) days’ prior written request from Lender, execute, acknowledge and deliver to Lender, an estoppel certificate,  (i) stating that this Agreement and the other Loan Documents are unmodified and, to the best of Borrower’s and/or Maryland Owner’s knowledge, in full force and effect (or, if there have been modifications, that this Agreement and the other Loan Documents are in full force and effect as modified and setting forth such modifications), (ii) stating, to the best of Borrower’s and/or Maryland Owner’s knowledge, the amount of accrued and unpaid interest and the outstanding principal amount of the Note and (iii) containing such other information with respect to Borrower and/or Maryland Owner, the Properties or any one or more Individual Properties and the Loan as Lender shall reasonably request.  The estoppel certificate shall also specify either that, to Borrower’s and/or Maryland Owner’s knowledge, no Default or Event of Default exists hereunder or, if any Default or Event of Default shall exist hereunder, such Default or Event of Default and the steps being taken to cure such Default or Event of Default.

 

(b)                                 Borrower and/or Maryland Owner shall use commercially reasonable efforts to deliver to Lender, within fifteen (15) Business Days of Lender’s request, tenant estoppel certificates from any requested Tenant in substantially the form and substance of the estoppel certificate set forth in Schedule 5.1.17, provided that neither Borrower nor Maryland Owner shall be required to deliver such certificates more frequently than one time in any twelve

 

95

 

(12)-month period; and provided, further, that, for the avoidance of doubt, Borrower and Maryland Owner shall not be deemed to be in Default hereunder due to a failure to deliver  any estoppel certificate to the extent they have used commercially reasonable efforts to obtain such tenant estoppel certificate.

 

(c)                                  Lender shall, from time to time, upon fifteen (15) Business Days prior written request from Borrower and/or Maryland Owner, execute, acknowledge and deliver to Borrower, an estoppel certificate, stating (i) the amount of accrued and unpaid interest on and the outstanding principal amount of the Note, (ii) the date installments of interest and principal were last paid and (iii) whether or not Lender has sent any notice of default under the Loan Documents which remains uncured in the opinion of Lender.

 

5.1.18              Loan Proceeds.  Borrower shall use the proceeds of the Loan received by it on the Closing Date only for the purposes set forth in Section 2.1.5.

 

5.1.19              No Joint Assessment.  Neither Borrower nor Maryland Owner shall suffer, permit or initiate the joint assessment of any Individual Property (a) with any other real property constituting a tax lot separate from such Individual Property or (b) which constitutes real property with any portion of such Individual 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 real property portion of the Individual Property.

 

5.1.20              No Further Encumbrances.  Borrower and/or Maryland Owner shall do, or cause to be done, all things necessary to keep and protect each Individual Property and all portions thereof unencumbered from any Liens, easements or agreements granting rights in or restricting the use or development of each Individual Property, except for (a) Permitted Encumbrances, (b) Liens permitted pursuant to the Loan Documents, (c) Liens for Impositions prior to the imposition of any interest, charges or expenses for the non-payment thereof, (d) any Liens permitted pursuant to Leases and (e) any Liens permitted pursuant to an REOA.

 

5.1.21              Leases.  Borrower and/or Maryland Owner shall promptly after receipt thereof deliver to Lender a copy of any notice received with respect to a Lease affecting more than thirty thousand (30,000) square feet claiming that Borrower and/or Maryland Owner is in default in the performance or observance of any of the material terms, covenants or conditions of such Lease.

 

5.1.22              O&M Plan.  As a condition of the making of the Loan, Borrower and/or Maryland Owner have agreed to implement the O&M Program.  Borrower and Maryland Owner hereby covenant and agree that during the term of the Loan, including any extension or renewal thereof, Borrower and Maryland Owner shall comply in all material respects with the terms and conditions of the O&M Program.  Nothing in this Section 5.1.22 shall be deemed to constitute a waiver or a modification of any of Borrower’s and Maryland Owner’s representations, covenants or agreements with respect to environmental matters set forth in this Agreement or any other Loan Documents.

 

96

 

5.1.23              Ground Leases.

 

(a)                                 Each Ground Tenant shall, at their sole cost and expense, promptly and timely perform and observe all the terms, covenants and conditions required to be performed and observed by it as lessee under its Ground Lease (including, but not limited to, the payment of all rent, additional rent, percentage rent and other charges required to be paid under the Ground Lease), except where the failure to so perform or observe would not reasonably be expected to have an Individual Material Adverse Effect.

 

(b)                                 If any Ground Tenant shall be in default under a Ground Lease beyond any applicable notice and cure periods, then, subject to the terms of such Ground Lease, such Ground Tenant shall grant Lender the right (but not the obligation) to cause the default or defaults under such Ground Lease to be remedied and otherwise exercise any and all rights of such Ground Tenant under such Ground Lease, as are necessary to prevent or cure any default, provided that such actions are necessary to protect Lender’s interest under such Ground Lease and the Loan Documents, and Lender shall have the right to enter all or any portion of the applicable Ground Lease Property at such times and in such manner as is necessary to prevent or to cure any such default.

 

(c)                                  The actions or payments of Lender to cure any default by any Ground Tenant under a Ground Lease shall not remove or waive, as between such Ground Tenant and Lender, the default that occurred under this Agreement by virtue of the default by such Ground Tenant under its Ground Lease.  All reasonable out-of-pocket sums expended by Lender to cure any such default shall be paid by Borrower and Maryland Owner to Lender, upon demand, with interest on such sum at the rate set forth in this Agreement from the date such sum is expended to and including the date the reimbursement payment is made to Lender.  All such indebtedness shall be deemed to be secured by the related Security Instrument.

 

(d)                                 Each Ground Tenant shall notify Lender promptly in writing of the occurrence and continuance of any default by its Ground Lessor under a Ground Lease and the receipt by such Ground Tenant of any notice (written or otherwise) from its Ground Lessor under the applicable Ground Lease noting or claiming the occurrence of any default by such Ground Tenant under the applicable Ground Lease.  Each Ground Tenant shall promptly deliver to Lender a copy of any such written notice of default.

 

(e)                                  Within twenty (20) days after receipt of written demand by Lender, each Ground Tenant shall use commercially reasonable efforts to obtain from its  Ground Lessor under its Ground Lease and furnish to Lender an estoppel certificate of such Ground Lessor stating the date through which rent has been paid and whether or not there are any defaults thereunder and specifying the nature of such claimed defaults, if any; provided  that, for the avoidance of doubt, Borrower and Maryland Owner shall not be deemed to be in Default hereunder due to a failure to deliver such estoppel certificate to the extent the applicable Ground Tenant has used commercially reasonable efforts to obtain such estoppel certificate.

 

(f)                                   Each Ground Tenant shall promptly execute, acknowledge and deliver to Lender such instruments as may reasonably be required to permit Lender to cure any default under its applicable Ground Lease or permit Lender to take such other action required to enable Lender to cure or remedy the matter in default and preserve the security interest of Lender under the Loan Documents with respect to the Ground Lease Property subject to such Ground Lease.

 

97

 

Each Ground Tenant hereby irrevocably appoints Lender as its true and lawful attorney-in-fact to do, in its name or otherwise, any and all acts and to execute any and all documents that are necessary to preserve any rights of such Ground Tenant under or with respect to its Ground Lease, including, without limitation, the right to effectuate any extension or renewal of its Ground Lease, or to preserve any rights of such Ground Tenant whatsoever in respect of any part of such Ground Lease (and the above powers granted to Lender are coupled with an interest and shall be irrevocable).

 

(g)                                  Notwithstanding anything to the contrary contained in this Agreement with respect to each Ground Lease:

 

(i)                                     the lien of the related Security Instrument attaches to all of each Ground Tenant’s rights and remedies at any time arising under or pursuant to Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. Sections 101 et  seq., including, without limitation, all of each Ground Tenant’s rights, as debtor, to remain in possession of the Ground Lease Property;

 

(ii)                                  no Ground Tenant shall, without Lender’s prior written consent, elect to treat any Ground Lease as terminated under Subsection 365(h)(l) of the Bankruptcy Code.  Any such election made without Lender’s prior written consent shall be void;

 

(iii)                               as security for the Indebtedness, each Ground Tenant unconditionally assigns, transfers and sets over to Lender all of such Ground Tenant’s claims and rights to the payment of damages arising from any rejection by the Ground Lessor under its Ground Lease under the Bankruptcy Code.  Lender and each Ground Tenant shall proceed jointly or in the name of the applicable Ground Tenant in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute any proofs of claim, complaints, motions, applications, notices and other documents in any case in respect of the Ground Lessors under the Bankruptcy Code.  This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the Indebtedness shall have been satisfied and discharged in full.  Any amounts received by Lender or any Ground Tenant as damages arising out of the rejection of any Ground Lease as aforesaid may be applied by Lender to all reasonable out-of-pocket costs and expenses of Lender (including, without limitation, reasonable attorney’s fees and costs) incurred in connection with the exercise of any of its rights or remedies in accordance with the applicable provisions of this Agreement;

 

(iv)                              if, pursuant to Subsection 365(h) of the Bankruptcy Code, any Ground Tenant seeks to offset, against the rent reserved in an applicable Ground Lease, the amount of any damages caused by the nonperformance by the lessor of any of its obligations thereunder after the rejection by the Ground Lessor of its Ground Lease under the Bankruptcy Code, then such Ground Tenant shall not effect any offset of the amounts so objected to by Lender in its reasonable

 

98

 

discretion.  If Lender has failed to object as aforesaid within five (5) days after notice from such Ground Tenant in accordance with the first sentence of this subparagraph (iv), such Ground Tenant may proceed to offset the amounts set forth in such Ground Tenant’s notice;

 

(v)                                 if any action, proceeding, motion or notice shall be commenced or filed in respect of any Ground Lessor of all or any part of any Ground Lease Property in connection with any case under the Bankruptcy Code, Lender and the applicable Ground Tenant shall cooperatively conduct and control any such litigation with counsel selected by such Ground Tenant and approved by Lender (such approval not to be unreasonably withheld, conditioned or delayed) in connection with such litigation at such Ground Tenant’s sole cost and expense.  Such Ground Tenant shall, upon demand, pay to Lender all reasonable out-of-pocket costs and expenses actually paid or actually incurred by Lender in connection with such prosecution or conduct of any such proceedings.  All such costs and expenses shall be secured by the lien of the related Security Instrument and the other Loan Documents; and

 

(vi)                              Each Ground Tenant shall promptly, after obtaining knowledge of such filing, notify Lender orally of any filing by or against a Ground Lessor under any Ground Lease of a petition under the Bankruptcy Code.  Each Ground Tenant shall thereafter promptly give written notice of such filing to Lender, setting forth any information available to such Ground Tenant as to the date of such filing, the court in which such petition was filed, and the relief sought in such filing.  Each Ground Tenant shall promptly deliver to Lender any and all notices, summonses, pleadings, applications and other documents received by an applicable Ground Tenant in connection with any such petition and any proceedings relating to such petition.

 

5.1.24              REOA.

 

(a)                                 Neither Borrower nor Maryland Owner shall, without Lender’s prior written consent, terminate, materially amend, materially modify or materially supplement, or consent to the termination, material amendment, material modification or material supplementation of any REOA, except that Lender shall not unreasonably withhold its consent to any termination, amendment, modification or supplementation which would not reasonably be expected to have an Individual Material Adverse Effect.

 

(b)                                 Borrower and/or Maryland Owner shall pay all charges and other sums to be paid by Borrower and Maryland Owner pursuant to the terms of each REOA as the same shall become due and payable and prior to the expiration of any applicable notice and/or grace period therein provided.  Borrower and/or Maryland Owner, at Borrower’s and/or Maryland Owner’s own expense, may contest by appropriate legal proceeding, arbitration, mediation or other alternate dispute resolution promptly initiated and conducted in good faith and with diligence, the amount or validity or application in whole or in part of any charges required to be paid by Borrower and/or Maryland Owner pursuant to any REOA, provided that (i) such proceeding shall not be prohibited under and shall be conducted in accordance with any applicable

 

99

 

provisions of such REOA and any other instrument to which Borrower and/or Maryland Owner, as applicable, is subject or by which the applicable Individual Property is bound and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable Legal Requirements; (ii) neither the Individual Property nor any part thereof or interest therein will be in imminent danger of being sold, forfeited, terminated, cancelled or lost; (iii) the applicable REOA will not be in danger of being terminated; (iv) Borrower and/or Maryland Owner, as applicable, shall promptly upon final non-appealable determination thereof pay the amount of any such charges, together with all costs, interest and penalties which may be payable in connection therewith; and (v) such proceeding shall suspend the collection of such charges from Borrower and/or Maryland Owner and the Individual Property to which the REOA applies.

 

(c)                                  Each of Borrower and Maryland Owner shall comply, in all material respects, with all of the terms, covenants and conditions on Borrower’s and Maryland Owner’s part to be complied with pursuant to terms of each REOA except where the failure to so comply would not reasonably be expected to have an Individual Material Adverse Effect.

 

(d)                                 Each of Borrower and Maryland Owner shall take all actions as may be necessary from time to time to preserve and maintain each REOA in accordance with applicable laws, rules and regulations except where the failure to take such action will not reasonably be expected to have an Individual Material Adverse Effect.

 

(e)                                  Each of Borrower and Maryland Owner shall enforce, in a commercially reasonable manner, the obligations to be performed by the parties to any REOA (other than Borrower or Maryland Owner, as applicable) except where the failure to so enforce would not reasonably be expected to have an Individual Material Adverse Effect.

 

(f)                                   Each of Borrower and Maryland Owner shall promptly furnish to Lender any notice of default actually received by Borrower or Maryland Owner in connection with any REOA by any party to such REOA or any third-party.

 

(g)                                  Neither Borrower nor Maryland Owner shall assign (other than to Lender) or encumber its rights under any REOA except as otherwise permitted under any of the Loan Documents.

 

(h)                                 Subject to the terms of the REOA, if Lender, its nominee, designee, successor, or assignee acquires title and/or rights of Borrower and/or Maryland Owner under any REOA by reason of foreclosure of the related Security Instrument, deed-in-lieu of foreclosure or otherwise, such party shall (i) succeed to all of the rights of and benefits accruing to Borrower and/or Maryland Owner, as applicable, under such REOA and (ii) be entitled to exercise all of the rights and benefits accruing to Borrower and/or Maryland Owner, as applicable, under such REOA.  At such time as Lender shall request, each of Borrower and Maryland Owner agrees to execute and deliver to Lender such documents as Lender and its counsel may reasonably require in order to ensure that the provisions of this Section 5.1.24(h) will be validly and legally enforceable and effective against Borrower and/or Maryland Owner and all parties claiming by, through, under or against Borrower and/or Maryland Owner, except that neither Borrower nor

 

100

 

 

Maryland Owner shall be required to execute or deliver any documents that materially increases its liabilities or obligations under any of the Loan Documents.

 

5.1.25              Interest Rate Cap Agreement.

 

(a)                                 Prior to or contemporaneously with the Closing Date, Borrower shall have obtained the Rate Cap.  Borrower shall be obligated to maintain the Rate Cap or a Replacement Rate Cap at all times that the Floating Rate Component of the Loan remains outstanding, subject to reduction in accordance with Section 2.5.4 as the Floating Rate Component is prepaid.  If the provider of the Rate Cap or any Replacement Rate Cap ceases to be an Acceptable Counterparty and/or if the term of the Rate Cap will expire prior to the Maturity Date, Borrower shall, as applicable, obtain a Replacement Rate Cap at Borrower’s sole cost and expense (i) within thirty (30) days of receipt of notice from Lender or Borrower’s obtaining knowledge that the provider is no longer an Acceptable Counterparty or (ii) on or prior to the expiration date of the then existing Rate Cap or Replacement Rate Cap.

 

(b)                                 Borrower shall collaterally assign to Lender pursuant to the Collateral Assignment of Interest Rate Cap Agreement all of its right, title and interest to receive any and all payments under the Rate Cap or any Replacement Rate Cap (and any related guarantee, if any) and shall deliver to Lender counterparts of such Collateral Assignment of Interest Rate Cap Agreement executed by Borrower and by the Acceptable Counterparty and notify the Acceptable Counterparty of such collateral assignment (either in such Rate Cap, in such Collateral Assignment of Interest Rate Cap Agreement or by separate instrument).  At such time as the Floating Rate Component of the Loan is repaid in full, all of Lender’s right, title and interest in the Rate Cap and any Replacement Rate Cap shall terminate and Lender shall execute and deliver, at Borrower’s sole cost and expense, such documents as may be required to evidence Lender’s release of the Rate Cap and any Replacement Rate Cap and to notify the Acceptable Counterparty of such release.

 

(c)                                  Borrower shall comply with all of its obligations under the terms and provisions of the Rate Cap and any Replacement Rate Cap.  All amounts paid by the Acceptable Counterparty under the Rate Cap to Borrower or Lender shall be deposited directly into the Lockbox Account and applied in accordance with the terms of this Agreement, the Collateral Assignment of Interest Rate Cap Agreement and the Cash Management Agreement.  Borrower shall take all actions reasonably requested by Lender to enforce Lender’s rights under the Rate Cap and any Replacement Rate Cap in the event of a default by the Acceptable Counterparty and shall not waive, amend or otherwise modify any of its rights thereunder; provided that Borrower shall not be required to take any action that increases its liabilities or obligations under any of the Loan Documents

 

(d)                                 In the event that Borrower fails to purchase and deliver to Lender the Rate Cap or any Replacement Rate Cap as and when required hereunder, or fails to maintain such agreement in accordance with the terms and provisions of this Agreement, Lender may (upon ten (10) days notice to Borrower) purchase the Rate Cap or any Replacement Rate Cap, as applicable, and the reasonable out-of-pocket cost incurred by Lender in purchasing the Rate Cap or any Replacement Rate Cap, as applicable, shall be paid by Borrower to Lender with interest

 

101

 

thereon at the Default Rate from the date such cost was incurred by Lender until such cost is reimbursed by Borrower to Lender.

 

(e)                                  In connection with the Rate Cap and any Replacement Rate Cap, Borrower shall obtain and deliver to Lender an opinion from counsel (which counsel may be in house counsel for the Acceptable Counterparty) for the Acceptable Counterparty (upon which Lender and its successors and assigns may rely) which shall provide, subject to customary assumptions and qualifications, in relevant part, that:

 

(i)                                     the Acceptable Counterparty is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization and has the organizational power and authority to execute and deliver, and to perform its obligations under, the Rate Cap or the Replacement Rate Cap, as applicable;

 

(ii)                                  the execution and delivery of the Rate Cap or the Replacement Rate Cap, as applicable, by the Acceptable Counterparty, and any other agreement which the Acceptable Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been and remain duly authorized by all necessary action and do not contravene any provision of its certificate of incorporation or by laws (or equivalent organizational documents) or any law, regulation or contractual restriction binding on or affecting it or its property;

 

(iii)                               all consents, authorizations and approvals required for the execution and delivery by the Acceptable Counterparty of the Rate Cap or the Replacement Rate Cap, as applicable, and any other agreement which the Acceptable Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been obtained and remain in full force and effect, all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with any governmental authority or regulatory body is required for such execution, delivery or performance; and

 

(iv)                              the Rate Cap or the Replacement Cap, as applicable, and any other agreement which the Acceptable Counterparty has executed and delivered pursuant thereto, has been duly executed and delivered by the Acceptable Counterparty and constitutes the legal, valid and binding obligation of the Acceptable Counterparty, enforceable against the Acceptable Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

 

5.1.26              Delivery of Documents Pursuant to the Loan Purchase Agreement.  If any document, other than a document required to be executed or delivered by Vornado DP LLC, required to be delivered to Purchaser or its designee pursuant to Section 3 of the Loan Purchase Agreement is not delivered as and when required, is not properly executed or is determined to be defective or not to be in compliance with the requirements of any applicable filing office or

 

102

 

recording depository, or if any such document is lost or returned unrecorded because of a defect therein (any of the foregoing, a “Defect”), within ninety (90) days of the receipt by Borrower and/or Maryland Owner of notice of such Defect, Borrower and/or Maryland Owner shall promptly prepare a substitute document and cause each such document to be duly submitted for filing or recording, as applicable, and shall otherwise cure such Defect; provided, however, that in the event that such Defect is capable of being cured but not within such 90-day period and Borrower and/or Maryland Owner have commenced and are diligently proceeding with the cure of such Defect, Borrower and/or Maryland Owner will have an additional ninety (90) days to complete such cure; provided, further, that with respect to such additional 90-day period, Borrower and/or Maryland Owner shall have delivered an Officer’s Certificate to Lender or its designee and the servicer setting forth the reason why such Defect is not capable of being cured within the initial ninety (90) day period and what actions Borrower and/or Maryland Owner are pursuing in connection with the cure thereof.

 

5.1.27              Required Repairs. Each of Borrower and Maryland Owner shall perform the repairs at the Properties as more particularly set forth on Schedule 5.1.27 hereto (such repairs herein referred to as “Required Repairs”) in a good workmanlike and prompt and expeditious manner, and shall diligently and continuously prosecute same to completion.

 

5.1.28              Surveys.  Each of Borrower and Maryland Owner shall, at their sole cost and expense, deliver to Lender within thirty (30) days of the date hereof current Surveys and executed American Land Title Association Endorsements 25-06 (Same as Survey) from the Title Company to become a part of each applicable Title Policy for each of (a) the Individual Property located in North Bergen, New Jersey, (b) the Individual Property located in East Hanover, New Jersey and (c) Towson, Maryland.

 

Section 5.2                                    Negative Covenants.  From the Closing Date until payment and performance in full of all obligations of Borrower and Maryland Owner under the Loan Documents or the earlier release of the Lien of this Agreement or the Security Instrument in accordance with the terms of this Agreement and the other Loan Documents, each Individual Borrower and Maryland Owner covenant and agree with Lender that it will not do, directly or indirectly, any act expressly prohibited by this Agreement or any of the following:

 

5.2.1                     Partition.  Neither Borrower nor Maryland Owner shall permit or petition for the partition of any Individual Property.

 

5.2.2                     Amend Organizational Documents.  Neither Borrower nor Maryland Owner shall amend or modify any of its organizational documents without Lender’s consent, other than in connection with any Transfer permitted pursuant to Article VIII or to reflect any change in capital accounts, contributions, distributions, allocations or to otherwise amend any provisions in any respect that do not and would not reasonably be expected to have an Individual Material Adverse Effect, provided that, in all instances, each Individual Borrower and Maryland Owner remains a Single Purpose Entity.

 

5.2.3                     Distributions.  From and after the occurrence and during the continuance of an Event of Default, neither Borrower nor Maryland Owner shall make any distributions to or for the benefit of any of its members.

 

103

 

5.2.4                     ERISA.  Neither Borrower nor Maryland Owner shall engage in any activity that would subject it to regulation under ERISA or qualify it as an “employee benefit plan” (within the meaning of Section 3(3) of ERISA) to which ERISA applies or would cause Borrower’s and/or Maryland Owner’s assets to constitute plan assets within the meaning of 29 C.F.R. Section 2510.3-101.

 

5.2.5                     Manager.

 

(a)                                 Without obtaining a Rating Agency Confirmation/Notification with respect to such action, neither Borrower nor Maryland Owner shall be permitted to:  (i) modify, change, supplement, alter or amend the Management Agreement or waive or release any of its rights and remedies under the Management Agreement that would, in any such instance, reasonably be expected to have a Material Adverse Effect or (ii) replace Manager with a Person other than a Qualified Manager; provided that Borrower and/or Maryland Owner shall have the unilateral right to replace Manager as it sees fit from time to time with one of its Affiliates.

 

(b)                                 Borrower and/or Maryland Owner shall notify Lender in writing (and deliver a copy of the proposed management agreement) of any entity proposed to be designated as a Qualified Manager of each applicable Individual Property to replace Manager not less than thirty (30) days before such Qualified Manager begins to manage the applicable Individual Property, and, if reasonably requested by Lender, deliver a reasonably acceptable non-consolidation opinion covering such replacement manager if such Person (i) is not covered by the Non-Consolidation Opinion or an Additional Non-Consolidation Opinion, and (ii) is an Affiliate of Borrower and/or Maryland Owner.

 

(c)                                  In the event that Manager is an Affiliate of Borrower and/or Maryland Owner, then (i) if an Event of Default has occurred and is continuing and Lender has elected to accelerate the Loan or (ii) upon the gross negligence or willful misconduct of Manager in the performance of its obligations under the Management Agreement (except if any such gross negligence or willful misconduct by Manager does not occur more than once in any twelve (12) month period and Manager has paid to Borrower and/or Maryland Owner all damages arising out of such actions), Borrower and/or Maryland Owner shall, at the request of Lender, terminate the Management Agreement and replace Manager with a Qualified Manager in accordance with this Section 5.2.5 and deliver a non-consolidation opinion (in form and substance reasonably acceptable to Lender and, if a Securitization shall have occurred, acceptable to the Rating Agencies) covering such replacement manager if such Person is not covered by the Non-Consolidation Opinion or an Additional Non-Consolidation Opinion.  In the event that Manager or any replacement Qualified Manager is not an Affiliate of Borrower and/or Maryland Owner, if (I) Manager shall become bankrupt or insolvent or (II) a default occurs under the Management Agreement beyond any applicable notice and grace period or (III) an Event of Default has occurred and is continuing, Borrower and/or Maryland Owner shall, at the request of Lender, terminate the Management Agreement and replace Manager with a Qualified Manager in accordance with this Section 5.2.5; provided, however, that prior to Borrower or Maryland Owner becoming so obligated, Borrower or Maryland Owner shall have ten (10) days, from and after the date of such request, within which to provide evidence reasonably satisfactory to Lender that Manager is no longer insolvent or such proceeding has been dismissed, as applicable, in which case neither Borrower nor Maryland Owner shall become so obligated.

 

104

 

(d)                                 Upon the retention of a Qualified Manager, Lender, and if a Securitization shall have occurred, the Rating Agencies, shall have the right to approve any new management agreement with such Qualified Manager (which approval by Lender shall not be unreasonably withheld, conditioned or delayed); provided that, if such replacement Manager is an Affiliate of Borrower and/or Maryland Owner, then as long as such new management agreement is on substantially the same terms and conditions of the Management Agreement, Lender’s consent to such new management agreement shall not be required.

 

(e)                                  Upon the termination of Manager and replacement with a Qualified Manager, such Qualified Manager shall constitute Manager hereunder and Borrower and/or Maryland Owner and Qualified Manager shall enter into an assignment of management agreement in favor of Lender in form and substance substantially similar to the Assignment of Management Agreement entered into as of the date hereof.

 

5.2.6                     Ground Lease.

 

(a)                                 Each Ground Tenant shall not, without Lender’s prior written consent, fail to exercise any option or right to renew or extend the term of its Ground Lease in accordance with the terms of such Ground Lease, and shall give immediate written notice to Lender and shall execute, acknowledge, deliver and record any document reasonably requested by Lender to evidence the lien of the related Security Instrument on such extended or renewed lease term; provided, however, that no Ground Tenant shall be required to exercise any particular option or right to renew or extend to the extent any Ground Tenant shall have received the prior written consent of Lender (which consent may be withheld by Lender in its sole and absolute discretion) allowing such Ground Tenant to forego exercising such option or right to renew or extend.  If any Ground Tenant shall fail to exercise any such option or right as aforesaid, Lender may exercise the option or right as such Ground Tenant’s agent and attorney-in-fact as provided above in Lender’s own name or in the name of and on behalf of a nominee of Lender, as Lender may determine in the exercise of its sole and absolute discretion.

 

(b)                                 No Ground Tenant shall waive, excuse, condone or in any way release or discharge the Ground Lessor under its Ground Lease of or from such Ground Lessor’s material obligations, covenants and/or conditions under such Ground Lease without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed.

 

(c)                                  No Ground Tenant shall, without Lender’s prior written consent, surrender, terminate, forfeit, or suffer or permit the surrender, termination or forfeiture of, or change, modify or amend in a material adverse manner, any applicable Ground Lease.  Consent to one amendment, change, agreement or modification shall not be deemed to be a waiver of the right to require consent to other, future or successive amendments, changes, agreements or modifications to the extent required in accordance herewith.  Any acquisition of any Ground Lessor’s interest in a Ground Lease by a Ground Tenant or any Affiliate of such Ground Tenant (which is hereby permitted, subject to the following terms of this sentence) shall be accomplished by such Ground Tenant in such a manner so as to avoid a merger of the interests or estates of lessor and lessee in such Ground Lease, unless prior written consent to such merger is granted by Lender, which consent shall not be unreasonably withheld, conditioned or delayed.

 

105

 

5.2.7                     Modify Account Agreement.  Without obtaining a Rating Agency Confirmation/Notification respect to such action, neither Borrower nor Maryland Owner shall execute any modifications to the Lockbox Agreement and/or the Cash Management Agreement, if the same would have a material adverse effect on Lender, including, without limitation, any adverse effect or limitation on the enforceability and/or validity of the security interests created pursuant to the Lockbox Agreement and/or the Cash Management Agreement.

 

5.2.8                     Zoning Reclassification.  Without the prior written consent of Lender, neither Borrower nor Maryland Owner shall (a) initiate or consent to any zoning reclassification (other than to expand the permitted uses to include uses which are consistent with the current use of the applicable Individual Property) of any portion of any Individual Property, (b) seek any variance under any existing zoning ordinance that could result in the use of any Individual Property becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, or (c) allow a change, in the case of any portion of any Individual Property, with the result that the use of such Individual Property shall become a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation.

 

5.2.9                     Debt Cancellation.  Neither Borrower nor Maryland Owner shall cancel or otherwise forgive or release any material claim or debt owed to it by any Person, except for adequate consideration or in the ordinary course of its business or except (a) in connection with the settlement of claims, subject to the terms and provisions of Section 8.8, against Tenants of or service providers to any Individual Property in connection with such Person’s Lease or other contract defaults, provided such settlements do not and would not reasonably be expected to have a Material Adverse Effect and (b) for termination of a Lease as permitted by Section 8.8.

 

5.2.10              Misapplication of Funds.  Neither Borrower nor Maryland Owner shall distribute any revenue from the Properties or any Proceeds in violation of the provisions of this Agreement, fail to remit amounts to the Lockbox Account or to Lender, as applicable, as required by Article III of this Agreement, the Lockbox Agreement, or the Cash Management Agreement, misappropriate any security deposit or portion thereof or apply the proceeds of the Loan in violation of Section 2.1.5.

 

5.2.11              Bankruptcy.  Neither Borrower nor Maryland Owner shall distribute any revenue from the Properties or any Proceeds in violation of the provisions of this Agreement, fail to remit amounts to the Lockbox Account or to Lender, as applicable, as required by Article III of this Agreement, the Lockbox Agreement, or the Cash Management Agreement, misappropriate any security deposit or portion thereof or apply the proceeds of the Loan in violation of Section 2.1.5.

 

106

 

ARTICLE VI

 

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

Section 6.1                                    Insurance Coverage.

 

6.1.1                     Insurance Coverage Requirements.  Borrower and Maryland Owner shall, at their sole cost and expense, keep in full force and effect insurance coverage of the types and minimum limits as follows during the term of this Agreement:

 

(a)                                 Property Insurance.  Property insurance against loss or damage by fire, lightning and such other perils as are included in a standard “ISO special causes of loss form” policy, including wind and named storms, riot and civil commotion, vandalism, malicious mischief, burglary and theft, in each case in an amount, for each Individual Property, equal to one hundred percent (100%) of the “Full Replacement Cost” of such Individual Property, which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (2) containing an agreed amount provision with respect to the Improvements and Borrower’s or Maryland Owner’s personal property at each Individual Property waiving all co-insurance provisions; (3) providing for no deductible in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (except for earthquake and wind coverage which shall be five percent (5%) of the total insured value; and (4) containing an “Ordinance or Law” provision if any of the Improvements or the use of any Individual Property shall at any time constitute legal non-conforming structures or uses, and compensating for loss of value or property resulting from operation of law and the cost of demolition and the increased cost of construction in amounts as reasonably required by Lender and comparable to properties similar to each applicable Individual Property.  In addition, Borrower and Maryland Owner shall obtain:  (A) if any portion of the Improvements is currently or at any time in the future located in a federally designated “special flood hazard area”, flood hazard insurance, if commercially available in an amount equal to the lesser of (i) the outstanding principal balance of the Loan, or (ii) the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended, or such greater amount as Lender shall reasonably require which may be in excess of that amount available under the Federal Flood Insurance Plan; and (B) earthquake insurance in amounts and in form and substance reasonably satisfactory to Lender in the event the Individual Property is located in an area with a high degree of seismic activity.  Insurance for losses relating to acts of terrorism, including Terrorism Losses, shall be governed by Section 6.1.7;

 

(b)                                 Liability Insurance.  Commercial general liability insurance providing coverage against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Individual Property, such insurance (1) to be on the so-called “occurrence” form and containing minimum limits per occurrence of One Million and No/100 Dollars ($1,000,000.00), and excluding umbrella coverage, a policy year aggregate limit of not less than Two Million and No/100 Dollars ($2,000,000.00); (2) to continue at not less than the aforesaid limit until required to be changed by Lender by reason of changed economic conditions making such protection inadequate; and (3) to cover at least the following hazards:  (A) premises and operations; (B) products and completed operations on an “if any” basis; (C) independent contractors; and (D) no exclusion for contractual liability for all “Insured Contracts”;

 

(c)                                  Workers’ Compensation Insurance.  Worker’s compensation including Employer’s Liability coverage and disability insurance as required by law;

 

107

 

(d)                                 Commercial Rents Insurance.  “Commercial rents” insurance (1) with loss payable to Lender as its interest shall appear as lender and mortgagee; (2) covering all risks required to be covered by the insurance provided for in paragraph (a) above and Section 6.1.7 below, if any; and (3) in an amount sufficient to provide Proceeds which will cover the actual loss of income sustained during the actual period of restoration but in any event not less than eighteen (18) months, with a limit of liability sufficient to avoid any co-insurance policy and, in any event, not less than the aggregate limit of the insurance policies required hereunder as of the date hereof, and containing an extended period of indemnity provision which provides that after the physical loss to the Improvements and personal property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of twelve (12) months from the date that applicable Individual Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period.  Such insurance shall be deemed to include “loss of rental value” insurance where applicable.  The term “rental value” means the sum of (A) the total then ascertainable Rents payable under the Leases, and (B) the total ascertainable amount of all other amounts to be received by Borrower and Maryland Owner from third parties which are legal obligations of Tenants, less (C) such amounts as would not be received because of operating expenses not incurred during a period of non-occupancy of that portion of such Individual Property then not being occupied.  All proceeds payable to Lender as its interest shall appear as lender and mortgagee pursuant to this subsection shall be held by Lender and shall be applied to the Obligations secured by the Loan Documents from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower or Maryland Owner of their Obligations to pay the Indebtedness on the respective dates of payment provided for in the Note and the other Loan Documents except to the extent such amounts are actually paid out of the proceeds of such “commercial rents” insurance.  Insurance for losses relating to acts of terrorism, including Terrorism Losses, shall be governed by Section 6.1.7;

 

(e)                                  Builder’s All Risk Insurance.  During any period of repair or restoration, and only if the Property and Liability coverage forms do not otherwise apply, (A) general liability and umbrella liability insurance covering claims related to construction, repairs or alterations being made at the Property and (B) “ISO special causes of loss form” (or equivalent) builder’s risk completed value form (1) on a non-reporting basis, (2) covering perils required herein this Section 6.1 in an amount equal to not less than the full insurable value of the Individual Property and all insurable costs of construction against such risks (including perils covered by the so-called “ISO special causes of loss form” (or equivalent) and collapse of the Improvements to agreed limits as Lender may request, in form and substance reasonably acceptable to Lender;

 

(f)                                   Boiler and Machinery Insurance.  Boiler and machinery insurance, if applicable, in an amount equal to the lesser of (1) the outstanding principal balance of the Loan, or (2) Ten Million and No/100 Dollars ($10,000,000.00);

 

(g)                                  Umbrella Liability.  Umbrella liability insurance in addition to primary coverage in an amount not less than One Hundred Million and No/100 Dollars ($100,000,000.00) on terms consistent with the commercial general liability insurance policy required under paragraph (b) above and paragraph (h) below;

 

108

 

(h)                                 Motor Vehicle Liability.  Motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, with limits which are reasonably required from time to time by Lender (if applicable); and

 

(i)                                     Other Insurance.  At Lender’s reasonable request, such other insurance with respect to the Properties against loss or damage of the kinds from time to time customarily insured against and in such amounts as are generally required by institutional lenders on multi-property loans of similar amounts and secured by properties comparable to, and in the general vicinity of, each Individual Property.

 

6.1.2                     Ratings of Insurers.  All insurance policies required pursuant to Section 6.1.1 shall:

 

(a)                                 be issued by companies approved to do business in the State where each Individual Property is located which companies either (1) shall each have a claims paying ability rating of at least “A” or better by S&P (and the equivalent rating by Fitch, if Fitch rates the insurers), (2) if (A) more than five (5) insurance companies issue the policies required hereunder, then at least sixty percent (60%) of the applicable insurance coverages represented by the policies required hereunder must be provided by insurance companies having a claims paying rating of “A” or better by S&P (and the equivalent rating by Fitch, if Fitch rates the insurers) and the remaining forty percent (40%) of the applicable insurance coverages represented by the policies required hereunder must be provided by insurance companies having a claims paying rating of “BBB” or better by S&P (and the equivalent rating by Fitch, if Fitch rates the insurers), or (3) if (A) more than one (1) but fewer than five (5) insurance companies issue the policies required hereunder, then at least seventy-five percent (75%) of the applicable insurance coverages represented by the policies required hereunder must be provided by insurance companies having a claims paying rating of “A” or better by S&P (and the equivalent rating by Fitch, if Fitch rates the insurers) and the balance of the applicable insurance coverages represented by the policies required hereunder must be provided by insurance companies having a claims paying rating of “BBB” or better by S&P (and the equivalent rating by Fitch, if Fitch rates the insurers).  If a Securitization occurs and more than five (5) insurance companies issue the policies required hereunder, the foregoing required insurance company rating by a Rating Agency not rating any Securities shall be disregarded.  Notwithstanding the foregoing, Borrower shall be permitted to maintain the policies required hereunder with insurance companies which do not meet the foregoing requirements (an “Otherwise Rated Insurer”), provided Borrower obtains a “cut-through” endorsement (that is, an endorsement which permits recovery against the provider of such endorsement) or a contingent policy (that is, a credit wrap with respect to an Otherwise Rated Insurer) reasonably acceptable to Lender with respect to any Otherwise Rated Insurer from an insurance company or companies that meet the claims paying ability ratings required above.  Notwithstanding the foregoing, the insurance required to be maintained by Borrower under Section 6.1.1(a) and (d) and Section 6.1.7 hereof for acts of terrorism only may be provided by a captive insurance company (a “Captive Insurance Company”) with the prior written consent of Lender and subject to Lender’s review and approval of policies and other documentation reasonably requested by Lender and the satisfaction of such other conditions as Lender may reasonably require provided that (and for so long as) (i) except with respect to any deductible permitted under Section 6.1.1(a), those covered losses which are not reinsured by the

 

109

 

federal government under the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIPRA”) and payable directly to the insured shall be reinsured by an insurance company having a claims paying ability rating of “A” or better with S&P, (ii) all re-insurance agreements between such Captive Insurance Company and all such re-insurance companies providing the referenced re-insurance shall be reasonably acceptable to Lender, and Borrower shall cause such re-insurance agreements to provide a cut-through endorsement acceptable to Lender, (iii) if at any time the Captive Insurance Company shall be subject to a bankruptcy or similar insolvency, borrower shall immediately replace such insurance provided by the Captive Insurance Company with a policy from an Insurance Company that meets the above requirements, (iv) such Captive Insurance Company shall be licensed in the applicable state, to the extent required, and qualified to issue the terrorism insurance policy described in Section 6.1.1(a), Section 6.1.1(d) and Section 6.1.7 and similar terrorism insurance policies in accordance with all Legal Requirements, (v) such Captive Insurance Company shall qualify for the reinsurance and other benefits afforded insurance companies under TRIPRA or subsequent statute or reauthorization, (vi) no Governmental Authority shall have issued any statement, opinion, finding or decree that any insurance company which is similar to such Captive Insurance Company does not qualify for such benefits and TRIPRA shall be in full force and effect, (vii) Lender shall have received each of the following, each of which shall be reasonably acceptable to Lender: (1) the organizational documents of such Captive Insurance Company; (2) any regulatory agreements of such Captive Insurance Company; (3) the application for licensing by the applicable state regulator for such Captive Insurance Company; and (4) the full and complete Policy to be used by such Captive Insurance Company to provide the insurance coverage described herein; (viii) the Insurance Premiums payable to such Captive Insurance Company shall be based on the current market conditions for such coverage; (ix) the organizational documents of such Captive Insurance Company shall not be materially amended without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed; and (x) except as otherwise expressly set forth in this paragraph (c), all such insurance provided by such Captive Insurance Company shall otherwise comply with all other terms and conditions of Section 6.1.1(a), Section 6.1.1(d) and Section 6.1.7;

 

(b)                                 with respect to all property insurance policies, name Lender and its successors and/or assigns as their interest may appear as Lender and mortgagee;

 

(c)                                  with respect to all property insurance policies and rental loss and/or business interruption insurance policies, contain a “Standard Mortgagee” and a “Lender’s Loss Payable” provision, or their equivalents, naming Lender as the person to whom payments will be made as its interest shall appear;

 

(d)                                 with respect to all liability policies, name Lender and its successors and/or assigns as an additional insured;

 

(e)                                  contain a waiver of subrogation against Lender; and

 

(f)                                   contain such provisions as Lender reasonably deems necessary or desirable to protect its interest, including endorsements if not already contained in the policy language providing that neither Borrower, Lender nor any other party shall be a co-insurer under said insurance policies.

 

110

 

Borrower and Maryland Owner shall each pay the insurance premiums for which it is responsible for hereunder as the same become due and payable and shall furnish to Lender evidence of the renewal of each of the insurance policies with receipts for the payment of the Insurance Premiums or other evidence of such payment to the extent due and payable reasonably satisfactory to Lender within thirty (30) days after their respective due dates (provided, however, that neither Borrower nor Maryland Owner shall be required to pay such Insurance Premiums nor furnish such evidence of payment to Lender in the event that the amounts required to pay such Insurance Premiums have been deposited into the Insurance Reserve Account pursuant to Section 16.2).

 

6.1.3                     Form of Insurance Policies; Endorsements.  Subject to Section 6.1.1, hereof, all insurance policies shall be in such form and with such endorsements as are reasonably satisfactory to Lender.  A certificate of insurance with respect to all of the above mentioned insurance policies has been delivered to Lender and certified copies of all such policies shall be delivered to Lender when the same are available (but no later than five (5) Business Days after Borrower’s or Maryland Owner’s receipt thereof) and shall be held by Lender.  All policies (except workers’ compensation and liability) shall contain:  (a) a standard “non-contributory mortgagee” provision or its equivalent relating, inter alia, to recovery by Lender notwithstanding the acts or omissions of Borrower and/or Maryland Owner and shall provide that with respect to the interest of Lender, such insurance policy shall not be invalidated by and shall insure Lender regardless of (1) any act, unintentional failure to act, declarations or conditions contained in such policy by any named insured except for the willful misconduct of Lender committed knowingly in violation of the conditions of such policy, (2) the occupancy or use of any Individual Property for purposes more hazardous than permitted by the terms thereof, or (3) any foreclosure or other action or proceeding taken by Lender pursuant to any provision of this Agreement; and (b) a provision that such policies shall not be canceled, terminated, modified, reduced or expire without at least thirty (30) days’ prior written notice to Lender, in each instance (or ten (10) days notice, in case of cancellation or termination for nonpayment of premiums).  Each insurance policy shall contain a provision whereby the insurer:  (1) waives any right to claim any premiums and commissions against Lender and (2) provides that Lender at its option, shall be permitted to make payments to effect the continuation of such policy upon notice of cancellation due to non-payment of premiums.

 

6.1.4                     Certificates.  Borrower and Maryland Owner shall deliver to Lender annually, no less than ten (10) Business Days prior to the effective date of renewal of the insurance policies required hereunder, a certificate of insurance in the then-current version of the appropriate form (or its equivalent), along with binders or other evidence of the renewal policies satisfactory to Lender, and a statement from Borrower’s and/or Maryland Owner’s insurance broker or agent stating that Borrower and/or Maryland Owner has paid all required premiums to the extent then due.  At Lender’s reasonable request, Borrower and Maryland Owner shall deliver to Lender copies of such replacement insurance policies five (5) Business Days after Borrower’s and/or Maryland Owner’s receipt thereof.  If Borrower and/or Maryland Owner fail to maintain and deliver to Lender the certificates of insurance and copies required by this Agreement, upon one (1) Business Day’s prior written notice to Borrower and/or Maryland Owner, Lender may procure such insurance, and all costs thereof (and interest thereon at the Default Rate) shall be added to the Indebtedness.  Lender shall not, by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any insurance, incur any

 

111

 

liability for or with respect to the amount of insurance carried, the form or legal sufficiency of insurance contracts, solvency of insurance companies, or payment or defense of lawsuits, and Borrower and Maryland Owner hereby expressly assume full responsibility therefor and all liability, if any, with respect to such matters.

 

6.1.5                     Separate Insurance.  Neither Borrower nor Maryland Owner shall take out separate insurance contributing in the event of loss with that required to be maintained pursuant to this Section 6.1 unless such insurance complies with this Section 6.1 and is approved by Lender in writing in advance.

 

6.1.6                     Blanket Policies.  Borrower and Maryland Owner shall have the right to effect the insurance coverages required under this Article VI by means of any one or more blanket insurance policies covering one or more Individual Properties, either alone or together with other properties that are not a part of the collateral for the Loan, provided that the Lender is satisfied by evidence reasonably required by Lender that the blanket policy shall provide substantially the same protection as would a separate insurance policy insuring only each Individual Property in compliance with the provisions of this Section 6.1.

 

6.1.7                     Terrorism Insurance.  The insurance coverage required hereunder for Terrorism Losses shall be on terms consistent with those required under Sections 6.1.1(a) and (d) above at all times during the term of the Loan, and either (A) Borrower and Maryland Owner shall maintain such coverage, if commercially available, through a policy or policies covering multiple locations so long as such coverage is on terms consistent with those required under Sections 6.1.1(a) and (d) above with a deductible of not greater than Five Hundred Thousand and No/100 Dollars ($500,000.00) or, if greater, at prevailing insurance market deductibles for such coverage with such increase to be reasonably approved by Lender and such coverage is in an amount, for each Individual Property, equal to one hundred percent (100%) of the Full Replacement Cost plus rents as required in Section 6.1.1(d) of such Individual Property and further provided that if any claim is made under such policy or policies reducing the amount of coverage below that which is required to be maintained under this Sections 6.1.1(a) and (d) above, then Borrower and Maryland Owner shall increase the amount of such policy or policies to an amount that satisfies the requirements of this Section 6.1.7, subject to the annual limit on Insurance Premiums represented by the Terrorism Premium Limit, or (B) Borrower and Maryland Owner shall obtain a stand-alone policy or policies that covers the Properties against Terrorism Losses, which stand-alone policy or policies shall be on terms consistent with those required under Sections 6.1.1(a) and (d) above with a deductible of not greater than Five Hundred Thousand and No/100 Dollars ($500,000.00) (or at prevailing insurance market deductibles for such coverage with such increase to be reasonably approved by Lender, such approval not to be unreasonably withheld, delayed or conditioned) and such coverage is in an amount, for each Individual Property, equal to one hundred percent (100%) of the Full Replacement Cost plus rents as required in Section 6.1.1(d) of such Individual Property.  Notwithstanding the foregoing, if TRIPRA or subsequent extension, reauthorization or similar Federal statute is no longer in effect, in no event shall Borrower and/or Maryland Owner be required under this Agreement or any other Loan Document to pay annual premiums for any insurance policy covering Terrorism Losses in respect of the Properties in excess of the Terrorism Premium Limit (i.e. if the cost exceeds the Terrorism Premium Limit, Borrower and

 

112

 

Maryland Owner shall obtain as much coverage for Terrorism Losses as is available at a cost equal to the Terrorism Premium Limit).

 

Section 6.2                                    Condemnation and Insurance Proceeds.

 

6.2.1                     Notification.  Borrower and/or Maryland Owner shall promptly notify Lender in writing upon obtaining knowledge of (a) the institution of any proceedings relating to any Taking (whether material or immaterial) of, or (b) the occurrence of any casualty, damage or injury to, any Individual Property or any portion thereof, the restoration of which is estimated by Borrower and/or Maryland Owner in good faith to cost more than the Casualty Amount.  In addition, each such notice shall set forth such good faith estimate of the cost of repairing or restoring such casualty, damage, injury or Taking in reasonable detail if the same is then available and, if not, as soon thereafter as it can reasonably be provided.

 

6.2.2                     Proceeds.  In the event of any Taking of or any casualty or other damage or injury to any Individual Property, Borrower’s and/or Maryland Owner’s right, title and interest in and to all compensation, awards, proceeds, damages, claims, insurance recoveries, causes and rights of action (whether accrued prior to or after the date hereof) and payments which Borrower and/or Maryland Owner may receive or to which Borrower and/or Maryland Owner may become entitled with respect to such Individual Property or any part thereof other than payments received in connection with any liability or loss of rental value or business interruption insurance, other than the Marlton Condemnation Proceeds (collectively, “Proceeds”), in connection with any such Taking of, or casualty or other damage or injury to, the Individual Property or any part thereof are, except as otherwise herein provided, hereby assigned by Borrower and Maryland Owner to Lender and shall, except as otherwise herein provided, be paid to Lender.  Borrower and/or Maryland Owner shall, in good faith and in a commercially reasonable manner, file and prosecute the adjustment, compromise or settlement of any claim for Proceeds and, subject to Borrower’s and/or Maryland Owner’s right to receive the direct payment of any Proceeds as herein provided, will cause the same to be paid directly to Lender to be held and applied in accordance with the provisions of this Agreement.  Except upon the occurrence and during the continuance of an Event of Default, Borrower and/or Maryland Owner may settle any insurance claim with respect to Proceeds which does not exceed the Casualty Amount.  Whether or not a Monetary Default or an Event of Default shall have occurred and be continuing, Lender shall have the right to approve, such approval not to be unreasonably withheld, conditioned or delayed any settlement which would in Lender’s reasonable judgment result in any Proceeds in excess of the Casualty Amount and Borrower and/or Maryland Owner shall deliver or cause to be delivered to Lender all instruments reasonably requested by Lender to permit such approval.  Borrower and/or Maryland Owner shall pay all reasonable fees charged and out-of-pocket costs, fees and expenses reasonably incurred by Lender (including all reasonable attorneys’ fees and expenses, the reasonable fees of insurance experts and adjusters and reasonable costs incurred in any litigation or arbitration), and interest thereon at the Default Rate to the extent not paid within fifteen (15) Business Days after delivery of a request for reimbursement by Lender, accompanied by reasonable back-up documentation, in connection with the settlement of any claim for Proceeds and the seeking and obtaining of any payment on account thereof in accordance with the foregoing provisions.  If any Proceeds are received by Borrower and/or Maryland Owner and may be retained by Borrower and/or Maryland Owner pursuant to this Section 6.2, such Proceeds shall, until the completion of

 

113

 

the related Work, be held in trust for Lender and shall be segregated from other funds of Borrower and/or Maryland Owner to be used to pay for the cost of the Work in accordance with the terms hereof, and to the extent such Proceeds exceed the Casualty Amount, such Proceeds shall be forthwith paid directly to and held by Lender in the Proceeds Reserve Account in trust for Borrower, in each case to be applied or disbursed in accordance with this Section 6.2.  If an Event of Default shall have occurred and be continuing, or if Borrower and/or Maryland Owner fails to file any insurance claim for a period of fifteen (15) Business Days, or to prosecute same with commercially reasonable diligence following Borrower’s receipt of written notice to do so from Lender, Borrower and Maryland Owner each hereby irrevocably empowers Lender, in the name of Borrower and/or Maryland Owner, as applicable, as their true and lawful attorney in fact, to file and prosecute such claim (including settlement thereof) with counsel reasonably satisfactory to Lender and to collect and to make receipt for any such payment, all at Borrower’s and/or Maryland Owner’s expense (including payment of interest at the Default Rate for any amounts advanced by Lender pursuant to this sentence).  Notwithstanding anything to the contrary set forth in this Agreement, but excluding all situations requiring prepayment of the Note, to the extent any Proceeds (either singly or when aggregated with all other then unapplied Proceeds with respect to any Individual Property) do not exceed the Casualty Amount applicable as to such Individual Property, provided, no Event of Default has occurred and is continuing, such Proceeds are to be paid directly to Borrower and/or Maryland Owner to be applied to restoration of such Individual Property in accordance with the terms hereof (except that Proceeds paid in respect of the insurance described in Section 6.1.1(d) shall be deposited directly to the Lockbox Account as revenue of such Individual Property).

 

6.2.3                     Lender to Take Proceeds.  If (a) no Event of Default shall have occurred and be continuing, (b) no Total Loss with respect to any Individual Property shall have occurred, (c) the Work is capable of being completed before the date which is six (6) months prior to the Stated Maturity Date, (d) such Individual Property is capable of being restored substantially to its condition prior to such Taking or casualty; provided, however, that in the case of a partial Taking, the restoration shall be done to the extent reasonably practicable after taking into account the consequences of such partial Taking; it being understood, however, that Borrower shall not be obligated to restore the Individual Property to the precise condition of the Individual Property prior to any partial Taking of, or casualty or other damage or injury to, the Individual Property, if the Work actually performed, if any, or failed to be performed, would not reasonably be expected to have, and does not have, a Material Adverse Effect on the value and use of the Individual Property from the value and use that the Individual Property would have had if the same had been restored to its condition immediately prior to such Taking, casualty or other damage or injury and (e) Lender determines in its reasonable discretion that upon the completion of the restoration, the Operating Income of the Properties will be restored to a level sufficient to cover all Operating Expenses of the Properties and the Net Operating Income of the Properties will be restored to a level sufficient to achieve a Debt Service Coverage Ratio of at least 1.05 to 1.00, (after taking into account any guaranty delivered by Guarantor (provided that no Guarantor Rating Period shall be in effect or any Letter of Credit or Cash and Cash Equivalents collateral delivered hereunder), of that portion of the outstanding principal amount of the Indebtedness which when deducted from the then current outstanding principal amount of the Indebtedness would result in a Debt Service Coverage Ratio of at least 1.05 to 1.00, provided that at such time the Guaranteed Obligations, together with such guaranty does not exceed ten percent (10%) of the outstanding principal amount of the Loan); then in any such case, all Proceeds shall be

 

114

 

applied to Borrower’s and/or Maryland Owner’s cost of restoration in accordance with Section 6.2.4, and any Proceeds remaining after such application (including reimbursement of Lender’s reasonable out-of-pocket costs and expenses actually incurred in connection with recovery of such Proceeds and their application hereunder (including, without limitation, reasonable attorney’s fees and disbursements and reasonable out-of-pocket administrative costs and inspection fees)) shall be remitted to Borrower and/or Maryland Owner.  In the event that Lender shall not be required to apply any Proceeds to Borrower’s and/or Maryland Owner’s cost of restoration, then such Proceeds (up to the Allocated Loan Amount for the affected Individual Property) may be applied by Lender to prepay each of the Components, in accordance with the provisions hereof, without any prepayment premium, Yield Maintenance Premium or penalty or similar payment or defeasance obligation, and the balance, if any, provided no Event of Default has occurred and is continuing, shall be paid to Borrower and/or Maryland Owner and, notwithstanding anything herein or in any other Loan Document to the contrary (including Section 6.2.4 hereof), Borrower’s and/or Maryland Owner’s obligation to restore each Individual Property in such event shall be limited to repair each applicable Individual Property to the extent necessary to (i) protect life and safety at such Individual Property and (ii) return such Individual Property to a condition where the subject Individual Property is deemed an architectural whole whereby access to any portion of such Individual Property is not impaired and the shell of the applicable Improvements is fully complete and closed.  The Proceeds (up to the Allocated Loan Amount for the affected Individual Property) so applied shall reduce the Allocated Loan Amount for the affected Individual Property.  In the event that the Proceeds applied (together with any other prepayment or defeasance permitted under the Loan Agreement) pursuant this Section 6.2.3 equals or exceeds the Allocated Loan Amount with respect to the affected Individual Property, then the Lien of the Security Instrument and the other Loan Documents in respect of such Individual Property shall be released or assigned in accordance with and subject to the applicable terms and conditions of Sections 2.5.3(a), (b) and (c).

 

6.2.4                     Borrower to Restore.

 

(a)                                 Promptly after the occurrence of any damage or destruction to all or any portion of any Individual Property or a Taking of a portion of any Individual Property, Borrower and/or Maryland Owner shall commence and diligently prosecute, or cause to be commenced and diligently prosecuted, to completion, subject to Excusable Delay, and delays directly caused by Lender’s failure to respond within a commercially reasonable prompt time to requests for approval of plans or other requests for approvals pursuant to this Section, the repair, restoration and rebuilding of such Individual Property (in the case of a partial Taking, to the extent it is capable of being restored) so damaged, destroyed or remaining after such Taking in full compliance with all material Legal Requirements and free and clear of any and all Liens except Permitted Encumbrances (such repair, restoration and rebuilding are sometimes herein collectively referred to as the “Work”).  The plans and specifications shall require that the Work be done in a good and workmanlike manner at least substantially equivalent to the quality and character prior to the damage or destruction, so that upon completion thereof, the Individual Property shall be at least equal in general utility to such Individual Property prior to the damage or destruction, subject to any restrictions on Borrower’s and/or Maryland Owner’s ability to do so which may be imposed by any applicable Legal Requirements (provided, however, that in the case of a partial Taking, such Individual Property restoration shall be done to the extent reasonably practicable after taking into account the consequences of such partial Taking); it

 

115

 

being understood, however, that Borrower and/or Maryland Owner shall not be obligated to restore any Individual Property to the precise condition of such Individual Property prior to any partial Taking of, or casualty or other damage or injury to, such Individual Property, if the Work actually performed, if any, or failed to be performed, shall have no and would not reasonably be expected to have a Individual Material Adverse Effect on the value of such Individual Property from the value that such Individual Property would have had if the same had been restored to its condition immediately prior to such Taking, casualty or other damage or injury.  Borrower and/or Maryland Owner shall be obligated to restore the Individual Property suffering a casualty or which has been subject to a partial Taking in accordance with the provisions of this Section 6.2 at Borrower’s and/or Maryland Owner’s sole cost and expense whether or not the Proceeds shall be sufficient, provided that, if required pursuant to this Agreement, the Proceeds shall be made available to Borrower and/or Maryland Owner by Lender in accordance with this Agreement.

 

(b)                                 If Proceeds are not applied toward payment of the Indebtedness pursuant to the terms hereof and Borrower and/or Maryland Owner has satisfied all of the conditions of Section 6.2.3, then Lender shall make the Proceeds which it is holding pursuant to the terms hereof (after payment of any reasonable out-of-pocket expenses actually incurred by Lender in connection with the collection thereof plus interest thereon at the Default Rate to the extent the same are not paid within fifteen (15) Business Days after request for reimbursement by Lender, accompanied by reasonable back-up documentation) available to Borrower and/or Maryland Owner for payment of or reimbursement of Borrower’s and/or Maryland Owner’s or the applicable Tenant’s expenses incurred with respect to the Work, upon the terms and subject to the conditions set forth in sub-paragraphs (i), (ii), (iii) and (iv) below and in Section 6.2.5:

 

(i)                                     at the time of the requested disbursement, there shall be no continuing Event of Default;

 

(ii)                                  if, at any time, the estimated cost of the Work (as estimated by the Independent Architect referred to in sub-paragraph (iv) below) shall exceed the Proceeds by more than the Threshold Amount (the amount of such excess over the Threshold Amount being a “Deficiency”) and for so long as a Deficiency shall exist, Lender shall not be required to make any Proceeds disbursement to Borrower unless Borrower (within a reasonable period of time after receipt of such estimate), at its election, either deposits with or delivers to Lender (A) Cash and Cash Equivalents or a Letter or Letters of Credit in an amount equal to the Deficiency, or (B) such other evidence of Borrower’s ability to meet such excess costs as shall be reasonably satisfactory to Lender and satisfactory to the Rating Agencies;

 

(iii)                               If the Work shall constitute an Alteration that would require Lender’s consent pursuant to Section 10.2, then Lender shall have reasonably approved the plans and specifications for the Work and any material change orders in connection with such plans and specifications; and

 

(iv)                              Lender shall, within a reasonable period of time prior to Borrower’s and/or Maryland Owner’s request for initial disbursement, be

 

116

 

furnished with an estimate of the cost of the Work accompanied by an Architect’s certification as to such costs.  Borrower and/or Maryland Owner shall restore all Improvements such that when they are fully restored and/or repaired, such Improvements and their contemplated use comply with all applicable Legal Requirements including zoning, environmental and building laws, codes, ordinances and regulations.

 

6.2.5                     Disbursement of Proceeds.

 

(a)                                 Disbursements of the Proceeds in Cash or Cash Equivalents to Borrower and/or Maryland Owner hereunder shall be made from time to time (but not more frequently than once in any month) by Lender but only for so long as no Monetary Default or Event of Default shall have occurred and be continuing, as the Work progresses upon receipt by Lender of (i) an Officer’s Certificate dated not more than ten (10) Business Days prior to the application for such payment, requesting such payment or reimbursement and describing the Work performed that is the subject of such request, the parties that performed such Work and the actual cost thereof, and also certifying that such Work and materials are or, upon disbursement of the payment requested to the parties entitled thereto, will be free and clear of Liens other than Permitted Encumbrances, (ii) evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed in connection with the Work for which disbursement is being requested have been or, upon disbursement of the payment requested to the parties entitled thereto, will be paid for in full, and (B) there exists no notices of pendency, stop orders, mechanic’s liens or notices of intention to file same (unless the same is required by State law as a condition to the payment of a contractor) or any liens or encumbrances of any nature whatsoever on any applicable Individual Property arising out of the Work which have not been either fully bonded to the reasonable satisfaction of Lender or discharged of record or in the alternative, fully insured to the satisfaction of Lender by the Title Company that issued the Title Policy or any other national title insurance company selected by Borrower and/or Maryland Owner as reasonably approved by Lender, and (iii) an Architect’s certificate (which certificate may be qualified as appropriate including as to such Person’s reliance on any other Person) certifying performance of the Work together with an estimate of the cost to complete the Work.  No payment made prior to the final completion of the Work, as certified by the Architect, except for payment made to contractors whose Work shall have been fully completed and from which final lien waivers have been received, shall exceed ninety percent (90%) (the “Retainage Release Threshold”) of the value of the Work performed and materials furnished and incorporated into the Improvements from time to time until such time as fifty percent (50%) of such Work has been satisfactorily completed (as certified by the Architect), at which time the Retainage Release Threshold with respect to such Work shall be increased to ninety-five percent (95%), and at all times the undisbursed balance of said Proceeds together with all amounts deposited, bonded, guaranteed or otherwise provided for pursuant to Section 6.2.4(b)(ii) above, shall be at least sufficient to pay for the estimated cost of completion of the Work; final payment of all Proceeds remaining with Lender shall be made upon receipt by Lender of a certification by an Architect, as to the completion of the Work substantially in accordance with the submitted plans and specifications and final lien releases, as certified pursuant to an Officer’s Certificate, and delivery of a certificate of occupancy with respect to the Work, or, if not applicable, an Officer’s Certificate to the effect that a certificate of occupancy is not required.

 

117

 

(b)                                 If, after the Work is completed in accordance with the provisions hereof and Lender receives evidence that all costs of completion have been paid, there are excess Proceeds, Lender shall, provided, no Event of Default has occurred and is continuing, (i) in the event such Proceeds relate to a Taking, apply such excess Proceeds with respect to such Taking of the applicable Individual Property to the payment or prepayment of all or any portion of the Indebtedness secured hereby up to the Allocated Loan Amount of the affected Individual Property without prepayment penalty or premium (including any Yield Maintenance Premium) or defeasance obligation, and the Allocated Loan Amount of the Individual Property shall be correspondingly reduced, and any balance thereof, shall be paid to Borrower and/or Maryland Owner, and (ii) in the event such Proceeds relate to a casualty to such Individual Property, remit to Borrower and/or Maryland Owner such excess Proceeds with respect to such casualty to such Individual Property.

 

ARTICLE VII

 

IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS

 

Section 7.1                                    Borrower and Maryland Owner to Pay Impositions and Other Charges.  Borrower and Maryland Owner shall pay all Impositions now or hereafter levied or assessed or imposed against each Individual Property or any part thereof and all Other Charges prior to the imposition of any interest, charges or expenses for the non-payment thereof, except to the extent provision for payment thereof from the Tax Reserve Account is made by Lender in this Section 7.1.  Borrower and/or Maryland Owner shall deliver to Lender annually, no later than fifteen (15) Business Days after each of the same are received, all bills for Impositions and Other Charges attributable to or affecting any Individual Property or Borrower and/or Maryland Owner.  Subject to Borrower’s and/or Maryland Owner’s right of contest set forth in Section 7.3, and to the extent of funds available in the Tax Reserve Account, Lender, on behalf of Borrower and/or Maryland Owner, shall pay all Impositions and Other Charges which are attributable to or affect each Individual Property or Borrower and/or Maryland Owner, prior to the date such Impositions or Other Charges shall become delinquent or late charges may be imposed thereon, directly to the applicable taxing authority with respect thereto.  Lender shall pay to the taxing authority such amounts to the extent funds in the Tax Reserve Account are sufficient to pay such Impositions.  Nothing contained in this Agreement or the Security Instrument shall be construed to require Borrower and/or Maryland Owner to pay any tax, assessment, levy or charge imposed on Lender in the nature of a franchise, capital levy, estate, inheritance, succession, income or net revenue tax.

 

Section 7.2                                    No Liens.  Subject to its right of contest set forth in Section 7.3, Borrower and/or Maryland Owner shall at all times pay when due and payable (or bond over) all claims and demands of mechanics, materialmen, laborers and others which, if unpaid, would result in or permit the creation of a Lien on any Individual Property or any portion thereof (except insofar as the same is Permitted Debt) and shall in any event cause the prompt, full and unconditional discharge of all Liens imposed on or against any Individual Property or any portion thereof within sixty (60) days after receiving written notice of the filing (whether from Lender, the lienor or any other Person) thereof.  Borrower and/or Maryland Owner shall do or cause to be done, at the sole cost of Borrower, everything reasonably necessary to fully preserve the first priority of the Lien of the Security Instrument against each applicable Individual

 

118

 

Property, subject to the Permitted Encumbrances.  Upon the occurrence and during the continuance of an Event of Default with respect to Borrower’s and Maryland Owner’s Obligations as set forth in this Article VII, Lender may (but shall not be obligated to) make such payment or discharge such Lien, and Borrower and/or Maryland Owner shall reimburse Lender within ten (10) Business Days after demand, accompanied by reasonable back-up documentation, for all such advances pursuant to Section 19.12 (together with interest thereon at the Default Rate).

 

Section 7.3                                    Contest.  Nothing contained herein shall be deemed to require Borrower and/or Maryland Owner to pay, or cause to be paid, any Imposition or Other Charges, or to satisfy any Lien, or to comply with any Legal Requirement or Insurance Requirement, so long as Borrower and/or Maryland Owner is in good faith, and by proper legal proceedings, where appropriate, diligently contesting the validity, amount or application thereof, provided that in each case, at the time of the commencement of any such action or proceeding, and during the pendency of such action or proceeding (a) Borrower and/or Maryland Owner shall keep Lender informed of the status of such contest at reasonable intervals, (b) if Borrower and/or Maryland Owner is not providing security as provided in clause (e) below, adequate reserves with respect thereto are maintained on Borrower’s and/or Maryland Owner’s books in accordance with GAAP or in the Tax Reserve Account or Insurance Reserve Account, as applicable, (c) either such contest operates to suspend collection or enforcement, as the case may be, of the contested Imposition, Lien or Legal Requirement, and such contest is maintained and prosecuted continuously and with diligence, or the Imposition or Lien is bonded or provision reasonably satisfactory to Lender for the protection of Lender’s interest in the each applicable Individual Property is otherwise made, (d) in the case of any Insurance Requirement, the failure of Borrower and/or Maryland Owner to comply therewith shall not impair the validity of any insurance required to be maintained by Borrower and/or Maryland Owner under Section 6.1 or the right to full payment of any claims thereunder, and (e) in the case of Impositions and Liens which are not bonded in excess of Ten Million and No/100 Dollars ($10,000,000.00) in the aggregate or One Million and No/100 Dollars ($1,000,000.00) individually (the “Contest Threshold”) during such contest, Borrower and/or Maryland Owner, shall deposit with or deliver to Lender either Cash and Cash Equivalents, a guaranty by VOP or any other Person, provided that VOP or such other Person maintains an Investment Grade rating as to its a long-term unsecured debt, to Lender (in form reasonably acceptable to Lender) of any or a Letter or Letters of Credit to the excess of (A) (i) the amount of Borrower’s and/or Maryland Owner’s obligations being contested plus (ii) any additional interest, charge, or penalty arising from such contest over (B) the Contest Threshold, or provision reasonably satisfactory to Lender for the protection of Lender’s interest in each applicable Individual Property is otherwise made.  Notwithstanding the foregoing, the creation of any such reserves or the furnishing of any bond or other security, Borrower and/or Maryland Owner promptly shall comply with any contested Legal Requirement or Insurance Requirement or shall pay any contested Imposition or Lien, and compliance therewith or payment thereof shall not be deferred, if, at any time any Individual Property or any portion thereof shall be, in Lender’s reasonable judgment, in imminent danger of being forfeited or lost or Lender is likely to be subject to civil or criminal charges as a result thereof.  If such action or proceeding is terminated or discontinued adversely to Borrower and/or Maryland Owner, Borrower and/or Maryland Owner shall deliver to Lender reasonable evidence of Borrower’s and/or Maryland Owner’s compliance with such contested Imposition, Lien, Legal Requirements or Insurance Requirements, as the case may be.

 

119

 

ARTICLE VIII

 

TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS

 

Section 8.1                                    Restrictions on Transfers.  Unless such action is permitted by the provisions of this Article VIII or any of the other provisions of this Agreement or any other Loan Document, (a) neither Borrower or Maryland Owner shall incur any Debt other than (i) Permitted Debt and (ii) Permitted Encumbrances, and (b) neither Borrower nor Maryland Owner shall, and shall not permit any Person holding any direct or indirect legal, economic, beneficial or other ownership interest in Borrower, Maryland Owner or any Individual Property to, except with the prior written consent of Lender, (i) Transfer all or any part of an applicable Individual Property or (ii) permit any Transfer (directly or indirectly) of any direct or indirect interest in Borrower.

 

Section 8.2                                    Sale of Building Equipment.  Borrower and/or Maryland Owner may Transfer or dispose of Building Equipment which is being replaced or which is no longer necessary in connection with the operation of an Individual Property and the same shall be free from the Lien of the Security Instrument, provided that such Transfer or disposal will not and would not reasonably be expected to have an Individual Material Adverse Effect on the applicable Individual Property taken as a whole, and provided, further, that any new Building Equipment acquired by Borrower and/or Maryland Owner (and not so disposed of) shall be subject to the Lien of the Security Instrument.  Lender shall, from time to time, upon receipt of an Officer’s Certificate requesting the same and confirming satisfaction of the conditions set forth above, execute a written instrument in form reasonably satisfactory to Lender to confirm that such Building Equipment which is to be, or has been, sold or disposed of is free from the Lien of the Security Instrument.

 

Section 8.3                                    Immaterial Transfers and Easements, etc.  Borrower and/or Maryland Owner may, without the consent of Lender, (a) make immaterial Transfers of portions of any Individual Property to Governmental Authorities for dedication or public use or portions of such Individual Property to third parties for the purpose of erecting and operating additional structures whose use is integrated with the use of such Individual Property and (b) grant easements, restrictions, covenants, reservations and rights-of-way (including reciprocal easements and operating agreements) in the ordinary course of business for access, water and sewer lines, telephone or other fiber optic or other data transmission lines, electric lines or other utilities, shared parking, common areas or for other purposes customary for properties similar to the Individual Property, provided that no such Transfer, conveyance or encumbrance set forth in the foregoing clauses (a) or (b) would reasonably be expected to have an Individual Material Adverse Effect on such Individual Property taken as a whole (it being agreed that (x) the release of vacant land shall not in and of itself be deemed to have an adverse effect on the value of the related Individual Property except to the extent, if any, such land was assigned value in the appraisals performed contemporaneously herewith and (y) with respect to any reciprocal easement and operating agreement, Lender shall have the right to make its own reasonable determination as to whether the same would have an Individual Material Adverse Effect on the related Individual Property).  In connection with any Transfer permitted pursuant to this Section 8.3, Lender shall execute and deliver any instrument reasonably necessary or appropriate, in the case of the Transfers referred to in paragraph (a) above, to release the portion

 

120

 

of any Individual Property affected by such Taking or such Transfer from the Lien of the Security Instrument and/or, in the case of paragraph (b) above, to subordinate the Lien of the Security Instrument to such easements, restrictions, covenants, reservations and rights-of-way or other similar grants upon receipt by Lender of:

 

(1)                                 Borrower shall have delivered to Lender all documentary deliveries required pursuant to this Section 8.3 at least fifteen (15) days prior to the requested effective date of such proposed Transfer (except as Lender may in its reasonable discretion shorten such period);

 

(2)                                 a copy of the instrument or instruments of Transfer;

 

(3)                                 an Officer’s Certificate stating (A) with respect to any Transfer, the consideration, if any, being paid for the Transfer, and (B) that such Transfer would not reasonably be expected to have an Individual Material Adverse Effect on the Individual Property in question (taking into account the parenthetical in the proviso in the first sentence of Section 8.3 above); and

 

(4)                                 reimbursement of all of Lender’s reasonable out-of-pocket costs and expenses incurred in connection with such Transfer.

 

Section 8.4                                    Indebtedness.  Neither Borrower nor Maryland Owner shall incur, create or assume any Debt without the consent of Lender; provided, however, that Borrower and/or Maryland Owner may, without the consent of Lender, incur, create or assume Permitted Debt.

 

Section 8.5                                    Permitted Owner Interest Transfers.

 

(a)                                 A Transfer of (but not a mortgage, pledge, hypothecation, encumbrance or grant of a security interest in) a direct or indirect beneficial interest in Borrower and/or Maryland Owner shall be permitted without Lender’s consent if (i) Lender shall have delivered to Lender all non-monetary and non-collateral deliveries required to be made to effect such Transfer at least fifteen (15) days prior to the requested date of such proposed Transfer (except as Lender may in its reasonable discretion shorten such period), (ii) subsequent to such Transfer, VRT shall directly or indirectly Control Borrower and Maryland Owner (it being agreed, for all purposes of this Section 8.5, that Control over a Person shall not be deemed absent solely because a non-managing member, partner or shareholder or any other Person shall have or shall exercise “veto” rights with respect to “major decisions”, provided that such non-managing member, partner or shareholder or other Person does not have authority over the day-to-day business of such Person), (iii) subsequent to such Transfer, VRT shall continue to directly or indirectly own at least fifty percent (50%) of the equity interests in Borrower and Maryland Owner, (iv) immediately prior to such Transfer, no Event of Default shall have occurred and be continuing, (v) subsequent to such Transfer, Borrower and Maryland Owner will each continue to be a Single Purpose Entity and (vi) if such Transfer causes the Transferee to own, in the aggregate with the ownership interests of its Affiliates and family members, more than a forty nine percent (49%) interest in Borrower and/or Maryland Owner (and the Transferee (together with the ownership interests of its Affiliates and family members) did not, prior to such Transfer,

 

121

 

own more than a forty nine percent (49%) interest in Borrower and/or Maryland Owner), then a reasonably acceptable non-consolidation opinion is delivered to Lender and to each of the Rating Agencies concerning, as applicable, Borrower, Maryland Owner, the new Transferee and/or their respective owners.

 

(b)                                 In the event that a Transfer of more than a forty nine percent (49%) interest in Borrower and/or Maryland Owner is made and, if Lender’s approval to such Transfer is required hereunder, is approved by Lender, at Borrower’s and/or Maryland Owner’s request, Lender shall release Guarantor from (i) the obligations and liabilities under any Guaranty for obligations and liabilities that occurred subsequent to such Transfer, provided that a Replacement Guarantor(s) shall have executed and delivered to Lender replacement guarantees in form and substance substantially similar to the applicable Guaranty, pursuant to which such Replacement Guarantor(s) expressly assumes all of Guarantor’s obligations under the applicable Guaranty for obligations and liabilities arising from and after the date of such Transfer, and/or (ii) the obligations and liabilities under any Guaranty for obligations and liabilities that occurred either prior or subsequent to such Transfer, provided that a Replacement Guarantor(s) shall have executed and delivered to Lender replacement guarantees in form and substance substantially similar to the applicable Guaranty, pursuant to which such Replacement Guarantor(s) expressly assumes all of Guarantor’s obligations under the applicable Guaranty, including those which occurred prior to the Transfer.

 

(c)                                  Notwithstanding the foregoing or anything herein to the contrary, 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 or Rating Agency Confirmation/Notification be required in connection with, (i) any pledge of the direct or indirect equity interests in and right to distributions from Borrower and/or Maryland Owner by VRT or VOP, or by another direct or indirect owner of Borrower and/or Maryland Owner in respect of which, as of the origination of the transaction in question, the Net Operating Income from the Properties is less than twenty five percent (25%) of the aggregate direct or indirect net income of such other direct or indirect owner, as reasonably determined by Borrower, to secure a loan secured, directly or indirectly, by all or substantially all of such Person’s assets, (ii) the Transfer or issuance of any securities or any direct or indirect interests in any direct or indirect owner of Borrower and/or Maryland Owner, in either case, whose securities are publicly traded on a national exchange (including, for so long as it is an indirect owner of Borrower, Maryland Owner and/or VRT) (regardless whether such Transfer or issuance is of publicly traded securities or interests) or of any Person who directly or indirectly holds such securities or interests, or (iii) the merger or consolidation of VRT with or into any other Person or sale of all or substantially all of the assets of VRT (each, a “VRT Transfer” and, collectively, the “VRT Transfers”); provided, however, that, if any VRT Transfer or series of VRT Transfers (other than (A) the sale of publicly traded securities in VRT and/or (B) the issuance or sale of limited partnership interests in VOP to any third parties that are not Affiliates of VRT, in the ordinary course of business) shall result in a change in Control of VRT, then a Rating Agency Confirmation/Notification shall be required in connection with such VRT Transfer unless after giving effect to such VRT Transfer, either (I) VRT (or the successor entity thereto) shall be a Person that has and provides substantially at least the same experience and expertise as VRT prior to such Transfer in conducting business of the nature currently conducted by VRT in respect of the Properties’ property type or (II) VOP (or the successor entity thereto) shall have substantially at least the same experience and expertise as VOP prior to such

 

122

 

Transfer, merger or consolidation in conducting business of the nature currently conducted by VOP and VOP is Controlled by a Person or Persons (other than VRT) that has experience and expertise that is not less than the experience and expertise of VRT prior to such VRT Transfer in respect of the property type of the Properties.

 

(d)                                 In addition, notwithstanding the foregoing or anything herein to the contrary, nothing contained in this Agreement or the other Loan Documents shall in any way restrict or prohibit, nor shall any notice or consent of Lender or Rating Agency Confirmation/Notification be required in connection with (i) the Transfer or issuance of any direct or indirect interests in VOP, (ii) the merger or consolidation of VOP with or into any other Person; provided, however, that, immediately after giving effect to each such Transfer, merger or consolidation, either (A) VRT (or any successor entity permitted above as a result of a VRT Transfer) shall continue to be the managing general partner of (or act in a similar capacity in respect of) VOP, and VRT shall remain in Control of the business and operations of VOP, regardless of the percentage of equity interests in VOP owned by VRT or (B) VOP (or the successor entity thereto) shall have substantially at least the same experience and expertise as VOP prior to such Transfer, merger or consolidation in conducting business of the nature currently conducted by VOP in respect of the property type of the Properties, or (iii) Transfers of direct or indirect interests in Borrower and/or Maryland Owner among VOP and any entity that is directly or indirectly wholly-owned by VOP, or among such entities.

 

(e)                                  In addition, notwithstanding the foregoing or anything herein to the contrary, a Transfer of (but not a mortgage, pledge, hypothecation, encumbrance or grant of a security interest in) a direct or indirect beneficial interest in Borrower and/or Maryland Owner in connection with the formation of a joint venture to hold, directly or indirectly, all of the equity interests in Borrower and Maryland Owner, shall be permitted without Lender’s consent if:

 

(i)                                     Borrower shall have delivered to Lender all non-monetary and non-collateral deliveries required to be made to effect such Transfer at least fifteen (15) days prior to the requested date of such proposed Transfer (except as the Lender may in its reasonable discretion shorten such period);

 

(ii)                                  subsequent to such Transfer, VRT shall directly or indirectly Control Borrower and Maryland Owner;

 

(iii)                               subsequent to such Transfer, VRT shall continue to directly or indirectly own at least thirty percent (30%) of the equity interests in Borrower and Maryland Owner;

 

(iv)                              immediately prior to such Transfer, no Event of Default shall have occurred and be continuing;

 

(v)                                 subsequent to such Transfer, Borrower and Maryland Owner will each continue to be a Single Purpose Entity;

 

(vi)                              each such Transferee, its principals and all other entities which may be owned or Controlled directly or indirectly by Transferee’s principals (the “Related Entities”) shall not have been party to any bankruptcy proceedings,

 

123

 

voluntary or involuntary, made an assignment for the benefit of creditors or taken advantage of any insolvency act, or any act for the benefit of debtors within seven (7) years prior to the date of the proposed Transfer;

 

(vii)                           each Transferee, such Transferee’s principals and all Related Entities shall provide evidence reasonably acceptable to Lender that each such entity is not a Prohibited Person;

 

(viii)                        there shall be no material litigation or regulatory action pending or threatened against such Transferee, its principals or the Related Entities which would reasonably be expected to result in a Material Adverse Effect;

 

(ix)                              each Individual Property shall be managed by Manager or a Qualified Manager after any such Transfer;

 

(x)                                 Borrower shall deliver to Lender a Rating Agency Confirmation/Notification as to such Transfer and each Transferee;

 

(xi)                              Borrower shall deliver to Lender an Additional Non-Consolidation Opinion reflecting such Transfer, which Additional Non-Consolidation Opinion may be relied upon by Lender, the Rating Agencies and their respective counsel, agents and representatives with respect to the proposed transaction, including, without limitation, Transferee;

 

(xii)                           Borrower, Maryland Owner, and any such Transferee shall deliver to Lender all organizational documents, joint venture agreements and other documents reasonably requested by Lender, which documents shall be reasonably acceptable to Lender; and

 

(xiii)                        Borrower shall pay Lender a transfer fee in the amount of $25,000 and shall pay all reasonable out-of-pocket costs and expenses of Lender incurred in connection with any such Transfer, including Lender’s reasonable attorneys’ fees and expenses and fees and expenses of the Rating Agencies.

 

Section 8.6                                    Permitted Encumbrances.  For the avoidance of doubt, Permitted Encumbrances are hereby permitted, in addition to any Transfer or Lien permitted hereunder or under any other Loan Document.

 

Section 8.7                                    Deliveries to Lender.  Not less than thirty (30) days prior to the closing of any transaction which, subject to the provisions of this Article VIII, requires notice to Lender, Borrower and/or Maryland Owner shall deliver to Lender an Officer’s Certificate describing the proposed transaction and stating that such transaction is permitted by this Article VIII, together with any appraisal or other documents upon which such Officer’s Certificate is based.  In addition, Borrower and/or Maryland Owner shall provide Lender with copies of executed deeds, assignments and/or other similar closing documents within ten (10) Business Days after such closing..

 

124

 

Section 8.8                                    Leases.

 

8.8.1                     New Leases and Lease Modifications.  Except as otherwise provided in Section 8.8.2, without the prior consent of Lender, which such consent shall not be unreasonably withheld, conditioned or delayed, or as required by the terms of the applicable Lease or by any Law or court order (including the order of any bankruptcy court), Borrower and/or Maryland Owner shall not (a) enter into any Lease (a “New Lease”), (b) consent to the assignment of any Lease that releases the original Tenant from its obligations under the Lease, (c) modify any Lease, allow a reduction in the term of any Lease or in the Rent payable under any Lease, change any renewal provisions of any Lease in a manner materially adverse to Borrower and/or Maryland Owner or Lender, materially increase the obligations of the landlord or materially decrease the obligations of any Tenant), or (d) terminate or accept a surrender of any Lease, unless the Tenant thereunder is in default of such Lease beyond the expiration of any applicable notice and/or grace period thereunder or unless such termination or surrender is in conjunction with a New Lease or Lease Modification described in Section 8.8.2(j) (any such action referred to in paragraphs (b), (c) or (d) that requires Lender’s consent being referred to herein as a “Lease Modification”), in each instance without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed (except that the term “Lease Modification” shall not include any of the foregoing if it is made pursuant to an express right of Tenant under the related Lease).  Any New Lease or Lease Modification that requires Lender’s consent shall be delivered to Lender for approval not less than ten (10) Business Days prior to the effective date of such New Lease or Lease Modification, together with all other materials reasonably requested by Lender in order to evaluate such New Lease or Lease Modification.  In addition, Borrower and/or Maryland Owner may request Lender’s approval of any change to the Standard Form of Lease, which approval shall not be unreasonably withheld, delayed or conditioned.  Each such request for approval and consent shall contain a legend in capitalized bold letters on the top of the cover page stating:  “THIS IS A REQUEST FOR CONSENT TO A [NEW LEASE] [LEASE MODIFICATION] [MODIFICATION OF THE STANDARD FORM OF LEASE].  LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED.” In the event that Lender fails to grant or withhold its approval and consent to such New Lease, Lease Modification or Modification to the Standard Form of Lease within such ten (10) Business Day period (and, in the case of a withholding of consent, stating the grounds therefor in reasonable detail), then Lender’s approval and consent shall be deemed to have been granted.  In addition, Borrower and/or Maryland Owner may, at Borrower’s and/or Maryland Owner’s option, prior to delivering to Lender a draft of any such New Lease or Lease Modification for Lender’s approval, first deliver to Lender for Lender’s approval a term sheet setting forth the major economic and other business terms (the “Material Business Terms”) of such proposed New Lease or Lease Modification, together with all other materials reasonably requested by Lender in order to evaluate such term sheet.  Each such request for approval and consent shall contain a legend in capitalized bold letters on the top of the cover page stating:  “THIS IS A REQUEST FOR CONSENT TO A TERM SHEET FOR A [NEW LEASE] [LEASE MODIFICATION].  LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED.” In the event that Lender fails to grant or withhold its approval and consent to such term sheet within such ten (10) Business Day

 

125

 

period (and, in the case of a withholding of consent, stating the grounds therefor in reasonable detail), then Lender’s approval and consent shall be deemed to have been granted.  Subject to the approval time periods set forth above with respect to New Leases and Lease Modifications, so long as any New Lease or Lease Modification submitted to Lender for approval and consent (i) does not contain Material Business Terms which differ in any material adverse respect from the Material Business Terms contained in the term sheet approved by Lender and (ii) otherwise does not contain any lease terms which deviate materially and adversely from the terms of the Standard Form of Lease, Lender’s consent to such New Lease or Lease Modification shall not be required.  In the event Lender withholds consent to a New Lease or a Lease Modification requiring the approval of Lender, Lender shall provide reasonably detailed grounds for its withholding of consent.

 

8.8.2                     Leasing Conditions.  Subject to terms of this Section 8.8, provided no Event of Default shall have occurred and be continuing, Borrower and/or Maryland Owner may enter into a New Lease or Lease Modification, without Lender’s prior written consent, that satisfies each of the following conditions (as evidenced by an Officer’s Certificate delivered to Lender with its quarterly report for the first quarter ending more than thirty (30) days after the lease execution):

 

(a)                                 such New Lease or Lease Modification other than a termination or surrender (to the extent such Lease Modification relates to a provision in the Standard Form Lease), as applicable, is written on the standard form of lease attached hereto as Schedule 8.8.2 (the “Standard Form of Lease”) or (i) substantially conforms in all material respects to the terms thereof, with only such changes as are commercially reasonable given the then current market conditions, none of which changes shall vary (in a manner materially adverse to Lender) the subordination, attornment and non-disturbance provisions contained in the Standard Form of Lease or (ii) the standard form of lease of a national retailer, with such changes as are commercially reasonable given the then current market conditions, none of which changes shall vary (in a manner materially adverse to Lender) the subordination, attornment and non-disturbance provisions contained in the Standard Form of Lease;

 

(b)                                 with respect to a New Lease or Lease Modification, (i) the premises demised thereunder, when aggregated with the premises demised under any other Lease to such Tenant and its Affiliates at the applicable Individual Property, accounts for not more than 50,000 net rentable square feet and/or (ii) the same does not contain an option to acquire all or any portion of such Individual Property;

 

(c)                                  the term of such New Lease or being amended by such Lease Modification (if the Lease term is addressed in such Lease Modification and excluding any terminations and surrenders), as applicable, including any option terms, is consistent with the then prevailing market;

 

(d)                                 the rental rate under such New Lease or Lease Modification to the extent a new rent is addressed in such Lease Modification, as applicable, is at least equal to the then prevailing market rate for similar leases in similar properties in the vicinity of the applicable Individual Property;

 

126

 

(e)                                  “fixed” or “base” rent under such New Lease or Lease Modification (to the extent a rent payment schedule is addressed in such Lease Modification), as applicable, is at a substantially consistent or rising level throughout the term of the lease, other than for (i) market rate “free rent” periods or (ii) tenant improvement and tenant inducements that exceed current market conditions but are amortized over a shorter time period than the entire initial term of such New Lease or Lease Modification, as applicable;

 

(f)                                   such New Lease or Lease Modification to the extent “use” is addressed in such Lease Modification, as applicable, provides that the premises demised thereby cannot be used for any of the following uses; any pornographic or obscene purposes, any commercial sex establishment, any pornographic, obscene, nude or semi-nude performances, modeling, materials, activities or sexual conduct or any other use that has or would reasonably be expected to violate applicable Legal Requirements;

 

(g)                                  the Tenant under such New Lease or Lease Modification, other than Lease Modifications relating to Leases in existence on the date hereof, as applicable, is not an Affiliate of Borrower and/or Maryland Owner;

 

(h)                                 the New Lease or Lease Modification, as applicable, does not contain any provision whereby the Rent payable thereunder would be based, in whole or in part, upon the net income or profits derived by any Person from the applicable Individual Property;

 

(i)                                     the New Lease or Lease Modification, as applicable, shall not entitle any Tenant to receive and retain Proceeds except those that may be specifically awarded to it in condemnation proceedings because of the Taking of its trade fixtures and its leasehold improvements which have not become part of the Property and such business loss as Tenant may specifically and separately establish;

 

(j)                                    in connection with any New Lease or Lease Modification that involves a termination of a Lease, Borrower and/or Maryland Owner shall contemporaneously enter into a New Lease or New Leases for the portion of the applicable Individual Property demised pursuant to such terminated Lease, which New Lease or New Leases shall comply with the other provisions of this Section 8.8.2; and

 

(k)                                 the New Lease or Lease Modification, as applicable, satisfies the requirements of Section 8.8.7,  Section 8.8.8 and Section 8.8.9.

 

8.8.3                     Delivery of New Lease or Lease Modification.  Together with the Officer’s Certificate described in the introduction to Section 8.8.2, Borrower and/or Maryland Owner shall deliver to Lender a copy of the executed Lease and an additional copy marked to show all changes from the Standard Form of Lease.

 

8.8.4                     Lease Amendments.  Borrower and Maryland Owner agree that they shall not have the right or power, as against Lender without its consent, to cancel, abridge, amend or otherwise modify any Lease unless such modification complies with this Section 8.8.  Notwithstanding anything herein to the contrary, no consent of Lender shall be required for any amendment reflecting the Tenant’s unilateral exercise of a renewal or expansion or termination option set forth in its Lease as of the date hereof or a Lease or Lease Modification subsequently

 

127

 

approved or otherwise entered into in accordance with the terms hereof and any such amendment shall not be deemed a Lease Modification for any purpose hereof.

 

8.8.5                     Security Deposits.  All security or other deposits of Tenants of the Properties shall be treated as trust funds and shall not be commingled with any other funds of Borrower and/or Maryland Owner, and such deposits shall be deposited, upon receipt of the same by Borrower and/or Maryland Owner, in a separate trust account maintained by Borrower and/or Maryland Owner expressly for such purpose.  Within ten (10) Business Days after written request by Lender, Borrower and/or Maryland Owner shall furnish to Lender reasonably satisfactory evidence of compliance with this Section 8.8.5, together with a statement of all lease securities deposited with Borrower and/or Maryland Owner by the Tenants and the location and account number of the account in which such security deposits are held.

 

8.8.6                     No Default Under Leases.  Borrower and Maryland Owner shall (a) promptly perform and observe all of the material terms, covenants and conditions required to be performed and observed by Borrower and/or Maryland Owner under the Leases, if the failure to perform or observe the same would have or would reasonably be expected to have a Material Adverse Effect; and (b) not collect any of the Rents more than one (1) month in advance (except that Borrower and/or Maryland Owner may collect such security deposits and last month’s Rents as are permitted by Legal Requirements and are commercially reasonable in the prevailing market and collect other charges in accordance with the terms of each Lease).

 

8.8.7                     Subordination.  Subject to Section 8.8.9, all Lease Modifications and New Leases entered into by Borrower and/or Maryland Owner after the date hereof shall be subject and subordinate to this Agreement and the Security Instrument (through a subordination provision contained in such Lease or otherwise)

 

8.8.8                     Attornment.  Subject to Section 8.8.9, each New Lease entered into by Borrower and/or Maryland Owner shall provide that in the event of the enforcement by Lender of any remedy under this Agreement or the Security Instrument, the Tenant under such New Lease shall, at the option of Lender or of any other Person succeeding to the interest of Lender as a result of such enforcement, attorn to Lender or to such Person and shall recognize Lender or such successor-in-interest as lessor under such New Lease.  Each New Lease shall also provide that, upon the reasonable request by Lender or such successor-in-interest, the Tenant shall execute and deliver an instrument or instruments confirming such attornment.

 

8.8.9                     Non-Disturbance Agreements.  Lender shall enter into, and, if required by applicable law in order to provide constructive notice or if requested by any Tenant, record in the land records for the applicable Individual Property, a subordination, non-disturbance and attornment agreement, in form and substance substantially similar to the form attached hereto as Schedule 8.8.9 (a “Non-Disturbance Agreement”), with any Tenant entering into a New Lease or a Lease Modification for which Lender’s prior written consent has been obtained or deemed obtained, or for which Lender’s prior written consent was not required, within ten (10) Business Days after written request therefor by Borrower and/or Maryland Owner.  All reasonable third party costs and expenses incurred by Lender in connection with the negotiation, preparation, execution, delivery and recordation of any Non-Disturbance Agreement, including, without

 

128

 

limitation, reasonable attorneys’ fees and disbursements, shall be paid by Borrower and/or Maryland Owner.

 

ARTICLE IX

 

INTENTIONALLY OMITTED

 

ARTICLE X

 

MAINTENANCE OF PROPERTIES; ALTERATIONS

 

Section 10.1                             Maintenance of Properties.  Borrower and/or Maryland Owner shall keep and maintain, or cause to be kept and maintained, each Individual Property and every part thereof in good condition and repair in accordance with reasonable market practice for a property of its nature, subject to ordinary wear and tear, and, subject to Excusable Delay and the provisions of this Agreement with respect to damage or destruction caused by casualty events or Takings, shall not permit or commit any waste, impairment, or deterioration of any portion of any Individual Property in any material respect.  Borrower and Maryland Owner further covenant to do all other acts which from the character or use of each Individual Property may be reasonably necessary to protect the security hereof in all material respects, the specific enumerations herein not excluding the general.  Neither Borrower nor Maryland Owner shall remove or demolish any Improvement on any Individual Property except as the same may be necessary in connection with an Alteration or a restoration in connection with a Taking or casualty, or as otherwise permitted herein or in any other Loan Document, in each case in accordance with the terms and conditions hereof.

 

Section 10.2                             Conditions to Alteration.  Lender’s prior approval, which shall not be unreasonably withheld, delayed or conditioned, shall be required in connection with any alteration, improvement, demolition or removal of the Properties, any Individual Property or any portion thereof (any such alteration, improvement, demolition or removal, an “Alteration”) the estimated cost of which exceeds the Threshold Amount; provided that Lender’s approval shall not be required with respect to (a) tenant improvement work to be performed pursuant to any Lease existing as of the date hereof or any New Lease or Lease Modification entered into in accordance with this Agreement which addresses such tenant improvement work and (b) any Alteration required by applicable Legal Requirements.  All Alterations must be undertaken in accordance with the applicable provisions of this Agreement and the other Loan Documents, as well as the provisions of the Leases.  Any Material Alteration shall be conducted under the supervision of an Architect and, in connection with any Material Alteration, Borrower and/or Maryland Owner shall deliver to Lender detailed plans and specifications (it being agreed that the format and information contained in any plans and specifications submitted to a Governmental Authority in connection with such Alteration shall be an acceptable format and detail with respect to Lender’s approval required hereunder) and cost estimates therefor, prepared by such Architect, which plans and specifications (if relating to Alterations requiring Lender’s approval hereunder) shall be approved by Lender, which approval shall not be unreasonably withheld or delayed.  Such plans and specifications may be revised at any time and from time to time by such Architect provided that material revisions of such plans and specifications (if relating to Alterations requiring Lender’s approval hereunder) are filed with,

 

129

 

and approved by, Lender, which approval shall not be unreasonably withheld, conditioned or delayed.  All work done in connection with any Alteration shall be performed in all material respects with due diligence in a good and workmanlike manner, all materials used in connection with any Alteration shall not be less than the standard of quality of the materials currently used at any applicable Individual Property and all materials used shall be in accordance with all applicable material Legal Requirements and Insurance Requirements.  Any request for approval of Lender pursuant to this Section 10.2 or Section 10.3 shall be delivered to Lender together with all other materials reasonably requested by Lender in order to evaluate such request.  Provided that Borrower and/or Maryland Owner complies with the requirements related to the delivery of such other materials as set forth in the preceding sentence, each such request for approval shall contain a legend in capitalized bold letters on the top of the first page stating:  “THIS IS A REQUEST FOR LENDER’S CONSENT.  LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED”.  In the event that Lender fails to grant or withhold its approval to such request within such ten (10) Business Day period, then Lender’s approval shall be deemed to have been granted.  Lender shall accompany any disapproval with a reasonably detailed explanation therefor.

 

Section 10.3                             Costs of Alteration.

 

(a)                                 Notwithstanding anything to the contrary contained in this Article X, no Material Alteration shall be performed by or on behalf of Borrower and/or Maryland Owner unless Borrower and/or Maryland Owner shall have delivered to Lender Cash and Cash Equivalents, or a guaranty by VOP or any Person, provided that VOP or such other Person maintains an Investment Grade rating as to its a long-term unsecured debt, to Lender (in form and substance reasonably acceptable to Lender and substantially similar to the Reserve Guaranty) (an “Alteration Deficiency Guaranty”) and/or a Letter of Credit as security in an amount not less than the estimated cost of the Material Alteration less the Threshold Amount (as set forth in the Architect’s written estimate referred to above) and less such amounts that are in the Reserve Accounts that relate to such Work (if any) (the “Alteration Deficiency”), or other assurances reasonably acceptable to Lender of Borrower’s and/or Maryland Owner’s ability to complete and pay for such Alterations.  In addition to payment or reimbursement from time to time of Borrower’s and/or Maryland Owner’s expenses incurred in connection with any Material Alteration or any such Alteration, the amount of such security and/or amount for which Guarantor is liable under a Alteration Deficiency Guaranty shall be reduced on any given date to the Architect’s written estimate of the cost to complete the Material Alteration (including any retainages), free and clear of Liens, other than Permitted Encumbrances, less the Threshold Amount (as set forth in the Architect’s written estimate).  Costs which are subject to retainage (which in no event shall be less than five percent (5%) in the aggregate) shall be treated as due and payable and unpaid from the date they would be due and payable but for their characterization as subject to retainage.  In the event that any Material Alteration or such Alteration shall be made in conjunction with any restoration with respect to which Borrower and/or Maryland Owner shall be entitled to withdraw Proceeds pursuant to Section 6.2, the amount of the Cash and Cash Equivalents, Alteration Deficiency Guaranty and/or Letter of Credit to be furnished pursuant hereto (if any) need not exceed the aggregate cost of such restoration and such Material Alteration or Alteration (as estimated by the Independent

 

130

 

Architect), less (i) the amount of any Proceeds which Borrower and/or Maryland Owner may be entitled to withdraw pursuant to Section 6.2 and are held by Lender in accordance with Section 6.2 and (ii) the Threshold Amount.

 

(b)                                 Payment or reimbursement of Borrower’s and/or Maryland Owner’s expenses incurred with respect to any Material Alteration or Alteration shall be upon the terms and subject to the conditions set forth in sub-paragraphs (i), (ii), (iii) and (iv) below and in Sections 10.3(c) and (d):

 

(i)                                     there shall be no continuing Event of Default;

 

(ii)                                  if, at any time, the estimated remaining cost of the Material Alteration or Alteration (as estimated by the Architect referred to in sub-paragraph (iii) below) which exceeds the Threshold Amount shall exceed the sum of the Cash and Cash Equivalents, Letter of Credit and/or Alteration Deficiency Guaranty furnished pursuant hereto, and for so long as any such Alteration Deficiency shall exist, Lender shall not be required to make any disbursement to Borrower and/or Maryland Owner until Borrower and/or Maryland Owner, at its election, either deposits with or delivers to Lender (A) Cash and Cash Equivalents and/or a Letter or Letters of Credit and/or an additional Alteration Deficiency Guaranty in an amount equal to the Alteration Deficiency, or (B) such other evidence of Borrower’s ability to meet such excess costs as shall be reasonably satisfactory to Lender;

 

(iii)                               Lender shall have reasonably approved the plans and specifications for the Material Alteration and any material change orders in connection with such plans and specifications; and

 

(iv)                              Lender shall, within a reasonable period of time prior to Borrower’s and/or Maryland Owner’s request for disbursement, be furnished with an estimate of the remaining cost of the Material Alteration or such Alteration accompanied by an Architect’s certification as to such remaining costs.

 

(c)                                  Disbursements of the Cash or Cash Equivalents (if any) held by Lender to or as directed by Borrower and/or Maryland Owner hereunder shall be made from time to time (but not more frequently than once in any month) by Lender but only for so long as no Monetary Default or Event of Default shall have occurred and be continuing, as such Alteration progresses upon receipt by Lender of (i) an Officer’s Certificate dated not more than five (5) Business Days prior to the application for such payment, requesting such payment or reimbursement and describing the portion of the Alteration performed that is the subject of such request, the parties that performed such portion of the Alteration and the actual cost thereof, and also certifying that such portion of the Alteration and materials are or, upon disbursement of the payment requested to the parties entitled thereto, will be free and clear of Liens other than Permitted Encumbrances, (ii) evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed in connection with such portion of the Material Alteration or Alteration have been paid for in full or will be paid for from such disbursement and (B) there exist no notices of pendency, stop orders, mechanic’s liens or notices of intention to file same (unless the same is

 

131

 

required by State law as a condition to the payment of a contract) or any liens or encumbrances of any nature whatsoever on the Individual Property arising out of the portion of the Material Alteration or Alteration, other than Permitted Encumbrances and Liens that have been bonded and (iii) an estimate of the remaining cost to complete the Material Alteration or Alteration (as described in Section 10.3(b)(iv) above).

 

(d)                                 At any time after substantial completion of any Alteration in respect of which Cash and Cash Equivalents and/or a Letter of Credit is deposited pursuant hereto or for which an Alteration Deficiency Guaranty is delivered hereunder, the whole balance of any Cash and Cash Equivalents so deposited by Borrower and/or Maryland Owner with Lender and then remaining on deposit (together with earnings thereon), as well as all retainages, may be withdrawn by Borrower and/or Maryland Owner and shall be paid by Lender to Borrower and/or Maryland Owner, and any other Cash and Cash Equivalents, Alteration Deficiency Guaranty (to the extent applicable), and/or a Letter of Credit so deposited or delivered shall, to the extent it has not been called upon, reduced or theretofore released, be released to Borrower, within ten (10) days after receipt by Lender of an application for such withdrawal and/or release together with an Officer’s Certificate, and signed also (as to the following sub-paragraph (i)) by the Architect, setting forth in substance as follows:

 

(i)                                     that the Alteration in respect of which such Cash and Cash Equivalents, Alteration Deficiency Guaranty and/or a Letter of Credit was deposited has been substantially completed in all material respects substantially in accordance with any plans and specifications therefor previously filed with Lender under Section 10.2 and that, if applicable, a certificate of occupancy has been issued with respect to such Alteration by the relevant Governmental Authority(ies) or, if not applicable, that a certificate of occupancy is not required;

 

(ii)                                  that to the knowledge of the certifying Person all amounts which Borrower is or may become liable to pay in respect of such Alteration through the date of the certification have been paid in full or adequately provided for or are being contested in accordance with Section 7.3 and that lien waivers have been obtained from the general contractor and major subcontractors performing such Alterations (or such waivers are not customary and reasonably obtainable by prudent managers in the area where the applicable Individual Property is located) subject to those amounts contested in accordance with the provisions of Section 7.3; and

 

(iii)                               For the purposes of this Section 10.3 only, Alterations and Material Alterations shall not include tenant improvement alterations, improvements, demolitions or removals undertaken pursuant to a Lease.

 

(e)                                  From and after the occurrence, and during the continuance of, a Guarantor Rating Period, Borrower and/or Maryland Owner shall either (i) promptly deliver to Lender cash or cash equivalents, to be held in an interest bearing money-market account, or (ii) promptly deliver to Lender a Letter of Credit in lieu of such cash deposits, which Letter of Credit shall satisfy the requirements of Section 16.9 of this Agreement, each in an amount equal to the

 

132

 

amount guaranteed under the Alteration Deficiency Guaranty or such lesser amount as may then be required hereunder.

 

ARTICLE XI

 

BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION

 

Section 11.1                             Books and Records.  Borrower and Maryland Owner shall keep and maintain on an annual basis proper books and records separate (subject to the provisions of Section 5.1.4(7) from any other Person accurately reflecting the business and affairs of Borrower and/or Maryland Owner relating to the Properties in accordance with GAAP.  Lender and its authorized representatives shall have the right at reasonable times during normal business hours, and upon reasonable notice, in connection with the Loan, to examine such books and records at the office of Borrower, Maryland Owner or such other Person maintaining the same and to make such copies or extracts thereof as Lender may reasonably require.

 

Section 11.2                             Financial Statements.

 

11.2.1              Quarterly Reports.  Not later than forty-five (45) days following the end of each fiscal quarter (other than the last quarter of each fiscal year), Borrower and Maryland Owner shall deliver to Lender unaudited financial statements, internally prepared on an accrual basis including a balance sheet and statement of operations as of the end of such quarter and for the corresponding quarter of the previous year, and a statement of Net Operating Income for such quarter and year-to-date, and a comparison of results with (a) to the extent prepared by Borrower and/or Maryland Owner, the results for the same period of the previous year, and (b) the Annual Budget for such period.  Such statements for each quarter shall be in the form attached hereto as Schedule 11.2.1 and shall be accompanied by an Officer’s Certificate, certifying to the best of the signer’s knowledge, (i) such statements fairly represent the financial condition and results of operations of Borrower and Maryland Owner as of the respective dates thereof, (ii) as of the date of such Officer’s Certificate, no Default exists under this Agreement, the Note or any other Loan Document or, if so, specifying the nature and status of each such Default and the action then being taken by Borrower and/or Maryland Owner or proposed to be taken to remedy such Default and (iii)  as of the date of such Officer’s Certificate, no litigation exists involving Borrower, Maryland Owner or any Individual Property in which the amount involved is One Million and No/100 Dollars ($1,000,000.00) (in the aggregate) or more in which all or substantially all of the potential liability is not covered by insurance, or, if so, specifying such litigation and the actions being taking in relation thereto.  Such submission shall contain such other information as shall be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof.  Additionally, from and after and during the continuance of a monetary or material non-monetary Default or Event of Default, and during any Guarantor Rating Period, in the event that any Guaranty remains in effect hereunder, Borrower and Maryland Owner shall at Lender’s request provide such financial statements and balance sheets on a monthly basis, within thirty (30) days following the end of each calendar month.

 

11.2.2              Annual Reports.  Not later than one hundred twenty (120) days after the end of each Fiscal Year, Borrower and Maryland Owner shall deliver to Lender unaudited

 

133

 

financial statements in accordance with GAAP covering each Individual Property, including a balance sheet as of the end of such year, a statement of Operations for the year comparative with the amounts for the previous year.  Such annual financial statements shall also be accompanied by an Officer’s Certificate in the form required pursuant to Section 11.2.1.

 

11.2.3              Leasing Reports.  Not later than forty five (45) days after the end of each fiscal quarter, Borrower and Maryland Owner shall deliver to Lender a true and complete rent roll in the form attached hereto as Schedule 11.2.3 for each Individual Property, dated as of the last month of such fiscal quarter, showing the current annual rent for each Individual Property, the expiration date of each Lease, and whether to Borrower’s and/or Maryland Owner’s knowledge any portion of such Individual Property has been sublet, and if it has, the name of the subtenant.  Such rent roll shall be accompanied by an Officer’s Certificate certifying that to the knowledge of such officer such rent roll is true, correct and complete in all material respects as of its date and whether Borrower and/or Maryland Owner, within the past three (3) months, has issued a notice of default with respect to any Lease which has not been cured and the nature of such default.  Additionally, from and after and during the continuance of a monetary or non-monetary Default or Event of Default, and during any Guarantor Rating Period, in the event that any Guaranty remains in effect hereunder, Borrower and Maryland Owner shall, at Lender’s request, provide such rent roll information on a monthly basis, within thirty (30) days following the end of each calendar month.

 

11.2.4              Annual Budget.  At least fifteen (15) days prior to the commencement of each Fiscal Year, Borrower and Maryland Owner shall deliver to Lender the Annual Budget for informational purposes or, if the Annual Budget has not yet been adopted the then most current draft, which shall be superseded upon Borrower’s adoption of the Annual Budget; provided, however, that, upon the occurrence and during the continuance of a Cash Sweep Event, Borrower and Maryland Owner shall deliver to Lender the Annual Budget for Lender’s review and approval of the discretionary items contained therein at least thirty (30) days prior to the commencement of such Fiscal Year (which approval shall not be unreasonably withheld, conditioned or delayed). The Annual Budget submitted pursuant to this Section 11.2.4 and, if required pursuant hereto as a result of a Cash Sweep Event, approved by Lender, for any calendar year shall herein be referred to as the “Approved Annual Budget”.  During the continuance of a Cash Sweep Event, neither Borrower, Maryland Owner nor Manager shall materially change or modify the Approved Annual Budget without first obtaining the prior written consent of Lender, which consent shall not be unreasonably withheld, delayed or conditioned.  If Borrower and/or Maryland Owner shall fail to deliver the Annual Budget and/or obtain Lender’s approval if required pursuant to this Section 11.2.4 because of the continuance of a Cash Sweep Event, the Approved Annual Budget for the preceding calendar year, as increased by any actual increase in non-discretionary expenses, shall constitute the Approved Annual Budget for the then applicable Fiscal Year until Borrower and Maryland Owner submit a new Annual Budget and, if applicable, obtains Lender’s approval thereof, for such Fiscal Year as required pursuant to this Section 11.2.4.  Each request for approval under this Section 11.2.4 shall contain a legend in capitalized bold letters on the top of the first page stating:  “THIS IS A REQUEST FOR LENDER’S APPROVAL.  LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S APPROVAL BEING DEEMED TO HAVE BEEN GRANTED.”  In the event that Lender fails to grant or withhold its approval to such

 

134

 

request within such ten (10) Business Day period, then Lender’s approval shall be deemed to have been granted.  Any disapproval of a proposed Annual Budget shall be accompanied with Lender’s reasonably detailed explanation of the reasons therefor.

 

11.2.5              Current Budget.  Lender hereby acknowledges its receipt of the Annual Budget for the 2010 calendar year.

 

11.2.6              Other Information.  Borrower and Maryland Owner shall, promptly after written request by Lender or, the Rating Agencies, furnish or cause to be furnished to Lender, in such manner and in such detail as may be reasonably requested by Lender, such reasonable additional information as may be reasonably requested with respect to any Individual Property.

ARTICLE XII

 

INTENTIONALLY OMITTED

 

ARTICLE XIII

 

SERVICER

 

Section 13.1                             Retention of Servicer.  Lender reserves the right, at Lender’s sole cost and expense, to retain the Servicer.  In connection with (a) a prepayment, release of the Properties or any Individual Properties, or assumption or modification of the Loan (to the extent contemplated hereunder), in any such case as requested by Borrower and/or Maryland Owner, (b) consents or approvals requested by Borrower and/or Maryland Owner, including, without limitation, Borrower’s and/or Maryland Owner’s request for Lender’s delivery of a subordination, non-disturbance and attornment agreement to a Tenant required hereunder, or (c) any enforcement of the Loan Documents, Borrower and Maryland Owner shall pay any reasonable out-of-pocket costs and expenses of the Servicer and any reasonable out-of-pocket third party fees and expenses, including, without limitation, reasonable attorneys’ fees and disbursements.  Lender shall pay the standard monthly servicing fee of the Servicer.  If Borrower and/or Maryland Owner sends any payment, notice or other reports or documentation required hereunder or under any other Loan Document to a Servicer who has been replaced with a new Servicer because Borrower and/or Maryland Owner has not been given prior written notice of a change in the Servicer, then no Default or Event of Default shall occur hereunder or under any other Loan Document by reason of the fact that such payment was made or such notice or other reports or documentation was sent by Borrower and/or Maryland Owner to the terminated Servicer.  Notwithstanding anything to the contrary contained herein or in any other Loan Documents, unless the Loan is being transferred to a “special servicer” or is then being “specially serviced” (in which case Borrower and Maryland Owner may be required to deal with one Primary Servicer and one “special servicer”), Borrower and Maryland Owner shall be required to deal with only one Servicer acting on behalf of all Persons comprising Lender (the “Primary Servicer”), with respect to any consents, approvals or notices required or permitted from, or to, Servicer or Lender pursuant to the Loan Documents (it being understood that such Servicer may need to consult with other Persons that hold a portion of Lender’s rights and

 

135

 

obligations under the Loan or with the Rating Agencies in connection with any such consent, approval or notice and that a so-called “special servicer” may act as such Primary Servicer).  Lender may replace such Primary Servicer with another Primary Servicer at any time in Lender’s sole discretion.  As of the date hereof, Wells Fargo Bank, National Association., in its capacity as servicer under a Servicing Agreement with Lender, is hereby designated as the Primary Servicer and unless and until Borrower is notified by a Lender of a new Primary Servicer, Borrower shall be permitted to rely conclusively and irrevocably on such designation.

 

ARTICLE XIV

 

INTENTIONALLY OMITTED

 

ARTICLE XV

 

ASSIGNMENTS

 

Section 15.1                             Assignments.  Without in any way limiting any rights of Lender or Borrower under this Agreement or the other Loan Documents, Lender may assign to one or more Persons all or a portion of its rights and obligations under this Agreement and the Loan.  Upon such assignment, from and after the effective date thereof, the assignee thereunder shall be a party hereto and have the rights and obligations of Lender hereunder.

 

Section 15.2                             Limitation on Costs.  Notwithstanding the provisions of this Article XV, neither Borrower nor Maryland Owner shall be responsible for any additional taxes, reserves, adjustments, costs of an assignment of all or a portion of the Loan or other costs or expenses (except as otherwise expressly provided for herein) that arise as a result of any transfer of the Loan or any interest or participation therein or from the execution of any component notes, including, without limitation, any mortgage tax.  Lender and/or the assignees or participants, as the case may be, shall from time to time designate one agent through which Borrower and/or Maryland Owner shall request all approvals and consents required or contemplated by this Agreement and on whose statements Borrower and/or Maryland Owner may rely.

 

ARTICLE XVI

 

RESERVE ACCOUNTS

 

Section 16.1                             Tax Reserve Account.

 

16.1.1              Borrower and Maryland Owner shall deposit with Lender to be held in the Tax Reserve Account on each Payment Date an amount equal to (a) one-twelfth (1/12) of the annual Impositions that Lender reasonably estimates in its good faith judgment, based on the most recent tax bill for each Individual Property, will be payable during the next ensuing twelve (12) months in order to accumulate with Lender sufficient funds to pay all such Impositions at least ten (10) days prior to the imposition of any interest, charges or expenses for the non-payment thereof, and (b) one-twelfth (1/12) of the annual Other Charges that Lender reasonably estimates in its good faith judgment will be payable during the next ensuing twelve (12) months (said monthly amounts in (a) and (b) collectively, the “Monthly Tax Reserve Amount”).

 

136

 

Amounts so deposited shall herein be referred to as Borrower’s “Tax Reserve Amount”.  Provided no Event of Default shall have occurred and be continuing, Lender shall apply the Tax Reserve Amount, if any, to payments of Impositions and Other Charges required to be made by Borrower and Maryland Owner pursuant to Article V and Article VII and under the Security Instrument, subject to Borrower’s and Maryland Owner’s right to contest Impositions and Other Charges in accordance with Section 7.3.  In making any payment from the Tax Reserve Account, Lender may do so according to any bill, statement or estimate procured from the appropriate public office, 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 funds in the Tax Reserve Account shall exceed the amounts due for Impositions and Other Charges pursuant to Article V and Article VII for any tax period, Lender shall adjust future payments of the Tax Reserve Amount, as necessary, to be made by Borrower and Maryland Owner.  If at any time Lender reasonably determines that the Tax Reserve Amount is not or will not be sufficient to pay Impositions and Other Charges by the dates set forth above, Lender shall notify Borrower and Maryland Owner of such determination and Borrower and Maryland Owner shall increase the deposit of the Monthly Tax Reserve Amount by the amount that Lender reasonably estimates is sufficient to make up the deficiency at least ten (10) days prior to the imposition of any interest, charges or expenses for the non-payment of the Impositions and Other Charges, provided that upon payment of the Impositions and Other Charges, Lender shall reassess the amount necessary to be deposited in the Tax Reserve Account for the succeeding tax period, which calculation shall take into account any excess amounts remaining in the Tax Reserve Account.  Any amounts remaining in the Tax Reserve Account after the Indebtedness has been repaid in full shall be promptly returned to Borrower and/or Maryland Owner or its designee.

 

Section 16.2                             Insurance Reserve Account.

 

16.2.1              Borrower and Maryland Owner shall deposit with Lender (to be held in the Insurance Reserve Account) on each Payment Date an amount equal to one-twelfth (1/12) of the insurance premiums that Lender reasonably estimates in its good faith judgment, based on the most recent insurance bill, will be payable for the renewal of the coverage afforded by the insurance policies 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 the policies required to be maintained by Borrower and Maryland Owner pursuant to the terms hereof (said monthly amounts herein called the “Monthly Insurance Reserve Amount”).  Amounts so deposited shall herein be referred to as Borrower’s “Insurance Reserve Amount”.  Provided no Event of Default shall have occurred and be continuing, Lender shall apply the Insurance Reserve Amount, if any, to payments of insurance premiums required to be made by Borrower and Maryland Owner pursuant to Article VI and under the Security Instrument.  In making any payment relating to the Insurance Reserve Account, Lender may do so according to any bill, statement or estimate procured from the insurer or agent, without inquiry into the accuracy of such bill, statement or estimate or into the validity thereof.  Notwithstanding anything herein to the contrary, to the extent that any of the insurance required to be maintained by Borrower and Maryland Owner is effected under a blanket policy, neither Borrower nor Maryland Owner shall be required to make deposits of the Monthly Insurance Reserve Amount.  If the amount of funds in the Insurance Reserve Account shall exceed the amounts due for insurance premiums pursuant to Article VI and under the Security Instrument, Lender shall

 

137

 

adjust future payments of the Insurance Reserve Amount, as necessary, to be made by Borrower and Maryland Owner.  If at any time Lender reasonably determines in its good faith judgment that the Insurance Reserve Amount is not or will not be sufficient to pay insurance premiums by the dates set forth above, Lender shall notify Borrower and Maryland Owner of such determination and Borrower and Maryland Owner shall increase its the deposit of the Monthly Insurance Reserve Amount by the amount that Lender reasonably estimates is sufficient to make up the deficiency at least thirty (30) days prior to expiration of the applicable insurance policies, provided that upon payment of such insurance premiums, Lender shall reassess the amount necessary to be deposited in the Insurance Reserve Account for the succeeding insurance billing period, which calculation shall take into account any excess amounts remaining in the Insurance Reserve Account.  Any amounts remaining in the Insurance Reserve Account after the Indebtedness has been repaid in full shall be promptly returned to Borrower and/or Maryland Owner or its designee.

 

Section 16.3                             Replacements and Replacement Reserve.

 

16.3.1              Borrower and Maryland Owner shall deposit with Lender on each Payment Date (to be held in the Replacement Reserve Account) one-twelfth (1/12th) of an amount equal to $0.13 per square foot of the Properties per annum (the “Monthly Replacement Reserve Amount”), which represents amounts estimated to be required for replacements, repairs, and other capital improvements required to be made to the Properties during the calendar year (collectively, the “Replacements”) based on the total square footage for each Individual Property set forth in Schedule 16.3.  Amounts so deposited shall herein be referred to as Borrower’s “Replacement Reserve Amount”.  Borrower’s obligation to deposit with Lender the Monthly Replacement Reserve Amount (either directly or from the Rents) shall not be in effect at any time the Replacement Reserve Amount is equal to or greater than the product of the then current Monthly Replacement Reserve Amount times twenty four (24) months; provided that at any time the Replacement Reserve Amount is less than such amount, Borrower’s obligation to deposit with Lender the Monthly Replacement Reserve Amount shall resume as of the next occurring Payment Date.  Any amount held in the Replacement Reserve Account in respect of an Individual Property shall be retained by Lender and credited toward future Monthly Replacement Reserve Amounts required by Lender hereunder in the event such Individual Property is released from the Lien of its related Security Instrument in accordance with Section 2.4, Section 2.5 or Section 2.6 hereof.

 

16.3.2              Disbursements from Replacement Reserve Account (a) Lender shall make disbursements from the Replacement Reserve Account to pay Borrower and/or Maryland Owner only for the costs of the Replacements.

 

(b)                                 Lender shall, upon written request from Borrower and/or Maryland Owner and satisfaction of the requirements set forth in this Section 16.3.2, disburse to Borrower and/or Maryland Owner amounts from the Replacement Reserve Account necessary to reimburse Borrower or Maryland Owner for the actual costs of Replacements, upon completion of such Replacements (or upon partial completion in the case of Replacements made pursuant to Section 16.3.2(e) hereof) as determined by Lender in its reasonable good faith judgment.  In no event shall Lender be obligated to disburse funds from the Replacement Reserve Account if an Event of Default exists and is continuing.

 

138

 

(c)                                  Each request for disbursement from the Replacement Reserve Account shall be in a form specified or approved by Lender acting reasonably and shall specify (i) the specific Replacements for which the disbursement is requested, (ii) the quantity and price of each item purchased, if the Replacement includes the purchase or replacement of specific items, (iii) the price of all materials (grouped by type or category) used in any Replacement other than the purchase or replacement of specific items, and (iv) the cost of all contracted labor or other services applicable to each Replacement for which such request for disbursement is made.  With each request Borrower and/or Maryland Owner shall certify that all Replacements have been made in all material respects in accordance with all applicable Legal Requirements of any Governmental Authority having jurisdiction over the applicable Individual Property to which Replacements are being provided.  Each request for disbursement shall include copies of invoices for all items or materials purchased and all contracted labor or services provided.  Except as provided in Section 16.3.2(e) hereof, each request for disbursement from the Replacement Reserve Account shall be made only after completion of the Replacement for which disbursement is requested.  Borrower shall provide Lender evidence of completion of the subject Replacement satisfactory to Lender in its reasonable judgment.

 

(d)                                 Borrower and/or Maryland Owner shall pay all invoices in connection with the Replacements with respect to which a disbursement is requested prior to submitting such request for disbursement from the Replacement Reserve Account or, at the request of Borrower and/or Maryland Owner, Lender will issue checks, payable to Borrower and/or Maryland Owner and the contractor, supplier, materialman, mechanic, subcontractor or other party to whom payment is due in connection with a Replacement.  In the case of payments made by joint check, Lender may require a waiver of lien from each Person receiving payment prior to Lender’s disbursement from the Replacement Reserve Account.  Any lien waiver delivered hereunder shall conform in all material respects to the Legal Requirements of applicable law and shall cover all work performed and materials supplied (including equipment and fixtures) for the applicable Individual Property by such contractor, supplier, subcontractor, mechanic,  materialman or other party through the date covered by the current reimbursement request (or, in the event that payment to such contractor, supplier, subcontractor, mechanic, materialman or other party is to be made by a joint check, the release of lien shall be effective through the date covered by the previous release of funds request).  In addition, as a condition to any disbursement, Lender may require Borrower and/or Maryland Owner to obtain lien waivers from each contractor, supplier, materialman, mechanic or subcontractor who receives payment in an amount equal to or greater than Two Hundred Thousand and No/100 Dollars ($200,000.00) for completion of its work or delivery of its materials.

 

(e)                                  If (i) the cost of a Replacement exceeds Two Hundred Thousand and No/100 Dollars ($200,000.00), (ii) the contractor performing such Replacement requires periodic payments pursuant to terms of a written contract, and (iii) Lender has approved in writing in advance such periodic payments, a request for reimbursement from the Replacement Reserve Account may be made after completion of a portion of the work under such contract, provided that (A) such contract requires payment upon completion of such portion of the work, (B) the materials for which the request is made are on site at the applicable Individual Property and are properly secured or have been installed in such Individual Property, (C) all other conditions in this Section 16.3 for disbursement have been satisfied, (D) funds remaining in the Replacement Reserve Account are, in Lender’s good faith reasonable judgment, sufficient to complete such

 

139

 

Replacement and other Replacements then committed for when required, and (E) if required by Lender, each contractor or subcontractor receiving payments under such contract in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00) shall provide a waiver of lien with respect to amounts which have been paid to that contractor or subcontractor.

 

(f)                                   Borrower shall not make a request for disbursement from the Replacement Reserve Account more frequently than once in any calendar month and (except in connection with the final disbursement) the total cost of all Replacements in any request shall not be less than Twenty-Five Thousand and No/100 Dollars ($25,000.00).  Any amounts remaining in the Replacement Reserve Account after the Indebtedness has been repaid in full shall be promptly returned to Borrower and/or Maryland Owner or its designee.

 

16.3.3              Performance of Replacements.

 

(a)                                 Borrower and/or Maryland Owner shall make Replacements when required in order to keep each Individual Property in condition and repair consistent with other first class, retail properties, as applicable, in the same market segment in the metropolitan area in which the respective Individual Property is located, and to keep each Individual Property or any portion thereof from deteriorating.  Borrower shall complete all Replacements in a good and workmanlike manner as soon as practicable following the commencement of making each such Replacement.

 

(b)                                 All contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors or other parties providing labor or materials in connection with the Replacements shall be on market terms for the area in which the applicable Individual Property is located.

 

(c)                                  During the continuance of an Event of Default, Lender shall have the option to withhold disbursement for such unsatisfactory Replacement and to proceed under existing contracts or to contract with third parties to complete such Replacement and to apply the Replacement Reserve Amount toward the labor and materials necessary to complete such Replacement, without providing any prior notice to Borrower, and to exercise any and all other remedies available to Lender upon an Event of Default hereunder.

 

(d)                                 In order to facilitate Lender’s completion or making of such Replacements during the continuance of an Event of Default pursuant to Section 16.3.3(c) above, Borrower grants Lender (after prior written notice to Borrower and/or Maryland Owner and subject to the rights of tenants and ground lessors) the right to enter onto any Individual Property and perform any and all work and labor necessary to complete or make such Replacements and/or employ watchmen to protect such Individual Property from damage.  All sums so expended by Lender, to the extent not from the Replacement Reserve Fund, shall be deemed to have been advanced under the Loan to Borrower and/or Maryland Owner and secured by the Security Instruments.  For this purpose, during the continuance of an Event of Default Borrower and Maryland Owner each constitutes and appoints Lender its true and lawful attorney-in-fact with full power of substitution to complete or undertake such Replacements in the name of Borrower and/or Maryland Owner.  Such power of attorney shall be deemed to be a power coupled with an interest and cannot be revoked.  Borrower and Maryland Owner each empower said attorney-in-fact as follows during the continuance of an Event of Default:  (i) to use any funds in the

 

140

 

Replacement Reserve Account for the purpose of making or completing such Replacements; (ii) to make such additions, changes and corrections to such Replacements as shall be necessary or desirable to complete such Replacements; (iii) to employ such contractors, subcontractors, agents, architects and inspectors as shall be required for such purposes; (iv) to pay, settle or compromise all existing bills and claims which are or may become Liens against any Individual Property, or as may be necessary or desirable for the completion of such Replacements, or for clearance of title; (v) to execute all applications and certificates in the name of Borrower and/or Maryland Owner which may be required by any of the contract documents; (vi) to prosecute and defend all actions or proceedings in connection with any Individual Property or the rehabilitation and repair of any Individual Property; and (vii) to do any and every act which Borrower and/or Maryland Owner might do in its own behalf to fulfill the terms of this Agreement.

 

(e)                                  Nothing in this Section 16.3.3 shall:  (i) make Lender responsible for making or completing any Replacements; (ii) require Lender to expend funds in addition to the Replacement Reserve Amount to make or complete any Replacement; (iii) obligate Lender to proceed with any Replacements; or (iv) obligate Lender to demand from Borrower and/or Maryland Owner additional sums to make or complete any Replacement.

 

(f)                                   Borrower and Maryland Owner shall permit Lender and Lender’s agents and representatives (including, without limitation, Lender’s engineer, architect, or inspector) or third parties making Replacements pursuant to this Section 16.3.3 to enter onto each Individual Property during normal business hours (subject to reasonable prior written notice to Borrower and/or Maryland Owner and subject to the rights of tenants and ground lessors) to inspect the progress of any Replacements and all materials being used in connection therewith, to examine all plans and shop drawings relating to such Replacements which are or may be kept at each Individual Property, and to complete any Replacements made pursuant to Section 16.3.3(d).  Borrower and Maryland Owner shall cause all contractors and subcontractors to cooperate with Lender or Lender’s representatives or such other Persons described above in connection with inspections described in this Section 16.3.3(f) or the completion of Replacements pursuant to Section 16.3.3(d).

 

(g)                                  Lender may require an inspection of the Individual Property at Borrower’s expense prior to making a monthly disbursement from the Replacement Reserve Account in excess of Two Million and No/100 Dollars ($2,000,000.00) at any Individual Property in order to verify completion of the Replacements for which reimbursement is sought.  Lender may require that such inspection be conducted by an appropriate independent qualified professional selected by Lender.  Borrower and/or Maryland Owner shall pay the reasonable out-of-pocket expense of all third-party professionals in connection with the inspection as required under this Section 16.3.3(g).

 

(h)                                 The Replacements and all materials, equipment, fixtures, or any other item comprising a part of any Replacement shall be constructed, installed or completed, as applicable, free and clear of all mechanic’s, materialmen’s or other liens other than Permitted Encumbrances.

 

(i)                                     Before each disbursement from the Replacement Reserve Account in excess of Two Million and No/100 Dollars ($2,000,000.00), Lender may require Borrower

 

141

 

and/or Maryland Owner to provide Lender with a search of title to the applicable Individual Property effective to the date of the disbursement, which search shows that no mechanic’s or materialmen’s liens or other liens of any nature have been placed against the applicable Individual Property since the date of recordation of the related Security Instrument and that title to such Individual Property is free and clear of all Liens (other than the lien of the related Security Instrument, any other Liens previously approved in writing by Lender, if any, and Permitted Encumbrances).

 

(j)                                    All Replacements shall comply in all material respects with all applicable Legal Requirements of all Governmental Authorities having jurisdiction over the applicable Individual Property and applicable insurance requirements including, without limitation, applicable building codes, special use permits, environmental regulations, and requirements of insurance underwriters.

 

16.3.4              Balance in the Replacement Reserve Account.  The insufficiency of any balance in the Replacement Reserve Account shall not relieve Borrower and/or Maryland Owner from its obligation to fulfill all preservation and maintenance covenants in the Loan Documents.

 

Section 16.4                             Ground Lease Reserve Fund.

 

16.4.1              Deposits to Ground Lease Fund.  Borrower and Maryland Owner shall deposit with Lender (to be held in the Ground Lease Reserve Account) on each Payment Date one-twelfth (1/12) of the Ground Rent that Lender estimates in its good faith reasonable judgment will be payable by Ground Tenant as tenant under the Ground Lease during the next ensuing twelve (12) months in order to accumulate with Lender sufficient funds to pay all such Ground Rent at least thirty (30) days prior to the respective due dates (the “Monthly Ground Lease Reserve Amount”).  In addition, on the Closing Date, Borrower and Maryland Owner shall deposit with Lender an amount equal to any Ground Rent payable and outstanding under the Ground Lease within thirty (30) days of the first Payment Date.  Amounts so deposited shall herein be referred to as Borrower’s “Ground Lease Reserve Amount”.

 

16.4.2              Release of Ground Lease Reserve Funds.  Lender shall have the right to apply amounts in the Ground Lease Reserve Account to the payment of the Ground Rent.  In making any payment relating to the Ground Rent, Lender may do so according to any bill, statement or estimate procured from the Ground Lessor under each Ground Lease, without inquiry into the accuracy of such bill, statement or estimate.  If the Ground Lease Reserve Amount shall exceed the amounts due for the Ground Rent under the Ground Lease for the immediately succeeding twelve (12) months as determined by Lender, Lender shall promptly return any excess to Borrower and Maryland Owner.  If at any time Lender reasonably in its good faith judgment determines that the Ground Lease Account is not or will not be sufficient to pay the Ground Rent by the dates set forth above, Lender shall notify Borrower or Maryland Owner, as applicable, of such determination and Borrower and Maryland Owner shall increase the Monthly Ground Lease Reserve Amount by the amount that Lender estimates is sufficient to make up the deficiency at least thirty (30) days prior to the due date of the Ground Rent.  Any amounts remaining in the Ground Lease Reserve Account after the Indebtedness has been repaid in full shall be promptly returned to Borrower and/or Maryland Owner or its designee.

 

142

 

Section 16.5                             Intentionally Omitted.

 

Section 16.6                             Reserve Accounts, Generally.  Borrower and Maryland Owner grant to Lender a first-priority perfected security interest in each of the Reserve Accounts and any and all monies now or hereafter deposited in each Reserve Account as additional security for payment of the Indebtedness.  Until expended or applied in accordance herewith, the Reserve Accounts shall constitute additional security for the Indebtedness.  Upon the occurrence and during the continuance of an Event of Default, Lender may, in addition to any and all other rights and remedies available to Lender, apply any sums then present in any or all of the Reserve Accounts to the payment of the Indebtedness in any order in its sole discretion.  The Reserve Accounts shall not constitute trust funds and may be commingled with other monies held by Lender.  The Reserve Accounts shall be Eligible Accounts and held in Permitted Investments in accordance with the terms and provisions of this Agreement and the Cash Management Agreement.  All interest on the funds in a Reserve Account shall be added to and become a part thereof.  Borrower and Maryland Owner shall be responsible for payment of any federal, state or local income or other tax applicable to the interest earned on funds in the Reserve Accounts.  Neither Borrower nor Maryland Owner shall, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any Reserve Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements to be filed with respect thereto, except, in each case, for those permitted, created or filed pursuant to the terms of the Loan Documents.  Lender shall not be liable for any loss sustained on the investment of any funds in the Reserve Accounts.  Borrower and Maryland Owner shall indemnify Lender and hold Lender harmless from and against any Losses arising from or in any way connected with the Reserve Accounts or the performance of the obligations for which the Reserve Accounts were established, except to the extent such Loss resulted from Lenders or its Affiliate’s, agent’s, employee’s or bailee’s fraud, gross negligence, bad faith or reckless or willful misconduct.  Borrower and Maryland Owner shall assign to Lender all rights and claims Borrower and/or Maryland Owner may have against all Persons supplying labor, materials or other services which are to be paid from or secured by the Reserve Accounts; provided, however, that Lender may not pursue any such right or claim unless an Event of Default has occurred and remains uncured.

 

Section 16.7                             Guaranty of Reserve Accounts.  Except in connection with any required deposits into the Excess Cash Flow Reserve Account, in lieu and in satisfaction of Borrower’s and/or Maryland Owner’s obligation of making all or any portion of the required payments to the Reserve Accounts required under Section 16.1, Section 16.2, Section 16.3, Section 16.4, Section 16.10 and Section 16.11 or in lieu of and in exchange for the Letter of Credit, Borrower and/or Maryland Owner may deliver to Lender a Reserve Guaranty.  Notwithstanding the foregoing, from and after the occurrence and during the continuance of a Guarantor Rating Period (a) with respect to all Reserve Accounts other than the Required Remediation Reserve Account, Borrower shall either (i) promptly deposit cash into the Reserve Accounts as otherwise provided in this Article XVI in an amount equal to the amount that would have been on deposit in the Reserve Account as of such date had Borrower and/or Maryland Owner, as required, been funding such Reserve Accounts in accordance with the terms of this Agreement, absent the delivery of the Reserve Guaranty, taking into account the applicable terms of this Agreement, including, without limitation, (A) the amounts that would have been withdrawn therefrom periodically for the payment of costs or expenses to be paid out of such

 

143

 

Reserve Accounts, (B) the fifth (5th) sentence of Section 16.2.1 (regarding blanket insurance policies) and (C) the maximum amount prescribed by Section 16.3.1 or (ii) promptly deliver to Lender a Letter of Credit in lieu of such cash deposits set forth in clause (i), which Letter of Credit shall satisfy the requirements of Section 16.8 and (b) with regard to the Required Remediation Reserve Account, an amount, if any, equal to the Required Remediation Amount less the amounts that would have been withdrawn therefrom periodically for the payment of costs or expenses in connection with the Required Remediation completed by Borrower and/or Maryland Owner prior to the date of such Guarantor Rating Period (the “Required Remediation Deposit Amount”) shall be deposited into the Required Remediation Account pursuant to and in accordance with Section 3.1(a) of the Cash Management Agreement.

 

Section 16.8                             Letters of Credit.

 

16.8.1              Delivery of Letters of Credit.

 

(a)                                 In lieu of making all or any portion of the required payments to the Reserve Accounts, Borrower and/or Maryland Owner may deliver to Lender in addition to the Reserve Guaranty or cash deposits, a Letter of Credit with respect to all or any portion of the amount due under the Reserve Guaranty or Section 16.1, Section 16.2, Section 16.3, Section 16.4, Section 16.10 and Section 16.11, in accordance with the provisions of this Section 16.8.  Additionally, Borrower and/or Maryland Owner may deliver to Lender a Letter of Credit in accordance with the provisions of this Section 16.8 in exchange for the return to Borrower and/or Maryland Owner of all or any portion of deposits previously made to the Reserve Accounts or the Reserve Guaranty.  Upon such delivery of such Letter of Credit in accordance with the provisions of this Section 16.8, Lender shall promptly return to Borrower and/or Maryland Owner such deposits previously made which are not covered by the Letter of Credit and/or the Reserve Guaranty.  The aggregate amount of any Reserve Guaranty, Letter of Credit and/or cash on deposit with respect to the Reserve Accounts shall at all times be at least equal to the aggregate amount which Borrower is required to have on deposit in such Reserve Accounts pursuant to this Agreement.

 

(b)                                 Borrower and Maryland Owner shall give Lender no less than thirty (30) days’ notice of Borrower’s and/or Maryland Owner’s election to deliver a Letter of Credit, and Borrower and Maryland Owner shall pay to Lender all of Lender’s reasonable out-of-pocket costs and expenses in connection therewith (but not any servicer’s, special servicer’s or trustee’s fees).  Neither Borrower nor Maryland Owner shall be entitled to draw upon any such Letter of Credit.  Upon ten (10) day’s notice to Lender, Borrower and/or Maryland Owner may replace a Letter of Credit with a cash deposit to any of the Reserve Accounts.  Prior to the return of a Letter of Credit otherwise required to be maintained hereunder, Borrower and/or Maryland Owner shall (i) deposit an amount equal to the amount that would have been on deposit in the applicable Reserve Account(a) as of such date had Borrower and/or Maryland Owner, as required, been funding such Reserve Accounts in accordance with the terms of this Agreement, absent the delivery of the Letter of Credit, taking into account the applicable terms of this Agreement, including, without limitation, (i) the amounts that would have been withdrawn therefrom for the payment of costs or expenses to be paid out of such Reserve Accounts, (ii) the fifth (5th) sentence of Section 16.2.1 (regarding blanket insurance policies) and (iii) the

 

144

 

maximum amount prescribed by Section 16.3.1 or (ii) provide a Reserve Guaranty in respect of such amount to the extent permitted hereunder.

 

16.8.2              Security for Indebtedness.  Each Letter of Credit delivered under this Agreement shall be additional security for the payment of the Indebtedness.  Upon the occurrence and during the continuance of an Event of Default, Lender shall have the right, at its option, to draw upon any Letter of Credit and to apply all or any part thereof to the payment of the items for which such Letter of Credit was established or to apply each such Letter of Credit to payment of the Indebtedness in such order, proportion or priority as Lender may determine.  Any such application to the principal amount of the Indebtedness shall be subject to the Yield Maintenance Premium in accordance with and subject to Section 2.3.3.

 

16.8.3              Additional Rights of Lender.  In addition to any other right Lender may have to draw upon a Letter of Credit pursuant to the terms and conditions of this Agreement, Lender shall have the additional right to draw upon any Letter of Credit in full:  (a) with respect to any evergreen Letter of Credit, if Lender has received a notice from the issuing bank that the Letter of Credit will not be renewed and a substitute Letter of Credit is not provided at least thirty (30) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (b) with respect to any Letter of Credit with a stated expiration date, if Lender has not received a notice from the issuing bank that it has renewed the Letter of Credit at least thirty (30) days prior to the date on which such Letter of Credit is scheduled to expire and a substitute Letter of Credit is not provided at least thirty (30) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (c) upon receipt of notice from the issuing bank that the Letter of Credit will be terminated (except if the termination of such Letter of Credit is permitted pursuant to the terms and conditions of this Agreement or a substitute Letter of Credit is provided); or (d) if Lender has received notice that the bank issuing the Letter of Credit shall cease to be an Approved Bank and a substitute Letter of Credit is not provided at least fifteen (15) days from the date Lender receives such notice.  Notwithstanding anything to the contrary contained in the above, Lender is not obligated to draw upon any Letter of Credit upon the happening of an event specified in clauses (a) or (b) above and shall not be liable for any losses sustained by Borrower due to the insolvency of the bank issuing the Letter of Credit if Lender has not drawn upon the Letter of Credit.

 

16.8.4              Limitations on Guarantees and Letters of Credit.  The parties have agreed that the Guaranteed Obligations, together with any Letter of Credit delivered pursuant to Section 16.8, shall not exceed ten percent (10%) of the outstanding principal balance of the Loan.  Accordingly, in the event that at any time the Guaranteed Obligations then outstanding together with any such Letter of Credit delivered pursuant to Section 16.8 exceeds ten percent (10%) of the outstanding principal balance of the Loan (such excess amount, the “Guaranty Excess”), Borrower shall, within ten (10) Business Days, promptly deposit cash into the Reserve Accounts as otherwise provided in this Article XVI in the amount of the Guaranty Excess and the Letter of Credit, the Reserve Guaranty and/or the Alteration Deficiency Guaranty shall be correspondingly reduced.  Any calculations made by Lender with respect to calculations of any amount required to be deposited by Borrower in the applicable Reserve Accounts and/or the Guaranty Excess shall be made in Lender’s reasonable good faith determination.  Lender shall return all or such portion of the Guaranty Excess to the extent the Guaranteed Obligations, together with any Letter of Credit delivered under Section 16.8, are subsequently reduced to an amount that is less

 

145

 

than ten percent (10%) of the outstanding principal balance of the Loan; provided that a new Letter of Credit, Alteration Deficiency Guaranty or Reserve Guaranty, as applicable, is delivered in exchange.

 

Section 16.9                             Excess Cash Flow Reserve Account.

 

16.9.1              During the continuance of a Cash Sweep Period, all Excess Cash Flow distributed to Lender pursuant to the Cash Management Agreement shall be deposited and held by Lender in the Excess Cash Flow Reserve Account.  Amounts so deposited shall herein be referred to as Borrower’s “Excess Cash Flow Reserve Amount”, and unless expended or applied in accordance herewith, shall constitute additional security for the Indebtedness.  Upon the earlier of (a) the occurrence of a Cash Sweep Event Cure and (b) the payment in full of the Indebtedness in accordance with the terms and provisions of the Loan Documents, the Excess Cash Flow Reserve Amount shall be promptly paid by Lender to Borrower and/or Maryland Owner, free and clear of the Lien of the Security Instrument or any other Loan Documents, and shall then be distributable by Borrower and/or Maryland Owner.

 

Section 16.10                      TI and Leasing Reserve Account.

 

(a)                                 Borrower and Maryland Owner shall deposit with Lender on the date hereof the amount of Three Million Two Hundred Thousand Ten and No/100 Dollars ($3,210,000.00) (the “TI and Leasing Reserve Amount”) to be held in the TI and Leasing Reserve Account, which amount shall be deposited with and held by Lender for tenant improvement and leasing commission obligations to be incurred prior to the date hereof with respect to certain Leases, all of which are specified on Schedule 16.10.  Provided that no Event of Default shall have occurred and be continuing, Lender shall make disbursements from the TI and Leasing Reserve Account (to the extent of funds on deposit therein) to Borrower and/or Maryland Owner to pay for or reimburse Borrower and/or Maryland Owner for the items specified on Schedule 16.10 (collectively, “TI and Leasing Costs”).

 

(b)                                 As between Lender and Borrower, Borrower shall be obligated to fund directly to such Tenants or third parties, as the case may be, all TI and Leasing Costs as required by a Lease.

 

Section 16.11                      Required Remediation Funds.

 

16.11.1       Deposits.  Borrower and Maryland Owner shall deposit with Lender on the date hereof the amount of One Million Three Hundred Thirty Three Thousand One Hundred Twenty Five and No/100 Dollars ($1,333,125.00) (the “Required Remediation Amount”) to be held in the Required Remediation Reserve Account, which amount shall be deposited with and held by Lender to perform the Required Remediation for each Individual Property indentified on Schedule 16.11.1 hereto.  Each of Borrower and Maryland Owner shall perform the monitoring and remediation at each applicable Individual Property as more particularly set forth on Schedule 16.11.1 hereto (such repairs herein referred to as “Required Remediation”) in a good workmanlike and prompt and expeditious manner, and shall diligently and continuously prosecute same to completion.  The amounts set forth on Schedule 16.11.1 include an additional twenty five percent (25%) of the cost of the work to secure Lender against cost overruns; such

 

146

 

twenty five percent (25%) will be released to Borrower (to the extent not previously released) when the Required Remediation at an Individual Property has been substantially completed.

 

16.11.2       Release of Required Remediation Funds.  Lender shall disburse to Borrower and Maryland Owner funds from the Required Remediation Reserve Account from time to time upon satisfaction by Borrower and Maryland Owner of each of the following conditions:  (a) Borrower and Maryland Owner shall submit a written request for payment to Lender at least ten (10) days prior to the date on which Borrower or Maryland Owner requests such payment be made and specifies the Required Remediation to be paid for, (b)  on the date such payment is to be made, no Event of Default shall exist and remain uncured, in connection with the final disbursement (c) Lender shall have received an Officer’s Certificate (i) stating that all Required Remediation at the applicable Individual Property to be funded by the requested disbursement have been performed in good and workmanlike manner and in accordance with all Legal Requirements in all material respects, such certificate to be accompanied by a copy of any license, permit or other approval (if any) by any Governmental Authority required to commence and/or complete the Required Remediation, (ii) identifying each Person that supplied materials or labor in connection with the Required Remediation performed at such Individual Property to be funded by the requested disbursement under a contract in excess of One Million and No/100 Dollars ($1,000,000.00), and (iii) stating that each Person who has supplied materials or labor in connection with the Required Remediation to be funded by the requested disbursement has been paid to date in full or will be paid to date in full upon such disbursement, such Officer’s Certificate to be accompanied by lien waivers or other evidence of payment reasonably satisfactory to Lender, (d) at Lender’s option in connection with the final disbursement, Lender shall have received a title search for such Individual Property indicating that such Individual Property is free from all liens, claims and other encumbrances not previously approved by Lender other than Permitted Encumbrances, and (e) Lender shall have received such other evidence as Lender shall reasonably request that the Required Remediation at such Individual Property to be funded by the requested disbursement have been performed and are paid for or will be paid upon such disbursement to Borrower or Maryland Owner.  Lender shall not be required to make disbursements from the Required Remediation Account with respect to the Properties more than once each calendar month and such disbursement shall be made only upon satisfaction in all material respects of each condition contained in this Section 16.11.2.  Any amounts remaining in the Required Remediation Reserve Account after the Indebtedness has been repaid in full shall be promptly returned to Borrower and/or Maryland Owner or its designee.

 

ARTICLE XVII

 

DEFAULTS

 

Section 17.1                             Event of Default.

 

(a)                                 Each of the following events shall constitute an event of default hereunder (an “Event of Default”):

 

147

 

(1)                                 if (A) the Indebtedness is not paid in full on the Maturity Date, (B) any regularly scheduled monthly payment of interest and/or principal due under the Note is not paid in full on the applicable Payment Date, (C) any prepayment of principal due under this Agreement or the Note is not paid when due, (D) any amounts paid to Borrower and/or Maryland Owner and not deposited to the Lockbox Account where such failure continues for two (2) Business Days following notice from Lender that such deposit has not been made, or (E) except as to any amount included in (A), (B), (C) and/or (D) of this sub-paragraph (1), any other amount payable pursuant to this Agreement, the Note or any other Loan Document is not paid in full when due and payable in accordance with the provisions of the applicable Loan Document, with such failure continuing for ten (10) Business Days after Lender delivers written notice thereof to Borrower;

 

(2)                                 subject to Borrower’s and/or Maryland Owner’s right to contest as set forth in Section 7.3, if any of the Impositions or Other Charges are not paid prior to the imposition of any interest, penalty, charge or expense for the non-payment thereof (except to the extent Lender is obligated to disburse funds from the Tax Reserve Account to pay for such Impositions or Other Charges under this Agreement, Lender has sufficient funds in such Tax Reserve Account to make such payment and Lender fails to make such payment);

 

(3)                                 if the insurance policies required by Section 6.1 are not kept in full force and effect (except to the extent Lender is obligated to disburse funds from the Insurance Reserve Account to pay for such insurance policies under this Agreement, Lender has sufficient funds in such Insurance Reserve Account to make such payment and Lender fails to make such payment), or if certified copies of any of such insurance policies (or other evidence of required insurance hereunder reasonably satisfactory to Lender) are not delivered to Lender on or before the date the same are to be delivered hereunder, and, in each case, such failure continues for ten (10) days after notice thereof;

 

(4)                                 if, except as permitted pursuant to Article VIII or any other provision of a Loan Document, (A) any Transfer of any direct or indirect legal, beneficial or equitable interest in all or any portion of the Properties (or any portion of any Individual Property) occurs, (B) any Transfer of any direct or indirect legal, beneficial or equitable interest in Borrower and/or Maryland Owner occurs, (C) any Lien on all or any portion of the Properties (or any portion of any Individual Property) occurs other than a Permitted Encumbrance, (D) any pledge, hypothecation, creation of a security interest in or other encumbrance of any direct or indirect legal, beneficial or equitable interests in Borrower and/or Maryland Owner occurs other than a Permitted Encumbrance, or (E) the filing of a declaration of condominium with respect to any Individual Property occurs;

 

(5)                                 if any representation or warranty made by Borrower and/or Maryland Owner herein or by Borrower, Maryland Owner Guarantor or any Affiliate of Borrower and/or Maryland Owner in any other Loan Document, or in any report, financial statement or other instrument, agreement or document

 

148

 

furnished to Lender pursuant hereto, shall have been false or misleading in any material respect as of the date the representation or warranty was made and such misrepresentation shall have a Material Adverse Effect, provided, however, with respect to any such breach which is not the subject of any other subsection of this Section 17.1(a) and which is capable of being cured, Borrower and/or Maryland Owner fails to remedy such condition within ten (10) days following notice to Borrower and Maryland Owner from Lender, in the case of any such breach which can be cured by the payment of a sum of money, or within thirty (30) days following notice from Lender in the case of any other such breach; provided, however, that if such non-monetary breach is susceptible of cure but cannot reasonably be cured within such thirty (30)-day period and provided further that Borrower and/or Maryland Owner shall have commenced to cure such breach within such thirty (30)-day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30)-day period shall be extended for such time as is reasonably necessary for Borrower and Maryland Owner in the exercise of due diligence to cure such breach, such additional period not to exceed sixty (60) days plus time permitted for Excusable Delays;

 

(6)                                 if Borrower, Maryland Owner or Guarantor shall make a general assignment for the benefit of creditors;

 

(7)                                 if a receiver, liquidator or trustee shall be appointed for Borrower, Maryland Owner or Guarantor or if Borrower, Maryland Owner or Guarantor shall be adjudicated a bankrupt or insolvent, or if 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, Maryland Owner or Guarantor, or if any proceeding for the dissolution or liquidation of Borrower, Maryland Owner or Guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower, Maryland Owner or Guarantor, upon the same not being discharged, stayed or dismissed within ninety (90) days;

 

(8)                                 if Borrower, Maryland Owner or Guarantor, as applicable, attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;

 

(9)                                 with respect to any term, covenant or provision set forth herein (other than the other subsections of this Section 17.1) which specifically contains a notice requirement or grace period and provides that failure to comply on or before the expiration of such period shall be an Event of Default hereunder, if Borrower, Maryland Owner or Guarantor shall be in default under such term, covenant or condition after the giving of such notice or the expiration of such grace period;

 

(10)                          if any of the assumptions contained in the Non-Consolidation Opinion or, in any Additional Non-Consolidation Opinion, is or shall become

 

149

 

untrue in any material respect unless such matter is cured in a timely manner and which would not cause an impairment, or negative or adverse change in the Non-Consolidation Opinion so delivered;

 

(11)                          if Borrower and/or Maryland Owner shall fail to comply with any covenants set forth in Section 5.2.10 and such failure to so comply continues without cure for ten (10) days after Lender delivers written notice thereof to Borrower;

 

(12)                          if Borrower and/or Maryland Owner shall fail to comply with any covenants set forth in Section 11.2 with such failure continuing for ten (10) Business Days after Lender delivers written notice thereof to Borrower, subject to Excusable Delay;

 

(13)                          if Borrower and/or Maryland Owner shall fail to comply with any covenants set forth in Section 5.1.26 and such failure materially and adversely affects the value of the Loan or the interest of the Lender in the Loan;

 

(14)                          if this Agreement or any other Loan Document or any Lien granted hereunder or thereunder, in whole or in part, shall terminate or shall cease to be effective or shall cease to be a legally valid, binding and enforceable obligation of Borrower, Maryland Owner or Guarantor subject to any exceptions as to enforceability provided in Section 4.1.19, or any Lien securing the Indebtedness shall, in whole or in part, cease to be a perfected first priority Lien, subject to the Permitted Encumbrances (except in any of the foregoing cases in accordance with the terms hereof or under any other Loan Document or by reason of any affirmative act of Lender) and the same has a Material Adverse Effect and is not cured with in fifteen (15) days;

 

(15)                          the Management Agreement is terminated and a Qualified Manager is not appointed as a replacement manager pursuant to the provisions of Section 5.2.5 within sixty (60) days after such termination;

 

(16)                          except as expressly permitted pursuant to the Loan Documents, if Borrower, Maryland Owner or any other Person grants any easement, covenant or restriction (other than the Permitted Encumbrances) over any Individual Property;

 

(17)                          if Borrower and/or Maryland Owner shall default beyond the expiration of any applicable cure period under any existing easement, covenant or restriction which affects any Individual Property, the default of which shall have a Material Adverse Effect;

 

(18)                          if (A) a breach or default by Ground Tenant under any condition or obligation contained in the Ground Lease is not cured within any applicable cure period provided therein, (B) there occurs any event or condition that gives the Ground Lessor under the Ground Lease a right to terminate or cancel the Ground Lease, (C) the Ground Lease Property shall be surrendered or the Ground Lease shall be terminated or cancelled for any reason or under any circumstances

 

150

 

whatsoever, or (D) any of the terms, covenants or conditions of the Ground Lease shall be modified, changed, supplemented, altered, or amended in a manner resulting in or causing any Individual Material Adverse Effect to the Ground Tenant, without the prior written consent of Lender; provided, however, that prior to declaring an Event of Default under this clause (18), Lender shall permit Ground Tenant to release the Ground Lease Property creating such default situation within sixty (60) days upon payment of the applicable Release Price and satisfaction of the other conditions set forth in Section 2.4 hereof;

 

(19)                          if a breach or default by any Individual Borrower or Maryland Owner under any condition or obligation contained in any REOA is not cured within any applicable cure period provided therein and such default has a Material Adverse Effect; and

 

(20)                          if Borrower, Maryland Owner or Guarantor shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement or of any Loan Document not specified in sub-paragraphs (1) to (19) above, for thirty (30) days after notice from Lender; provided, however, that if such Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided, further, that Borrower, Maryland Owner or Guarantor shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower and Maryland Owner in the exercise of due diligence to cure such Default, such additional period not to exceed one hundred twenty (120) days, subject to Excusable Delay.  Notwithstanding the foregoing sentence, the cure period provided hereunder may be extended for one additional one hundred twenty (120) day period if and only if (A) such default involves breach of a covenant (as distinct from a representation) and cure of such default would require physical construction or remedial work, and (B) such cure cannot with diligence be completed within the initial one hundred twenty (120) (but can with diligence be completed within an additional one hundred twenty (120) day period).  Borrower and/or Maryland Owner shall provide Lender with an additional written report and evidence of the progress of Borrower’s and/or Maryland Owner ‘s cure efforts sixty (60) days after the commencement of such additional one hundred twenty (120) day cure period.

 

(b)                                 Unless waived in writing by Lender, upon the occurrence and during the continuance of an Event of Default (other than an Event of Default described in paragraphs (a)(6) or (7) above), Lender may, without notice or demand, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action as Lender deems advisable to protect and enforce its rights against Borrower, Maryland Owner and in each Individual Property, including, without limitation, (i) declaring immediately due and payable the entire Principal Amount together with interest thereon and all other sums due by Borrower under the Loan Documents, (ii) collecting interest on the Principal Amount at the Default Rate whether or not Lender elects to accelerate the Note and (ii) enforcing or availing itself of any or all rights or remedies set forth in the Loan Documents against Borrower, Maryland Owner and each Individual Property, including, without

 

151

 

limitation, all rights or remedies available at law or in equity; and upon any Event of Default described in paragraph (a)(6) or (a)(7) above, the Indebtedness and all other obligations of Borrower and/or Maryland Owner hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower and Maryland Owner hereby expressly waive any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.  The foregoing provisions shall not be construed as a waiver by Lender of its right to pursue any other remedies available to it under this Agreement, the Security Instrument or any other Loan Document.  Any payment hereunder may be enforced and recovered in whole or in part at such time by one or more of the remedies provided to Lender in the Loan Documents.

 

Section 17.2                             Remedies.

 

(a)                                 Unless waived in writing by Lender, upon the occurrence and during the continuance of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower and/or Maryland Owner under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower and/or Maryland Owner 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 Indebtedness 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 with respect to any Individual Property.  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 herein or in the other Loan Documents.  Without limiting the generality of the foregoing, Borrower and Maryland Owner agree that if an Event of Default is continuing (i) Lender shall not be 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 Properties and/or any Individual Property and the Security Instrument has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Indebtedness or the Indebtedness has been paid in full.

 

(b)                                 Upon the occurrence and during the continuance of an Event of Default, with respect to funds on deposit in the Lockbox Account or the Cash Management Account, Lender may, in Lender’s sole discretion:

 

(i)                                     without notice to Borrower, except as required by law, and at any time or from time to time, charge, set off and otherwise apply all or any part of such funds against the Obligations, Operating Expenses and/or Capital Expenditures for the Properties or any part of any thereof;

 

(ii)                                  at any time and from time to time, exercise any and all rights and remedies available to it under this Agreement, and/or as a secured party under the UCC;

 

152

 

(iii)                               demand, collect, take possession of or receipt for, settle, compromise, adjust, sue for, foreclose or realize upon such funds (or any portion thereof); and

 

(iv)                              take all other actions provided in, or contemplated by, this Agreement.

 

(c)                                  With respect to Borrower and Maryland Owner, the funds on deposit in the Lockbox Account and the Cash Management Account and the Properties, nothing contained herein or in any other Loan Document shall be construed as requiring Lender to resort to any Individual Property for the satisfaction of any of the Indebtedness, and Lender may seek satisfaction out of any Individual Property or any part thereof, in its absolute discretion in respect of the Indebtedness.  In addition, Lender shall have the right from time to time to partially foreclose this Agreement and the Security Instrument in any manner and for any amounts secured by this Agreement or the Security Instrument then due and payable as determined by Lender in its sole discretion including, without limitation, the following circumstances:  (i) in the event Borrower defaults beyond any applicable cure or grace period in the payment of one or more scheduled payments of principal or interest, Lender may foreclose this Agreement and the Security Instrument to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose this Agreement and the Security Instrument to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by this Agreement or the Security Instrument as Lender may elect.  Notwithstanding one or more partial foreclosures, each Individual Property shall remain subject to this Agreement and the Security Instrument to secure payment of sums secured by this Agreement and the Security Instrument and not previously recovered.

 

Section 17.3                             Remedies Cumulative; Waivers.  The rights, powers and remedies of Lender under this Agreement and the Security Instrument shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower and/or Maryland Owner pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise.  Lender’s rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion.  No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall 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 with respect to Borrower or Guarantor shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower, Maryland Owner or Guarantor or to impair any remedy, right or power consequent thereon.

 

Section 17.4                             Costs of Collection.  In the event that after an Event of Default and during the continuance thereof:  (a) the Note or any of the Loan Documents is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding; (b) an attorney is retained to represent Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors’ rights and involving a claim under the Note or any of the Loan Documents or (c) an attorney is retained to protect or enforce the lien or

 

153

 

any of the terms of this Agreement, the Security Instrument or any of the Loan Documents, then, in any such instance, Borrower and Maryland Owner shall pay to Lender all reasonable attorneys’ fees, costs and expenses actually incurred in connection therewith, including costs of appeal, together with interest on any judgment obtained by Lender at the Default Rate.

 

ARTICLE XVIII

 

SPECIAL PROVISIONS

 

Section 18.1                             Exculpation.

 

18.1.1              Exculpated Parties.  No personal liability shall be asserted, sought or obtained by Lender or enforceable against (a) Borrower (except as set forth in this Section 18.1), (b) Maryland Owner, (c) Guarantor (except as set forth in the Guaranty and sub-paragraph (5) below), (d) Manager, (e) any Affiliate of Borrower, (f) any Person owning, directly or indirectly, any legal or beneficial interest in Borrower, Maryland Owner, Guarantor or Manager and/or Maryland Owner, Guarantor, Manager or any Affiliate of Borrower or Maryland Owner, or Manager or (g) any direct or indirect partner, member, principal, officer, Controlling Person, beneficiary, trustee, advisor, shareholder, employee, agent, Affiliate or director of any Persons described in paragraphs (a) through (g) above (collectively, the “Exculpated Parties”) and none of the Exculpated Parties shall have any personal liability (whether by suit deficiency judgment or otherwise) in respect of the Obligations, this Agreement, the Security Instrument, the Note, the Properties or any other Loan Document or otherwise in connection with the Loan, or the making, issuance or transfer thereof, all such liability, if any, being expressly waived by Lender.  The foregoing limitation shall not in any way limit or affect Lender’s right to any of the following and Lender shall not be deemed to have waived any of the following:

 

(1)                                 Any right of Lender to foreclose the lien of this Agreement and the Security Instrument in accordance with the terms and provisions set forth herein and in the Security Instrument;

 

(2)                                 Any right of Lender to take any other action against any other security at any time given to secure the payment of the Note and the other Obligations;

 

(3)                                 Any right of Lender to exercise any other remedy set forth in this Agreement or in any other Loan Document which is not inconsistent with the terms of this Section 18.1;

 

(4)                                 Any right which Lender may have under Section 506(a), Section 506(b), Section 1111(b) or any other provisions of the Bankruptcy Code to file a claim against Borrower for the full amount of the Indebtedness secured by this Agreement and the Security Instrument or to require that all collateral shall continue to secure all of the Indebtedness owing to Lender in accordance with the Loan Documents; or

 

154

 

(5)                                 The liability of any given Exculpated Party with respect to any separate written guaranty or agreement given by any such Exculpated Party in connection with the Loan (including, without limitation, the Guaranty).

 

18.1.2              Carveouts from Non-Recourse Limitations.  Notwithstanding the foregoing or anything in this Agreement or any of the Loan Documents to the contrary, there shall at no time be any limitation on Borrower’s and/or Maryland Owner’s liability for the payment, in accordance with the terms of this Agreement, the Note, the Security Instrument and the other Loan Documents, to Lender of:

 

(a)                                 all Losses incurred by or on behalf of Lender by reason of the fraudulent acts of (1) Borrower, (2) Guarantor, (3) Maryland Owner, or (4) any Affiliate of Borrower in connection with the Loan;

 

(b)                                 all Losses incurred by or on behalf of Lender by reason of the willful misconduct of (1) Borrower, (2) Maryland Owner or (3) Guarantor in connection with the Loan;

 

(c)                                  Proceeds which Borrower, Maryland Owner or any Affiliate of Borrower or Maryland Owner has received and intentionally misapplied (it being agreed that neither Borrower nor Maryland Owner shall be deemed to have misapplied Proceeds unless same are received by Borrower and/or Maryland Owner and not paid to Lender, in a circumstance in which Lender is expressly entitled to receive same from Borrower and/or Maryland Owner pursuant to the terms of this Agreement or any of the Loan Documents to be applied toward payment of the Indebtedness, or used for the repair or replacement of any Individual Property in accordance with the provisions of this Agreement);

 

(d)                                 all Losses incurred by Lender and arising from any intentional misrepresentation of (1) Borrower, (2) Guarantor, (3) Maryland Owner, or (4) any Affiliate of Borrower under the Loan Documents;

 

(e)                                  any misappropriation of Rents or security deposits (including the proceeds of any Letters of Credit held by Manager, Borrower, Maryland Owner or any Affiliate of Borrower or Maryland Owner in lieu of such security deposits) by Manager, Borrower, Maryland Owner or any Affiliate of Borrower or Maryland Owner;

 

(f)                                   after the occurrence and during the continuance of an Event of Default, the removal or disposal of any of the Properties in violation of the Loan Documents;

 

(g)                                  any Rents, issues, profits and/or income collected by Borrower or Maryland Owner or any Affiliate of Borrower or Maryland Owner (other than Rent sent to the Lockbox Account or Cash Management Agreement or paid directly to Lender pursuant to any notice of direction delivered to Tenants of the applicable Individual Property) and not applied to payment of the Obligations or used to pay normal and verifiable Operating Expenses or ordinary and customary capital expenditures not constituting extraordinary expenses of the applicable Individual Property or otherwise applied in a manner permitted under the Loan Documents;

 

(h)                                 any Losses incurred by or on behalf of Lender by reason of physical damage to any Individual Property from intentional waste committed by Borrower and/or

 

155

 

Maryland Owner or any Affiliate of Borrower or Maryland Owner (provided that this clause (h) shall not include any Losses arising from Borrower’s insufficiency of funds from operations);

 

(i)                                     any Losses incurred by or on behalf of Lender by reason of a failure of Borrower and/or Maryland Owner to comply with the Single Purpose Entity requirements of this Agreement (other than those set forth in Section 5.1.4(6), Section 5.1.4(9), Section 5.1.4(12) (to the extent the assumptions referenced therein are excluded from this clause (i)) and Section 5.1.4(28)(D), and Sections 4.1.29(e) through (l), that constitutes a Material Adverse Effect, such that either (A) the failure was considered by a court as a factor in the court’s finding for a consolidation of the assets of Borrower with the assets of another Person, or (B) as a result thereof, Lender suffers any losses (including reasonable attorneys’ fees and disbursement s, whether or not litigation has commenced); provided that solely with respect to this clause (i), liens for Impositions and other charges, mechanics, materialmen’s and supplier’s liens, judgments liens and other non-consensual liens and Debt for the deferred purchase price of property or services in connection with the operation, maintenance, leasing or ownership of the Properties shall not constitute Debt for purposes of the definition of “Debt” as and when used in Section 5.1.4 if and to the extent Borrower does not have sufficient funds from operations to pay the same;

 

(j)                                    any Losses incurred by or on behalf of Lender by reason of the occurrence of any of the events specified in clauses (A) through (F) in the next succeeding paragraph of this Section 18.1.2;

 

(k)                                 any Losses incurred by or on behalf of Lender by reason of Borrower’s and/or Maryland Owner’s failure to comply with any of the provisions of Section 8.4, provided that solely with respect to this clause (k), liens for Impositions and other charges, mechanics, materialmen’s and supplier’s liens, judgments liens and other non-consensual liens and Debt for the deferred purchase price of property or services in connection with the operation, maintenance, leasing or ownership of the Properties shall not constitute Debt for purposes of the definition of “Debt” as and when used in Section 8.4 if and to the extent Borrower does not have sufficient funds from operations to pay the same;

 

(l)                                     all Losses incurred by Lender and arising from the Liens or purported Liens described on Schedule 18.1.2;  and

 

(m)                             reasonable attorneys’ fees and expenses incurred by Lender in connection with any successful suit filed on account of any of the foregoing paragraphs (a) through (l) or on account of any of clauses (A) through (F) in the next succeeding paragraph of this Section 18.1.2.

 

The term “Losses” means any and all losses, damages, costs, expenses, liabilities, claims or other obligations reasonably incurred by Lender (including reasonable attorneys’ fees and costs).  Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan Documents, (1) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b) or 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Indebtedness or to require that all collateral shall continue to secure all of the Indebtedness owing to Lender in accordance with the Loan Documents, and

 

156

 

(2) the Indebtedness shall be fully recourse to Borrower and Maryland Owner in the event that:  (A) Borrower and/or Maryland Owner fails to comply with any of the provisions of Section 8.1, provided that solely with respect to this paragraph, liens for Impositions and other charges, mechanics, materialmen’s and supplier’s liens, judgments liens and other non-consensual liens and Debt for the deferred purchase price of property or services in connection with the operation, maintenance, leasing or ownership of the Properties (and Transfers resulting therefrom) shall not violate Section 8.1 if and to the extent the same remain unpaid or arise because Borrower does not have sufficient funds from operations to pay the same; (B) Borrower or Maryland Owner files a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (C) an Affiliate, officer, trustee, director, or representative which controls, directly or indirectly, Borrower and/or Maryland Owner files, or joins in the filing of, an involuntary petition against Borrower and/or Maryland Owner under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower and/or Maryland Owner from any Person; (D) Borrower and/or Maryland Owner files or joins in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition from any Person or colludes to effect any involuntary petition; (E) any Affiliate, officer, trustee, director, or representative which controls Borrower and/or Maryland Owner files or joins in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower and/or Maryland Owner or any portion of any Individual Property (except at the request of Lender); or (F) Borrower and/or Maryland Owner makes a general assignment for the benefit of creditors.

 

ARTICLE XIX

 

MISCELLANEOUS

 

Section 19.1                             Survival.  This Agreement and all covenants, indemnifications, 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 all or any of the Indebtedness is outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan Documents.  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party.  All covenants, promises and agreements in this Agreement, by or on behalf of Borrower and/or Maryland Owner, shall inure to the benefit of the successors and assigns of Lender.  The obligations and liabilities of Borrower and Maryland Owner hereunder and under the other Loan Documents shall be joint and several.

 

Section 19.2                             Lender’s Discretion.  Whenever pursuant to this Agreement, 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 be (except as is otherwise specifically herein provided) in the sole discretion of Lender and final and conclusive.

 

157

 

Section 19.3                             Governing Law.  (A)  THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER AND MARYLAND OWNER IN 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, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, 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 (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.  TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER EACH 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 SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

(B)                               ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, BORROWER OR MARYLAND OWNER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER AND LENDER EACH WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER, MARYLAND OWNER AND LENDER EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING, EXCEPT THAT IN CONNECTION WITH ANY FORECLOSURE OR SIMILAR EXERCISE OF REMEDIES AGAINST ANY INDIVIDUAL PROPERTY UNDER THIS AGREEMENT FOR THE ENFORCEMENT OF A SECURITY INSTRUMENT OR AN ASSIGNMENT OF LEASES AND RENTS, SUCH ACTION SHALL, TO THE EXTENT REQUIRED BY APPLICABLE LAW, BE CONDUCTED IN THE COURTS OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED. EACH OF BORROWER AND MARYLAND OWNER DOES HEREBY DESIGNATE AND APPOINT:

 

The Corporation Trust Company
 111 Eighth Avenue
 13th Floor
 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

 

158

 

SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AUTHORIZED AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER AND/OR MARYLAND OWNER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER AND/OR MARYLAND OWNER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  EACH OF BORROWER AND MARYLAND OWNER (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 SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND 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.

 

Section 19.4                             Modification, Waiver in Writing.  No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, or of the Note, or of any other Loan Document, or consent to any departure 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 and/or Maryland Owner shall entitle Borrower and/or Maryland Owner to any other or future notice or demand in the same, similar or other circumstances.

 

Section 19.5                             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 the Note or under any other Loan Document, or any other instrument given as security therefor, 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 this Agreement, the Note or any other 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 this Agreement, the Note or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.

 

Section 19.6                             Notices.  All notices, consents, approvals and requests required or permitted hereunder or under any other Loan Document shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) certified or registered United States mail, postage prepaid, return receipt requested, (b) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery or (c) telecopier (with answer back acknowledged), addressed as follows (or at such other address and Person as shall be designated 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 19.6):

 

159

 

If to Lender:

 

Vornado Finance II L.P.

c/o Vornado Realty Trust
 210 Route 4 East
 Paramus, New Jersey 07652
 Attention:  Chief Financial Officer
 Facsimile No.:  (201) 843-2198

 

With copies to:

 

Vornado Realty Trust
 888 Seventh Avenue
 New York, New York  10019
 Attention:  Executive Vice President, Capital Markets
 Facsimile No.:  (212) 894-7070

 

and:

 

Vornado Realty Trust
 888 Seventh Avenue
 New York, New York  10019
 Attention:  Corporate Counsel
 Facsimile No.:  (212) 894-7070

 

If to Borrower or Maryland Owner:

 

Hackensack VF L.L.C., as Borrower Agent
 c/o Vornado Realty Trust
 210 Route 4 East
 Paramus, New Jersey 07652
 Attention:  Chief Financial Officer
 Facsimile No.:  (201) 843-2198

 

With copies to:

 

Vornado Realty Trust
 888 Seventh Avenue
 New York, New York  10019
 Attention:  Executive Vice President, Capital Markets
 Facsimile No.:  (212) 894-7070

 

and:

 

Vornado Realty Trust
 888 Seventh Avenue
 New York, New York  10019

 

160

 

Attention:  Corporate Counsel
 Facsimile No.:  (212) 894-7070

 

All notices, elections, requests and demands under this Agreement shall be effective and deemed received upon the earliest of (1) the actual receipt of the same by personal delivery or otherwise, (2) one (1) Business Day after being deposited with a nationally recognized overnight courier service as required above, provided, such courier is instructed to deliver the notice within one (1) Business Day, (3) three (3) Business Days after being deposited in the United States mail as required above or (4) on the day sent if sent by facsimile with confirmation on or before 5:00 p.m. New York time on any Business Day or on the next Business Day if so delivered after 5:00 p.m. New York time or on any day other than a Business Day.  Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt of the notice, election, request or demand sent.  Notices on behalf of Lender may be sent by the Servicer and notices on behalf of Lender or Borrower may be sent by their respective counsel.

 

Upon a transfer of Lender’s interest in this Agreement and the other Loan Documents to Vornado DP LLC Trust 2010, Borrower and Maryland Owner each agree and acknowledge that the address for notices to Lender shall be:

 

Deutsche Bank National Trust Company
 1761 East St. Andrew Place
 Santa Ana, California 92705
 Attention:  Trust Administration – JP10B2
 Facsimile No.:  (714) 247-6478

 

With copies to:

 

Wells Fargo Bank, National Association
 MAC D110-090, 9th Floor
 201 South College Street
 Charlotte, North Carolina 28244
 Attention.:  Vornado DP LLC Trust 2010 - Asset Manager

Facsimile No.:  (704) 715-0036

 

and

 

Wells Fargo Bank, N.A.
 Legal Department
 45 Fremont, 27th Floor,
 San Francisco, CA
 Attention:  Legal Support

Facsimile No.:  (415) 975-7819

 

Section 19.7                            TRIAL BY JURY.  BORROWER, MARYLAND OWNER AND LENDER EACH, AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR

 

161

 

CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF, OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER, MARYLAND OWNER AND LENDER EACH, HEREBY AGREES AND CONSENTS THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY.  BORROWER, MARYLAND OWNER AND LENDER EACH ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE LOAN.  THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.  GUARANTOR IS AN INTENDED BENEFICIARY OF LENDER’S OBLIGATIONS UNDER THIS SECTION 19.7.

 

Section 19.8                             Headings.  The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

 

Section 19.9                             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.

 

Section 19.10                      Preferences.  To the extent Borrower and/or Maryland Owner makes a payment or payments to Lender, which payment or proceeds or any part thereof are 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 obligations hereunder 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.

 

Section 19.11                      Waiver of Notice.  Neither Borrower nor Maryland Owner shall be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and/or Maryland Owner and except with respect to matters for which Borrower and/or Maryland Owner is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice.  Borrower and Maryland Owner hereby

 

162

 

expressly waive the right to receive any notice from Lender with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Lender to Borrower and/or Maryland Owner.

 

Section 19.12                      Expenses; Indemnity.

 

(a)                                 Except as otherwise set forth herein or in any other Loan Document, Borrower and Maryland Owner covenant and agree to pay or, if Borrower and/or Maryland Owner fails to pay, to reimburse, Lender upon receipt of written notice from Lender for all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender in connection with (1) the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby and all the costs of furnishing all Opinions of Counsel (including, without limitation, any opinions required to be delivered on the date hereof or required to be delivered at Borrower’s and/or Maryland Owner’s expense pursuant to this Agreement); (2) Lender’s ongoing performance of and compliance with all agreements and conditions contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date; (3) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters as required herein or under the other Loan Documents; (4) securing Borrower’s and/or Maryland Owner’s compliance with any requests made pursuant to the provisions of this Agreement; (5) the filing and recording fees and expenses, mortgage recording taxes, title insurance and reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the Lien in favor of Lender pursuant to this Agreement and the other Loan Documents; (6) 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 and/or Maryland Owner, this Agreement, the other Loan Documents, any Individual Property, or any other security given for the Loan; (7) enforcing any obligations of or collecting any payments due from Borrower and/or Maryland Owner under this Agreement, the other Loan Documents or with respect to any Individual Property or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a work-out or of any insolvency or bankruptcy proceedings; and (8) procuring insurance policies pursuant to Section 6.1; provided, however, that neither Borrower nor Maryland Owner shall be liable for the payment of any such costs and expenses to the extent the same arise (A) by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender, bad faith, recklessness, (B) in any other instance herein or in any other Loan Document that provides that the matter in question is to be “at Lender’s expense” or “at no cost to Borrower and/or Maryland Owner” or words of similar import (C) except for any Securitization, in connection with any assignment, syndication or sale of participations in the loan subsequent to the date hereof or in connection with any dispute, buy-sell or other matters as between one or more Lenders, or between a Lender and one or more Lenders, or (D) in connection with the execution of any note to replace lost, destroyed or mutilated notes.  During the continuance of an Event of Default, any cost and expenses due and payable to Lender may be paid from any amounts in the Cash Management Account.

 

163

 

(b)                                 Subject to the non-recourse provisions of Section 18.1, except to the extent caused by the actual willful misconduct, bad faith, recklessness or gross negligence of the Indemnified Parties, Borrower and Maryland Owner shall protect, indemnify and save harmless Lender, and all officers, trustees, directors, stockholders, members, partners, employees, agents, successors and assigns thereof (collectively, the “Indemnified Parties”) from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including all reasonable attorneys’ fees and expenses actually incurred) imposed upon or incurred by or asserted against the Indemnified Parties or the Properties or any Individual Property or any part of its interest therein, by reason of the occurrence or existence of any of the following (to the extent Proceeds payable on account of the following shall be inadequate; it being understood that in no event will the Indemnified Parties be required to actually pay or incur any costs or expenses as a condition to the effectiveness of the foregoing indemnity) prior to the earliest of:  (1) the acceptance by Lender or its designee of a deed in lieu of foreclosure with respect to any Individual Property, (2) an Indemnified Party or its designee taking possession or control of any Individual Property or (3) the foreclosure of the Security Instrument:  (A) ownership of Borrower’s and/or Maryland Owner’s interest in any Individual Property, or any interest therein, or receipt of any Rents or other sum therefrom, (B) any accident, injury to or death of any persons or loss of or damage to property occurring on or about any Individual Property or any Appurtenances thereto, (C) any design, construction, operation, repair, maintenance, use, non-use or condition of any Individual Property or Appurtenances thereto, including claims or penalties arising from violation of any Legal Requirement or Insurance Requirement, as well as any claim based on any patent or latent defect, whether or not discoverable by Lender, any claim the insurance as to which is inadequate, and any Environmental Claim, (D) any Default under this Agreement or any of the other Loan Documents or any failure on the part of Borrower and/or Maryland Owner to perform or comply with any of the terms of any Lease within the applicable notice or grace periods, (E) any performance of any labor or services or the furnishing of any materials or other property in respect of any Individual Property or any part thereof, (F) any negligence or tortious act or omission on the part of Borrower and/or Maryland Owner or any of its agents, contractors, servants, employees, sublessees, licensees or invitees, (G) any contest referred to in Section 7.3 hereof, (H) any obligation or undertaking relating to the performance or discharge of any of the terms, covenants and conditions of the landlord contained in the Leases, (I) the presence at, in or under any Individual Property or the Improvements of any Hazardous Materials in violation of any Environmental Law or (J) the transactions contemplated in this Agreement with respect to the Reserve Accounts.  Any amounts the Indemnified Parties are legally entitled to receive under this Section which are not paid within fifteen (15) Business Days after written demand therefor by the Indemnified Parties or Lender, setting forth in reasonable detail the amount of such demand and the basis therefor, shall bear interest from the date of demand at the Default Rate, and shall, together with such interest, be part of the Indebtedness and secured by the Security Instrument.  In case any action, suit or proceeding is brought against the Indemnified Parties by reason of any such occurrence, Borrower and/or Maryland Owner shall at Borrower’s and/or Maryland Owner’s expense resist and defend such action, suit or proceeding or will cause the same to be resisted and defended by counsel at Borrower’s and/or Maryland Owner’s reasonable expense for the insurer of the liability or by counsel designated by Borrower and/or Maryland Owner (unless reasonably disapproved by Lender promptly after Lender has been notified of such counsel); provided, however, that nothing herein shall compromise the right of Lender (or

 

164

 

any Indemnified Party) to appoint its own counsel at Borrower’s and/or Maryland Owner’s expense for its defense with respect to any action which in its reasonable opinion presents a conflict or potential conflict between Lender, Borrower and Maryland Owner that would make such separate representation advisable; and, provided, further, that if Lender shall have appointed separate counsel pursuant to the foregoing, Borrower and Maryland Owner shall not be responsible for the expense of additional separate counsel of any Indemnified Party unless in the reasonable opinion of Lender a conflict or potential conflict exists between such Indemnified Party and Lender.  So long as Borrower and/or Maryland Owner is resisting and defending such action, suit or proceeding as provided above in a prudent and commercially reasonable manner, Lender and the Indemnified Parties shall not be entitled to settle such action, suit or proceeding without Borrower’s and/or Maryland Owner’s consent which shall not be unreasonably withheld or delayed, and Lender agrees that it will not settle any such action, suit or proceeding without the consent of Borrower and/or Maryland Owner; provided, however, that if Borrower and/or Maryland Owner is not diligently defending such action, suit or proceeding in a prudent and commercially reasonable manner as provided above, and Lender has provided Borrower and/or Maryland Owner with thirty (30) days’ prior written notice, or shorter period if mandated by the requirements of applicable law, and opportunity to correct such determination, Lender may settle such action, suit or proceeding and claim the benefit of this Section 19.12 with respect to settlement of such action, suit or proceeding.  Any Indemnified Party will give Borrower and/or Maryland Owner prompt notice after such Indemnified Party obtains actual knowledge of any potential claim by such Indemnified Party for indemnification hereunder.  The Indemnified Parties shall not settle or compromise any action, proceeding or claim as to which it is indemnified hereunder without notice to Borrower and/or Maryland Owner.

 

Section 19.13                      Exhibits and Schedules Incorporated.  The Exhibits and Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

 

Section 19.14                      Offsets, Counterclaims and Defenses.  Any assignee of Lender’s interest in and to this Agreement, the Note and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower and/or Maryland Owner may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower and/or Maryland Owner 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 and Maryland Owner.

 

Section 19.15                      Liability of Assignees of Lender.  No assignee of Lender shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any other Loan Document or any amendment or amendments hereto made at any time or times, heretofore or hereafter, any different than the liability of Lender hereunder.  In addition, no assignee shall have at any time or times hereafter any personal liability, directly or indirectly, under or in connection with or secured by any agreement, lease, instrument, encumbrance, claim or right affecting or relating to any Individual Property or to which any Individual Property is now or hereafter subject any different than the liability of Lender hereunder.  The limitation of liability provided in this Section 19.15 is (a) in addition to, and not in limitation of, any

 

165

 

limitation of liability applicable to the assignee provided by law or by any other contract, agreement or instrument, and (b) shall not apply to any assignee’s gross negligence or willful misconduct.

 

Section 19.16                      No Joint Venture or Partnership; No Third Party Beneficiaries.  (a) Borrower, Maryland Owner 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, Maryland Owner and Lender nor to grant Lender any interest in any Individual Property other than that of mortgagee, beneficiary or lender.

 

(b)                                 This Agreement and the other Loan Documents are solely for the benefit of Lender, Maryland Owner and Borrower and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Lender, Maryland 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.

 

Section 19.17                      Publicity.  All news releases, publicity or advertising by either party hereto or its Affiliates through any media intended to reach the general public (but excluding, for clarity, any filings or news releases necessary or appropriate under applicable laws, including securities laws) which refers to the Loan Documents or the financing evidenced by the Loan Documents, to Lender, or any of its Affiliates shall be subject to the prior consultation between the parties hereto.

 

Section 19.18                      Waiver of Counterclaim and Other Actions.  Borrower and Maryland Owner hereby expressly and unconditionally waive, in connection with any suit, action or proceeding brought by Lender on this Agreement, the Note, the Security Instrument or any Loan Document, any and every right it may have to (a) interpose any counterclaim therein (other than a counterclaim which can only be asserted in the suit, action or proceeding brought by Lender on this Agreement, the Note, the Security Instrument or any Loan Document and cannot be maintained in a separate action) and (b) have any such suit, action or proceeding consolidated with any other or separate suit, action or proceeding.

 

Section 19.19                      Conflict; Construction of Documents; Reliance.  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 they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same.  Borrower and Maryland Owner acknowledge that, with respect to the Loan, Borrower and Maryland Owner shall rely solely on their own judgment and advisors in entering into the Loan without relying in any manner on any

 

166

 

statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate of Lender.  Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may acquire in Borrower and/or Maryland Owner, and Borrower and Maryland Owner hereby irrevocably waive the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies.  Borrower and Maryland Owner acknowledge that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

 

Section 19.20                      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 and unless specifically set forth in a writing contemporaneous herewith the terms, conditions and provisions of any and all such prior agreements do not survive execution of this Agreement.

 

Section 19.21                      Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document.

 

Section 19.22                      Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets.  (a)  Borrower and Maryland Owner acknowledge that Lender has made the Loan to Borrower upon the security of its collective interest in the Properties and in reliance upon the aggregate of the Properties taken together being of greater value as collateral security than the sum of each Individual Property taken separately.  Borrower and Maryland Owner agree that the Security Instruments are and will be cross-collateralized and cross-defaulted with each other so that (i) an Event of Default under any of the Security Instruments shall constitute an Event of Default under each of the other Security Instruments which secure the Note or the Maryland Guaranty Agreement; (ii) an Event of Default under the Note, the Maryland Guaranty Agreement or this Agreement shall constitute an Event of Default under each Security Instrument; (iii) each Security Instrument shall constitute security for the Note or Maryland Guaranty Agreement as if a single blanket lien were placed on all of the Properties as security for the Note; and (iv) such cross-collateralization shall in no event be deemed to constitute a fraudulent conveyance.

 

(b)                                 To the fullest extent permitted by law, Borrower and Maryland Owner, for themselves and their successors and assigns, waive all rights to a marshalling of the assets of Borrower, Maryland Owner, Borrower’s and/or Maryland Owner’s partners and others with interests in Borrower, Maryland Owner or their respective partners, and of the Properties, or to a sale in inverse order of alienation in the event of foreclosure of all or any of the Security Instruments, 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 Properties for the collection of the Indebtedness without any prior or different resort for collection or of the right of Lender to the payment of the

 

167

 

Indebtedness out of the net proceeds of the Properties in preference to every other claimant whatsoever.  In addition, Borrower and Maryland Owner, for themselves and their successors and assigns, waive in the event of foreclosure of any or all of the Security Instruments, any equitable right otherwise available to Borrower and/or Maryland Owner which would require the separate sale of the Properties or require Lender to exhaust its remedies against any Individual Property or any combination of the Properties before proceeding against any other Individual Property or combination of Properties; and further in the event of such foreclosure Borrower and Maryland Owner do hereby expressly consent to and authorize, at the option of Lender, the foreclosure and sale either separately or together of any combination of the Properties.

 

Section 19.23                      Borrower Agent.  Each Individual Borrower and Maryland Owner hereby designates Hackensack VF L.L.C., as Individual Borrower and agent for Borrower (“Borrower Agent”), as the party to give and receive notices on behalf of Borrower and Maryland Owner hereunder, to be the named party in connection with the Lockbox Account, the Cash Management Account and the Rate Cap and to perform all other functions of Borrower Agent contemplated by the Loan Documents, and any notice received by Lender by a Borrower or Maryland Owner other than Borrower Agent shall not constitute effective notice to, or be binding upon Lender hereunder.  Notwithstanding the foregoing, any notice by Lender to one or more Borrowers and/or Maryland Owner other than Borrower Agent shall be deemed to constitute effective notice to all of the Individual Borrowers.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

168

 

IN WITNESS WHEREOF, the parties hereto have caused this Loan and Security Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
NEWINGTON VF L.L.C., a   Connecticut limited liability company
    
	
 
    	
 
    
	
 
    	
WATERBURY VF L.L.C., a   Connecticut limited liability company
    
	
 
    	
 
    
	
 
    	
CHICOPEE HOLDING L.L.C., a
    
	
 
    	
Massachusetts limited liability company
    
	
 
    	
 
    
	
 
    	
SPRINGFIELD VF L.L.C., a   Massachusetts limited liability company
    
	
 
    	
 
    
	
 
    	
TOWSON II VF LLC., a Delaware   limited liability company
    
	
 
    	
 
    
	
 
    	
BRICKTOWN VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
CHERRY HILL VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
DOVER VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
HANOVER VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
EAST BRUNSWICK VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
NEW VORNADO/SADDLE BROOK LLC, a Delaware   limited liability company
    
	
 
    	
 
    
	
 
    	
VNO PATERSON PLANK ROAD LLC, a Delaware   limited liability company
    
	
 
    	
 
    
	
 
    	
HACKENSACK VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
CONRANS VF L.L.C., a New   Jersey limited liability company
    

 

 

	
 
    	
JERSEY CITY VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
LAWNSIDE VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
MANALAPAN VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
MARLTON VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
MIDDLETOWN VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
MONTCLAIR VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
MORRIS PLAINS HOLDING VF L.L.C.,
    
	
 
    	
a New Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
MORRIS PLAINS LEASING VF L.L.C.,
    
	
 
    	
a New Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
TOTOWA VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
UNION VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
NORTH BERGEN VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
VNO 7000 HADLEY ROAD LLC, a Delaware   limited liability company
    
	
 
    	
 
    
	
 
    	
VNO 2445 SPRINGFIELD AVENUE LLC, a Delaware   limited liability company
    
	
 
    	
 
    
	
 
    	
WATCHUNG VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
WOODBRIDGE VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
FREEPORT VF L.L.C., a New York   limited liability company
    

 

 

	
 
    	
ROCHESTER HOLDING L.L.C., a New York   limited liability company
    
	
 
    	
 
    
	
 
    	
THE SECOND ROCHESTER HOLDING   L.L.C., a New York limited liability company
    
	
 
    	
 
    
	
 
    	
LODI VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
LODI II VF L.L.C., a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
NEW HANOVER LLC, a New   Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
VNO 839 NEW YORK AVENUE LLC,
    
	
 
    	
a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alan J. Rice
    
	
 
    	
 
    	
Name:   Alan J. Rice
    
	
 
    	
 
    	
as   Authorized Signatory of, and on behalf of, each of the 36 limited liability   companies listed above
    
	
 
    	
 
    
	
 
    	
TWO GUYS FROM HARRISON HOLDING   COMPANY L.P., 
   a Pennsylvania limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
TWO   GUYS FROM HARRISON HOLDING COMPANY L.L.C., a Delaware limited   liability company, its General Partner
    
	
 
    	
 
    
	
 
    	
BENSALEM HOLDING COMPANY L.P., a   Pennsylvania limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
BENSALEM   HOLDING COMPANY, L.L.C., a Delaware limited liability company, its   General Partner
    
				

 

 

	
 
    	
BETHLEHEM PROPERTIES HOLDING   COMPANY L.P., a Pennsylvania limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
BETHLEHEM   PROPERTIES HOLDING COMPANY L.L.C., a Delaware limited   liability company, its General Partner
    
	
 
    	
 
    
	
 
    	
BETHLEHEM VF L.P., a   Pennsylvania limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
BETHLEHEM   VF L.L.C., a Delaware limited liability company, its   General Partner
    
	
 
    	
 
    
	
 
    	
MARPLE   HOLDING COMPANY L.P.,
    
	
 
    	
a Pennsylvania limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
MARPLE   HOLDING COMPANY, L.L.C., a Delaware limited liability company, its   General Partner
    
	
 
    	
 
    
	
 
    	
PHILADELPHIA HOLDING COMPANY   L.P., a Pennsylvania limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
PHILADELPHIA   HOLDING COMPANY, L.L.C., a Delaware limited liability company, its   General Partner
    
	
 
    	
 
    
	
 
    	
LANCASTER LEASING COMPANY L.P., a   Pennsylvania limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
LANCASTER   LEASING COMPANY L.L.C., a Delaware limited liability company, its   General Partner
    

 

 

	
 
    	
YORK HOLDING COMPANY L.P., a   Pennsylvania limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
YORK   HOLDING COMPANY, L.L.C., a Delaware limited liability company, its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alan J. Rice
    
	
 
    	
 
    	
Name:   Alan J. Rice
    
	
 
    	
 
    	
as   Authorized Signatory of, and on behalf of, each of the 8 general partners   listed above, on behalf of each of the 8 limited partnership listed above
    

 

 

	
 
    	
MARYLAND   OWNER:
    
	
 
    	
 
    
	
 
    	
TOWSON   VF LLC., a Maryland limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alan J. Rice
    
	
 
    	
 
    	
Name:   Alan J. Rice
    
	
 
    	
 
    	
Title:   Authorized Signatory
    

 

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
VORNADO FINANCE II LP., a Delaware   limited partnership
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alan J. Rice
    
	
 
    	
 
    	
Name:   Alan J. Rice
    
	
 
    	
 
    	
Title:   Authorized SignatoryExhibit 10.6

 

	
 
    

 

LOAN AGREEMENT

 

Dated as of March 25, 2013

 

Between

 

VNO BERGEN MALL OWNER LLC,

as Borrower

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Lender

 

PROPERTY: Bergen Town Center, Paramus, New Jersey

 

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
I.
    	
DEFINITIONS;   PRINCIPLES OF CONSTRUCTION
    	
 
    	
1
    
	
 
    	
Section 1.1.
    	
Specific   Definitions
    	
 
    	
1
    
	
 
    	
Section 1.2.
    	
Index   of Other Definitions
    	
 
    	
19
    
	
 
    	
Section 1.3.
    	
Principles   of Construction
    	
 
    	
21
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
II.
    	
THE   LOAN
    	
 
    	
22
    
	
 
    	
Section 2.1.
    	
The   Loan
    	
 
    	
22
    
	
 
    	
2.1.1
    	
Agreement   to Lend and Borrow
    	
 
    	
22
    
	
 
    	
2.1.2
    	
Single   Disbursement to Borrower
    	
 
    	
22
    
	
 
    	
2.1.3
    	
The   Note
    	
 
    	
22
    
	
 
    	
2.1.4
    	
Use   of Proceeds
    	
 
    	
22
    
	
 
    	
Section 2.2.
    	
Interest   Rate
    	
 
    	
22
    
	
 
    	
2.2.1
    	
Interest   Rate
    	
 
    	
22
    
	
 
    	
2.2.2
    	
Default   Rate
    	
 
    	
22
    
	
 
    	
2.2.3
    	
Interest   Calculation
    	
 
    	
22
    
	
 
    	
2.2.4
    	
Usury   Savings
    	
 
    	
22
    
	
 
    	
Section 2.3.
    	
Loan   Payments
    	
 
    	
23
    
	
 
    	
2.3.1
    	
Payments
    	
 
    	
23
    
	
 
    	
2.3.2
    	
Payments   Generally
    	
 
    	
23
    
	
 
    	
2.3.3
    	
Payment   on Maturity Date
    	
 
    	
23
    
	
 
    	
2.3.4
    	
Late   Payment Charge
    	
 
    	
23
    
	
 
    	
2.3.5
    	
Method   and Place of Payment
    	
 
    	
24
    
	
 
    	
Section 2.4.
    	
Prepayments
    	
 
    	
24
    
	
 
    	
2.4.1
    	
Prepayments
    	
 
    	
24
    
	
 
    	
2.4.2
    	
Defeasance
    	
 
    	
24
    
	
 
    	
2.4.3
    	
Open   Prepayment
    	
 
    	
27
    
	
 
    	
2.4.4
    	
Mandatory   Prepayments
    	
 
    	
27
    
	
 
    	
2.4.5
    	
Prepayments   After Default
    	
 
    	
27
    
	
 
    	
Section 2.5.
    	
Release   of Property
    	
 
    	
27
    
	
 
    	
2.5.1
    	
Release   Upon Defeasance
    	
 
    	
27
    
	
 
    	
2.5.2
    	
Release   on Payment in Full
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
III.
    	
REPRESENTATIONS   AND WARRANTIES
    	
 
    	
30
    
	
 
    	
Section 3.1.
    	
Borrower   Representations
    	
 
    	
30
    
	
 
    	
3.1.1
    	
Organization;   Special Purpose
    	
 
    	
30
    
	
 
    	
3.1.2
    	
Proceedings;   Enforceability
    	
 
    	
30
    
	
 
    	
3.1.3
    	
No   Conflicts
    	
 
    	
30
    
	
 
    	
3.1.4
    	
Litigation
    	
 
    	
30
    
	
 
    	
3.1.5
    	
Agreements
    	
 
    	
30
    
	
 
    	
3.1.6
    	
Consents
    	
 
    	
31
    
	
 
    	
3.1.7
    	
Property;   Title
    	
 
    	
31
    
	
 
    	
3.1.8
    	
ERISA;   No Plan Assets
    	
 
    	
32
    
	
 
    	
3.1.9
    	
Compliance
    	
 
    	
32
    

 

i

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1.10
    	
Financial   Information
    	
 
    	
32
    
	
 
    	
3.1.11
    	
Easements;   Utilities and Public Access
    	
 
    	
33
    
	
 
    	
3.1.12
    	
Assignment   of Leases
    	
 
    	
33
    
	
 
    	
3.1.13
    	
Insurance
    	
 
    	
33
    
	
 
    	
3.1.14
    	
Flood   Zone
    	
 
    	
33
    
	
 
    	
3.1.15
    	
Physical   Condition
    	
 
    	
33
    
	
 
    	
3.1.16
    	
Boundaries
    	
 
    	
34
    
	
 
    	
3.1.17
    	
Leases
    	
 
    	
34
    
	
 
    	
3.1.18
    	
Tax   Filings
    	
 
    	
35
    
	
 
    	
3.1.19
    	
No   Fraudulent Transfer
    	
 
    	
35
    
	
 
    	
3.1.20
    	
Federal   Reserve Regulations
    	
 
    	
35
    
	
 
    	
3.1.21
    	
Organizational   Chart
    	
 
    	
35
    
	
 
    	
3.1.22
    	
Organizational   Status
    	
 
    	
36
    
	
 
    	
3.1.23
    	
Bank   Holding Company
    	
 
    	
36
    
	
 
    	
3.1.24
    	
No   Casualty
    	
 
    	
36
    
	
 
    	
3.1.25
    	
Purchase   Options
    	
 
    	
36
    
	
 
    	
3.1.26
    	
FIRPTA
    	
 
    	
36
    
	
 
    	
3.1.27
    	
Investment   Company Act
    	
 
    	
36
    
	
 
    	
3.1.28
    	
Fiscal   Year
    	
 
    	
36
    
	
 
    	
3.1.29
    	
Other   Debt
    	
 
    	
36
    
	
 
    	
3.1.30
    	
Intentionally   Omitted
    	
 
    	
36
    
	
 
    	
3.1.31
    	
Full   and Accurate Disclosure
    	
 
    	
36
    
	
 
    	
3.1.32
    	
Intentionally   Omitted
    	
 
    	
36
    
	
 
    	
3.1.33
    	
Intentionally   Omitted
    	
 
    	
36
    
	
 
    	
3.1.34
    	
REA
    	
 
    	
36
    
	
 
    	
3.1.35
    	
Illegal   Activity
    	
 
    	
37
    
	
 
    	
Section 3.2.
    	
Survival   of Representations
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
IV.
    	
BORROWER   COVENANTS
    	
 
    	
37
    
	
 
    	
Section 4.1.
    	
Payment   and Performance of Obligations
    	
 
    	
37
    
	
 
    	
Section 4.2.
    	
Due   on Sale and Encumbrance; Transfers of Interests
    	
 
    	
37
    
	
 
    	
Section 4.3.
    	
Liens
    	
 
    	
38
    
	
 
    	
Section 4.4.
    	
Special   Purpose
    	
 
    	
38
    
	
 
    	
Section 4.5.
    	
Existence;   Compliance with Legal Requirements
    	
 
    	
39
    
	
 
    	
Section 4.6.
    	
Taxes   and Other Charges
    	
 
    	
39
    
	
 
    	
Section 4.7.
    	
Litigation
    	
 
    	
39
    
	
 
    	
Section 4.8.
    	
Title   to the Property
    	
 
    	
39
    
	
 
    	
Section 4.9.
    	
Financial   Reporting
    	
 
    	
40
    
	
 
    	
4.9.1
    	
Generally
    	
 
    	
40
    
	
 
    	
4.9.2
    	
Quarterly/Monthly   Reports
    	
 
    	
40
    
	
 
    	
4.9.3
    	
Annual   Reports
    	
 
    	
41
    
	
 
    	
4.9.4
    	
Other   Reports
    	
 
    	
41
    
	
 
    	
4.9.5
    	
Annual   Budget
    	
 
    	
41
    
	
 
    	
Section 4.10.
    	
Access   to Property
    	
 
    	
42
    
	
 
    	
Section 4.11.
    	
Leases
    	
 
    	
42
    
	
 
    	
4.11.1
    	
Generally
    	
 
    	
42
    
	
 
    	
4.11.2
    	
Approvals
    	
 
    	
42
    

 

ii

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.11.3
    	
Covenants
    	
 
    	
44
    
	
 
    	
4.11.4
    	
Security   Deposits
    	
 
    	
44
    
	
 
    	
Section 4.12.
    	
Repairs;   Maintenance and Compliance; Alterations
    	
 
    	
45
    
	
 
    	
4.12.1
    	
Repairs;   Maintenance and Compliance
    	
 
    	
45
    
	
 
    	
4.12.2
    	
Alterations
    	
 
    	
45
    
	
 
    	
Section 4.13.
    	
Insolvency   Opinion
    	
 
    	
45
    
	
 
    	
Section 4.14.
    	
Property   Management
    	
 
    	
47
    
	
 
    	
4.14.1
    	
Management   Agreement
    	
 
    	
47
    
	
 
    	
4.14.2
    	
Prohibition   Against Termination or Modification
    	
 
    	
47
    
	
 
    	
4.14.3
    	
Replacement   of Manager
    	
 
    	
47
    
	
 
    	
Section 4.15.
    	
Performance   by Borrower
    	
 
    	
47
    
	
 
    	
Section 4.16.
    	
Licenses
    	
 
    	
48
    
	
 
    	
Section 4.17.
    	
Further   Assurances
    	
 
    	
48
    
	
 
    	
Section 4.18.
    	
Estoppel   Statement
    	
 
    	
48
    
	
 
    	
Section 4.19.
    	
Notice   of Default
    	
 
    	
48
    
	
 
    	
Section 4.20.
    	
Cooperate   in Legal Proceedings
    	
 
    	
49
    
	
 
    	
Section 4.21.
    	
Indebtedness
    	
 
    	
49
    
	
 
    	
Section 4.22.
    	
Business   and Operations
    	
 
    	
49
    
	
 
    	
Section 4.23.
    	
Dissolution
    	
 
    	
49
    
	
 
    	
Section 4.24.
    	
Debt   Cancellation
    	
 
    	
50
    
	
 
    	
Section 4.25.
    	
Affiliate   Transactions
    	
 
    	
50
    
	
 
    	
Section 4.26.
    	
No   Joint Assessment
    	
 
    	
50
    
	
 
    	
Section 4.27.
    	
Intentionally   Omitted
    	
 
    	
50
    
	
 
    	
Section 4.28.
    	
Change   of Name, Identity or Structure
    	
 
    	
50
    
	
 
    	
Section 4.29.
    	
Costs   and Expenses
    	
 
    	
50
    
	
 
    	
Section 4.30.
    	
Indemnity
    	
 
    	
51
    
	
 
    	
Section 4.31.
    	
ERISA
    	
 
    	
52
    
	
 
    	
Section 4.32.
    	
Patriot   Act Compliance
    	
 
    	
52
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
V.
    	
INSURANCE,   CASUALTY AND CONDEMNATION
    	
 
    	
53
    
	
 
    	
Section 5.1.
    	
Insurance
    	
 
    	
53
    
	
 
    	
5.1.1
    	
Insurance   Policies
    	
 
    	
53
    
	
 
    	
5.1.2
    	
Insurance   Company
    	
 
    	
58
    
	
 
    	
Section 5.2.
    	
Casualty
    	
 
    	
60
    
	
 
    	
Section 5.3.
    	
Condemnation
    	
 
    	
60
    
	
 
    	
Section 5.4.
    	
Restoration
    	
 
    	
61
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
VI.
    	
CASH   MANAGEMENT AND RESERVE FUNDS
    	
 
    	
66
    
	
 
    	
Section 6.1.
    	
Cash   Management Arrangements
    	
 
    	
66
    
	
 
    	
Section 6.2.
    	
Intentionally   Reserved
    	
 
    	
67
    
	
 
    	
Section 6.3.
    	
Tax   Funds
    	
 
    	
67
    
	
 
    	
6.3.1
    	
Deposits   of Tax Funds
    	
 
    	
67
    
	
 
    	
6.3.2
    	
Release   of Tax Funds
    	
 
    	
67
    
	
 
    	
6.3.3
    	
Letter   of Credit
    	
 
    	
67
    
	
 
    	
Section 6.4.
    	
Insurance   Funds
    	
 
    	
68
    
	
 
    	
6.4.1
    	
Deposits   of Insurance Funds
    	
 
    	
68
    
	
 
    	
6.4.2
    	
Release   of Insurance Funds
    	
 
    	
68
    

 

iii

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.4.3
    	
Acceptable   Blanket Policy
    	
 
    	
69
    
	
 
    	
6.4.4
    	
Letter   of Credit
    	
 
    	
69
    
	
 
    	
Section 6.5.
    	
Capital   Expenditure Funds
    	
 
    	
69
    
	
 
    	
6.5.1
    	
Deposits   of Capital Expenditure Funds
    	
 
    	
69
    
	
 
    	
6.5.2
    	
Release   of Capital Expenditure Funds
    	
 
    	
69
    
	
 
    	
6.5.3
    	
Letter   of Credit
    	
 
    	
70
    
	
 
    	
Section 6.6.
    	
Rollover   Funds
    	
 
    	
71
    
	
 
    	
6.6.1
    	
Deposits   of Rollover Funds
    	
 
    	
71
    
	
 
    	
6.6.2
    	
Release   of Rollover Funds and Lease Termination Deposit Amounts
    	
 
    	
71
    
	
 
    	
6.6.3
    	
Letter   of Credit
    	
 
    	
73
    
	
 
    	
Section 6.7.
    	
Intentionally   Omitted
    	
 
    	
73
    
	
 
    	
Section 6.8.
    	
Intentionally   Omitted
    	
 
    	
73
    
	
 
    	
Section 6.9.
    	
Casualty   and Condemnation Account
    	
 
    	
73
    
	
 
    	
Section 6.10.
    	
Cash   Collateral Funds
    	
 
    	
73
    
	
 
    	
Section 6.11.
    	
Property   Cash Flow Allocation
    	
 
    	
74
    
	
 
    	
6.11.1
    	
Order   of Priority of Funds in Deposit Account
    	
 
    	
74
    
	
 
    	
6.11.2
    	
Failure   to Make Payments
    	
 
    	
74
    
	
 
    	
6.11.3
    	
Application   After Event of Default
    	
 
    	
74
    
	
 
    	
Section 6.12.
    	
Security   Interest in Reserve Funds
    	
 
    	
74
    
	
 
    	
Section 6.13.
    	
Intentionally   Omitted
    	
 
    	
75
    
	
 
    	
Section 6.14.
    	
Intentionally   Reserved
    	
 
    	
75
    
	
 
    	
Section 6.15.
    	
Limitations   on Letters of Credit/Alteration Deficiency Guarantees
    	
 
    	
75
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
VII.
    	
PERMITTED   TRANSFERS
    	
 
    	
75
    
	
 
    	
Section 7.1.
    	
Permitted   Transfer of the Entire Property
    	
 
    	
75
    
	
 
    	
Section 7.2.
    	
Permitted   Transfers
    	
 
    	
77
    
	
 
    	
Section 7.3.
    	
Cost   and Expenses; Searches; Copies
    	
 
    	
80
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
VIII.
    	
DEFAULTS
    	
 
    	
80
    
	
 
    	
Section 8.1.
    	
Events   of Default
    	
 
    	
80
    
	
 
    	
Section 8.2.
    	
Remedies
    	
 
    	
84
    
	
 
    	
8.2.1
    	
Acceleration
    	
 
    	
84
    
	
 
    	
8.2.2
    	
Remedies   Cumulative
    	
 
    	
84
    
	
 
    	
8.2.3
    	
Severance
    	
 
    	
85
    
	
 
    	
8.2.4
    	
Lender’s   Right to Perform
    	
 
    	
86
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
IX.
    	
SALE   AND SECURITIZATION OF MORTGAGE
    	
 
    	
86
    
	
 
    	
Section 9.1.
    	
Sale   of Mortgage and Securitization
    	
 
    	
86
    
	
 
    	
Section 9.2.
    	
Securitization   Indemnification
    	
 
    	
89
    
	
 
    	
Section 9.3.
    	
Conversion   to Registered Form
    	
 
    	
92
    
	
 
    	
Section 9.4.
    	
Costs   and Expenses
    	
 
    	
93
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
X.
    	
MISCELLANEOUS
    	
 
    	
93
    
	
 
    	
Section 10.1.
    	
Exculpation
    	
 
    	
93
    
	
 
    	
Section 10.2.
    	
Survival;   Successors and Assigns
    	
 
    	
96
    
	
 
    	
Section 10.3.
    	
Lender’s   Discretion; Rating Agency Review Waiver
    	
 
    	
96
    

 

iv

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 10.4.
    	
Governing   Law
    	
 
    	
97
    
	
 
    	
Section 10.5.
    	
Modification,   Waiver in Writing
    	
 
    	
98
    
	
 
    	
Section 10.6.
    	
Notices
    	
 
    	
98
    
	
 
    	
Section 10.7.
    	
Waiver   of Trial by Jury
    	
 
    	
100
    
	
 
    	
Section 10.8.
    	
Headings,   Schedules and Exhibits
    	
 
    	
100
    
	
 
    	
Section 10.9.
    	
Severability
    	
 
    	
100
    
	
 
    	
Section 10.10.
    	
Preferences
    	
 
    	
100
    
	
 
    	
Section l0.11.
    	
Waiver   of Notice
    	
 
    	
100
    
	
 
    	
Section 10.12.
    	
Remedies   of Borrower
    	
 
    	
100
    
	
 
    	
Section 10.13.
    	
Offsets,   Counterclaims and Defenses
    	
 
    	
101
    
	
 
    	
Section 10.14.
    	
No   Joint Venture or Partnership; No Third Party Beneficiaries
    	
 
    	
101
    
	
 
    	
Section 10.15.
    	
Publicity
    	
 
    	
101
    
	
 
    	
Section 10.16.
    	
Waiver   of Marshalling of Assets
    	
 
    	
101
    
	
 
    	
Section 10.17.
    	
Certain   Waivers
    	
 
    	
102
    
	
 
    	
Section 10.18.
    	
Conflict;   Construction of Documents; Reliance
    	
 
    	
102
    
	
 
    	
Section 10.19.
    	
Brokers   and Financial Advisors
    	
 
    	
102
    
	
 
    	
Section 10.20.
    	
Prior   Agreements
    	
 
    	
102
    
	
 
    	
Section 10.21.
    	
Servicer
    	
 
    	
103
    
	
 
    	
Section 10.22.
    	
Joint   and Several Liability
    	
 
    	
104
    
	
 
    	
Section 10.23.
    	
Creation   of Security Interest
    	
 
    	
104
    
	
 
    	
Section 10.24.
    	
Assignments   and Participations
    	
 
    	
104
    
	
 
    	
Section 10.25.
    	
Counterparts
    	
 
    	
104
    

 

v

 

Schedules and Exhibits

 

	
Schedules:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Schedule I
    	
-
    	
Rent   Roll
    
	
Schedule II
    	
-
    	
Intentionally   Omitted
    
	
Schedule III
    	
-
    	
Organizational   Chart of Borrower
    
	
Schedule IV
    	
-
    	
Exceptions   to Representations and Warranties
    
	
Schedule V
    	
-
    	
Definition   of Special Purpose Bankruptcy Remote Entity
    
	
Schedule VI
    	
-
    	
Intentionally   Omitted
    
	
Schedule VII
    	
-
    	
REAs
    
	
Schedule VIII
    	
—
    	
H&M   Lease
    
	
Schedule IX
    	
—
    	
Prohibited   Transferee
    
	
Schedule X
    	
—
    	
Description   of Rentable Units
    
	
Schedule XI
    	
—
    	
Temporary   and Storage Space Tenants
    
	
Schedule XII
    	
—
    	
TI/LC   Expenses Outstanding as of the Closing Date
    
	
 
    	
 
    	
 
    
	
Exhibits:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
-
    	
Legal   Description
    
	
Exhibit B
    	
-
    	
Reserved
    
	
Exhibit C
    	
-
    	
Form of   Alterations Deficiency Guaranty
    
	
Exhibit D
    	
-
    	
Form of   Standard Lease
    
	
Exhibit E
    	
-
    	
Form of   Contribution Agreement
    
	
Exhibit F
    	
-
    	
Form of   SNDA
    

 

vi

 

LOAN AGREEMENT

 

This LOAN AGREEMENT, dated as of March 25, 2013 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), between WELLS FARGO BANK, NATIONAL ASSOCIATION, having an address at One Wells Fargo Center, 1901 Harrison Street, 2nd Floor, Oakland, California 94612 (together with its successors and assigns, “Lender”), and VNO BERGEN MALL OWNER LLC, a Delaware limited liability company, having an address at 888 Seventh Avenue, New York, New York 10106 (together with its permitted successors and assigns, “Borrower”).

 

All capitalized terms used herein shall have the respective meanings set forth in Article I hereof.

 

W I T N E S S E T H:

 

WHEREAS, Borrower desires to obtain the Loan from Lender; and

 

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the terms and conditions of this Agreement and the other Loan Documents.

 

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:

 

I.             DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1.           Specific Definitions. For all purposes of this Agreement, except as otherwise expressly provided:

 

“Affiliate” shall mean, 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.

 

“ALTA” shall mean American Land Title Association, or any successor thereto.

 

“Alteration Deficiency Guaranty” shall mean a guaranty (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time) in favor of Lender pursuant to the terms and provisions of Section 4.12.2 of this Agreement, which shall be substantially in the form attached hereto as Exhibit C and shall be executed and delivered by Guarantor or a Qualified Guarantor.

 

“Alteration Threshold” shall mean $5,000,000; provided, however, that the list of any alterations performed which are detailed in the proviso to the definition of Material Alteration shall not be included in determining whether an alteration exceeds the Alteration Threshold.

 

“Annual Budget” shall mean the operating and capital budget for the Property setting forth, on a month-by-month basis, in reasonable detail, each line item of Borrower’s good faith estimate of anticipated Operating Income, Operating Expenses and Capital Expenditures for the applicable Fiscal Year.

 

 

“Approved Capital Expenditures” shall mean Capital Expenditures incurred by Borrower and either (i) included in the Approved Annual Budget or (ii) approved by Lender, which approval shall not be unreasonably withheld or delayed.

 

“Approved Leasing Expenses” shall mean any actual out-of-pocket expenses (including brokerage commissions and tenant allowances and improvements) incurred by Borrower in leasing space at the Property pursuant to Leases entered into in accordance with the Loan Documents.

 

“Approved Replacement Guarantor” shall mean a Qualified Transferee (a) having a Net Worth of not less than $500,000,000 and Liquid Assets in an amount not less than $50,000,000, and (b) who either Controls Borrower (or Transferee Borrower, as applicable) or owns a direct or indirect interest in Borrower (or Transferee Borrower, as applicable).

 

“Assignment of Agreements” shall mean that certain Assignment of Agreements, Licenses, Permits and Contracts, dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee.

 

“Assignment of Leases” shall mean that certain first priority Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee.

 

“Assignment of Management Agreement” shall mean that certain Assignment of Management Agreement and Subordination of Management Fees, dated as of the date hereof, among Borrower, Manager and Lender.

 

“Award” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect to all or any part of the Property.

 

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder.

 

“Bottom Dollar Guaranty” shall mean, collectively, those certain guarantees which may be entered into after the date hereof, executed by guarantors other than the Guarantor for the benefit of Lender, provided, for clarity, the Guaranty is not a “Bottom Dollar Guaranty”.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday on which national banks are not open for general business in (a) the State of New York, or (b) the place of business in the United States of (i) the trustee under a Securitization (or, if no Securitization has occurred, Lender), (ii) any Servicer or (iii) the financial institution that maintains any account for or on behalf of Lender, any Servicer or any Reserve Funds.

 

“Calculation Date” shall mean the last day of each calendar quarter during the Term.

 

“Capital Expenditures” for any period shall mean amounts expended for replacements and alterations to the Property (excluding tenant improvements) and required to be capitalized according to GAAP.

 

2

 

“Cash Management Agency Agreement” shall mean that certain Cash Management Agency Agreement, dated as of the date hereof, between Borrower and Cash Management Agent.

 

“Cash Management Agent” shall mean VRLP.

 

“Cash Management Agreement” shall mean that certain Cash Management Agreement of even date herewith among Lender, Deposit Bank, Borrower, and Manager.

 

“Clearing Account Agreement” shall mean that certain Deposit Account Control Agreement dated the date hereof by and among Borrower, Lender, Manager and Clearing Bank.

 

“Closing Date” shall mean the date of the funding of the Loan.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

 

“Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.

 

“Control” shall mean, with respect to any Person, 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, and Control shall not be deemed absent solely because a non-managing member, partner or shareholder shall have veto rights with respect to major decisions. The terms “Controlled” and “Controlling” shall have correlative meanings.

 

“Debt” shall mean the Outstanding Principal Balance together with all interest accrued and unpaid thereon and all other sums (including any applicable Prepayment Fee, if applicable) due to Lender from time to time in respect of the Loan under the Note, this Agreement, the Mortgage, the Environmental Indemnity or any other Loan Document.

 

“Debt Service” shall mean, with respect to any particular period scheduled interest payments due under the Note.

 

“Debt Service Coverage Ratio” shall mean, a ratio for the applicable period, reasonably determined by Lender, in which:

 

(a)           the numerator is the Net Cash Flow for such period; and

 

(b)           the denominator is the aggregate Debt Service payable for such period.

 

“Default” shall mean the occurrence of any event hereunder or under any other Loan Document which, but for the giving of notice or passage of time, or both, would constitute an Event of Default.

 

3

 

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate or (ii) three percent (3%) above the Interest Rate.

 

“Deposit Account” shall mean an Eligible Account at the Deposit Bank.

 

“Deposit Bank” shall mean Wells Fargo Bank, N.A., provided that such bank shall at all times be an Eligible Institution.

 

“Discount Rate” shall mean the rate which, when compounded monthly, is equivalent to the Treasury Rate when compounded semi-annually.

 

“DSW/Filene’s Claims” shall mean the claims made pursuant to that certain civil case entitled Vornado Bergen Mall LLC v. DSW MS LLC in the Superior Court of New Jersey, Bergen County (Docket No.: L-5172-12).

 

“Eligible Account” shall mean a separate and identifiable account from all other funds held by the holding institution that is either (i) an account or accounts (or subaccounts thereof) maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (ii) a segregated trust account or accounts (or subaccounts thereof) 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 Title 12 of the Code of Federal Regulations §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 authorities. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

 

“Eligible Institution” shall mean a depository institution or trust company insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody’s, and F-1 by Fitch in the case of accounts in which funds are held for thirty (30) days or less or, in the case of Letters of Credit or accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least “A+” by Fitch and S&P and “A1” by Moody’s, or such other depository institution otherwise approved by the Rating Agencies from time to time.

 

“Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement dated as of the date hereof executed by Borrower and Guarantor in connection with the Loan for the benefit of Lender.

 

“Exchange Act Filing” shall mean any filing under or pursuant to the Exchange Act in connection with or relating to a Securitization.

 

“Excluded Property” shall mean, individually or collectively as the context may require, the DSW/Filene’s Claims and the Solar Panel Equipment.

 

“Excusable Delay” shall mean a delay solely due to acts of God, Governmental Authority restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable control of Borrower.

 

4

 

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the Term, or such other fiscal year as may be selected by Borrower and approved by Lender, which approval shall not be unreasonably withheld, delayed or conditioned.

 

“Fitch” shall mean Fitch, Inc.

 

“GAAP” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession as of the date of the applicable financial report or other date when GAAP is applicable.

 

“Governmental Authority” shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, commonwealth, county, district, municipal, city or otherwise) whether now or hereafter in existence.

 

“Gross Income” shall mean, as of the end of any calendar quarter for which Net Cash Flow is determined (or such other date for which Net Cash Flow is determined) an amount equal to (A) the sum of: (i) pro forma base rents annualizing rent step-ups that will occur during the next twelve (12) month period, in each case under bona fide Leases (including the Master Leases) (“Bona Fide Leases”) at the Property with Tenants that have accepted possession, paying full unabated rent as of the date of such calculation; (ii) actual percentage rents, escalation payments, payments on account of electricity, condenser water usage and overtime charges, other recoveries and other sundry charges received by Borrower under Bona Fide Leases for the twelve (12) months ending as of such calendar quarter; (iii) pro forma base rents for Leases at the Property entered into as of the date of calculation if the Tenant under each such Lease has taken possession of its premises and nine (9) months or less of rent abatements remain outstanding under such Lease (for the avoidance of doubt, the calculation of pro forma rent pursuant to this clause (iii) shall include the initial base rent payable under such Lease(s) excluding the effect of the free rent period); (iv) for the twelve (12) months preceding the date such Net Cash Flow is determined, the amount of base rent that would have been payable by VRLP under the Master Lease if a Trigger Period had occurred and been continuing during such period; and (v) for the twelve (12) month period preceding the date such Net Cash Flow is determined, actual cash flow receipts received by Borrower from other sources at the Property (to the extent not covered in (i) through (iii) above); less (B) the sum of the following amounts: (v) any amounts included in (A) above representing sales, use and occupancy or other taxes on receipts required to be accounted for by Borrower to any Governmental Authority, tax rebates, refunds, proceeds from the sale of furniture, fixtures and equipment or any other sale, transfer or exchange, proceeds from any financing, capital contributions, interest income from any source other than the Deposit Account, the Accounts or other accounts required to be maintained for the benefit of Lender pursuant to the Loan Documents, Insurance Proceeds (other than business interruption or rent loss insurance proceeds), Awards, forfeited Tenant security, utility and other similar deposits, and any other extraordinary or other non-recurring revenues; and (vi) any amounts included in (A) above received (w) from Tenants not paying full, unabated rent (except as set forth in clause (iii) above), (x) from Tenants that are in material default of their obligations

 

5

 

to pay monthly rent under their Leases and such default has remained uncured for thirty (30) days and (y) from Tenants that are the subject of a bankruptcy or other insolvency proceeding.

 

“Gross Revenue” shall mean all revenue derived from the ownership and operation of the Property from whatever source, including Rents and any Insurance Proceeds (whether or not Lender elects to treat any such Insurance Proceeds as business or rental interruption Insurance Proceeds pursuant to Section 5.4(e) hereof).

 

“Guarantor” shall mean VRLP.

 

“Guaranty” shall mean that certain Guaranty of Recourse Obligations of even date herewith from Guarantor for the benefit of Lender.

 

“H&M” shall mean H&M Hennes & Mauritz L.P.

 

“HomeGoods” shall mean HomeGoods, Inc.

 

“Indebtedness” shall mean, for any Person, without duplication: (i) all indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or its assets is liable, (ii) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable if such amounts were advanced thereunder, (iii) all amounts required to be paid by such Person as a guaranteed payment to partners or a preferred or special dividend, including any mandatory redemption of shares or interests, except if the partnership, operating or similar agreement provides that the same is waived to the extent such Person lacks funds to pay the same, (iv) all indebtedness guaranteed by such Person, directly or indirectly, (v) all obligations under leases that constitute capital leases for which such Person is liable, and (vi) all obligations of such Person under interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case for which such Person is liable or its assets are liable, whether such Person (or its assets) is liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss.

 

“Independent” shall mean, when used with respect to any Person, a Person who: (i) does not have any direct financial interest or any material indirect financial interest in Borrower or in any Affiliate of Borrower, (ii) is not connected with Borrower or any Affiliate of Borrower as an officer, employee, promoter, underwriter, trustee, partner, member, manager, creditor, director, supplier, customer or person performing similar functions (other than as a result of providing services to Borrower or any Affiliate) and (iii) is not a member of the immediate family of a Person defined in clauses (i) or (ii) above.

 

“Independent Accountant” shall mean (i) a firm of nationally recognized, certified public accountants which is Independent and which is selected by Borrower and reasonably acceptable to Lender or (ii) such other certified public accountant(s) selected by Borrower, which is Independent and reasonably acceptable to Lender, it being agreed that Deloitte LLP (including any successor entity thereto) is hereby approved by Lender as the Independent Accountant as long as such Person continues to be a nationally recognized, certified public accounting firm.

 

6

 

“Insolvency Opinion” shall mean that certain bankruptcy non-consolidation opinion letter dated the date hereof delivered by Edwards Wildman Palmer LLP in connection with the Loan.

 

“Interest Rate” shall mean a rate of three and fifty-six one hundredths of one percent (3.56%) per annum (or, when applicable pursuant to this Agreement or any other Loan Document, the Default Rate).

 

“Investment Grade” shall mean, with respect to any Person, that the long-term unsecured debt obligations of such Person are rated at least “BBB-” by S&P or its equivalent by another Rating Agency.

 

“Lease” shall mean any lease, sublease or sub-sublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy, all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, sub-sublease or other agreement entered into in connection with such lease, sublease, sub-sublease or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

 

“Lease Termination Deposit Amount” shall mean, with respect to each Lease Termination Payment received by Borrower, an amount equal to (a) with respect to kiosk Leases or agreements, $0.00 per rentable square foot, (b) with respect to office Leases, $15.00 per rentable square foot and (c) with respect to all Leases other than those set forth in clauses (a) and (b) hereof, $30.00 per rentable square foot, in each case for the entire demised premises (exclusive of storage space) of such Lease for which such Lease Termination Payment is made.

 

“Legal Requirements” shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting the Loan, any Secondary Market Transaction with respect to the Loan, Borrower or the Property or any part thereof or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the Securities Act, the Exchange Act, Regulation AB, the rules and regulations promulgated pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, zoning and land use laws, the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting the Property or any part thereof (excluding the Leases), including any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.

 

“Letter of Credit” shall mean an irrevocable, unconditional, transferable (without payment of any transfer fee), clean sight draft letter of credit (either an evergreen letter of credit or one which does not expire until at least thirty (30) Business Days after the Stated Maturity Date) 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; provided that a letter of credit shall cease to be a Letter of Credit if at any time the issuing

 

7

 

institution is not an Eligible Institution. The following terms and conditions shall apply to each Letter of Credit:

 

(A)             Each such Letter of Credit shall expressly provide that partial draws are permitted thereunder.

 

(B)             Each such Letter of Credit shall expressly provide that it is freely transferable (without payment of any transfer fee) to any successor or assign of Lender.

 

(C)             Lender shall be entitled to draw on any Letter of Credit immediately and without further notice (1) upon the occurrence and during the continuance of any Event of Default, (2) if Borrower shall not have delivered to Lender, no less than thirty (30) days prior to the expiration date of such Letter of Credit (including any renewal or extension thereof), a renewal or extension of such Letter of Credit or a replacement Letter of Credit for a term of not less than one year (or through the date that is thirty (30) days beyond the Stated Maturity Date, whichever is earlier), or (3) within ten (10) Business Days after receiving notice from Lender that the issuing institution is not an Eligible Institution, either (x) deliver to Lender a replacement Letter of Credit or (y) deposit with Lender cash collateral in lieu of such Letter of Credit.

 

“Lien” shall mean any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, 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.

 

“Liquid Assets” shall mean any of the following, but only to the extent owned individually, free of all security interests, liens, pledges, charges or any other encumbrance: (a) cash, (b) marketable direct obligations issued by, or guaranteed by, the United States of America or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, (c) investment grade municipal and corporate bonds, (d) time deposits, demand deposits, certificates of deposit, Eurodollar time deposits, time deposit accounts, term deposit accounts or bankers’ acceptances maturing within two years from the date of acquisition or overnight bank deposits, (e) investments in money market funds which invest substantially all of their assets in securities of the type described in clauses (b) through (d) above, and (f) marketable securities publicly traded on a nationally recognized stock exchange (including operating partnership units of any operating partnership of a publicly-traded real estate investment trust so long as, in each case, the same are not subject to lock-up rights and can be readily converted into shares of common stock in such publicly-traded real estate investment trust).

 

“Loan” shall mean the loan in the original principal amount of Three Hundred Million and No/100 Dollars ($300,000,000.00) made by Lender to Borrower pursuant to this Agreement.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing Account Agreement, the Assignment of Agreements, the Environmental Indemnity, the Assignment of Management Agreement and the Guaranty and any other documents, agreements and instruments now or

 

8

 

hereafter evidencing, securing or delivered to Lender in connection with the Loan, as the same 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. Any Bottom Dollar Guaranty shall not be construed to be a Loan Document.

 

“Loan-to-Value Ratio” shall mean the ratio, as of a particular date, in which the numerator is equal to the Outstanding Principal Balance and the denominator is equal to the “as-is” value as shown in an MAI appraisal obtained by Lender at Borrower’s cost and reasonably approved by Lender in form and substance.

 

“Low Debt Service Period” shall commence if, as of any Calculation Date, the Debt Service Coverage Ratio is less than 1.85:1.00, as reasonably determined by Lender, and shall end (i) if the Property has achieved a Debt Service Coverage Ratio of at least 1.90:1.00 as of any subsequent Calculation Date, as reasonably determined by Lender or (ii) Borrower shall have delivered cash collateral or a Letter of Credit to Lender, in either case, in an amount which, if applied to the payment of the Outstanding Principal Balance, would result in a Debt Service Coverage Ratio equal to (or if elected by Borrower, greater than) 1.85:1.00.

 

“Major Lease” shall mean (i) any Lease which, either individually or when taken together with all other Leases at the Property with the same Tenant or such Tenant’s Affiliates, and taking into consideration all so-called “must take” space in any such Lease but excluding non-mandatory expansion options and any preferential rights to lease additional space at the Property contained in any such Lease, is reasonably anticipated to demise 25,000 square feet or more of the Property’s rentable square feet, (ii) any Lease which contains an option, right of first offer, right of first refusal or other similar entitlement to acquire all or any portion of the Property, (iii) any Lease with an Affiliate of Borrower as Tenant, (iv) any Lease to be entered into during the continuance of an Event of Default, or (v) any instrument guaranteeing or providing credit support for any Lease meeting the requirements of clauses (i), (ii), (iii) and/or (iv) above.

 

“Management Agreement” shall mean the management agreement entered into by and between Borrower and the current Manager or any replacement management agreement entered into by and between Borrower and a Manager in accordance with the terms of the Loan Documents, in each case, pursuant to which the Manager is to provide management and other services with respect to the Property, in either such case, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time in compliance with the terms and conditions of the Loan Documents.

 

“Manager” shall mean Vornado Retail Management LLC, or any other manager engaged in accordance with the terms and conditions of the Loan Documents.

 

“Material Adverse Effect” shall mean any event or condition that has a material adverse effect, in each case, taken as a whole on (a) the use, operation or value of the Property, (b) the business, profits, operations or financial condition of Borrower, (c) the ability of Guarantor to perform its obligations under the Environmental Indemnity or Guaranty or any other guaranty given in connection with the Loan or (d) the ability of Borrower to repay the principal and interest of the Loan as it becomes due or to satisfy any of Borrower’s obligations under the Loan Documents.

 

9

 

“Material Alteration” shall mean any alteration of the Property the cost of which exceeds the Alteration Threshold; provided, however, that in no event shall (i) any Tenant improvement work performed pursuant to any Lease existing on the Closing Date or entered into hereafter in accordance with the provisions of this Agreement, (ii) any alterations performed as part of a Restoration, or (iii) any alterations required pursuant to applicable Legal Requirements constitute a Material Alteration.

 

“Master Lease” shall mean, individually or collectively as the context may require, (a) that certain Master Lease (Space I), dated as of the date hereof, between Borrower, as lessor, and VRLP, as lessee, for Rentable Unit One and (b) Master Lease (Space I), dated as of the date hereof, between Borrower, as lessor, and VRLP, as lessee, for Rentable Unit Two.

 

“Maturity Date” shall mean the date on which the final payment of principal of the Note becomes due and payable as herein and therein provided, whether at the Stated Maturity Date, by declaration of acceleration, extension or otherwise.

 

“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such Governmental Authority whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

 

“Monthly Debt Service Payment Amount” shall mean an amount equal to the interest on the Outstanding Principal Balance accrued at the Interest Rate during the Interest Period immediately preceding the applicable Monthly Payment Date.

 

“Monthly Operating Expense Budgeted Amount” shall mean the monthly amount set forth in the Approved Annual Budget for Operating Expenses for the calendar month in which such Monthly Payment Date occurs.

 

“Monthly Payment Date” shall mean the eighth (8th) day of every calendar month occurring during the Term. The first Monthly Payment Date shall be [May 8], 2013.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Morningstar” shall mean Morningstar Credit Ratings, LLC, or any of its successors in interest, assigns, and/or changed entity name or designation resulting from any acquisition by Morningstar, Inc. or other similar entity of Morningstar Credit Ratings, LLC.

 

“Mortgage” shall mean that certain first priority Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated the date hereof, executed and delivered by Borrower as security for the Loan and encumbering the Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Multi-Asset Person” shall mean a Person in respect of which the net operating income from the Property (or such portion thereof allocable to such Person) is less than fifty percent (50%) of such Person’s aggregate gross income.

 

10

 

“Net Cash Flow” shall mean, as of the end of any calendar quarter for which Net Cash Flow is determined (or such other date for which Net Cash Flow is determined), the difference between Gross Income and Operating Expenses over the twelve (12) month period preceding the date of determination of Net Cash Flow, as reasonably determined by Lender.

 

“Net Worth” shall mean, with respect to any proposed Replacement Guarantor, the Gross Asset Value of such proposed Replacement Guarantor minus the sum of (i) the Total Liabilities of such proposed Replacement Guarantor, and (ii) minority interests not owned by such proposed Replacement Guarantor. For purpose of this definition, (a) “Gross Asset Value” shall include, but not be limited to Liquid Assets, personal homes and effects, operating partnership units held by such proposed Replacement Guarantor in the operating partnership of any real estate investment trust, the current market value of all marketable securities and the real estate assets owned by such proposed Replacement Guarantor (with the value of such real estate assets to be based on their respective book values), together with the amount of all uncalled capital commitments of institutional “accredited investors”, within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended, and/or a “qualified institutional buyers” or both within the meaning of Rule 144A promulgated under the Securities Exchange Act of 1934, as amended, and (b) “Total Liabilities” shall mean the sum of all liabilities, including principal recourse and non-recourse debt, drawn lines of credit, issued and undrawn letters of credit, unsecured debt, subordinated debt, accounts payable and accrued expenses, federal and state tax liabilities and unfunded obligations of such proposed Replacement Guarantor.

 

“NRSRO” shall mean any credit rating agency that has elected to be treated as a nationally recognized statistical rating organization for purposes of Section 15E of the Exchange Act, without regard to whether or not such credit rating agency has been engaged by Lender or its designees in connection with, or in anticipation of, a Securitization.

 

“Obligations” shall mean, collectively, Borrower’s obligations for the payment of the Debt and the performance of the Other Obligations.

 

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which is signed by an authorized officer of Borrower or by an authorized officer of its Controlling owner; provided that any Officer’s Certificate required to be delivered pursuant to Section 4.9 shall be signed by the chief financial officer or controller of Borrower or its Controlling owner.

 

“Open Prepayment Date” shall mean the Monthly Payment Date in January, 2023.

 

“Operating Expenses” shall mean, for any period, without duplication, all expenses actually paid or payable by Borrower during such period in connection with the operation, management, maintenance, repair and use of the Property, determined on an accrual basis, and, except to the extent otherwise provided in this definition, in accordance with GAAP. Operating Expenses specifically shall include, without limitation, (i) all operating expenses incurred in the immediately preceding twelve (12) month period based on quarterly financial statements delivered to Lender in accordance with Section 4.9.2 hereof, (ii) property management fees in an amount equal to the greater of (A) two percent (2.0%) of Operating Income, and (B) the management fees actually paid under the Management Agreement (iii) administrative, payroll, security and general expenses for the Property, (iv) the cost of utilities, inventories and fixed asset supplies consumed in the operation of the Property, (v) costs and fees of independent

 

11

 

professionals (including, without limitation, legal, accounting, consultants and other professional expenses), technical consultants, operational experts (including quality assurance inspectors) or other third parties retained to perform services required or permitted hereunder, (vi) cost of attendance by employees at training and manpower development programs, (vii) association dues, (viii) computer processing charges, (ix) operational equipment and other lease payments that are not capitalized in accordance with GAAP and (x) Taxes and Other Charges (other than income taxes or Other Charges in the nature of income taxes) and insurance premiums. Notwithstanding the foregoing, Operating Expenses shall not include (1) depreciation, amortization or other noncash items (other than expenses that are due and payable and not yet paid), (2) income taxes or Other Charges in the nature of income taxes, (3) any expenses (including legal, accounting and other professional fees, expenses and disbursements) incurred in connection with the making of the Loan or the sale, exchange, transfer, financing or refinancing of all or any portion of the Property or in connection with the recovery of Insurance Proceeds or Awards which are applied to prepay the Note, (4) Capital Expenditures and any other expenses which are required to be capitalized in accordance with GAAP, (5) non-recurring and extraordinary expenses, (6) Debt Service, (7) any item of expense which would otherwise be considered within Operating Expenses pursuant to the provisions above but is paid directly by any Tenant, (8) equity distributions, (9) leasing costs, including tenant improvements and allowances, leasing commissions and legal costs, and (10) deposits to Reserve Accounts.

 

“Operating Income” shall mean, for any period, all income of Borrower during such period from the use, ownership or operation of the Property, including:

 

(a)           all amounts payable to Borrower by any Person as Rent and other amounts under Leases, license agreements, concession agreements, occupancy agreements and other agreements relating to the Property;

 

(b)           business interruption insurance proceeds allocable to the applicable reporting period; and

 

(c)           all other amounts which in accordance with GAAP are included in Borrower’s annual financial statements as operating income attributable to the Property.

 

Notwithstanding the foregoing, Operating Income shall not include (a) any Insurance Proceeds (other than business interruption and/or rental loss insurance proceeds and only to the extent allocable to the applicable reporting period), (b) any proceeds resulting from the Transfer of all or any portion of the Property, (c) any Rent attributable to a Lease prior to the date in which the Tenant thereunder has taken occupancy or in which the actual payment of rent is required to commence thereunder, (d) any item of income otherwise included in Operating Income but paid directly by any Tenant to a Person other than Borrower as an offset or deduction against Rent payable by such Tenant, provided such item of income is for payment of an item of expense (such as payments for utilities paid directly to a utility company) and such expense is otherwise excluded from the definition of Operating Expenses pursuant to clause “(6)” of the definition thereof, (e) security deposits received from Tenants until forfeited or applied, (f) any Lease Termination Payments and (g) any Rents paid by or on behalf of any Tenant under a Lease where the Tenant is the subject of any proceeding or action relating to its bankruptcy, reorganization or other arrangement pursuant to federal bankruptcy law or any similar federal or state law or which has been adjudicated a bankrupt or insolvent unless such Lease has been assumed by the trustee in such proceeding or action. Operating Income shall be calculated on

 

12

 

the accrual basis of accounting and, except to the extent otherwise provided in this definition, in accordance with GAAP.

 

“Other Charges” shall mean 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 the Property, now or hereafter levied or assessed or imposed against the Property or any part thereof, and any interest or penalties assessed in connection with any of the foregoing.

 

“Other Obligations” shall mean (a) the performance of all obligations of Borrower contained herein; (b) the performance of each obligation of Borrower contained in any other Loan Document; and (c) the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of this Agreement, the Note or any other Loan Document.

 

“Outstanding Principal Balance” shall mean, as of any date, the outstanding principal balance of the Loan.

 

“Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.

 

“Permitted Encumbrances” shall mean, collectively, (i) the Liens and security interests created by the Loan Documents, (ii) all encumbrances and other matters disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes or Other Charges imposed by any Governmental Authority not yet delinquent or that are being contested in compliance with the terms of this Agreement, (iv) any workers’, mechanics’ or other similar Liens on the Property provided that any such Lien is bonded or discharged within sixty (60) days after Borrower first receives written notice of such Lien or which is being contested in good faith in accordance with the requirements of Section 4.3, (v) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s reasonable discretion and (vi) the Leases.

 

“Permitted Bergen Transfers” means any of the following, provided the same shall not result in a violation of ERISA or the Patriot Act:

 

(a)           any pledge of direct or indirect equity interests in and/or right to distributions from, VRLP, VRT, any Multi-Asset Person or any of their Affiliates (other than Borrower) to secure a loan to any such Person that is secured by all or a substantial portion of any such Person’s assets;

 

(b)           the Transfer or issuance of any securities or any direct or indirect interests in (i) any direct or indirect owner of Borrower, in either case, whose securities are publicly traded on a national exchange (including VRLP and VRT) (regardless of whether such Transfer or issuance is of publicly traded securities or interests), (ii) any Person who directly or indirectly holds such securities or interests or (iii) any Multi-Asset Person; provided, that after such Transfer, either VRLP or VRT shall continue to Control Borrower; or

 

13

 

(c)                                  the merger or consolidation of VRLP or VRT with or into any other Person or sale of all or substantially all of the assets of VRLP or VRT (each, a “VNO Transfer” and, collectively, “VNO Transfers”); provided, however, that if any VNO Transfer or series of VNO Transfers (other than the sale of publicly traded securities in VRLP or VRT) shall result in a change in Control of VRLP or VRT, then Lender’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed) shall be required in connection with such VNO Transfer unless after giving effect to such VNO Transfer, VRLP (or the successor entity thereto) shall be a Person that has and provides substantially the same or better experience and expertise as VRLP prior to such Transfer, merger or consolidation in conducting business of the nature currently conducted by VRLP in respect of the Property’s type.

 

“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any Governmental Authority and any fiduciary acting in such capacity on behalf of any of the foregoing.

 

“Physical Conditions Report” shall mean that certain Property Condition Report, prepared by Partner Assessment Corporation, Inc. and dated as of February 20, 2013.

 

“Prepayment Fee” shall mean an amount equal to the greater of (i) the Yield Maintenance Amount, or (ii) three percent (3%) of the amount repaid.

 

“Prepayment Notice” shall mean a prior written notice to Lender specifying the proposed Business Day on which a prepayment of the Debt is to be made pursuant to Section 2.4.3 hereof, which date must be no earlier than ten (10) days after the date of such Prepayment Notice and no later than sixty (60) days after the date of such Prepayment Notice.

 

“Property” shall mean the parcel of real property described on Exhibit A attached hereto and made a part hereof, the Improvements now or hereafter erected or installed thereon and all personal property owned by Borrower and encumbered by the Mortgage, together with all rights pertaining to such property and Improvements, all as more particularly described in the Granting Clauses of the Mortgage, but excluding in all cases the Excluded Property.

 

“PZR Report” shall mean that certain PZR Report — Zoning and Site Requirements Summary issued by Planning and Zoning Resource Corporation as of March       , 2013.

 

“Qualified Guarantor” shall mean a Person that (a) is formed in, maintains its principal place of business in, and is subject to service of process in, the United States, (b) has all or substantially all of its assets in the United States, (c) has never been indicted or convicted of, or plead guilty or no contest to a Patriot Act Offense and is not on any Government List and (d) at all times that such Person is acting as a guarantor under an Alterations Deficiency Guaranty, maintains an Investment Grade rating from each of the Rating Agencies rating the Securities or a Rating Agency Confirmation is obtained in connection with such guarantor.

 

“Qualified Manager” shall mean (i) the Manager as of the Closing Date, (ii) so long as Borrower is Controlled by VRLP or VRT, a property management company owned and/or Controlled by VRT or VRLP or (iii) an Unaffiliated Qualified Manager.

 

14

 

“Qualified Owner” shall mean any one of the following:

 

(a)                                 a co-investment vehicle managed by VRLP or its Affiliate;

 

(b)                                 a pension fund, pension trust or pension account that (i) owns real estate assets in excess of $1,000,000,000 (exclusive of the Property) and (ii) is managed by a Person that controls (by ownership or management) real estate assets in excess of $1,000,000,000 (exclusive of the Property);

 

(c)                                  a pension fund advisor that (i) immediately prior to any transfer of the Property to such Person, controls (by ownership or management) real estate assets in excess of $1,000,000,000 (exclusive of the Property) and (ii) is acting on behalf of one or more pension funds that, in the aggregate, owns real estate assets in excess of $1,000,000,000 (exclusive of the Property);

 

(d)                                 an insurance company which is subject to the jurisdiction subject to the jurisdiction of an insurance commissioner (or similar official or agency) of any state in the United States or the District of Columbia that (i) has a Net Worth, as of a date not more than six (6) months prior to the date of any transfer of the Property to such insurance company, of at least $500,000,000 and (ii) immediately prior to any such transfer of the Property, controls (by ownership or management) real estate assets in excess of $1,000,000,000 (exclusive of the Property);

 

(e)                                  a corporation organized under the banking laws of the United States or any state or territory of the United States (including the District of Columbia) that (i) has a combined capital and surplus equal to at least $500,000,000 and (ii) immediately prior to a transfer of the Property to such corporation, controls (by ownership or management) real estate assets of at least $1,000,000,000 (exclusive of the Property); and/or

 

(f)                                   a Person that (i) has a long-term unsecured debt rating from each of the Rating Agencies that is investment grade or (ii) (A) has a Net Worth, as of a date not more than six (6) months prior to the date of any transfer of the Property to such Person, of at least $500,000,000 and (B) immediately prior to a transfer of the Property to such Person, controls (by ownership or management) real estate assets of at least $1,000,000,000 (exclusive of the Property).

 

“Qualified Transferee” shall mean a transferee for whom, prior to the Transfer, Lender shall have received: (x) evidence that proposed transferee (1) has never been indicted or convicted of, or plead guilty or no contest to a Patriot Act Offense and is not on any Government List and (2) unless a Rating Agency Confirmation is being obtained in connection with such transferee, has not in the past seven (7) years been the subject of a voluntary or involuntary (to the extent the same has not been discharged) bankruptcy proceeding and (y) if the proposed transferee will obtain Control of or obtain a direct or indirect interest of ten percent (10%) or more in Borrower as a result of such proposed transfer, a credit check and such other customary searches against such proposed transferee as reasonably requested by Lender.

 

“Rating Agencies” shall mean (i) prior to the Securitization of the Loan, any nationally-recognized statistical rating organization (e.g. Standard & Poor’s Ratings Services, Morningstar Credit Ratings, LLC, Moody’s Investor Service, Inc., Fitch, Inc., DBRS, Inc. or any successor

 

15

 

thereto) and (ii) following the Securitization of the Loan, any of the rating organizations that actually rate the Securities secured by the Loan and issued in connection with the Securitization of the Loan.

 

“Rating Agency Confirmation” shall mean, subject to Section 10.3 hereof, a written affirmation from each of the Rating Agencies that the credit rating of the Securities by such Rating Agency immediately prior to the occurrence of the event or circumstance with respect to which such Rating Agency Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the occurrence of such event, which affirmation may be granted or withheld in such Rating Agency’s sole and absolute discretion, except that if the Loan has not been the subject of a Securitization, then the matter in question shall be determined by Lender in its reasonable discretion.

 

“REA” shall mean, collectively, those certain agreement(s) more particularly described on Schedule VII attached hereto and made a part hereof as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement.

 

“Regulation AB” shall mean Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.

 

“Related Loan” shall mean a loan to an Affiliate of Borrower or any Guarantor or secured by a Related Property, that is included in a Securitization with the Loan, and any other loan that is cross-collateralized with the Loan.

 

“Related Property” shall mean a parcel of real property, together with improvements thereon and personal property related thereto, that is “related” within the meaning of the definition of Significant Obligor, to the Property.

 

“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code that holds the Note or any portion thereof.

 

“Rentable Unit One” shall mean that portion of the Property more particularly described on Schedule X attached hereto.

 

“Rentable Unit Two” shall mean that portion of the Property more particularly described on Schedule X attached hereto.

 

“Rents” shall mean all rents, “additional rent” (i.e. pass-throughs for operating expenses, real estate tax escalations and/or real estate tax pass-throughs, payments by Tenants on account of electrical consumption, porters’ wage escalations, condenser water charges and tap-in fees, freight elevator and HVAC overtime charges, charges for excessive rubbish removal and other sundry charges), rent equivalents, monies payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) 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 or any of their respective agents or employees from any and all sources arising from or

 

16

 

attributable to the Property and the Improvements, 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 Property or rendering of services by or on behalf of Borrower, and Insurance Proceeds, if any, from business interruption or other loss of income insurance.

 

“Repayment Date” shall mean the date of a defeasance or prepayment (as applicable) of the Loan pursuant to the provisions of Section 2.4 hereof.

 

“Reserve Funds” shall mean, collectively, all funds deposited by Borrower with Lender or Deposit Bank pursuant to Article VI of this Agreement, including, but not limited to, the Capital Expenditure Funds, the Insurance Funds, the Tax Funds, the Casualty and Condemnation Funds and the Rollover Funds.

 

“Restoration” shall mean, following the occurrence of a Casualty or a Condemnation which is of a type necessitating repair of the Property (or any portion thereof) as required by this Agreement, the repair and restoration of the Property (or applicable portion thereof) as nearly as possible to the condition the Property (or applicable portion thereof) immediately prior to such Casualty or Condemnation, with such alterations as may otherwise be reasonably approved by Lender.

 

“Restoration DSCR” shall mean, as of any date of determination, the ratio, as determined by Borrower and reasonably confirmed and approved by Lender, of (a) the Underwritten Net Cash Flow of the Property, based on rents in place (annualized and including rental loss insurance proceeds) and expenses on a pro forma basis for the next twelve (12) months after Restoration, as reasonably determined by Lender, to (b) an amount equal to twelve (12) times the Monthly Debt Service Payment Amount.

 

“S&P” shall mean Standard & Poor’s Ratings Group, a division of the McGraw-Hill Companies.

 

“Significant Obligor” shall have the meaning set forth in Item 1101(k) of Regulation AB under the Securities Act.

 

“Solar Panel Equipment” shall mean those certain solar panels and related equipment that are owned by Vornado Sun, LLC (an Affiliate of Borrower) and located on the rooftop area of the Property that is leased by Borrower to Vornado Sun, LLC (the “Solar Panel Equipment Lease”).

 

“Solar Panel Equipment Lease” has the meaning set forth in the definition of “Solar Panel Equipment”.

 

“State” shall mean the state of New Jersey.

 

“Stated Maturity Date” shall mean April 8, 2023.

 

“Sugar and Plum Lease” shall mean that certain Lease Agreement, dated August 18, 2011, by and between Vornado Bergen LLC (predecessor-in-interest to Borrower) and Sugar and

 

17

 

Plum Paramus LLC, as the same has been amended to date and as the same may be further amended in accordance with this Agreement.

 

“Survey” shall mean a survey of the Property prepared by a surveyor licensed in the State and satisfactory to Lender and the company or companies issuing the Title Insurance Policy, and containing a certification of such surveyor satisfactory to Lender.

 

“Taxes” shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof, together with all interest and penalties thereon.

 

“Tenant” shall mean any Person obligated by contract or otherwise to pay monies (including a percentage of gross income, revenue or profits) under any Lease now or hereafter affecting all or any part of the Property.

 

“Term” shall mean 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 Insurance Policy” shall mean an ALTA mortgagee title insurance policy in the form acceptable to Lender issued with respect to the Property and insuring the Lien of the Mortgage.

 

“Treasury Rate” shall mean the yield calculated by the linear interpolation of the yields, as reported in 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 Repayment Date, of U.S. Treasury constant maturities with maturity dates (one longer and one shorter) most nearly approximating the Maturity Date. (In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Treasury Rate.)

 

“TRIPRA” shall mean the Terrorism Risk Insurance Program Reauthorization Act of 2007 or any extension, renewal or replacement thereof.

 

“Trigger Period” shall commence upon the occurrence of (i) an Event of Default or (ii) the commencement of a Low Debt Service Period; and shall end if, (A) with respect to a Trigger Period continuing pursuant to clause (i). the Event of Default commencing the Trigger Period has been cured and such cure has been accepted by Lender (and no other Event of Default is then continuing) or (B) with respect to a Trigger Period continuing due to clause (ii). the Low Debt Service Period has ended pursuant to the terms hereof

 

“Trustee” shall mean any trustee holding the Loan in a Securitization.

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State (with respect to fixtures) and the State of New York with respect to the Accounts.

 

“Unaffiliated Qualified Manager” shall mean a property manager that (A) is a reputable management company having at least five (5) years’ experience in the management of properties similar in class and size to the Property in the United States, (B) at the time of its engagement as

 

18

 

property manager has under management leasable square footage equal to or greater than 3,000,000 leasable square feet (excluding the Property) of retail space and (C) is not the subject of a bankruptcy or similar insolvency proceeding.

 

“U.S. Obligations” shall mean securities evidencing an obligation to timely pay principal and/or interest in a full and timely manner that are (a) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (b) other “government securities” within the meaning of Section 2(a)(l6) of the Investment Company Act of 1940, as amended, which in each case are (i) not subject to prepayment, call or early redemption and (ii) in compliance with all requirements of all Rating Agencies.

 

“VRLP” means Vornado Realty L.P., a Delaware limited partnership, and its permitted successors by merger, consolidation or transfer of all or substantially all of the assets of Vornado Realty L.P., subject to any applicable terms, covenants and/or conditions of this Agreement.

 

“VRT” means Vornado Realty Trust, a Maryland real estate investment trust, and its permitted successors by merger, consolidation or transfer of all or substantially all of the assets of Vornado Realty Trust, subject to any applicable terms, covenants and/or conditions of this Agreement.

 

“Yield Maintenance Amount” shall mean the present value, as of the Repayment Date, of the remaining scheduled payments of principal and interest (at the non-default rate) from the Repayment Date through the Open Prepayment Date (including any balloon payment due on the Stated Maturity Date) determined by discounting such payments at the Discount Rate, less the amount of principal being prepaid on the Repayment Date.

 

Section 1.2.                                 Index of Other Definitions. the following terms are defined in the sections or Loan Documents as indicated below:

 

“Accounts” - 6.1

“Act” - Schedule V

“Acceptable Blanket Policy” - 5.1.1(c)

“Agreement” - Introductory Paragraph

“Approved Annual Budget” - 4.9.5

“Approved Extraordinary Expenses” — 4.9.5

“Available Cash” — Cash Management Agreement

“Bona Fide Leases” — Definition of Gross Income

“Borrower” - Introductory Paragraph

“Borrower’s Recourse Liabilities” - 10.1

“Borrower Reimbursable Trust Fund Expenses” - 10.21(b)

“Capital Expenditure Account” - 6.5.1

“Capital Expenditure Funds” - 6.5.1

“Cash Collateral Account” - 6.10

“Cash Collateral Funds” - 6.10

“Cash Management Accounts” - 6.12

“Casualty” - 5.2

“Casualty and Condemnation Account” - 6.9

“Casualty and Condemnation Funds” - 6.9

“Casualty Consultant” - 5.4(b)(iii)

 

19

 

“Casualty Retainage” - 5.4(b)(iv)

“Cause” - Schedule V

“Clearing Account” - 6.1

“Clearing Bank” - 6.1

“Committee” - Schedule V

“Condemnation Proceeds” - 5.4(b)

“Contest Threshold” — Section 4.3

“Covered Rated Agency Information” — 9.2(f)

“Defeasance Collateral” - 2.4.2(a)(iii)

“Defeasance Lockout Expiration Date” - 2.4.2(a)

“Defeasance Security Agreement” - 2.4.2 (a)(iii)

“Designated Purchaser” — Section 2.5.1 (b)

“Disclosure Document” - 9.2(a)

“Easements” - 3.1.11

“Embargoed Person” - 4.32(c)

“Equipment” - Mortgage

“ERISA” - 4.31

“ESA: -3.1.36

“Event of Default” - 8.1

“Exchange Act” - 9.2(a)

“Government Lists” - 4.32 (b)

“Gross Asset Value” — Definition of Net Worth

“Improvements” - Mortgage

“Indemnified Liabilities” - 4.30

“Independent Director” - Schedule V

“Independent Manager” - Schedule V

“Insurance Account” - 6.4.1

“Insurance Funds” - 6.4.1

“Insurance Premiums” - 5.1.1(b)

“Insurance Proceeds” - 5.4(b)

“Interest Period” - 2.3.2

“Lease Termination Payments” - 6.6.1(b)

“Lender” - Introductory Paragraph

“Liabilities” - 9.2(b)

“Licenses” - 3.1.9

“Loan Bifurcation” — 9.1(a)

“Nationally Recognized Service Company” - Schedule V

“Net Proceeds” - 5.4(b)

“Net Proceeds Deficiency” - 5.4(b)(vi)

“Note”-2.1.3

“Notice” - 10.6

“OFAC” - 4.32(b)

“Omitted Information” — 9.2(b)

“Otherwise Rated Insurer” — 5.1.2

“Patriot Act Offense” - 4.32(b)

“Permitted Indebtedness” - 4.21

“Permitted Investments” - Cash Management Agreement

“Permitted Transfer” - 7.2

 

20

 

“PML” - 5.1.1(a)

“Policies” - 5.1.1(b)

“Provided Information” - 9.2(b)

“Qualified Carrier” - 5.1.1 (i)

“Registrar” — 9.3

“Registration Statement” — 9.2(b)

“Release Date” - 2.4.2(a)(i)

“Review Waiver” -10.3(b)

“Rollover Account” - 6.6.1(a)

“Rollover Funds” - 6.6.1(a)

“Secondary Market Transactions” - 9.1(a)

“Securities” - 9.1(a)

“Securities Act - 9.2(a)

“Securitization” - 9.1(a)

“Servicer” - 10.21

“Servicing Agreement” - 10.21

“Severed Loan Documents” - 8.2(b)

“Sole Member” - Schedule V

“Special Member” - Schedule V

“Special Purpose Bankruptcy Remote Entity” - Schedule V

“Springing Recourse Event” - 10.1

“Successor Borrower” - 2.4.2(b)

“Tax Account” - 6.3.1

“Tax Funds” - 6.3.1

“Terrorism Premium Cap” - 5.1.1 (i)

“Total Liabilities” — Definition of Net Worth

“Transfer” - 4.2

“Transfer and Assumption” - 7.1

“Transferee Borrower” - 7.1

“Underwriter Group” - 9.2(b)

“Updated Information” — 9.1 (a)

“VNO Transfer” — Definition of “Permitted Bergen Transfers”

“VNO Transfers” - Definition of “Permitted Bergen Transfers”

“Wells Group” — 9.2(b)

 

Section 1.3.                                 Principles of Construction. All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document as a whole and not to any particular provision hereof or thereof. When used in this Agreement or any other Loan Document, the word “including” shall mean “including but not limited to”. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.

 

21

 

II.                                   THE LOAN

 

Section 2.1.                                 The Loan.

 

2.1.1                     Agreement to Lend and Borrow. Subject to and upon the terms and conditions set forth herein, Lender shall make the Loan to Borrower and Borrower shall accept the Loan from Lender on the Closing Date.

 

2.1.2                     Single Disbursement to Borrower. Borrower shall receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.

 

2.1.3                     The Note. The Loan shall be evidenced by that certain Promissory Note of even date herewith, in the stated principal amount of Three Hundred Million and No/100 Dollars ($300,000,000.00) executed by Borrower and payable to the order of Lender in evidence of the Loan (as the same may hereafter be amended, supplemented, restated, increased, extended or consolidated from time to time, the “Note”) and shall be repaid in accordance with the terms of this Agreement, the Note and the other Loan Documents.

 

2.1.4                     Use of Proceeds. Borrower shall use proceeds of the Loan to (i) pay all past-due Taxes, Insurance Premiums and Other Charges, if any, in respect of the Property, (ii) make initial deposits of the Reserve Funds, (iii) pay costs and expenses incurred in connection with the closing of the Loan, and (iv) to the extent any proceeds remain after satisfying clauses (i) through (iii) above, for such lawful purpose as Borrower shall designate (including distributions to the equityholders of Borrower).

 

Section 2.2.                                 Interest Rate.

 

2.2.1                     Interest Rate. Interest on the Outstanding Principal Balance shall accrue throughout the Term at the Interest Rate.

 

2.2.2                     Default Rate. In the event that, and for so long as, any Event of Default shall have occurred and be continuing, the Outstanding Principal Balance and, to the extent not prohibited by applicable law, all other portions of the Debt, shall accrue interest at the Default Rate, calculated from the date such payment was due or such Default shall have occurred without regard to any grace or cure periods contained herein. Interest at the Default Rate shall be paid immediately upon demand, which demand may be made as frequently as Lender shall elect, to the extent not prohibited by applicable law.

 

2.2.3                     Interest Calculation. Interest on the Outstanding Principal Balance 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 (that is, the Interest Rate expressed as an annual rate divided by 360) by (C) the Outstanding Principal Balance. The accrual period for calculating interest due on each Monthly Payment Date shall be the Interest Period immediately prior to such Monthly Payment Date.

 

2.2.4                     Usury Savings. This Agreement and the other Loan Documents are subject to the express condition that at no time shall Borrower be required to pay interest on the Outstanding Principal Balance at a rate which could subject Lender to either civil or criminal

 

22

 

liability as a result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the Outstanding Principal Balance at a rate in excess of the Maximum Legal Rate, the Interest Rate shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal (without premium or penalty) and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under 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 Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

 

Section 2.3.                                 Loan Payments.

 

2.3.1                     Payments. On May 8, 2013 and each Monthly Payment Date thereafter through and including the Monthly Payment Date immediately preceding the Stated Maturity Date, Borrower shall make a payment of interest equal to the Monthly Debt Service Payment Amount. The Monthly Debt Service Payment Amount shall be applied first to accrued and unpaid interest and the balance to the Outstanding Principal Balance. Borrower shall also pay to Lender all amounts to the extent required in respect of Reserve Funds pursuant to Article VI hereof.

 

2.3.2                     Payments Generally. Each interest accrual period thereafter (each, an “Interest Period”) shall commence on the eight (8th) day of each calendar month during the Term and shall end on and include the seventh (7th) day of the next calendar month. For purposes of making payments hereunder, but not for purposes of calculating interest accrual periods, if the day on which such payment is due is not a Business Day, then amounts due on such date shall be due on the immediately preceding Business Day. With respect to payments of principal due on the Maturity Date, interest shall be payable at the Interest Rate, through and including the day immediately preceding such Maturity Date. All amounts due pursuant to this Agreement and the other Loan Documents shall be payable without setoff, counterclaim, defense or any other deduction whatsoever.

 

2.3.3                     Payment on Maturity Date. Borrower shall pay to Lender on the Maturity Date the Outstanding Principal Balance, all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Mortgage and the other Loan Documents.

 

2.3.4                     Late Payment Charge. If any principal, interest or any other sum due under the Loan Documents (other than the Outstanding Principal Balance due and payable on the Maturity Date) is not paid by Borrower within three (3) Business Days after the date on which it is due (it being acknowledged that such three (3) Business Day period is not a grace period and shall not be deemed to change the Monthly Payment Date hereof), Borrower shall pay to Lender upon demand an amount equal to the lesser of three percent (3%) of such unpaid sum or the maximum amount permitted by applicable law 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. Any such amount shall be secured by the Mortgage and the other Loan Documents to the extent permitted by law.

 

23

 

2.3.5                     Method and Place of Payment. Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not later than 2:00 p.m., New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender’s office or at such other place as Lender shall from time to time designate, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

 

Section 2.4.                                 Prepayments.

 

2.4.1                     Prepayments. Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in whole or in part prior to the Stated Maturity Date.

 

2.4.2                     Defeasance.

 

(a)                                 Conditions to Defeasance. Provided no Event of Default has occurred and is continuing, at any time after the date which is the earlier of: (A) two (2) years after the “startup day,” within the meaning of Section 860G(a)(9) of the Code, of the final “real estate mortgage investment conduit,” established within the meaning of Section 860D of the Code, that holds any note that evidences all or any portion of the Loan or (B) May 8, 2016 (the “Defeasance Lockout Expiration Date”), Borrower shall have the right to obtain a release of the collateral for the Loan in whole, but not in part (other than the Defeasance Collateral) from the Liens of the Mortgage and the other Loan Documents upon the satisfaction of the following conditions:

 

(i)                              not less than thirty (30) days prior written notice shall be given to Lender specifying a date (the “Release Date”) on which the Defeasance Collateral is to be delivered, provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment;

 

(ii)                             all accrued and unpaid interest and all other sums due under the Note and under the other Loan Documents up to the Release Date if the Release Date is a Monthly Payment Date or, if the Release Date is not a Monthly Payment Date, through the next occurring Monthly Payment Date, including, without limitation, all reasonable out-of-pocket costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and

 

(iii)                              Borrower shall deliver to Lender on or prior to the Release Date:

 

(A)                               U.S. Obligations that provide for payments (1) on or prior to, but as close as possible to and including, all successive scheduled Monthly Payment Dates after the Release Date through the Monthly Payment Date selected by Borrower that is either the Open Prepayment Date, a Monthly Payment Date following the Open Prepayment Date or the Stated Maturity Date (as so selected by Borrower, the “Defeasance

 

24

 

Collateral Maturity Date”), and (2) in amounts equal to or greater than the Monthly Debt Service Payment Amount through and including any Monthly Payment Date designated by Borrower in (A)(1) above commencing on the Release Date through the Defeasance Collateral Maturity Date together with payment in full of the Outstanding Principal Balance as of the Defeasance Collateral Maturity Date (the “Defeasance Collateral”), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance reasonably satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of the Lender in conformity with all applicable state and federal laws governing granting of such security interests;

 

(B)                               a pledge and security agreement, in form and substance reasonably satisfactory to Lender, creating a first priority security interest in favor of Lender in the Defeasance Collateral (the “Defeasance Security Agreement”), which shall provide, among other things, that any payments generated by the Defeasance Collateral shall be paid directly to Lender and applied by Lender in satisfaction of all amounts then due and payable hereunder and any excess received by Lender from the Defeasance Collateral over the amounts payable by Borrower (or Successor Borrower, if applicable) hereunder or under the Note shall be refunded to Borrower (or Successor Borrower, if applicable) promptly after each Monthly Payment Date;

 

(C)                               a certificate of Borrower certifying that all of the requirements set forth in this Section 2.4.2 have been satisfied;

 

(D)                               an opinion of counsel for Borrower (or Defeasance Borrower, is applicable) in form and substance and delivered by counsel reasonably satisfactory to Lender opining that (subject to customary assumptions and qualifications): (1) the Defeasance Security Agreement has been duly authorized by Borrower (or Successor Borrower, as applicable), that Lender has a perfected first priority security interest in the Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower (or Successor Borrower, as applicable) in accordance with its terms; and (2) that any REMIC Trust formed pursuant to a Securitization 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 such defeasance;

 

(E)                                a Rating Agency Confirmation from each applicable Rating Agency;

 

25

 

(F)                                 confirmation from a firm of independent public accountants acceptable to Lender certifying that the Defeasance Collateral is sufficient to satisfy the provisions of Section 2.4.2(a)(iii)(A) above; and

 

(G)                               such other certificates, documents or instruments as Lender may reasonably require.

 

(b)                                 Successor Borrower. Upon the defeasance of the Loan under this Section 2.4.2, Borrower may, or at the option of Lender shall, assign all of its Obligations, together with the pledged Defeasance Collateral, to a successor entity designated by Borrower and approved by Lender in its reasonable discretion (in each case, the “Successor Borrower”). Such Successor Borrower shall execute an assumption agreement in form and substance reasonably satisfactory to Lender pursuant to which it shall assume Borrower’s Obligations and, unless the Successor Borrower executed and delivers the Defeasance Security Agreement, the Defeasance Security Agreement. As conditions to such assignment and assumption, Borrower or Successor Borrower shall (i) deliver to Lender an opinion of counsel in form and substance and delivered by counsel reasonably satisfactory to Lender, opining (subject to customary qualifications and assumptions) that: such assumption agreement has been duly authorized by the Successor Borrower and is enforceable against the Successor Borrower in accordance with its terms and that the Note, the Defeasance Security Agreement and the other Loan Documents, as so assumed, are enforceable against such successor entity in accordance with their respective terms, and (ii) pay all reasonable out-of-pocket costs and expenses incurred by Lender or its agents in connection with such assignment and assumption (including, without limitation, the review of the proposed transferee and the review of the assumption agreement and related documentation). In connection with a transfer of the Defeasance Collateral to the Successor Borrower, Borrower shall, as a condition to such defeasance, deliver or cause to be delivered a non-consolidation opinion in form and substance reasonably satisfactory to Lender and the Rating Agencies. Upon such assumption, Borrower shall be relieved of its Obligations hereunder, under the other Loan Documents and under the Defeasance Security Agreement other than those Obligations which expressly survive the termination, satisfaction or assignment of this Agreement or the exercise of Lender’s rights and remedies hereunder.

 

(c)                                  Miscellaneous. Upon the defeasance of the Loan in accordance with clauses (a) and (b) of this Section 2.4.2, Borrower shall have no further right to prepay the Note pursuant to the other provisions of this Section 2.4.2 or otherwise. Borrower shall pay any and all expenses incurred in the purchase of the Defeasance Collateral and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the Note or otherwise required to accomplish the agreements of this Section 2.4.2.

 

2.4.3                     Open Prepayment. Notwithstanding anything to the contrary contained herein, and provided that Borrower shall deliver to Lender a Prepayment Notice, Borrower may prepay the entire principal balance of the Note and any other amounts outstanding under the Note, this Agreement, or any of the other Loan Documents, without payment of the Prepayment Fee or any other prepayment premium, penalty or fee, on any Business Day on or after the Open Prepayment Date. If such prepayment is not made on a Monthly Payment Date, Borrower shall also pay interest that would have accrued on the principal balance of the Note to, but not including, the next Monthly Payment Date. Any Prepayment Notice may be revoked by Borrower at any time, provided Borrower reimburses Lender for any reasonable out-of-pocket

 

26

 

costs and expenses, including reasonable attorney’s fees and disbursements, incurred directly in conjunction with preparing for the prepayment.

 

2.4.4                     Mandatory Prepayments. If Lender is not obligated to make Net Proceeds available to Borrower for Restoration, on the next occurring Monthly Payment Date following the date on which (a) Lender actually receives any Net Proceeds, and (b) Lender has determined that such Net Proceeds shall be applied against the Debt (to the extent that Lender is permitted to make such determination in accordance with the terms hereof), Borrower shall prepay, or authorize Lender to apply Net Proceeds as a prepayment of, the Debt in an amount equal to one hundred percent (100%) of such Net Proceeds. Except during an Event of Default, such Net Proceeds shall be applied by Lender as follows in the following order of priority: First, to all amounts (other than principal and interest) then due and payable under the Loan Documents, including any costs and expenses of Lender in connection with such prepayment); Second, accrued and unpaid interest at the Interest Rate; and Third, to principal. Notwithstanding anything herein to the contrary, no Prepayment Fee or any other prepayment premium, penalty or fee shall be due in connection with any prepayment made pursuant to this Section 2.4.4. Any partial principal prepayment under this Section 2.4.4 shall be applied to the last payments of principal due under the Loan.

 

2.4.5                     Prepayments After Default. If concurrently with the occurrence of an Event of Default or if an Event of Default is continuing, payment of all or any part of the Debt is tendered by Borrower, a purchaser at foreclosure or any other Person, or is otherwise recovered by Lender after acceleration of the Debt (including through application of Reserve Funds), (i) such tender or recovery shall be deemed an attempt to circumvent the prohibition against prepayment set forth herein and (ii) Borrower, such purchaser at foreclosure or other Person shall pay the Prepayment Fee, in addition to the Debt including if such tender and acceptance is not made on a Monthly Payment Date, interest that would have accrued on the Debt to, but not including, the next Monthly Payment Date. Notwithstanding anything to the contrary contained herein or in any other Loan Document, any prepayment of the Debt made concurrently with the occurrence of an Event of Default or while an Event of Default is continuing shall be applied to the Debt in such order and priority as may be determined by Lender in its sole discretion.

 

Section 2.5.                                 Release of Property.

 

2.5.1                     Release Upon Defeasance.

 

(a)                                 If Borrower has elected to obtain a release of the collateral for the Loan (other than the Defeasance Collateral) pursuant to Section 2.4.2 and the requirements of Section 2.4.2 have been satisfied, the collateral (other than the Defeasance Collateral) shall be released from the Liens of the Mortgage and the other Loan Documents, and the Defeasance Collateral pledged pursuant to the Defeasance Security Agreement shall constitute the only collateral which shall secure the Note and all other Obligations. In connection with the release of the Lien, Borrower shall submit to Lender, not less than twenty (20) days prior to the Release 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 Property is located. 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 reasonable out-

 

27

 

of-pocket costs, taxes and expenses associated with the release of the Liens of the Mortgage and the other Loan Documents, including Lender’s reasonable attorneys’ fees. Borrower (or the Successor Borrower, if applicable), pursuant to the Defeasance Security Agreement, shall authorize and direct that the payments received from Defeasance Collateral be made directly to Lender and applied to satisfy the Obligations, including payment in full of the Outstanding Principal Balance as of the Defeasance Collateral Maturity Date.

 

(b)                                 If Borrower advises Lender that it desires to defease the Note in a manner which will permit the assignment of the Note and the Mortgage to any Person designated by Borrower (the “Designated Purchaser”) in order to preserve mortgage recording tax or to legally avoid the payment of any other taxes, Borrower and Lender shall effect such proposed assignment in the following manner: Lender shall assign the Note and the Mortgage, each without recourse, covenant or warranty of any nature, express or implied (except representations that Lender owns the Note and Mortgage free of any liens and encumbrances and has the authority to effect the assignment), to the Designated Purchaser, provided that Borrower (i) has executed and delivered to the Designated Purchaser a new note to be secured by the Defeasance Collateral pursuant to the security agreement between Borrower and the Designated Purchaser (such new note to have the same term, interest rate, unpaid principal balance and all other material terms and conditions of the Note, except that the New Note shall be secured only by the Defeasance Collateral), which new note, together with the defeasance security agreement and the rights of such new lender in and to the Defeasance Collateral, shall be assigned by such new lender to Lender simultaneously with the assignment of the Note and the Mortgage by Lender, and (ii) has complied with all other provisions of Section 2.4 and this Section 2.5 to the extent not inconsistent with this subsection 2.5.1(b). In addition, any such assignment shall be conditioned on the following: (A) the payment by Borrower of the reasonable out-of-pocket expenses of Lender incurred in connection therewith, including Lender’s reasonable attorneys’ fees and disbursements; (B) prior to the assignment of the new note to Lender, the Designated Purchaser shall not materially modify the Note such that it shall be treated as a new loan for federal tax purposes; (C) such an assignment is not then prohibited by any federal, state or local law, rule, regulation, order or by any other governmental authority; (D) such assignment and the actions described above do not constitute a prohibited transaction for any REMIC Trust then holding the Loan and will not disqualify such REMIC Trust as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code as a result of such assignment and the defeasance of the Note, and an opinion of counsel to Borrower in form and substance, and delivered by counsel, that would be reasonably acceptable to a prudent lender to that effect are delivered to Lender; and (E) Borrower shall provide such other opinions, items, information and documents which a prudent lender would reasonably require to effectuate such assignment, provided that none of the foregoing shall impose greater obligations (other than to a de minimis extent) or liabilities on Borrower or reduce Borrower’s rights under the Loan Documents (other than to a de minimis extent) from those otherwise provided for herein. Borrower shall be responsible for all mortgage recording taxes, recording fees and other charges payable in connection with any such assignment. Lender agrees that the assignment of the Note and the Mortgage to the new lender and the assignment of the new note, the Defeasance Collateral and the defeasance security agreement by the new lender to Lender shall be accomplished by an escrow closing conducted through an escrow agent reasonably satisfactory to Lender and pursuant to an escrow agreement reasonably satisfactory to Lender in form and substance. Notwithstanding the foregoing, Lender reserves the right to impose different requirements or procedures on such an assignment of the Note and the Mortgage in order to

 

28

 

accommodate any applicable Legal Requirements at the time of such defeasance if a reasonably prudent Lender would impose such requirements or procedures, provided that none of the foregoing shall impose greater obligations or liabilities on Borrower (other than to a de minimis extent) or reduce Borrower’s rights under the Loan Documents (other than to a de minimis extent) from those otherwise provided for herein.

 

2.5.2                                                                    Release on Payment in Full.

 

(a)                                 Lender shall, upon the written request, upon payment in full of the Debt in accordance with the terms and provisions of the Loan Documents, release the Lien of the Mortgage. In connection with the release of the Lien, Borrower shall submit to Lender, not less than ten (10) days prior to the Repayment 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 Property is located. 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 out-of-pocket costs, taxes and expenses associated with the release of the Lien of the Mortgage, including the Lender’s reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred in connection with same.

 

(b)                                 Notwithstanding the foregoing, if Borrower advises Lender that it desires to effectuate the consequences to Lender of a repayment or prepayment in a manner which will permit the assignment of the Note and the Mortgage to a new lender providing the repayment or prepayment funds, then Lender shall (i) assign the Mortgage and all of the other Loan Documents to any Person designated by Borrower, which assignment documents shall be in recordable form (but without representation or warranty by, or recourse to, Lender, except representations that Lender owns the Note and Mortgage free of any liens and encumbrances and has the authority to effect the assignment), (ii) deliver to or as directed by Borrower the originally executed Note and all originally executed other notes which may have been consolidated, amended and/or restated in connection with the execution of the Note or, with respect to any note where the original has been lost, destroyed or mutilated, a lost note affidavit for the benefit of the assignee lender and the title insurance company insuring the Mortgage, as assigned, in form sufficient to permit such title insurance company to insure the lien of the Mortgage as assigned to and held by the assignee without exception for any matter relating to the lost, destroyed or mutilated note, (iii) execute and deliver an allonge with respect to the Note and any other note(s) as described in the preceding clause (ii) above without recourse, covenant or warranty of any nature, express or implied (except as to the outstanding principal balance of the Loan and that Lender owns the Note and Security Instrument free of any liens and encumbrances and has the authority to execute and deliver the allonge), (iv) deliver the original executed Mortgage or a certified copy of record, and (v) execute and deliver such other instruments of conveyance, assignment, termination, severance and release (including appropriate UCC-3 termination statements) in recordable form as may reasonably be requested by Borrower to evidence such assignment. All reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender in connection with the foregoing shall be paid by Borrower, provided that in no event shall Borrower be required to pay any fee or premium to the Lender or the Servicer in connection therewith.

 

29

 

III.                              REPRESENTATIONS AND WARRANTIES

 

Section 3.1.                                 Borrower Representations. Borrower represents and warrants to Lender that, except to the extent (if any) disclosed on Schedule IV hereto with reference to a specific subsection of this Section 3.1:

 

3.1.1                     Organization; Special Purpose. Borrower has been duly organized and is validly existing and in good standing with full power and authority to own its assets and conduct its business, and is duly qualified and in good standing in the jurisdiction in which the Property is located, and Borrower has taken all necessary limited liability company action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents by it, and has the power and authority to execute and deliver, and perform its obligations, under this Agreement and the other Loan Documents. Borrower complies with the definition of Special Purpose Bankruptcy Remote Entity.

 

3.1.2                     Proceedings; Enforceability. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by Borrower and constitute a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower or Guarantor including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable (except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar “creditors rights laws”, and by general principles of equity and an implied covenant of good faith and fair dealing (regardless of whether such enforceability is considered in a proceeding in equity or at law)), and neither Borrower nor Guarantor has asserted any right of rescission, set-off, counterclaim or defense with respect thereto.

 

3.1.3                     No Conflicts. The execution and delivery of this Agreement and the other Loan Documents by Borrower and the performance of its Obligations hereunder and thereunder will not conflict with any provision of any law or regulation to which Borrower is subject, or conflict with, result in a material breach of, or constitute a material default under, any of the terms, conditions or provisions of any of Borrower’s organizational documents or any agreement or instrument to which Borrower is a party or by which it is bound, or any order or decree applicable to Borrower, or result in the creation or imposition of any Lien on any of Borrower’s assets or property (other than pursuant to the Loan Documents).

 

3.1.4                     Litigation. There is no action, suit, proceeding or investigation pending or, to Borrower’s knowledge, threatened against Borrower, Manager or the Property in any court or by or before any other Governmental Authority which, if adversely determined, would reasonably be expected to result in a Material Adverse Effect.

 

3.1.5                     Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which would reasonably be expected to result in, or does result in, a Material Adverse Effect. Borrower is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted

 

30

 

Encumbrance or any other agreement or instrument to which it is a party or by which it or the Property is bound, except where such default would not reasonably be expected to result in, and does not result in, a Material Adverse Effect.

 

3.1.6                     Consents. No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by Borrower of, or compliance by Borrower with, this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby, other than those which have been obtained by Borrower.

 

3.1.7                     Property; Title.

 

(a) Borrower has good, marketable and insurable fee simple title to the real property comprising part of the Property and good title to the balance of the Property owned by it, free and clear of all Liens whatsoever except the Liens permitted hereunder (including Permitted Encumbrances). The Mortgage, when properly recorded in the appropriate records (and all appropriate recording costs, taxes and fees (if any) are paid), together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a valid, first priority, perfected Lien on Borrower’s interest in the Property, subject only to Permitted Encumbrances, and (ii) perfected security interests in and to, and perfected collateral assignments of, all personalty owned by Borrower (including the Leases), all in accordance with the terms thereof, in each case subject only to the Liens permitted hereunder (including the Permitted Encumbrances). To Borrower’s knowledge, there are no mechanics’, materialman’s or other similar Liens or claims which have been filed for work, labor or materials affecting the Property which are or may be Liens prior to, or equal priority with, the Lien of the Mortgage, except for such Liens as are permitted hereunder (including the Permitted Encumbrances). None of the Permitted Encumbrances, individually or in the aggregate, (a) materially interfere with the benefits of the security intended to be provided by the Mortgage and this Agreement or (b) result in or constitute a Material Adverse Effect.

 

(b)                                 All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid under applicable Legal Requirements in connection with the Property have been paid or are being paid simultaneously herewith. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including the Mortgage, have been paid or are being paid simultaneously herewith. All Taxes and Other Charges due and owing in respect of the Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established hereunder or are insured against by the Title Insurance Policy.

 

(c)                                  The Property is comprised of one (1) or more parcels which constitute separate tax lots and do not constitute a portion of any other tax lot not a part of the Property.

 

(d)                                 No Condemnation has been commenced or, to Borrower’s knowledge, is contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.

 

31

 

(e)                                  To Borrower’s knowledge, there are no pending or proposed special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated improvements to the Property that may result in such special or other assessments.

 

3.1.8                     ERISA; No Plan Assets. As of the date hereof and throughout the Term (i) Borrower is not an “employee benefit plan,” as defined in Section 3(3) of ERISA, (ii) 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, (iii) Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA, and (iv) transactions by or with Borrower are not and will not be subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans.

 

3.1.9                     Compliance. Except as described in the PZR Report or the Property Condition Report, Borrower and the Property (including, but not limited to the Improvements) and the use thereof comply in all respects with all applicable Legal Requirements, including parking, building and zoning and land use laws, ordinances, regulations and codes the noncompliance of which would reasonably be expected to result in, or does result in, a Material Adverse Effect. Borrower is not in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority, the violation of which would reasonably be expected to result in, or does result in, a Material Adverse Effect. To Borrower’s knowledge, Borrower has not committed any act which may give any Governmental Authority the right to cause Borrower to forfeit the Property or any part thereof or any monies paid in performance of Borrower’s Obligations under any of the Loan Documents. The Property is used exclusively as a retail shopping center and for other appurtenant and related uses. Except as described in the PZR Report, in the event that all or any part of the Improvements are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction, and thereafter exist for the same use without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or special permits. To Borrower’s knowledge and except as described in the PZR Report or the Property Condition Report, no legal proceedings are pending or threatened with respect to the zoning of the Property and neither the zoning nor any other right to use or operate the Property is in any way dependent upon or related to any property other than the Property. All certifications, permits, licenses and approvals, including without limitation, certificates of completion and occupancy permits required of Borrower for the legal use, occupancy and operation of the Property for its current use (collectively, the “Licenses”), have been obtained and are in full force and effect, except to the extent the failure to have such Licenses would not reasonably be expected to result in, and does not result in, a Material Adverse Effect. The use being made of the Property is in conformity with the certificate of occupancy issued for the Property and all other restrictions, covenants and conditions affecting the Property, except for such non-compliance that would not reasonably be expected to result in, or does not result in, a Material Adverse Effect.

 

3.1.10              Financial Information. All financial data, including operating statements, statements of cash flow and income and operating expense, that have been delivered to Lender in connection with the Loan (i) are true, complete and correct in all material respects, (ii) accurately represent the financial condition of the Property as of the date of such reports in all material respects, and (iii) the operating statements and statements of cash flow and income and operating expense have been prepared in accordance with GAAP throughout the periods

 

32

 

covered, except as disclosed therein. Borrower does not have contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower, and there are no legal proceedings pending, in each case which are reasonably likely to have a Material Adverse Effect, except in each instance as referred to or reflected in said financial statements as required to be disclosed under GAAP. Since the date of the financial statements, there has been no material adverse change in the financial condition, operations or business of Borrower or the Property from that set forth in said financial statements.

 

3.1.11              Easements; Utilities and Public Access. All easements, cross easements, licenses, air rights and rights-of-way or other similar property interests (collectively, “Easements”), if any, necessary for the utilization of the Improvements for their intended purposes have been obtained and are in full force and effect without default thereunder, except to the extent the failure to obtain such Easements or a default in respect of same would not reasonably be expected to have, and does not have, a Material Adverse Effect. The Property has rights of access to public ways and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service the Property for its intended uses. All public utilities necessary or convenient to the existing use of the Property are located in the public right-of-way abutting the Property or in recorded Easements serving the Property, which Easements are set forth in the Title Insurance Policy.

 

3.1.12              Assignment of Leases. The Assignment of Leases creates a valid assignment of, or a valid security interest in, Borrower’s rights under the Leases, subject only to a license granted to Borrower to exercise certain rights and to perform certain obligations of the lessor under the Leases, including the right to operate the Property. Borrower has not assigned the Leases or any portion of the Rents due and payable or to become due and payable thereunder to any Person other than Lender, except for the assignment of leases and rents being terminated as of the Closing Date.

 

3.1.13              Insurance. Borrower has obtained and has delivered to Lender certificates of insurance evidencing all of the Policies, with all premiums paid as due thereunder, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. Neither Borrower nor, to Borrower’s knowledge, any other Person, has done, by act or omission, anything which would impair the coverage of any of the Policies.

 

3.1.14              Flood Zone. Except as shown on the Survey, none of the Improvements on the Property are located in an area identified by the Federal Emergency Management Agency as a special flood hazard area.

 

3.1.15              Physical Condition. To Borrower’s knowledge and except as may be expressly set forth in the Physical Conditions Report: (i) the Property, including 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; and (ii) there exists no structural or other material defects or damages in the 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 Property, or any part thereof, which would reasonably be expected to materially and adversely

 

33

 

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.

 

3.1.16              Boundaries. Except as disclosed in the Survey, the Title Insurance Policy or the PZR Reports, all of the Improvements lie wholly within the boundaries and building restriction lines of the Land, and no improvements on adjoining properties encroach upon the Property, and no easements or other encumbrances upon the Land encroach upon any of the Improvements, so as to materially and adversely affect the marketability of the Property.

 

3.1.17              Leases. The rent roll attached hereto as Schedule I is true, complete and correct in all material respects and the Property is not subject to any Leases other than the Leases described in Schedule I and Leases with temporary Tenants or Leases that relate solely to storage space which are set forth on Schedule XI. Borrower is the owner and lessor of landlord’s interest in the Leases. No Person has any possessory interest in the Property or right to occupy the same except under and pursuant to the provisions of the Leases. Except as set forth on Schedule IV hereto or in the estoppel certificates delivered to Lender in connection with the closing of the Loan, the Leases identified on Schedule I are in full force and effect and there are no material defaults thereunder by either party beyond any applicable notice or cure period, and there are no conditions that, with the passage of time or the giving of notice, or both, would constitute defaults thereunder. The copies of the Leases delivered to Lender are true and complete, and there are no oral agreements with respect thereto. Except as set forth on Schedule IV hereto or in the estoppel certificates delivered to Lender in connection with the closing of the Loan, no Rent (including security deposits) has been paid more than one (1) month in advance of its due date. Except as set forth on Schedule IV hereto or in the estoppel certificates delivered to Lender in connection with the closing of the Loan, to Borrower’s knowledge, all work to be performed by Borrower under each Lease has been performed as required and has been accepted by the applicable Tenant. Except as set forth on Schedule IV hereto and except as disclosed in the estoppel certificates delivered to Lender in connection with the closing of the Loan, any payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or abatements required to be given by Borrower to any Tenant under a Lease has already been received by such Tenant. Except as set forth on Schedule IV hereto or in the estoppel certificates delivered to Lender in connection with the closing of the Loan, each Tenant under each Lease have accepted possession of and is in occupancy of all of its respective space demised under its Lease and has commenced the payment of full, unabated rent under its Lease. Borrower has delivered to Lender a true, correct and complete list of all security deposits made by Tenants at the Property which have not been applied (including accrued interest thereon), all of which are held by Borrower in accordance with the terms of the applicable Lease and applicable Legal Requirements. Except as set forth on Schedule IV hereto, to Borrower’s knowledge, no Tenant under a Lease is the subject of bankruptcy or reorganization proceedings. Except for the Solar Panel Equipment Lease and the Master Leases, no Tenant under any Lease (or any sublease) is an Affiliate of Borrower. Except as set forth on Schedule IV hereto and except as disclosed in the estoppel certificates delivered to Lender in connection with the closing of the Loan, there are no brokerage fees or commissions due and payable in connection with the leasing of space at the Property and no such fees or commissions will become due and payable in the future in connection with the Leases, including by reason of any extension of such Lease or expansion of the space leased thereunder. Borrower has not sold, transferred, assigned, hypothecated or pledged any Lease or the Rents received therefrom, except for those which are no longer in effect and except to Lender pursuant to the Loan Documents. Except as set forth on Schedule IV

 

34

 

hereto and except as disclosed in the estoppel certificates delivered to Lender in connection with the closing of the Loan, to Borrower’s knowledge, no Tenant under any Lease has assigned its Lease or sublet all or any portion of the premises demised thereby and no such Tenant holds its leased premises under assignment or sublease. Except as set forth on Schedule IV hereto and except as disclosed in the estoppel certificates delivered to Lender in connection with the closing of the Loan, no Tenant under any Lease has a right or option pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part.

 

3.1.18              Tax Filings. To the extent required, Borrower has filed (or has obtained effective extensions for filing) all material federal, state, commonwealth, district and local tax returns required to be filed and has paid or made adequate provision for the payment of all material federal, state, commonwealth, district and local taxes, charges and assessments payable by Borrower. Borrower’s tax returns (if any) properly reflect the income and taxes of Borrower for the periods covered thereby, subject only to reasonable adjustments permitted by the Internal Revenue Service or other applicable tax authority upon audit.

 

3.1.19              No Fraudulent Transfer. Borrower (i) has not entered into the transaction or any Loan Document with the actual intent to hinder, delay, or defraud any creditor, and (ii) received reasonably equivalent value in exchange for its Obligations under the Loan Documents. After giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including subordinated, unliquidated, disputed and contingent liabilities. The fair saleable value of Borrower’s assets is, and immediately following the making of the Loan, will be, greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur Indebtedness and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of the obligations of Borrower). No petition in bankruptcy has been filed by Borrower and Borrower has not ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors. Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of Borrower’s assets or properties, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it.

 

3.1.20              Federal Reserve Regulations. No part of the proceeds of the Loan will be used by Borrower 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 which would violate Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.

 

3.1.21              Organizational Chart. The organizational chart attached as Schedule III, relating to Borrower and certain Affiliates, is true, complete and correct on and as of the date

 

35

 

hereof. No Person other than those Persons shown on Schedule III and their respective owners have any ownership interest in, or right of control, directly or indirectly, in Borrower.

 

3.1.22              Organizational Status. Borrower’s exact legal name is as set forth in the introductory paragraph to this Agreement. Borrower is a limited liability company, and the jurisdiction in which Borrower is organized is: Delaware. Borrower’s Tax I.D. number is: 46-2202003 and Borrower’s Organizational I.D. number is: 5298483.

 

3.1.23              Bank Holding Company. Borrower is not a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.

 

3.1.24              No Casualty. The Improvements have suffered no material casualty or damage which has not been fully repaired and the cost thereof fully paid.

 

3.1.25              Purchase Options. Neither Borrower nor, to Borrower’s knowledge, any other Person, has granted any purchase option, right of first refusal, right of first offer or other similar right in favor of third parties with respect to the Property.

 

3.1.26              FIRPTA. Borrower is not a “foreign person” within the meaning of Sections 1445 or 7701 of the Code.

 

3.1.27              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, or (ii) subject to any other United States federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

 

3.1.28              Fiscal Year. Each fiscal year of Borrower commences on January 1.

 

3.1.29              Other Debt. Borrower has no Indebtedness, other than Permitted Encumbrances and Permitted Indebtedness.

 

3.1.30              Intentionally Omitted.

 

3.1.31              Full and Accurate Disclosure. No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances in which they were made, except that the foregoing statement shall be qualified by “to Borrower’s knowledge” to the extent any statements herein are so qualified. There is no material fact presently known to Borrower which has not been disclosed to Lender which would reasonably be expected to result in, or has resulted in, a Material Adverse Effect.

 

3.1.32              Intentionally Omitted.

 

3.1.33              Intentionally Omitted.

 

3.1.34              REA. With respect to each REA, (a) each REA is in full force and effect and has not been amended, restated, replaced or otherwise modified (except, in each case, as

 

36

 

expressly set forth herein), (b) to Borrower’s knowledge, there are no material defaults under any REA by any party thereto, (c) all material sums due and payable by Borrower under each REA have been paid in full, and (d) to Borrower’s knowledge, no party to any REA has commenced any action or given or received any notice for the purpose of terminating any REA. Borrower has completed all construction contemplated to be performed with respect to the Property pursuant to that certain Construction Easement Agreement between Vornado Bergen Mall LLC and Vornado Bergen East LLC dated March 19, 2008 and recorded April 17, 2008 in Deed Book 9527 page 172.

 

3.1.35              Illegal Activity. No portion of the Property has been or will be purchased with proceeds of any illegal activity.

 

Section 3.2.                                 Survival of Representations. The representations and warranties set forth in Section 3.1 and elsewhere in this Agreement and the other Loan Documents shall (i) survive until the Obligations have been paid and performed in full and (ii) be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.

 

IV.                               BORROWER COVENANTS

 

Until the end of the Term, Borrower hereby covenants and agrees with Lender that:

 

Section 4.1.                                 Payment and Performance of Obligations. Borrower shall pay and otherwise perform the Obligations in accordance with the terms of this Agreement and the other Loan Documents.

 

Section 4.2.                                 Due on Sale and Encumbrance; Transfers of Interests. Borrower acknowledges that Lender has examined and relied on the experience of Borrower and its general partners and managing members, as applicable, and principals of Borrower in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the Property as security for repayment of the Debt and the performance of the Other Obligations. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt or the performance of the Other Obligations, Lender can recover the Debt by a sale of the Property. Therefore, except as permitted in this Agreement or the other Loan Documents, without the prior written consent of Lender, neither Borrower nor any other Person having a direct or indirect ownership or beneficial interest in Borrower shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or transfer the Property or any part thereof, or any interest, direct or indirect, in Borrower, whether voluntarily or involuntarily (a “Transfer”). A Transfer within the meaning of this Section 4.2 shall be deemed to include (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Borrower for the leasing of all or a substantial part of the Property for any purpose other than the actual occupancy by a space Tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (iii) if Borrower, its sole member or any general partner, managing member or controlling shareholder of Borrower or its sole member is a corporation, the voluntary or involuntary sale, conveyance or transfer of such corporation’s stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise)

 

37

 

or the creation or issuance of new stock; (iv) if Borrower, its sole member or any general partner, managing member or controlling shareholder of Borrower or its sole member is a limited or general partnership, joint venture or limited liability company, the change, removal, resignation or addition of a general partner, managing partner, limited partner, joint venturer or member or the transfer of the partnership interest of any general partner, managing partner or limited partner or the transfer of the interest of any joint venturer or member; and (v) any pledge, hypothecation, assignment, transfer or other encumbrance of any direct or indirect ownership interest in Borrower.

 

Section 4.3.                                 Liens. Subject to Borrower’s contest rights as set forth in this Section 4.3, Borrower shall discharge any Lien on any portion of the Property, except for the Permitted Encumbrances and except as otherwise permitted in this Agreement or the other Loan Documents, within sixty (60) days after Borrower receives written notice of the filing of such Lien. Notwithstanding the foregoing, Borrower, at its own expense, may contest by appropriate legal proceeding, conducted in good faith and with due diligence, the amount or validity of any Liens, provided that (i) no Event of Default has occurred and is continuing; (ii) such proceeding shall be permitted under and be conducted in accordance with all applicable statutes, laws and ordinances; (iii) neither the Property nor any part thereof or interest therein will be in reasonable danger of being sold, forfeited, terminated, canceled or lost; (iv) Borrower shall, as required upon final determination thereof, pay the amount of any such Liens, together with all costs, interest and penalties which may be payable in connection therewith; (v) only if collateral is not required to be posted in connection with such proceeding, in the case of Liens in excess of $3,000,000, individually or in the aggregate (the “Contest Threshold”), to insure the payment of such Liens during the term of such contest, Borrower shall deliver to Lender either (A) cash, cash equivalents, a Letter of Credit, a guaranty from a Qualified Guarantor or other security as may be reasonably approved by Lender, in an amount equal to one hundred ten percent (110%) of the contested amount over the Contest Threshold or (B) an amount equal to one hundred percent (100%) of the contested amount from a surety acceptable to Lender in its reasonable discretion, (vi) failure to pay such Liens will not subject Lender to any civil liability (other than fines which Borrower promptly pays in full) or criminal liability, (vii) such contest shall not materially adversely affect the ownership, use or occupancy of the Property, and (viii) Borrower shall keep Lender informed of the status of such proceedings at reasonable intervals and, if requested by Lender, confirm to Lender the continuing satisfaction of the conditions set forth in clauses (i) through (vii) of this Section 4.3. After five (5) Business Days’ notice to Borrower, Lender may pay over any such cash or other security held by Lender to the claimant entitled thereto at any time when, in the reasonable judgment of Lender, the entitlement of such claimant is finally established by the Governmental Authority authorized to make such determination or the Property (or any part thereof or interest therein) shall be in immediate danger of being sold, forfeited, terminated, cancelled or lost or there shall be any immediate danger of the Lien of the Mortgage being primed by any related Lien.

 

Section 4.4.                                 Special Purpose. Without in any way limiting the provisions of this Article IV, Borrower shall at all times comply with the requirements set forth in the definition of “Special Purpose Bankruptcy Remote Entity”. Borrower shall not (i) directly or indirectly make any change, amendment or modification to any of the “Special Purpose Provisions” as defined in and set forth in its organizational documents without the prior written consent of Lender and the receipt of Rating Agency Confirmation, or (ii) otherwise take any action which would result in Borrower not being a Special Purpose Bankruptcy Remote Entity.

 

38

 

Section 4.5.                                 Existence; Compliance with Legal Requirements. Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence and all rights, licenses, permits and franchises necessary to comply with all Legal Requirements applicable to it and the Property, except for such failure or noncompliance as would not reasonably be expected to, and does not, result in a Material Adverse Effect.

 

Section 4.6.                                 Taxes and Other Charges. Subject to Borrower’s contest rights as set forth in this Section 4.6, Borrower shall pay all Taxes and Other Charges now or hereafter levied, assessed or imposed prior to the date the same shall become delinquent and shall promptly furnish to Lender receipts for the payment of the Taxes and the Other Charges (provided, however, that Borrower need not pay Taxes directly nor furnish such receipts for payment of Taxes to the extent that funds to pay for such Taxes have been deposited into the Tax Account pursuant to Section 6.3). Notwithstanding the foregoing, Borrower, at its own expense, may contest by appropriate legal proceeding, conducted in good faith and with due diligence, the amount or validity of any Taxes or Other Charges, provided that (i) no Event of Default has occurred and is continuing; (ii) such proceeding shall be permitted under and be conducted in accordance with all applicable statutes, laws and ordinances; (iii) neither the Property nor any part thereof or interest therein will be in reasonable danger of being sold, forfeited, terminated, canceled or lost; (iv) Borrower shall, as required upon final determination thereof, pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of Taxes or Other Charges from the Property; (vi) in the case of Taxes or Other Charges above the Contest Threshold, Borrower shall deposit with Lender cash, cash equivalents, a Letter of Credit, a guaranty from a Qualified Guarantor or other security as may be reasonably approved by Lender, in an amount equal to one hundred ten percent (110%) of the contested amount (together with all interest and penalties thereon) over the Contest Threshold, to insure the payment of any such Taxes or Other Charges during such contest, (vii) failure to pay such Taxes or Other Charges will not subject Lender to any civil liability (other than fines which Borrower promptly pays in full) or criminal liability, (viii) such contest shall not materially adversely affect the ownership, use or occupancy of the Property, and (ix) Borrower shall keep Lender informed of the status of such proceedings at reasonable intervals and, if requested by Lender, confirm to Lender the continuing satisfaction of the conditions set forth in clauses (i) through (vii) of this Section 4.6. After five (5) Business Days’ notice to Borrower, Lender may pay over any such cash or other security held by Lender to the claimant entitled thereto at any time when, in the reasonable judgment of Lender, the entitlement of such claimant is finally established by the Governmental Authority authorized to make such determination or the Property (or any part thereof or interest therein) shall be in immediate danger of being sold, forfeited, terminated cancelled or lost or there shall be any immediate danger of the Lien of the Mortgage being primed by any related Lien.

 

Section 4.7.                                 Litigation. Borrower shall give prompt notice to Lender of any litigation or governmental proceedings pending or, to Borrower’s knowledge, threatened against the Property or Borrower which would, if adversely determined, reasonably be expected to result in a Material Adverse Effect.

 

Section 4.8.                                 Title to the Property. Borrower shall warrant and defend (a) its title to the Property and every part thereof, subject only to Permitted Encumbrances and (b) the validity and priority of the Lien of the Mortgage, the Assignment of Leases and this Agreement

 

39

 

on the Property, subject only to Permitted Encumbrances and other Liens expressly permitted pursuant to the terms of the Loan Documents, in each case against the claims of all Persons whomsoever.

 

Section 4.9.                                 Financial Reporting.

 

4.9.1                     Generally. Borrower shall keep and maintain, or will cause to be kept and maintained, on an annual basis, proper and accurate books and records, in accordance with GAAP, reflecting the business and financial affairs of Borrower. Lender shall have the right at reasonable times during normal business hours upon reasonable advance notice to Borrower to examine such books and records at the office of Borrower or other Person maintaining such books and records and to make such copies or extracts thereof as Lender may reasonably request.

 

4.9.2                     Quarterly/Monthly Reports. Not later than forty-five (45) days following the end of each fiscal quarter (commencing with the first (1st) quarter of 2013), Borrower shall deliver to Lender:

 

(i)                          unaudited financial statements, internally prepared in accordance with GAAP including a balance sheet and profit and loss statement as of the end of such quarter and for the corresponding quarter of the previous year, and a statement of revenues and expenses for the year to date, a statement of operations for such fiscal quarter, and a comparison of the year to date results with (i) the results for the same period of the previous year, and (ii) the Annual Budget for such period and the Fiscal Year. Such statements for each quarter shall be accompanied by an Officer’s Certificate certifying to the best of the signer’s knowledge, (A) that such statements fairly represent the financial condition and results of operations of Borrower in all material respects, (B) that as of the date of such Officer’s Certificate, no Event of Default exists under this Agreement, the Note or any other Loan Document or, if so, specifying the nature and status of each such Event of Default and the action then being taken by Borrower or proposed to be taken to remedy such Event of Default and (C) that as of the date of each Officer’s Certificate, no litigation exists involving Borrower or the Property that would reasonably be expected to have a Material Adverse Effect. Such financial statements shall contain such other information as shall be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof;

 

(ii)                               a rent roll for the Property, dated as of the last month of such fiscal quarter, showing the current annualized rent for the Property (as of the date of such rent roll), and the expiration date of each Lease. Such rent roll shall be accompanied by an Officer’s Certificate certifying that such rent roll is true, correct and complete in all material respects as of its date and stating whether Borrower, within the past three (3) months, has issued a notice of default with respect to any Lease which has not been cured and the nature of such default;

 

(iii)                            copies of any Lease, or any Lease renewal, modification, amendment or modification executed during such fiscal quarter; and

 

(iv)                           a summary report containing each of the following with respect to the Property for the most recently completed calendar month or quarter (as applicable):

 

40

 

(A) aggregate sales by tenants under Leases or other occupants of the Property, to the extent the same have been provided to Borrower by such tenants or other occupants under their respective Leases, (B) rent per square foot payable by each such tenant or occupant, (C) aggregate occupancy of the Property and (D) a tenant aging and receivables report.

 

4.9.3                     Annual Reports. Not later than one hundred five (105) days after the end of each Fiscal Year of Borrower’s operations (commencing on the Fiscal Year ending December 31, 2013), Borrower shall deliver to Lender:

 

(i)                          audited financial statements certified by an Independent Accountant in accordance with GAAP, covering the Property, including a balance sheet as of the end of such Fiscal Year, a statement of operations for the year and stating in comparative form the figures for the previous Fiscal Year, as well as a profit and loss statement and occupancy statistics for the Property. Such annual financial statements shall be accompanied by an Officer’s Certificate in the form required pursuant to Section 4.9.2(i) above; and

 

(ii)                               an annual summary of any and all Capital Expenditures made at the Property during the prior twelve (12) month period.

 

4.9.4                     Other Reports.

 

(a)                                 At any time that the Manager is not an Affiliate of Borrower, Borrower shall deliver to Lender, within ten (10) Business Days of the receipt thereof by Borrower, a copy of all reports prepared by Manager pursuant to the Management Agreement, including, without limitation, the Annual Budget and any inspection reports.

 

(a)                                 Borrower shall, within ten (10) Business Days after written request by Lender or such longer period as reasonably required to produce the same, if all or part of the Loan is being or has been included in a Securitization, by the Rating Agencies, furnish or cause to be furnished to Lender and, if applicable, the Rating Agencies, in such manner and in such detail as may be reasonably requested by Lender or the Rating Agencies, such reasonable additional information as may be reasonably requested with respect to the Property.

 

(b)                                 Borrower shall submit to Lender the financial data and financial statements required (if any), and within the time periods, under clauses (f) and (g) of Section 9.1.

 

4.9.5                     Annual Budget.

 

(a)                                 Provided no Trigger Period has occurred and is continuing, Borrower shall provide to Lender, for informational purposes, no later than sixty (60) days following the end of the prior Fiscal Year (commencing with the Fiscal Year ending December 31, 2013) the Annual Budget for the current Fiscal Year; provided, however, that, if any Trigger Period commences, Borrower shall deliver to Lender an Annual Budget for Lender’s review and approval (which approval shall not be unreasonably withheld, conditioned or delayed) within thirty (30) days of the commencement of such Trigger Period. During the continuance of a Trigger Period, Lender shall have the right to approve each Annual Budget, including extraordinary operating expenses and Capital Expenditures (which approval shall not be unreasonably withheld, conditioned or

 

41

 

delayed). Annual Budgets delivered to Lender (other than during the continuance of a Trigger Period) or approved by Lender during the continuance of a Trigger Period shall hereinafter be referred to as an “Approved Annual Budget”, any such extraordinary operating expenses approved by Lender pursuant to this Section 4.9.5(a) shall hereinafter be referred to as “Approved Extraordinary Expenses”. During the continuance of a Trigger Period, until such time that any Annual Budget has been approved by Lender, the prior Approved Annual Budget shall apply for all purposes hereunder (with such adjustments as necessary to reflect actual increases in Taxes, Insurance Premiums, utilities expenses and other non-discretionary items). During the continuance of a Trigger Period, neither Borrower nor Manager shall change or modify the Annual Budget that has been approved by Lender without the prior written consent of Lender (which consent shall not be unreasonably withheld, conditioned or delayed).

 

Notwithstanding anything to the contrary contained in this Section 4.9.5, whenever Lender’s approval or consent is required pursuant to the provisions of this Section 4.9.5, Lender shall have ten (10) Business Days from receipt of written request and all reasonably requested information and documentation relating thereto in which to approve or disapprove such matter, provided that such request to Lender is marked at the top in bold lettering with the following language: “THIS IS A REQUEST FOR APPROVAL OF A BUDGET. LENDER’S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER AND FAILURE OF LENDER TO RESPOND SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED” and the envelope containing the request must be marked “PRIORITY”. Borrower shall provide Lender with such information and documentation as may be reasonably required by Lender to evaluate such request. In the event that Lender fails to grant or withhold its approval and consent to such matter within such ten (10) Business Day period (and, in the case of a withholding of consent, stating the grounds therefor in reasonable detail, it being understood that a request for such additional information and documentation shall be deemed to be acceptable grounds), then provided no Event of Default is continuing, Lender’s approval and consent shall be deemed to have been granted.

 

Section 4.10.                          Access to Property. Borrower shall permit agents, representatives and employees of Lender to inspect the Property or any part thereof during normal business hours upon reasonable advance notice (which may be given by email or telephonically), subject to the rights of Tenants under Leases and Borrower’s usual and customary safety requirements and accompanied by a representative of Borrower.

 

Section 4.11.                          Leases.

 

4.11.1              Generally. Upon reasonable request, Borrower shall furnish Lender with executed copies of all Leases then in effect.

 

4.11.2              Approvals.

 

(a)                                 Any Major Lease and any renewals, material amendments or material modifications of a Major Lease (other than those which are expressly permitted under such Lease pursuant to a right of the Tenant thereunder not requiring the consent of Borrower) shall be subject to Lender’s approval (which approval shall not be unreasonably withheld, delayed or conditioned). Any Lease and any renewals, amendments or modifications of a Lease (other than

 

42

 

any renewal, amendment or material modification to a Major Lease) that meets the following requirements may be entered into by Borrower without Lender’s prior consent: (i) provides for prevailing market-rate terms, (ii) unless a subordination, non-disturbance and attornment agreement is delivered pursuant to this Section 4.11.2, provides that such Lease is subordinate to the Mortgage and the Assignment of Leases and that the Tenant thereunder will attorn to Lender and any successor landlord, and (iii) is written substantially in accordance with the Standard Form of Lease which has been approved by Lender on or prior to the Closing Date and attached hereto as Exhibit D or any replacement, modification or amendment to such Standard Form of Lease which has been reasonably approved by Lender pursuant to the terms of this Section 4.11.2 (subject to any commercially reasonable changes made in the course of negotiations with the applicable Tenant). All other Leases (including Major Leases) and all renewals, material amendments and material modifications thereof executed after the date hereof shall be subject to Lender’s prior approval (which approval shall not be unreasonably withheld, delayed or conditioned).

 

(b)                                 Borrower shall not permit or consent to any assignment or sublease of any Major Lease that has the effect of releasing the assigning or subletting Tenant from its obligations under the Lease, without Lender’s prior written approval (other than assignments or subleases expressly permitted under any Major Lease pursuant to a right of the Tenant thereunder not requiring the consent of Borrower). Lender shall enter into, and, if required by applicable law in order to provide constructive notice or if requested by any Tenant, record in the county where the Property is located, a subordination, non-disturbance and attornment agreement, in form and substance substantially similar to the form attached hereto as Exhibit F (with such changes to such form as are commercially reasonable and as otherwise reasonably approved by Lender pursuant to this Section 4.11.2, or, if the Tenant is a national retailer or major regional retailer, on such Tenant’s standard form if reasonably approved by Lender, each a “Non-Disturbance Agreement”), with any Tenant entering into a New Lease or a modification of a Lease for which Lender’s prior written consent has been obtained or deemed obtained, or for which Lender’s prior written consent was not required, within ten (10) Business Days after written request therefor by Borrower. All reasonable third party costs and expenses incurred by Lender in connection with the negotiation, preparation, execution, delivery and recordation of any Non-Disturbance Agreement, including, without limitation, reasonable attorneys’ fees and disbursements, shall be paid by Borrower.

 

(c)                                  Borrower shall have the right, without the consent or approval of Lender, to terminate or accept a surrender of any Lease so long as such termination or surrender is (i) by reason of a Tenant monetary default beyond any applicable notice and grace periods or (ii) Borrower is simultaneously replacing such terminated or surrendered Lease with a Lease that is either (A) approved or deemed approved by Lender (such approval not to be unreasonably withheld, delayed or conditioned) or (B) complies in all respects with the requirements forth in Section 4.11.2(a) above and Lender’s approval thereof is not required thereunder or (iii) of the Sugar and Plum Lease as contemplated by the terms of the applicable Master Lease. Except as expressly set forth in this Section 4.11.2(c), Borrower shall not have the right to terminate any Lease without the express written consent of the Lender, such consent not to be unreasonably withheld with respect to non-Major Leases and to be granted or withheld in Lender’s sole discretion with regard to Major Leases.

 

43

 

Notwithstanding anything to the contrary contained in this Section 4.11.2, whenever Lender’s approval or consent is required pursuant to the provisions of this Section 4.11.2, Lender shall have ten (10) Business Days from receipt of written request and all reasonably requested information and documentation relating thereto in which to approve or disapprove such matter, provided that such request to Lender is marked at the top in bold lettering with the following language: “THIS IS A REQUEST FOR CONSENT TO A LEASE. LENDER’S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER AND FAILURE OF LENDER TO RESPOND SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED” and the envelope containing the request must be marked “PRIORITY”. Borrower shall provide Lender with such information and documentation as may be reasonably required by Lender to evaluate such request, including, without limitation, lease comparables and other market information as reasonably required by Lender. In the event that Lender fails to grant or withhold its approval and consent to such matter within such ten (10) Business Day period (and, in the case of a withholding of consent, stating the grounds therefor in reasonable detail, it being understood that a request for such additional information and documentation shall be deemed to be acceptable grounds), then provided no Event of Default is continuing, Lender’s approval and consent shall be deemed to have been granted.

 

(d)                                 Notwithstanding the foregoing, Borrower shall be entitled to enter into a Lease with H&M substantially in the form approved by Lender and attached hereto as Schedule VIII and to terminate the Sugar and Plum Lease in connection therewith, as contemplated by the terms of the Master Lease. In the case of clause (i) and (ii), Borrower shall be permitted to make commercially reasonable changes which will not materially and adversely affect Borrower or the Lender’s interest in such Lease and which do not, in any event, affect the term, rent payable or free rent periods granted under such lease and which do not expand any rights of the tenant to offset or abate rent or terminate the lease prior to the expiration date thereof.

 

4.11.3              Covenants. Borrower (i) shall observe and perform the material obligations imposed upon the lessor under the Leases in a commercially reasonable manner (i.e., in a manner that would not reasonably be expected to result in a termination of a Lease or cause any right of offset or other defense against the payment of Rent or any other material claim by a Tenant); (ii) shall enforce the material terms, covenants and conditions contained in the Leases upon the part of the Tenants thereunder to be observed or performed in a commercially reasonable manner, including, without limitation, using commercially reasonable efforts to cause Tenants to remove any Liens filed against the Property due to work performed by or on behalf of Tenant at the Property; (iii) shall not collect any of the Rents more than one (1) month in advance (other than security deposits); and (iv) shall not execute any assignment of lessor’s interest in the Leases or the Rents (except as contemplated or permitted by the Loan Documents). Borrower shall promptly send copies to Lender of all written notices of material default which Borrower shall receive under the Leases.

 

4.11.4              Security Deposits. All security deposits of Tenants, whether held in cash or any other form, shall be held in compliance with all Legal Requirements and shall not be commingled with any other funds of Borrower to the extent required by applicable law. Upon the foreclosure of the Lien of the Mortgage, Borrower shall, upon Lender’s request, if permitted

 

44

 

by applicable Legal Requirements, cause all cash security deposits (and any interest theretofore earned thereon) to be transferred into the Deposit Account or, in the case of a letter of credit, cause physical possession thereof to be delivered to Lender.

 

4.11.5              Master Lease.

 

(a)                                 Notwithstanding anything to the contrary contained in this Section 4.11, Borrower shall not amend, modify, restate, substitute, terminate, cancel or permit the surrender of any Master Lease, except for a termination in accordance with its express terms, without the prior written consent of Lender, such consent to be granted or withheld in Lender’s sole discretion.

 

(b)                                 In the event the Tenant under the Master Lease pays to Borrower, as landlord, the Tenant Buyout Payment under and as defined in the applicable Master Lease, Borrower shall be required to promptly deliver such Tenant Buyout Payment to Lender. Borrower shall deliver to Lender cash or a Letter of Credit in the amount of the Tenant Buyout Payment. If cash is delivered, such funds shall be held in an account controlled by Lender and shall be collateral for the Loan. If the Tenant Buyout Payment shall be delivered to Lender in the form of a Letter of Credit, such Letter of Credit shall be held as collateral for the Loan, and upon the occurrence of an Event of Default, Lender shall have the right without prior notice to Borrower to draw on the Letter of Credit and apply the proceeds thereof to the payment of the Debt in such order, proportion and priority as Lender may determine in its sole and absolute discretion. Any such cash or Letter of Credit shall be returned to Borrower, provided no Event of Default exists, upon the earlier to occur of (a) the expiration of the term of the applicable Master Lease as if such Tenant Buyout Payment had not been made (i.e., ten (10) years from the date of the Master Lease) or (b) repayment or defeasance in full of the Debt. Upon delivery of the cash or Letter of Credit to Lender in the amount of the Tenant Buyout Payment, Borrower shall be permitted to terminate the applicable Master Lease.

 

Section 4.12.                          Repairs; Maintenance and Compliance; Alterations.

 

4.12.1              Repairs; Maintenance and Compliance. Borrower shall at all times cause the Property to be maintained in a good and safe condition and repair (in accordance with reasonable market practice for properties of similar type and size), subject to ordinary wear and tear, and shall not remove, demolish or alter the Improvements or Equipment (except for alterations performed in accordance with Section 4.12.2 below and as permitted in Article VII). Borrower shall comply with all Legal Requirements and cure properly any violation of a Legal Requirement to the extent that such noncompliance or violation would reasonably be expected to result in, or does result in, a Material Adverse Effect.

 

4.12.2              Alterations.

 

(a)                                 Borrower may, without Lender’s consent, perform alterations to the Improvements and Equipment which do not constitute a Material Alteration and would not reasonably be expected to result in, or does result in, a Material Adverse Effect. At any time the outstanding costs of all alterations then being performed at the Property exceeds the Alteration Threshold, Borrower shall deliver to Lender security for payment of the cost of such alterations in excess of the Alteration Threshold, as additional security for Borrower’s Obligations under the Loan Documents, which security may be any of the following: (i) cash or cash equivalents, (ii) a

 

45

 

Letter of Credit, (iii) an Alteration Deficiency Guaranty or (iv) such other security as may be reasonably approved by Lender. Such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements (other than such amounts to be paid or reimbursed by Tenants under the Leases) over the Alteration Threshold (the amount of such excess, an “Alteration Deficiency”) and Lender may apply such security from time to time at the option of Lender to pay for such alterations if any unpaid amounts are required to be paid pursuant to the Loan Documents and Borrower has not made the applicable payments subject to Borrower’s right to contest such payments in good faith. Borrower shall be entitled to a reduction or release, as the case may be, of such security being held by Lender from time to time (but not more than once per calendar month) as the unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements is reduced due to partial completion. Upon substantial completion of any Material Alteration, Borrower shall provide evidence reasonably satisfactory to Lender that (i) the Material Alteration was constructed in accordance with applicable Legal Requirements, (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 liens (or such liens have otherwise been fully bonded over to the reasonable satisfaction of Lender or fully insured by the title company issuing the Title Insurance Policy), and (iii) all material licenses and permits 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. If Borrower has provided cash security, as provided above, such cash shall be released by Lender to fund such Material Alterations, and if Borrower has provided non-cash security, as provided above, Lender shall release and return such security (or in the case of an Alteration Deficiency Guaranty, terminate such Alteration Deficiency Guaranty) upon Borrower’s satisfaction of the requirements of the preceding sentence.

 

Each request for approval of alterations to any Improvements shall contain a legend in capitalized bold letters on the top of the cover page stating: “THIS IS A REQUEST FOR CONSENT TO ALTERATIONS TO IMPROVEMENTS. LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS. LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED” and Borrower shall include the following documentation with such request: (a) a detailed description of the alterations to be performed to the Improvements, and (b) all other materials reasonably determined by Borrower and Lender to be necessary in order for Lender to evaluate such proposed alterations. Within three (3) Business Days of Lender’s receipt of Borrower’s written request, Lender shall notify Borrower of any additional information or materials necessary for Lender’s evaluation of such request. If Lender fails to so notify Borrower that it requires additional information, the materials provided by Borrower with the initial request for consent shall be deemed to be sufficient to permit Lender to evaluate such request. In the event that Lender fails to grant or withhold its approval and consent to such alterations within ten (10) Business Days from the date that Lender shall have received all additional information or materials timely requested hereunder (and, in the case of a withholding of consent, stating the grounds therefor in reasonable detail), or, if no additional materials were so requested, then provided no Event of Default is continuing, within ten (10) Business Days from the date of Borrower’s request for consent, then Lender’s approval and consent shall be deemed to have been granted.

 

46

 

Section 4.13.                          Insolvency Opinion. Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all material respects.

 

Section 4.14.                          Property Management.

 

4.14.1              Management Agreement. Borrower shall (i) promptly perform and/or observe all of the material covenants and agreements required to be performed and observed by it under the Management Agreement; (ii) promptly notify Lender of any “event of default” under the Management Agreement of which it is aware; and (iii) enforce in a commercially reasonable manner the performance and observance of the material covenants and agreements required to be performed and/or observed by the Manager under the Management Agreement.

 

4.14.2              Prohibition Against Termination or Modification. Borrower shall not (i) surrender, terminate or cancel (unless being replaced with a Qualified Manager and a new Management Agreement) or materially modify, renew or extend (unless the renewal or extension is of the same Management Agreement) the Management Agreement, (ii) enter into any other agreement relating to the management or operation of the Property with Manager or any other Person (other than the Management Agreement or pursuant to the express terms of the Management Agreement), (iii) consent to the assignment by the Manager of its interest under the Management Agreement other than to a Qualified Manager, or (iv) waive or release any of its material rights and remedies under the Management Agreement, in each case without the express consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, the appointment by Borrower of a new property manager (other than a Qualified Manager) such consent may also, if all or part of the Loan is being or has been included in a Securitization, be conditioned upon Borrower delivering a Rating Agency Confirmation from each applicable Rating Agency as to such new property manager and its management agreement. Notwithstanding the foregoing, however, provided no Event of Default is continuing, neither the approval of Lender nor a Rating Agency Confirmation shall be required with respect to the appointment of a Qualified Manager. If at any time Lender consents to the appointment of a new property manager or a Qualified Manager is appointed, such new property manager (including a Qualified Manager) and Borrower shall, as a condition to Lender’s consent, if required, or to the appointment of a Qualified Manager, execute (i) a management agreement in form and substance substantially similar to the form and substance of the Management Agreement in effect on the Closing Date or as otherwise reasonably acceptable to Lender, and (ii) a subordination of management agreement in a form substantially similar to the Assignment of Management Agreement entered into on the Closing Date or such other form as is reasonably acceptable to Lender.

 

4.14.3              Replacement of Manager. Lender shall have the right to require Borrower to replace the Manager with (x) an Unaffiliated Qualified Manager (or another Affiliate of Borrower in the case of clause (ii) below) selected by Borrower or (y) another property manager chosen by Borrower and reasonably approved by Lender (provided, that such approval may, if all or part of the Loan is being or has been included in a Securitization, be conditioned upon Borrower delivering a Rating Agency Confirmation as to such new property manager and management agreement) under any of the following circumstances: (i) at any time following the occurrence of an Event of Default and an acceleration of the Loan, (ii) if Manager shall become insolvent or a debtor in any bankruptcy or insolvency proceeding, or (iii) if at any time the Manager has engaged in gross negligence, fraud, willful misconduct or misappropriation

 

47

 

of funds unless Lender receives evidence reasonably acceptable to Lender that the person or persons responsible for such acts or omissions have been permanently removed from working on matters related to the Property and Manager has paid to Lender any losses incurred by Lender as a direct result of such acts or omissions; provided, however, that prior to Borrower’s becoming so obligated under clause (ii) above, Borrower shall have ten (10) Business Days, from and after the date of such request, within which to provide evidence reasonably satisfactory to Lender that Manager is no longer insolvent or such proceeding has been dismissed, as applicable, in which case Borrower shall not become so obligated.

 

Section 4.15.                          Performance by Borrower. Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision of each Loan Document required to be performed, observed or fulfilled by Borrower.

 

Section 4.16.                          Licenses. Borrower shall keep and maintain all Licenses necessary for the operation of the Property as a retail property, to the extent the failure to do so would reasonably be expected to or does result in a Material Adverse Effect.

 

Section 4.17.                          Further Assurances. Borrower shall, at Borrower’s sole cost and expense:

 

(a)                                 cure any defects in the execution and delivery of the Loan Documents and execute and deliver, or cause to be executed and delivered, to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary to correct the Loan Documents (without in any way increasing the obligations of Borrower (other than to a de minimis extent) or reducing Borrower’s rights under the Loan Documents (other than to a de minimis extent)), to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Obligations, as Lender may reasonably require; and

 

(b)                                 do and execute all and such further lawful and reasonable acts, conveyances and assurances necessary to carry out the intents and purposes of this Agreement and the other Loan Documents, as Lender may reasonably require from time to time, provided that in no event shall Borrower be required to do or execute any act, conveyance or assurance that impose greater obligations or liabilities on Borrower (other than to a de minimis extent) or reduce Borrower’s rights under the Loan Documents from those otherwise provided for therein (other than to a de minimis extent).

 

Section 4.18.                          Estoppel Statement.

 

(a)                                 After written request by Lender, Borrower shall within ten (10) Business Days furnish Lender with a statement, duly acknowledged and certified, stating (i) the Outstanding Principal Balance of the Note, (ii) the Interest Rate, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses to the payment and performance of the Obligations, if any, and (v) that this Agreement and the other Loan Documents have not been modified or if modified, giving particulars of such modification.

 

(b)                                 Borrower shall use commercially reasonable efforts to deliver to Lender, within thirty (30) days following Lender’s written request, an estoppel certificate from each Tenant under any Lease in the form required pursuant to its Lease or otherwise in form and

 

48

 

substance reasonably satisfactory to Lender; provided, that Borrower shall not be required to deliver such certificates more frequently than one (1) time in any six (6) month period.

 

Section 4.19.                          Notice of Default. Borrower shall promptly advise Lender of the occurrence of any Default or Event of Default of which Borrower has knowledge.

 

Section 4.20.                          Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which would, if adversely determined, reasonably be expected to have a Material Adverse Effect and, in connection therewith, permit Lender, at its election, to participate in any such proceedings (other than those proceedings in which Borrower and any Lender are adverse parties).

 

Section 4.21.                          Indebtedness. Borrower shall not directly or indirectly create, incur or assume any Indebtedness other than (i) the Debt and the other Obligations and liabilities specifically provided for in the Loan Documents, (ii) unsecured trade payables incurred in the ordinary course of business relating to the ownership and operation of the Property, which in the case of such unsecured trade payables (A) are not evidenced by a note, (B) do not exceed, at any time, a maximum aggregate amount of three percent (3%) of the original amount of the Outstanding Principal Balance and (C) are paid within sixty (60) days of the date incurred, (iii) accrued tenant improvement costs and leasing commissions due pursuant to the terms of any Lease approved or deemed approved hereunder, and (iv) amounts due under equipment leases, so long as such amounts, together the amounts due under clause (ii) do no exceed three percent (3%) of the original amount of the Outstanding Principal Balance (collectively, “Permitted Indebtedness”). Nothing contained herein shall be deemed to require Borrower to pay any amount, so long as Borrower is in good faith, and by proper legal proceedings, diligently contesting the validity, amount or application thereof, provided that in each case, at the time of the commencement of any such action or proceeding, and during the pendency of such action or proceeding (1) no Event of Default shall exist and be continuing, (2) adequate reserves with respect thereto are maintained on the books of Borrower in accordance with GAAP, and (3) such contest operates to suspend collection or enforcement, as the case may be, of the contested amount and such contest is maintained and prosecuted continuously and with diligence. Notwithstanding anything set forth herein, in no event shall Borrower be permitted under this provision to enter into a note (other than the Note and the other Loan Documents) or other instrument for borrowed money.

 

Section 4.22.                          Business and Operations. Borrower will continue to engage in the businesses presently conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Property. Borrower will qualify to do business and will remain in good standing under the laws of the state in which the real property comprising the Property is located and to the extent the same are required for the ownership, maintenance, management and operation of the Property.

 

Section 4.23.                          Dissolution. Borrower shall not (i) cause, permit or suffer the taking of any action, or omitting to take any action, which results in Borrower being dissolved, wound up or liquidated in whole or in part, in each case without obtaining the prior consent of Lender or (ii) dissolve, wind up, liquidate or merge with any other Person, in each case without obtaining the prior consent of Lender.

 

49

 

Section 4.24.                          Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any material claim or debt (other than the termination of Leases in accordance herewith and the settlement of claims against Tenants and/or service providers in connection with such Persons’ defaults) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.

 

Section 4.25.                          Affiliate Transactions. Borrower shall not enter into, or be a party to, any transaction with an Affiliate of Borrower or any of the partners, members or shareholders, as applicable, of Borrower except in the ordinary course of business upon terms and conditions that are commercially reasonable and substantially similar to those that would be available on an arms-length basis with third parties other than such affiliated party.

 

Section 4.26.                          No Joint Assessment. Borrower shall not suffer, permit or initiate the joint assessment of the portion of the Property which constitutes real property (i) with any other real property constituting a tax lot separate from the Property or (ii) with any portion of the 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 portion of the Property which constitutes real property.

 

Section 4.27.                          Intentionally Omitted.

 

Section 4.28.                          Change of Name, Identity or Structure. Borrower shall not change Borrower’s name or convert from a limited liability company structure into any other organizational form without first obtaining the prior written consent of Lender, such consent not to be unreasonably withheld, conditioned or delayed. Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change reasonably required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein.

 

Section 4.29.                          Costs and Expenses.

 

(a)                                 Except as otherwise expressed herein or in any of the other Loan Documents, Borrower shall pay or, if Borrower fails to pay, reimburse Lender upon receipt of notice from Lender, for all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender (including amounts incurred by any Servicer appointed with respect to the Loan) in accordance with the terms of this Agreement and the other Loan Documents in connection with (i) Lender’s ongoing performance of and compliance with all agreements and covenants contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date (except to the extent expressly set forth in Section 10.21(a) hereof); (ii) intentionally omitted; (iii) filing and recording of any Loan Documents in connection with the origination of the Loan; (iv) the creation, perfection or protection of Lender’s Liens in the Property and the Accounts (including intangibles taxes, personal property taxes, mortgage recording taxes, and costs of environmental reports contemplated in the Loan Documents); (v) intentionally omitted; (vi) intentionally omitted; (vii) fees charged by Servicer, subject to the limitations set forth in Section 10.21; (viii) intentionally omitted; (ix) any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by Lender if an interest in the Property, other than as permitted hereunder, is claimed by another Person (other than any loss, damage or expense which constitutes a diminution in value of the Lender’s interest in the Loan); and (x) after the

 

50

 

occurrence and during the continuance of an Event of Default, 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 interests; provided, however, that Borrower shall not be liable for the payment of any such costs and expenses (A) to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender, (B) to the extent the same are the costs of the preparation and closing of the Securitization of the Loan, (C) except to the extent included as part of Borrower Reimbursable Trust Fund Expenses, to the extent the same arise by reason of Lender’s monitoring of Borrower’s ongoing performance and compliance of its agreements and covenants contained in the Loan Documents, including confirming compliance with the insurance, environmental and financial reporting covenants, (D) any costs incurred by Lender with respect to a claim or adjudication brought by Borrower or Guarantor pursuant to Section 10.12 hereof in which it is finally determined that Lender acted in bad faith or the relief sought by Borrower is granted pursuant to a final judgment and (E) in any other instance herein or in any other Loan Document that specifically provides that the matter in question is to be “at Lender’s expense” or “at no cost to Borrower” or words of similar import.

 

(b)                                 In addition, in connection with any Rating Agency Confirmation, Review Waiver or other Rating Agency consent, approval or review requested by Borrower or required hereunder or under the Servicing Agreement (other than the initial review of the Loan by the Rating Agencies in connection with a Securitization), Borrower shall pay all of the reasonable out-of-pocket costs and expenses of Lender, Servicer, any trustee or certificate administrator and each Rating Agency in connection therewith, and, if applicable, shall pay any fees imposed by any Rating Agency in connection therewith.

 

(c)                                  Any costs and expenses due and payable by Borrower hereunder which are not paid by Borrower within ten (10) Business Days after demand may be paid from any amounts in the Deposit Account, with notice thereof to Borrower. The obligations and liabilities of Borrower under this Section 4.29 shall (i) become part of the Obligations, (ii) be secured by the Loan Documents and (iii) survive the Term and the exercise by Lender of any of its rights or remedies under the Loan Documents, including the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure.

 

Section 4.30.                          Indemnity. Subject to Section 10.1, Borrower shall indemnify, defend and hold harmless Lender from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs and expenses (including reasonable out-of-pocket attorneys’ fees and expenses but specifically excluding any Lender or Servicer fees), imposed on, incurred by, or asserted against Lender in any manner relating to or arising out of (i) any breach by Borrower of its Obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, other than any loss, damage or expense which constitutes a diminution in value of the Lender’s interest in the Loan; (ii) ownership of the Mortgage, the Property or any interest therein, or receipt of any Rents; (iii) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (iv) any use, nonuse or condition in or of the Property; (v) performance of any labor or services or the furnishing of any materials or other property in respect of the Property; (vi) any failure of the Property to comply with any Legal Requirement; (vii) 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 Property or any part thereof, or any liability asserted

 

51

 

against Lender with respect thereto (other than any broker or agent retained by or on behalf of Lender in connection with the Loan); and (viii) the claims of any lessee of any portion of the Property or any Person acting through or under any lessee or otherwise arising under or as a consequence of any Lease (collectively, the “Indemnified Liabilities”); provided, however, that Borrower shall not have any obligation to Lender hereunder to the extent that such Indemnified Liabilities arise (x) from the gross negligence, illegal acts, fraud or willful misconduct of Lender and (y) to the extent any of the foregoing relate to the period subsequent to (1) the acceptance by Lender or its designee of a deed-in-lieu of foreclosure with respect to the Property or (2) the foreclosure of the Mortgage. To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall pay 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 Lender.

 

Section 4.31.                          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 the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

 

(b)                                 Borrower shall not permit the assets of Borrower to become “plan assets,” whether by operation of law or under regulations promulgated under ERISA.

 

Section 4.32.                          Patriot Act Compliance.

 

(a)                                 Borrower will use its good faith and commercially reasonable efforts to comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Property, except, with respect to any such requirements other than the Patriot Act and requirements related to anti-money laundering and terrorism, where such failure or noncompliance as would not reasonably be expected to result in a Material Adverse Effect. If required pursuant to the Patriot Act or any other Legal Requirement, Lender shall have the right to audit Borrower’s compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Property, including those relating to money laundering and terrorism. In the event that Borrower fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Lender may, at its option, cause Borrower to comply therewith and any and all reasonable out-of-pocket costs and expenses incurred by Lender in connection therewith shall be secured by the Mortgage and the other Loan Documents and shall be immediately due and payable.

 

(b)                                 Neither Borrower nor any owner of a direct or indirect interest in Borrower (other than the holders of interests in VRLP (other than VRT) and/or VRT) (i) is listed on any Government Lists, (ii) is a person who has been determined by competent authority to be in violation of the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OF AC or in any enabling legislation or other Presidential Executive Orders in respect thereof, or (iii) has been previously indicted for or convicted for any Patriot Act Offense, in each case, with the result that the Loan made by Lender is in violation of applicable Legal Requirements. For purposes hereof,

 

52

 

the term “Patriot Act Offense” means any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under (A) the criminal laws against terrorism, (B) the criminal laws against money laundering, (C) the Bank Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act, provided that “Patriot Act Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes hereof, the term “Government Lists” means (1) the Specially Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control (“OFAC”), (2) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the rules and regulations of OFAC that Lender notified Borrower in writing in advance is now included in “Government Lists”, or (3) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other Governmental Authority or pursuant to any Executive Order of the President of the United States of America that Lender notified Borrower in writing in advance is now included in “Government Lists”.

 

(c)                                  At all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower shall constitute property of, or shall be beneficially owned, directly or, to Borrower’s knowledge, indirectly, by any Person subject to trade restrictions under United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder, with the result that the investment in Borrower (whether directly or indirectly), would be prohibited by such laws (each, an “Embargoed Person”), or the Loan made by Lender would be in violation of such laws, (b) no Embargoed Person shall have any interest of any nature whatsoever in Borrower with the result that the investment in Borrower (whether directly or indirectly) would be prohibited by such laws or the Loan would be in violation of such laws, and (c) none of the funds of Borrower shall be derived from any unlawful activity with the result that the investment in Borrower (whether directly or indirectly), would be prohibited by law or the Loan would be in violation of law, in all cases, excluding the interests held in VRLP (other than VRT) or in VRT.

 

V.                                           INSURANCE, CASUALTY AND CONDEMNATION

 

Section 5.1.                                 Insurance.

 

5.1.1                     Insurance Policies.

 

(a)                                 Borrower, at its sole cost and expense, shall obtain and maintain during the entire Term, or cause to be maintained, insurance policies providing at least the following coverages:

 

(i)                                             Property insurance against loss or damage by fire, lightning and such other perils as are included in a standard “special form of loss” policy (formerly known as an “all-risk” policy), and against loss or damage by all other risks and hazards covered by a standard extended coverage insurance policy, with no exclusion for damage or destruction caused by the acts of “Terrorists” (as defined by TRIPRA) (or, subject to Section 5.1.1(i) below, standalone coverage with respect thereto) riot and civil commotion, vandalism, malicious mischief, burglary

 

53

 

and theft (A) in an amount equal to one hundred percent (100%) of the “Full Replacement Cost” of the Property, which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (B) containing an agreed-amount endorsement with respect to the Improvements and personal property at the Property waiving all co-insurance provisions; and (C) containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the Improvements or the use of the Property shall at any time constitute legal nonconforming structures or uses, and compensating for loss of value or property resulting from operation of law and the cost of demolition and the increased cost of construction in amounts as reasonably required by Lender and comparable to property similar to the Property. In addition, Borrower shall obtain: (y) if any portion of the Improvements is currently or at any time in the future located in a federally designated “special flood hazard area”, flood hazard insurance in an amount reasonably required by Lender (and comparable to that required for other property similar to the Property) to the extent the same is commercially available and having a deductible of $100,000; and (z) earthquake insurance in amounts and in form and substance reasonably satisfactory to Lender (provided that earthquake insurance shall not be required hereunder unless the Property is located in an area with a high degree of seismic activity and a Probable Maximum Loss (“PML”) of greater than twenty percent (20%)), provided that the insurance pursuant to clauses (y) and (z) hereof shall be on terms consistent with the all risk insurance policy required under this subsection (i);

 

(ii)                             commercial general liability insurance providing coverages against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the so-called “occurrence” form and containing minimum limits per occurrence of $1,000,000.00, with an aggregate limit per policy year, excluding umbrella coverage, of not less than $2,000,000.00; (B) to continue at not less than the aforesaid limit until required to be changed by Lender by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) independent contractors; and (4) contractual liability for all insurable contracts as defined in the standard Insurance Service Office (ISO) policy form to the extent the same is commercially available;

 

(iii)                               rental loss and/or business income interruption insurance (A) with dual-party endorsement; (B) covering all risks required to be covered by the insurance provided for in subsection (i) above and Section 5.1.1(h) below; (C) covering a period of restoration of thirty-six (36) months and containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and Personal Property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of twenty-four (24) months from the date that the Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period; and (D) in an amount equal to one hundred percent (100%) of the projected

 

54

 

Gross Revenue (excluding Net Proceeds) from the Property for a period of thirty-six (36) months from the date that the Property is repaired or replaced and operations are resumed. The amount of such business income insurance shall be determined prior to the date hereof and at least once each year thereafter based on Borrower’s reasonable estimate of the Gross Revenue (excluding Net Proceeds) from the Property for the succeeding thirty (30) month period. All proceeds payable to Lender pursuant to this subsection shall be held by Lender and shall be applied to the Obligations secured by the Loan Documents from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower of its Obligations to pay the Debt on the respective dates of payment provided for in the Note and the other Loan Documents except to the extent such amounts are actually paid out of the proceeds of such business income or commercial rents insurance;

 

(iv)                             during any period of structural construction, repairs or restorations are being made with respect to the Improvements, and only if the Property coverage form does not otherwise apply, (A) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above-mentioned commercial general liability insurance policy; and (B) the insurance provided for in subsection (i) above written in a so-called builder’s risk completed-value form (1) on a non-reporting basis, (2) against all risks insured against pursuant to subsection (i) above, (3) including permission to occupy the Property, and (4) with an agreed amount endorsement waiving co-insurance provisions;

 

(v)                             workers’ compensation and employer’s liability insurance with limits required by the statutory limits of the state in which the Property is located in respect of any work or operations on or about the Property or in connection with the Property or its operation (if applicable);

 

(vi)                             comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably acceptable to Lender on terms consistent with the commercial property insurance policy required under subsection (i) above;

 

(vii)                             umbrella liability insurance in addition to primary coverage in an amount not less than $200,000,000.00 per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and subsection (viii) below;

 

(viii)                              motor vehicle liability coverage, if applicable, for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, with limits which are reasonably acceptable to Lender from time to time;

 

(ix)                             windstorm insurance in an amount equal to the Outstanding Principal Balance or such lesser amount as reasonably acceptable to Lender in writing, but in no event greater than the sum of the Full Replacement Cost of the Property and the required business income interruption insurance;

 

55

 

(x)                            insurance against employee dishonesty, if applicable, in an amount not less than one (1) month of Gross Revenue (excluding Net Proceeds) from the Property and with a deductible not greater than $150,000.00; and

 

(xi)                            at Lender’s reasonable request, upon ninety (90) days’ written notice, (A) such other insurance with respect to the Property against loss or damage from time to time of the kinds customarily insured in such amounts as are generally required by institutional lenders on loans secured by similar properties as the Property located in or around the region in which the Property is located and (B) such increases in the amounts of coverage required hereunder as may be reasonably requested by Lender, taking into consideration changes in liability laws and changes in prudent customs and practices, and otherwise currently being required with respect to Properties similar to the Property with mortgage loans similar to the Loan.

 

(b)                                 All insurance provided for in Section 5.1.1(a) shall be obtained under valid and enforceable policies (collectively, the “Policies” or in the singular, the “Policy”) and shall be subject to the reasonable approval of Lender as to form and substance, including amounts, deductibles, loss payees and insureds. Not less than three (3) Business Days prior to the expiration dates of the Policies theretofore furnished to Lender, certificates of insurance evidencing the renewal Policies (and, upon the written request of Lender, copies of such Policies to the extent such Policies have been received by Borrower) accompanied, within thirty (30) days after the respective due dates therefor, by evidence reasonably satisfactory to Lender of payment of the premiums then due thereunder (the “Insurance Premiums”), shall be delivered by Borrower to Lender (provided, however, that Borrower need not pay any Insurance Premiums directly nor furnish such evidence of payment of Insurance Premiums to the extent that funds to pay for such Insurance Premiums have been deposited into the Insurance Account pursuant to Section 6.4).

 

(c)                                  Any blanket insurance Policy shall provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Section 5.1.1(a) (any such blanket policy, an “Acceptable Blanket Policy”).

 

(d)                                 All Policies of insurance provided for or contemplated by Section 5.1.1(a) shall name Borrower as a named insured, and, with respect to liability policies shall name Lender and its successors and/or assigns as additional insureds, all property policies shall name Lender and its successors and/or assigns as mortgagee and lender’s loss payee, as its interests may appear, and in the case of property damage, including, but not limited to, boiler and machinery, terrorism, windstorm, flood and earthquake insurance (if any), shall contain a so-called New York standard non-contributing mortgagee clause (or its equivalent) in favor of Lender providing that the loss thereunder shall be payable to Lender unless below the threshold for Borrower to handle such claim without Lender intervention as provided in Section 5.2 below. Additionally, if Borrower obtains property insurance coverage in addition to or in excess of that required by Section 5.1.1(a)(i), then such insurance policies shall also contain a so-called New York standard non-contributing mortgagee clause (or its equivalent) in favor of Lender providing that the loss thereunder shall be payable to Lender.

 

56

 

(e)                                  All Policies of insurance provided for in Section 5.1.1(a), except for the Policies referenced in clauses (ii), (iv)(A), (v), (viii) and (x) of Section 5.1.1(a), shall contain clauses or endorsements to the effect that:

 

(i)                                no act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant or other occupant, or foreclosure or similar action, or failure to comply with the provisions of any Policy, which might otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as Lender is concerned;

 

(ii)                                the Policy shall not be canceled without at least thirty (30) days’ written notice to Lender and any other party named therein as an additional insured (other than in the case of non-payment in which case only ten (10) days prior notice, or the shortest time allowed by applicable Legal Requirement (whichever is longer), will be required) and, if obtainable by Borrower using commercially reasonable efforts, shall not be materially changed (other than to increase the coverage provided thereby) without such a thirty (30) day notice; provided such notice as to material change may be given either by the insurer or Borrower if such change would result in the coverage provided by such Policy not complying in all respects with the terms and conditions of this Agreement;

 

(iii)                                 Lender shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder; and

 

(iv)                               the issuers and/or Borrower thereof shall give notice to Lender if any Policy has not been renewed three (3) Business Days prior to its expiration.

 

(f)                                   If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, on one (1) Business Days’ notice to Borrower to take such action as Lender deems reasonably necessary to protect its interest in the Property, including the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate (but in no event in excess of the insurance required to be maintained pursuant to Section 5.1.1), provided that Lender agrees to use commercially reasonable efforts to obtain such insurance pursuant to a cancellable policy, the premiums for which will be refundable for the portion of such policy that is terminated, and all premiums incurred by Lender in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by the Mortgage and shall bear interest at the Default Rate. Lender shall provide written notice to Borrower after obtaining such insurance coverage.

 

(g)                                  In the event of foreclosure of the Mortgage or other transfer of title to the Property in extinguishment in whole or in part of the Obligations, all right, title and interest of Borrower in and to the Policies that are not blanket Policies then in force concerning the Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or Lender or other transferee in the event of such other transfer of title.

 

(h)                                 The property insurance, general liability insurance, umbrella liability and rental loss and/or business interruption insurance required under Sections 5.1.1(a)(i), (ii), (iii), (iv) and (vii) above shall cover perils of terrorism and acts of terrorism, or, if excluded, Borrower

 

57

 

shall maintain property insurance, general liability insurance, umbrella liability and rental loss and/or business interruption insurance for loss resulting from perils and acts of terrorism on terms (including amounts) consistent with those required under Sections 5.1.1(a)(i), (ii), (iii) , (iv) and (vii) above, subject to the terms of Section 5.1.1(i), at all times during the term of the Loan as long as such coverage is commercially available.

 

(i)                                     Notwithstanding anything in subsection (a)(i) or (h) above to the contrary, Borrower shall be required to obtain and maintain coverage in its property insurance Policy (or by a separate Policy) against loss or damage by terrorist acts in an amount equal to one hundred percent (100%) of the “Full Replacement Cost” of the Property plus rental loss and/or business interruption coverage required under clause (a)(iii) above; provided that such coverage is commercially available. In the event that such coverage with respect to terrorist acts is not included as part of the “all risk” property policy required by subsection (a)(i) above, Borrower shall, nevertheless be required to obtain coverage for terrorism (as standalone coverage) in an amount equal to one hundred percent (100%) of the “Full Replacement Cost” of the Property plus the rental loss and/or business interruption coverage under clause (a)(iii) above; provided that such coverage is available. Borrower shall obtain the coverage required under this clause (i) from a carrier which otherwise satisfies the rating criteria specified in Section 5.1.2 below (a “Qualified Carrier”) or in the event that such coverage is not available from a Qualified Carrier, Borrower shall, to the extent commercially feasible, obtain such coverage from the highest rated insurance company providing such coverage. Notwithstanding the foregoing, with respect to any such standalone policy covering terrorist acts, Borrower shall not be required to pay any Insurance Premiums solely with respect to such terrorism coverage in excess of the Terrorism Premium Cap (hereinafter defined); provided that if the Insurance Premiums payable with respect to such terrorism coverage exceeds the Terrorism Premium Cap, Lender may, at its option purchase such standalone terrorism Policy, with Borrower paying such portion of the Insurance Premiums with respect thereto equal to the Terrorism Premium Cap and the Lender paying such portion of the Insurance Premiums in excess of the Terrorism Premium Cap. As used herein, “Terrorism Premium Cap” means an amount equal to the greater of (A) the product of the rate of $0.10 per $100 times the lesser of (1) the Outstanding Principal Balance and (2) the sum of one hundred percent (100%) of the Full Replacement Cost and the required amount of rental loss and/or business income interruption insurance and (B) two (2) times the amount of annual insurance premium that is payable at such time for the insurance coverage required pursuant to Section 5.1. 1(a)(i) and Section 5.1.1(a)(iii) of this Agreement (without giving effect to the cost of terrorism coverage).

 

5.1.2                     Insurance Company. All Policies required pursuant to Section 5.1.1(a) (i) shall be issued by companies eligible to do business in the state where the Property is located, with a financial strength and claims paying ability rating of “A” or better by S&P (and, if the Loan is part of a Securitization, the equivalent by any other Rating Agency that actually provides insurance ratings for such carriers), provided, however for multi-layered policies (“Multi-Layered Policies”), (A) if four (4) or less insurance companies issue the Policies, then at least seventy-five percent (75%) of the insurance coverage represented by the Policies must be provided by insurance companies with a claims paying ability rating of “A” or better by S&P (and, if the Loan is part of a Securitization, the equivalent by any other Rating Agency that actually provides insurance ratings for such carriers), with no carrier below “BBB” (and, if the Loan is part of a Securitization, the equivalent by any other Rating Agency that actually provides insurance ratings for such carriers), or (B) if five (5) or more insurance companies issue the

 

58

 

Policies, then at least sixty percent (60%) of the insurance coverage represented by the Policies must be provided by insurance companies with a claims paying ability rating of “A” or better by S&P (and, if the Loan is part of a Securitization, the equivalent by any other Rating Agency that actually provides insurance ratings for such carriers), with no carrier below “BBB” (and, if the Loan is part of a Securitization, the equivalent by any other Rating Agency that actually provides insurance ratings for such carriers); (ii) shall, with respect to all property insurance policies and rental loss and/or business interruption insurance policies, contain a Standard Mortgagee Clause and a Lender’s Loss Payable Endorsement, or their equivalents, naming Lender as the person to whom all payments made by such insurance company shall be paid; (iii) shall, with respect to all liability policies, name Lender and its successors and/or assigns as an additional insured; (iv) shall contain a waiver of subrogation against Lender; (v) shall contain such provisions as Lender deems reasonably necessary or desirable to protect its interest including endorsements providing(A) that neither Borrower, Lender nor any other party shall be a co-insurer under said Policies, (B) that Lender shall receive at least thirty (30) days (or, in the case of non-payment of premium, ten (10) days) prior written notice from the insurer and/or Borrower of any cancellation, and (C) for a deductible per loss of an amount not more than that which is customarily maintained by prudent owners of properties with a standard of operation and maintenance comparable to and in the general vicinity of the Property; and (vi) shall be reasonably satisfactory in form and substance to Lender. Notwithstanding the foregoing, in the event that the insurance required hereunder is maintained through a Multi-Layered Policy, (x) Borrower shall be permitted to maintain the Policies required hereunder with insurance companies which do not meet the foregoing requirements (including, for the coverage required by Section 5.1.1(i) above), or through a licensed captive insurance company reasonably acceptable to Lender which is owned by VRLP or VRT (an “Otherwise Rated Insurer”), in each case provided the Otherwise Rated Insurer is satisfactory to the Rating Agencies as evidenced by a Rating Agency Confirmation and provided further that Borrower obtains a “cut-through” endorsement (that is, an endorsement which permits recovery against the provider of such endorsement), or reinsurance in the case of a captive insurance company, in each case reasonably acceptable to Lender with respect to any Otherwise Rated Insurer from an insurance company which meets the claims paying ability ratings required above and (y) solely with respect to property insurance coverage in excess of a primary layer of One Billion Dollars ($1,000,000,000), up to ten percent (10%) of the total amount of such property coverage may be provided by carriers that do not satisfy the minimum rating by S&P of not lower than “BBB” (and the equivalent by any other Rating Agency that actually provides ratings with respect to such carriers), so long as such carriers maintain a Best Insurance Reports rating of A:X or better. Lender agrees that the Otherwise Rate Insurer in place as of the date hereof in connection with the insurance coverage required pursuant to Section 5.1.1(a) herein is acceptable as of the date hereof. Notwithstanding the foregoing, Lender acknowledges and agrees that Borrower shall be permitted to maintain the Policies with FM Global; provided, however, if after the date hereof FM Global is downgraded by Best Insurance Reports to below A:XIV or S&P downgrades FM Global to below a rating of Api, then within sixty (60) days of either such downgrade Borrower shall be required to obtain the Policies from insurance companies that comply with the requirements set forth above. No insurance policy required hereunder shall include any so called “terrorist exclusion” or similar exclusion or exception to insurance coverage, or if excluded, a standalone insurance policy providing coverage relating to the acts of terrorist groups or individuals; provided that, for so long TRIPRA is in effect and continues to cover foreign and domestic acts, Lender shall accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. Copies of the Policies shall be delivered to Lender at the address below (or to such

 

59

 

other address or Person as Lender shall designate from time to time by notice to Borrower) on the date hereof with respect to the current Policies and within ten (10) Business Days after the receipt by Borrower thereof with respect to all renewal Policies:

 

Wells Fargo Bank, N.A.

Commercial Mortgage Insurance Department

P.O. Box 6087

Concord, California 94524

 

Borrower shall pay the Insurance Premiums annually in advance as the same become due and payable and shall furnish to Lender evidence of the renewal of each of the Policies with receipts for the payment of the Insurance Premiums or other evidence of such payment reasonably satisfactory to Lender (provided, however, that Borrower shall not be required to pay such Insurance Premiums nor furnish such evidence of payment to Lender in the event that the amounts required to pay such Insurance Premiums have been deposited into the Insurance Account pursuant to Section 6.4 hereof).

 

Section 5.2.                         Casualty. If the Property shall be 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 (subject to Excusable Delay and delays directly caused by Lender’s failure to respond within a commercially reasonable prompt time to requests for approval of plans or other requests for approvals pursuant to this Article V) proceed to diligently restore, repair, replace or rebuild the Property in accordance with Legal Requirements to be of substantially equal quality and rentable square footage and of substantially the same character as prior to such damage or destruction, with such changes as may be reasonably approved by Lender. Lender may, but shall not be obligated to, make proof of loss if not made by Borrower within fifteen (15) Business Days after Borrower’s actual knowledge of the occurrence of such Casualty. In addition, Lender may participate in any settlement discussions with any insurance companies (and shall approve any final settlement, such approval not to be unreasonably withheld, conditioned or delayed) (i) if an Event of Default is continuing or (ii) with respect to any Casualty in which the Net Proceeds or the costs of completing the Restoration are equal to or greater than $7,500,000 and Borrower shall deliver to Lender all instruments reasonably required by Lender to permit such participation. Except as set forth in the foregoing sentence, any Insurance Proceeds in connection with any Casualty (whether or not Lender elects to settle and adjust the claim or Borrower settles such claim) shall be due and payable to Lender and held and disbursed by Lender in accordance with the terms of this Agreement. In the event Borrower or any party other than Lender is a payee on any check representing Insurance Proceeds with respect to any Casualty, Borrower shall immediately endorse, and cause all such third parties to endorse, such check payable to the order of Lender. Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an interest, to, upon five (5) Business Days prior notice to Borrower or during the continuance of an Event of Default, endorse any such check payable to the order of Lender. Borrower hereby releases Lender from any and all liability with respect to the settlement and adjustment by Lender of any claims in respect of any Casualty.

 

Section 5.3.                         Condemnation. Borrower shall give Lender prompt notice of the actual or threatened commencement of any proceeding for the Condemnation of all or any portion of the Property of which Borrower has knowledge and shall deliver to Lender copies of any and all papers served in connection with such proceedings. Lender may participate in any

 

60

 

such proceedings (i) if an Event of Default is continuing or (ii) with respect to any Condemnation in which the Net Proceeds or the costs of completing the Restoration are equal to or greater than $7,500,000, and Borrower shall from time to time deliver to Lender all instruments reasonably requested by it to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and reasonably cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through Condemnation or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the Debt shall not be reduced until any Award shall have been actually received and applied by Lender, after the deduction of reasonable out-of-pocket expenses of collection, to the reduction or 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 rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by a condemning authority, Borrower shall (subject to Excusable Delay and delays directly caused by Lender’s failure to respond within a commercially reasonable prompt time to requests for approval of plans or other requests for approvals pursuant to this Article V) commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 5.4, whether or not an Award is available to pay the costs of such Restoration. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the Debt.

 

Section 5.4.                         Restoration. The following provisions shall apply in connection with the Restoration:

 

(a)                                 If the Net Proceeds shall be less than $15,000,000, and provided no Event of Default is continuing, the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Section 5.4(b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to complete with due diligence the Restoration in accordance with the terms of this Agreement subject to Excusable Delay and delays directly caused by Lender’s failure to respond within a commercially reasonable prompt time to requests for approval of plans or other requests for approvals pursuant to this Article V.

 

(b)                                 If the Net Proceeds are equal to or greater than $15,000,000, the Net Proceeds will be held by Lender and Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 5.4. The term “Net Proceeds” shall mean: (i) the net amount of all insurance proceeds received by Lender pursuant to Section 5.1.1 (a)(i), (iv), (vi), (ix) and (xi) as a result of a Casualty, after deduction of Lender’s reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”), or (ii) the net amount of the Award, after deduction of its reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”), whichever the case may be.

 

(i)                                The Net Proceeds shall be made available to Borrower for Restoration upon the determination of Lender, in its reasonable discretion, that the following conditions are met:

 

61

 

(A)                               no Event of Default shall have occurred and be continuing;

 

(B)                               (1) in the event the Net Proceeds are Insurance Proceeds, less than forty percent (40%) of the rentable square footage of the Improvements on the Property has been damaged, destroyed or rendered unusable as a result of such Casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than fifteen percent (15%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property, and no portion of the Improvements is located on such land;

 

(C)                               Leases demising in the aggregate a percentage amount equal to or greater than 67.5% of the total rentable space in the Property which has been demised under executed and delivered Leases in effect as of the date of the occurrence of such Casualty or Condemnation, whichever the case may be, shall remain in full force and effect during and after the completion of the Restoration without abatement of rent beyond the time required for Restoration;

 

(D)                               Borrower shall commence the preparation of plans and specifications for the Restoration and the filing of an application for required building permits as soon as reasonably practicable after such Casualty or Condemnation (but in no event later than sixty (60) days after such Casualty or Condemnation, whichever the case may be, occurs) and shall thereafter diligently pursue the Restoration to completion.

 

(E)                                Lender shall be reasonably satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note, which will be incurred with respect to the Property as a result of the occurrence of any such Casualty or Condemnation, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 5.1.1(a)(iii), if applicable, or (3) by other funds of Borrower or any collateral provided by Borrower or Guarantor;

 

(F)                                 Lender shall be reasonably satisfied that the Restoration will be completed on or before the earliest to occur of (1) the date which is six (6) months prior to the Stated Maturity Date, (2) such time as may be required under applicable Legal Requirements or (3) if the insurance coverage referred to in Section 5.1.1(a)(iii) runs out prior to the completion of Restoration pursuant to its terms, three (3) months prior to the expiration of the insurance coverage referred to in Section 5.1.1(a)(iii); provided, however, that if less than three (3) months remains prior to the expiration of such coverage, Borrower may satisfy this condition by depositing with Lender an amount equal to such insurance proceeds to be held and disbursed by Lender to Borrower in equal monthly installments over such three (3) month period;

 

(G)                               the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable Legal

 

62

 

Requirements to the extent that noncompliance would reasonably be expected to or does result in a Material Adverse Effect;

 

(H)                              in the case of a Condemnation, such Condemnation does not result in the loss of access to the Property or the related Improvements in a manner that would reasonably be expected to or does result in a Material Adverse Effect;

 

(I)                                   the Restoration DSCR, after giving effect to the Restoration, shall be equal to or greater than 1.75:1.00;

 

(J)                                   Borrower shall deliver, or cause to be delivered, to Lender a signed detailed budget approved in writing by Borrower’s architect or engineer stating the entire cost of completing the Restoration, which budget shall be reasonably acceptable to Lender; and

 

(K)                              the Net Proceeds together with any cash, cash equivalents or other security deposited by Borrower with Lender are sufficient in Lender’s reasonable determination to cover the cost of the Restoration.

 

(ii)                             The Net Proceeds shall be held by Lender in the Casualty and Condemnation Account and, until disbursed in accordance with the provisions of this Section 5.4(b), shall constitute additional security for the Debt and the Other Obligations. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property (other than Permitted Encumbrances) which have not either been fully bonded to the reasonable satisfaction of Lender and discharged of record or in the alternative fully insured to the reasonable satisfaction of Lender by the title company issuing the Title Insurance Policy.

 

(iii)                              All plans and specifications required in connection with a Restoration shall be subject to the prior reasonable approval of Lender, subject to review of an independent consulting engineer selected by Lender (the “Casualty Consultant”). Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to the reasonable approval of Lender. All reasonable out-of-pocket costs and expenses incurred by Lender in connection with recovering, holding and advancing the Net Proceeds for the Restoration including, without limitation, reasonable attorneys’ fees and disbursements and the Casualty Consultant’s fees and disbursements, shall be paid by Borrower.

 

63

 

(iv)                            In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration less the Casualty Retainage. The term “Casualty Retainage” shall mean, as to each contractor, subcontractor or materialman engaged in the Restoration, (A) an amount equal to ten percent (10%) of the costs actually incurred for work in place as part of the Restoration until such time as the Casualty Consultant certifies to Lender that Net Proceeds representing fifty percent (50%) of the required Restoration have been disbursed and (B) an amount equal to five percent (5%) of the costs actually incurred for work in place as part of the Restoration thereafter. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Section 5.4(b), be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released until Borrower certifies to Lender in an Officer’s Certificate and Lender confirms and approves (Borrower acknowledges that Lender may rely on the Casualty Consultant in connection with such confirmation and approval) that the Restoration has been completed in accordance with the provisions of this Section 5.4(b) and that all approvals necessary for the re-occupancy and use of the Property have been obtained from all appropriate Governmental Authorities, and Lender receives evidence reasonably satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage; provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which (i) Borrower certifies to Lender in an Officer’s Certificate and Lender confirms and approves (Borrower acknowledges that Lender may rely on the Casualty Consultant in connection with such confirmation and approval) that such contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of such contractor’s, subcontractor’s or materialman’s contract, and (ii) the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company issuing the Title Insurance Policy. If required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.

 

(v)                            Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

 

(vi)                            If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of Lender, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender (for deposit into the Casualty and Condemnation Account) before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be deposited by Lender into the Casualty and Condemnation Account and shall be

 

64

 

disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 5.4(b) shall constitute additional security for the Obligations.

 

(vii)                             The excess, if any, of the Insurance Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after Borrower certifies to Lender in an Officer’s Certificate and Lender confirms and approves (Borrower acknowledges that Lender may rely on the Casualty Consultant in connection with such confirmation and approval) that the Restoration has been completed in accordance with the provisions of this Section 5.4(b), and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing. The excess, if any, of the Condemnation Proceeds after the Borrower certifies to Lender in an Officer’s Certificate and Lender confirms and approves (Borrower acknowledges that Lender may rely on the Casualty Consultant in connection with such confirmation and approval) that the Restoration has been completed in accordance with the provisions of this Section 5.4(b), and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted to Lender to prepay the Note subject to and in accordance with Section 2.4.4 of this Agreement.

 

(c)                                  Notwithstanding anything to the contrary set forth in this Agreement, including the provisions of this Section 5.4, if the Loan is included in a REMIC Trust and, immediately following a release of any portion of the Lien of the Mortgage following a Casualty or Condemnation (but taking into account any proposed Restoration of the remaining Property), the ratio of the unpaid principal balance of the Loan to the value of the remaining Property is greater than one hundred twenty-five percent (125%) (such value to be determined by Lender in any commercially reasonable method permitted to a REMIC Trust; and which shall exclude the value of personal property or going concern value, if any), the Outstanding Principal Balance must be paid down by an amount equal to the least of the following amounts: (i) the net Award (after payment of Lender’s costs and expenses and any other fees and expenses that have been approved by Lender) or the net Insurance Proceeds (after payment of Lender’s costs and expenses and any other fees and expenses that have been approved by Lender), as the case may be, or (ii) a “qualified amount” as that term is defined in the IRS Revenue Procedure 2010-30, as the same may be amended, replaced, supplemented or modified from time to time, unless Lender receives an opinion of counsel that if such amount is not paid, the applicable Securitization will not fail to maintain its status as a REMIC Trust as a result of the related release of such portion of the Lien of the Mortgage. If and to the extent the preceding sentence applies, only such amount of the net Award or net Insurance Proceeds (as applicable), if any, in excess of the amount required to pay down the Outstanding Principal Balance may be released for purposes of Restoration or released to Borrower as otherwise expressly provided in this Section 5.4.

 

(d)                                 All Net Proceeds not required (i) to be made available for the Restoration hereunder or (ii) to be returned to Borrower as excess Net Proceeds pursuant to Section 5.4(b)(vii) may be retained and applied by Lender in accordance with Section 2.4.4

 

65

 

hereof toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its discretion shall deem proper, or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower for such purposes as Lender shall approve, in its reasonable discretion.

 

(e)                                  Notwithstanding anything to the contrary contained herein, if in connection with a Casualty any insurance company makes a payment under a property insurance Policy that Borrower proposes be treated as business or rental interruption insurance, then, notwithstanding any designation (or lack of designation) by the insurance company as to the purpose of such payment, as between Lender and Borrower, such payment shall not be treated as business or rental interruption Insurance Proceeds unless Borrower has demonstrated to Lender’s reasonable satisfaction that the remaining Net Proceeds that have been received from the property insurance companies are sufficient to pay 100% of the cost of the Restoration or, if such Net Proceeds are to be applied to repay the Obligations in accordance with the terms hereof, that such remaining Net Proceeds will be sufficient to satisfy the Obligations in full.

 

VI.                               CASH MANAGEMENT AND RESERVE FUNDS

 

Section 6.1.                         Cash Management Arrangements. Borrower shall cause all Rents to be transmitted directly by Tenants of the Property into a trust account (the “Clearing Account”) established and maintained by Borrower at Bank of America, N.A. (the “Clearing Bank”) as more fully described in the Clearing Account Agreement. The Clearing Bank shall at all times during the term of the Loan be an Eligible Institution. Without in any way limiting the foregoing, if Borrower or Manager receive any Gross Revenues from the Property (other than amounts released from the Clearing Account or the Deposit Account to Borrower in accordance with the terms hereof and of the other Loan Documents), then (i) such amounts shall be deemed to be collateral for the Obligations and shall be held in trust for the benefit, and as the property, of Lender, (ii) such amounts shall not be commingled with any other funds or property of Borrower or Manager, and (iii) Borrower or Manager shall deposit such amounts in the Clearing Account within one (1) Business Day of receipt. Funds in the Deposit Account and the other Accounts may only be invested in Permitted Investments as directed by Borrower (unless an Event of Default has occurred and is continuing), as more particularly set forth in the Cash Management Agreement. Lender shall also establish subaccounts of the Deposit Account which shall at all times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts) (such subaccounts are referred to herein as “Accounts”), as contemplated herein and in the Cash Management Agreement. The Clearing Account, the Deposit Account and all Accounts will be under the sole control and dominion of Lender, and Borrower shall have no right of withdrawal therefrom except as expressly provided herein. Borrower shall pay for all expenses of opening and maintaining the Clearing Account, the Deposit Account and all Accounts. Funds deposited into the Clearing Account shall be swept on each Business Day into an operating account as identified by Borrower, unless a Trigger Period is continuing, in which event such funds shall be swept on each Business Day into the Deposit Account and applied and disbursed in accordance with this Agreement and the Cash Management Agreement.

 

66

 

Section 6.2.                         Intentionally Reserved.

 

Section 6.3.                         Tax Funds.

 

6.3.1                     Deposits of Tax Funds. During the continuance of a Trigger Period, Borrower shall, subject to Sections 6.11.2 and 6.3.3 hereof deposit with Lender the following: (a) upon the commencement of such Trigger Period, an amount reasonably determined by Lender such that sufficient amounts shall be on deposit in the Tax Account (taking into account the payments required to be deposited pursuant to clause (b) of this Section 6.3.1) to pay the next scheduled payment of Taxes and (b) on each Monthly Payment Date during the continuance of a Trigger Period, an amount equal to one-twelfth (1/12th) of the Taxes that Lender reasonably estimates will be payable during the next ensuing twelve (12) months (taking into account the amounts on deposit pursuant to clause (a) of this Section 6.3.1) in order to accumulate sufficient funds to pay all such Taxes at least thirty (30) days prior to the respective dates the same shall become delinquent, which amounts shall be transferred into an Account established to hold such funds (the “Tax Account”). Amounts deposited from time to time into the Tax Account pursuant to this Section 6.3.1 are referred to herein as the “Tax Funds”. If at any time Lender reasonably determines that the Tax Funds will not be sufficient to pay the Taxes (taking into account the monthly deposits of Tax Funds required to be made pursuant to clause (b) above), Lender shall notify Borrower of such determination and the succeeding monthly deposits for Taxes shall be increased by the amount that Lender reasonably estimates is sufficient to make up the deficiency at least ten (10) days prior to the respective dates that such Taxes become delinquent; provided, that if Borrower receives notice from Lender of any deficiency after the date that is ten (10) days prior to the date that Taxes become delinquent, Borrower will deposit with or on behalf of Lender the amount of such deficiency within three (3) Business Days after its receipt of such notice (provided that, if the Taxes will become delinquent in less than three (3) Business Days, Borrower will deposit the required amounts within one (1) Business Day).

 

6.3.2                     Release of Tax Funds. Provided no Event of Default shall exist and remain uncured, Lender shall apply Tax Funds in the Tax Account to the timely payment of Taxes. In making any payment relating to Taxes, Lender may do so according to any bill, statement or estimate procured from the appropriate public office (with respect to Taxes) 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 Funds shall exceed the amounts due for Taxes, Lender shall return any excess to Borrower or credit such excess against future monthly payments of Tax Funds to be made. Any Tax Funds remaining in the Tax Account after the Obligations have been paid in full or after the termination of the applicable Trigger Period shall be returned, within five (5) Business Days, to Borrower (or, in connection with the repayment of the Obligations in full, credited against the payoff amount of the outstanding Obligations on the payoff statement).

 

6.3.3                     Letter of Credit. In lieu of depositing the full amount of Tax Funds required hereunder in cash, Borrower may deliver to Lender a Letter of Credit for all or any portion of such Tax Funds. The aggregate amount of any Letter of Credit and/or cash on deposit with respect to the Tax Account shall at all times be at least equal to the aggregate amount which Borrower is required to have on deposit at such time in the Tax Account pursuant to this Agreement. If Borrower delivers to Lender a Letter of Credit in lieu of depositing cash into the Tax Account, Borrower shall be responsible for paying directly all Taxes subject to and in accordance with this Agreement. If Borrower fails to pay the Taxes as required by this

 

67

 

Agreement, Lender shall have the right without prior notice to Borrower to draw on the Letter of Credit in an amount sufficient to pay the Taxes then due. Provided that no Event of Default has occurred and is continuing, the amount of any Letter of Credit delivered pursuant to this Section 6.3.3 may, at Borrower’s discretion, from time to time be decreased to an amount equal to the then outstanding amounts required to be on deposit in the Tax Account, taking into account deposits and disbursements from the Tax Account that would have been made subject to and in accordance with this Agreement if cash had been deposited into the Tax Account. Notwithstanding the foregoing, the final return by Lender to Borrower of any Letter of Credit delivered in connection with this Section 6.3.3 shall be subject to Borrower’s satisfaction of the conditions set forth in the last sentence of Section 6.3.2 of this Agreement.

 

Section 6.4.                         Insurance Funds.

 

6.4.1                     Deposits of Insurance Funds. During the continuance of a Trigger Period, Borrower shall, subject to Sections 6.11.2, 6.4.3, and 6.4.4 hereof, deposit with Lender the following: (a) upon the commencement of such Trigger Period, an amount reasonably determined by Lender such that sufficient amounts shall be on deposit in the Insurance Account (taking into account the payments required pursuant to clause (b) of this Section 6.4.1) to pay the next scheduled payment of Insurance Premiums and (b) on each Monthly Payment Date, an amount equal to one-twelfth (l/12th) of the Insurance Premiums that Lender reasonably estimates will be payable for the renewal of the coverage afforded by the Policies upon the expiration thereof (taking into account the amounts on deposit pursuant to clause (a) of this Section 6.4.1), in order to accumulate sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the expiration of the Policies, which amounts shall be transferred into an Account established to hold such funds (the “Insurance Account”). Amounts deposited from time to time into the Insurance Account pursuant to this Section 6.4.1 are referred to herein as the “Insurance Funds”. If at any time Lender reasonably determines that the Insurance Funds will not be sufficient (taking into account the monthly deposits of Insurance Funds required to be made pursuant to clause (b) above) to pay the Insurance Premiums, Lender shall notify Borrower of such determination and the succeeding monthly deposits for Insurance Premiums shall be increased by the amount that Lender reasonably estimates is sufficient to make up the deficiency at least ten (10) days prior to expiration of the Policies.

 

6.4.2                     Release of Insurance Funds. Provided no Event of Default shall exist and remain uncured, Lender shall apply Insurance Funds in the Insurance Account to the timely payment of Insurance Premiums, provided Borrower shall furnish Lender with all bills, invoices and statements for the Insurance Premiums for which such funds are required at least thirty (30) days prior to the date on which such charges first become payable. In making any payment relating to Insurance Premiums, Lender may do so according to any bill, statement or estimate procured from the insurer or its agent, without inquiry into the accuracy of such bill, statement or estimate. If the amount of the Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender shall return any excess to Borrower or credit such excess against future monthly payments of Insurance Funds to be made. Any Insurance Funds remaining in the Insurance Account after the Obligations have been paid in full or after termination of the applicable Trigger Period shall be returned, within five (5) Business Days, to Borrower (or, in connection with the repayment of the Obligations in full, credited against the payoff amount of the outstanding Obligations on the payoff statement).

 

68

 

6.4.3                     Acceptable Blanket Policy. Notwithstanding anything to the contrary contained in Section 6.4.1, in the event that an Acceptable Blanket Policy is in effect with respect to any of the Policies required pursuant to Section 5.1 and no Event of Default exists, deposits into the Insurance Account required for Insurance Premiums pursuant to Section 6.4.1 above shall be suspended to the extent that Insurance Premiums relate to such Acceptable Blanket Policy. As of the date hereof, Lender acknowledges and agrees that an Acceptable Blanket Policy is in effect with respect to the Policies required pursuant to Section 5.1.

 

6.4.4                     Letter of Credit. In lieu of depositing the full amount of Insurance Funds required hereunder in cash, Borrower may deliver to Lender a Letter of Credit for all or any portion of such Insurance Funds. The aggregate amount of any Letter of Credit and/or cash on deposit with respect to the Insurance Account shall at all times be at least equal to the aggregate amount which Borrower is required to have on deposit at such time in the Insurance Account pursuant to this Agreement. If Borrower delivers to Lender a Letter of Credit in lieu of depositing cash into the Insurance Account, Borrower shall be responsible for paying directly all Insurance Premiums subject to and in accordance with this Agreement. If Borrower fails to pay the Insurance Premiums in violation of this Agreement, Lender shall have the right without prior notice to Borrower to draw on the Letter of Credit in an amount sufficient to pay the Insurance Premiums then due. Provided that no Event of Default has occurred and is continuing, the amount of any Letter of Credit delivered pursuant to this Section 6.4.4 may, at Borrower’s discretion, from time to time be decreased to an amount equal to the then outstanding amounts required to be on deposit in the Insurance Account, taking into account deposits and disbursements from the Insurance Account that would have been made subject to and in accordance with this Agreement if cash had been deposited into the Insurance Account. Notwithstanding the foregoing, the final return by Lender to Borrower of any Letter of Credit delivered in connection with this Section 6.4.4 shall be subject to Borrower’s satisfaction of the conditions set forth in the last sentence of Section 6.4.2 of this Agreement.

 

Section 6.5.                         Capital Expenditure Funds.

 

6.5.1                     Deposits of Capital Expenditure Funds. During the continuance of a Trigger Period, Borrower shall, subject to Sections 6.11.2 and 6.5.3 hereof, deposit with Lender on each Monthly Payment Date, the amount of $12,523.00, for annual Capital Expenditures, which amounts shall be transferred into an Account established to hold such funds (the “Capital Expenditure Account”). Amounts deposited from time to time into the Capital Expenditure Account pursuant to this Section 6.5.1 are referred to herein as the “Capital Expenditure Funds”.

 

6.5.2                     Release of Capital Expenditure Funds. Provided no Event of Default is continuing, Lender shall disburse Capital Expenditure Funds to Borrower out of the Capital Expenditure Account, within five (5) Business Days after the delivery by Borrower to Lender of a request therefor (but not more often than once per month), in amounts of at least $10,000 (or a lesser amount if the total amount in the Capital Expenditure Account is less than $10,000, in which case only one (1) disbursement of the amount remaining in the account shall be made) provided that: (i) such disbursement is for an Approved Capital Expenditure; (ii) the request for disbursement is accompanied by (A) an Officer’s Certificate from Borrower (1) stating that the items to be funded by the requested disbursement are Approved Capital Expenditures, and a description thereof, (2) stating that all Approved Capital Expenditures to be funded by the requested disbursement have been completed (or completed to the extent of the requested

 

69

 

disbursement) in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (3) stating that the Approved Capital Expenditures (or the relevant portions thereof) to be funded from the disbursement in question have not been the subject of a previous disbursement, and (4) stating that all previous disbursements of Capital Expenditure Funds have been used to pay previously identified Approved Capital Expenditures, (B) a copy of any license, permit or other approval required by any Governmental Authority in connection with such Approved Capital Expenditure, if any, and not previously delivered to Lender, (C) copies of appropriate lien waivers, conditional lien waivers, or other evidence of payment reasonably satisfactory to Lender, (D) for disbursements in the amount of $100,000 or more, at Lender’s option, a title search for the Property indicating that the Property is free from all Liens, claims and other encumbrances not permitted hereunder or under the other Loan Documents, and (E) such other evidence as Lender shall reasonably request to demonstrate that the Approved Capital Expenditures to be funded by the requested disbursement have been completed and are paid for or will be paid upon such disbursement to Borrower (or the portion thereof as to which such request for disbursement has been submitted has been completed and is paid for (other than any retention amount which is not a part of such disbursement request) or will be paid upon such disbursement to Borrower) and (iii) if such disbursement request is for $500,000 or more, Lender shall have (if it desires) verified (by an inspection conducted at Borrower’s reasonable out-of-pocket expense) performance of the work associated with such Approved Capital Expenditure, it being agreed that Lender shall notify Borrower within five (5) Business Days if it intends to conduct an inspection and then reasonably promptly cause such inspection to be performed. Any Capital Expenditure Funds remaining in the Capital Expenditure Account after the Obligations have been paid in full or after termination of the applicable Trigger Period shall be returned, within five (5) Business Days, to Borrower (or, in connection with the repayment of the Obligations in full, credited against the payoff amount of the outstanding Obligations on the payoff statement).

 

6.5.3                     Letter of Credit. In lieu of depositing the full amount of Capital Expenditure Funds required hereunder in cash, Borrower may deliver to Lender a Letter of Credit for all or any portion of such Capital Expenditure Funds. The aggregate amount of any Letter of Credit and/or cash on deposit with respect to the Capital Expenditure Account shall at all times be at least equal to the aggregate amount which Borrower is required to have on deposit at such time in the Capital Expenditure Account pursuant to this Agreement. If Borrower delivers to Lender a Letter of Credit in lieu of depositing cash into the Capital Expenditure Account, Borrower shall be responsible for paying directly all Capital Expenditures subject to and in accordance with this Agreement. If Borrower fails to pay for Capital Expenditures subject to and in accordance with this Agreement, Lender shall have the right without prior notice to Borrower to draw on the Letter of Credit in an amount sufficient to pay the costs of Capital Expenditures then due. Provided that no Event of Default has occurred and is continuing, the amount of any Letter of Credit delivered pursuant to this Section 6.5.3 may, at Borrower’s discretion, from time to time be decreased to an amount equal to the then outstanding amounts required to be on deposit in the Capital Expenditure Account, taking into account deposits and disbursements from the Capital Expenditure Account that would have been made subject to and in accordance with this Agreement if cash had been deposited into the Capital Expenditure Account. Notwithstanding the foregoing, the final return by Lender to Borrower of any Letter of Credit delivered in connection with this Section 6.5.3 shall be subject to Borrower’s satisfaction of the conditions set forth in the last sentence of Section 6.5.2 of this Agreement.

 

70

 

Section 6.6.                         Rollover Funds.

 

6.6.1                     Deposits of Rollover Funds.

 

(a)                                 Borrower shall, subject to Sections 6.11.2 and 6.6.3 hereof, deposit with Lender during the continuance of a Trigger Period the following: (i) upon the commencement of such Trigger Period, an amount determined by Lender such that sufficient amounts shall be on deposit in the Rollover Account (taking into account the payments required pursuant to clause (ii) of this Section 6.6.1) to pay the costs of Borrower’s then current obligations with respect to tenant improvements and leasing commissions, but in no event shall such amount be more than the amount that would have been on deposit in the Rollover Account had Borrower been required to make the monthly deposits required pursuant to clause (ii) of this Section 6.6.1(a) from the Closing Date through the commencement of such Trigger Period taking into account the disbursements from the Rollover Account that would have been made subject to and in accordance with this Agreement during such period and (ii) on each Monthly Payment Date the sum of $104,359.00, for tenant improvements and leasing commissions that may reasonably be incurred under the Leases following the commencement of such Trigger Period, which amounts shall be transferred into an Account established to hold such funds (the “Rollover Account”). Amounts deposited from time to time into the Rollover Account pursuant to this Section 6.6.1 are referred to herein as the “Rollover Funds”. Borrower hereby represents and warrants that Schedule XII accurately reflects all tenant improvements and leasing commissions due under Leases as of the Closing Date.

 

(b)                                 In addition to the required monthly deposits set forth in subsection (a) above, the following items shall be deposited into the Rollover Account and held as Rollover Funds (subject to and in accordance with the terms of Section 6.6.2(b)), and Borrower shall advise Lender at the time of receipt thereof of the nature of such receipt so that Lender shall have sufficient time to instruct the Deposit Bank to deposit and hold such amounts in the Rollover Account pursuant to the Cash Management Agreement: all sums paid with respect to (i) a modification of any Lease that materially reduces the Rent paid thereunder or the space demised thereunder and (ii) any rejection, termination, surrender or cancellation of any Lease (including in any bankruptcy case) or any lease buy-out or surrender payment from any Tenant (including any payment relating to unamortized tenant improvements and/or leasing commissions) (collectively, “Lease Termination Payments”) in an amount equal to the applicable Lease Termination Deposit Amount, which amount shall constitute Rollover Funds and shall be disbursed subject to and in accordance with Section 6.6.2(a) in connection with tenant improvements and leasing commissions with respect to the space demised under the applicable terminated or surrendered Lease. The remainder of any Lease Termination Payments in excess of the Lease Termination Deposit Amount shall be deposited into the Deposit Account and applied in accordance with this Agreement and the other Loan Documents. Notwithstanding anything to the contrary contained herein, in no event shall Borrower be required to deposit with Lender any Lease Termination Payment received in connection with the Sugar & Plum Lease, if, at the time such Lease Termination Payment is paid, the portion of the Property demised under the Sugar & Plum lease is leased by VRLP pursuant to a Master Lease.

 

6.6.2                     Release of Rollover Funds and Lease Termination Deposit Amounts.

 

(a)                                 Provided no Event of Default is continuing, Lender shall disburse Rollover Funds to Borrower out of the Rollover Account, within five (5) Business Days after the

 

71

 

delivery by Borrower to Lender of a request therefor (but not more often than once per month), in amounts of at least $10,000 (or a lesser amount if the total amount in the Rollover Account is less than $10,000, in which case only one (1) disbursement of the amount remaining in the account shall be made) provided that: (i) such disbursement is for an Approved Leasing Expense; (ii) the request for disbursement is accompanied by (A) an Officer’s Certificate from Borrower (1) stating that the items to be funded by the requested disbursement are Approved Leasing Expenses and a description thereof, (2) stating that any tenant improvements at the Property to be funded by the requested disbursement (or the relevant portion thereof as to which such request for funds relates) have been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (3) stating that the Approved Leasing Expenses (or the relevant portions thereof) to be funded from the disbursement in question have not been the subject of a previous disbursement, and (4) stating that all previous disbursements of Rollover Funds have been used to pay previously identified Approved Leasing Expenses, (B) a copy of any license, permit or other approval by any Governmental Authority required in connection with the tenant improvements and not previously delivered to Lender; provided, however, that if Borrower is not performing the tenant improvements, then Borrower shall use commercially reasonable efforts to cause the Tenant to deliver the foregoing to the extent required under such Tenant’s Lease, (C) copies of appropriate lien waivers, conditional lien waivers or other evidence of payment reasonably satisfactory to Lender; provided, however, that if Borrower is not performing the tenant improvements, then Borrower shall use commercially reasonable efforts to cause the Tenant to deliver the foregoing to the extent required under such Tenant’s Lease, (D) for disbursements in the amount of $100,000 or more, at Lender’s option, a title search for the Property indicating that the Property is free from all Liens, claims and other encumbrances not permitted hereunder or under the other Loan Documents, (E) for tenant improvements with respect to a single demised premises under a Lease in an aggregate amount of $500,000 or more, if requested by Lender, with respect to the final disbursement from the Rollover Account for such tenant improvement costs, a current Tenant estoppel certificate in form and substance required under such Tenant’s Lease and otherwise reasonably acceptable to Lender and (F) such other evidence as Lender shall reasonably request to demonstrate that the Approved Leasing Expenses, to be funded by the requested disbursement have been paid for or will be paid upon such disbursement to Borrower (or the portion thereof as to which such request for disbursement has been submitted has been paid for (other than any retention amount which is not a part of such disbursement request) or will be paid upon such disbursement to Borrower).

 

(b)                                 If any Lease Termination Deposit Amount is deposited into the Rollover Account with respect to a terminated or surrendered Lease and the amount required to be paid for leasing commissions and tenant improvements with respect to the space demised under such terminated or surrendered Lease is less than the amount of such Lease Termination Deposit Amount, then, provided that no Event of Default is continuing, such excess amount shall be shall disbursed on the first occurring Monthly Payment Date pursuant to Section 6.11.1 of this Agreement after the complete re-leasing of such space to one or more replacement Tenants pursuant to Leases with a term of at least five (5) years and otherwise entered into in compliance with the terms of this Agreement.

 

(c)                                  Any Rollover Funds and/or Lease Termination Deposit Amounts remaining in the Rollover Account after the Obligations have been paid in full or, with respect to the Rollover Funds deposited pursuant to clause (ii) of Section 6.6.1 above, after termination of the applicable Trigger Period, shall be returned, within five (5) Business Days, to Borrower (or,

 

72

 

in connection with the repayment of the Obligations in full, credited against the payoff amount of the outstanding Obligations on the payoff statement).

 

6.6.3                     Letter of Credit. In lieu of depositing the full amount of Rollover Funds required hereunder in cash, Borrower may deliver to Lender a Letter of Credit for all or any portion of such Rollover Funds. The aggregate amount of any Letter of Credit and/or cash on deposit with respect to the Rollover Account shall at all times be at least equal to the aggregate amount which Borrower is required to have on deposit at such time in the Rollover Account pursuant to this Agreement. If Borrower delivers to Lender a Letter of Credit in lieu of depositing cash into the Rollover Account, Borrower shall be responsible for paying directly all tenant improvement costs and leasing commissions subject to and in accordance with this Agreement. If Borrower fails to pay for tenant improvement costs and leasing commissions in violation of this Agreement, Lender shall have the right without prior notice to Borrower to draw on the Letter of Credit in an amount sufficient to pay the costs of tenant improvement and leasing commissions then due. Provided that no Event of Default has occurred and is continuing, the amount of any Letter of Credit delivered pursuant to this Section 6.6.3 may, at Borrower’s discretion, from time to time be decreased to an amount equal to the then outstanding amounts required to be on deposit in the Rollover Account, taking into account deposits and disbursements from the Rollover Account that would have been made subject to and in accordance with this Agreement if cash had been deposited into the Rollover Account. Notwithstanding the foregoing, the final return by Lender to Borrower of any Letter of Credit delivered in connection with this Section 6.6.3 shall be subject to Borrower’s satisfaction of the conditions set forth in the last sentence of Section 6.6.2 of this Agreement.

 

Section 6.7.                         Intentionally Omitted.

 

Section 6.8.                         Intentionally Omitted.

 

Section 6.9.                         Casualty and Condemnation Account. Borrower shall, subject to Section 6.11.2 hereof, pay, or cause to be paid, to Lender all Insurance Proceeds or Awards due to any Casualty or Condemnation in accordance with the provisions of Sections 5.2 and 53 (but subject to Section 5.4), which amounts shall be transferred into an Account established to hold such funds (the “Casualty and Condemnation Account”). Amounts deposited from time to time into the Casualty and Condemnation Account pursuant to this Section 6.9 are referred to herein as the “Casualty and Condemnation Funds”. All Casualty and Condemnation Funds shall be held, disbursed and/or applied in accordance with the provisions of Sections 5.2, 5.3 and 5.4 hereof.

 

Section 6.10.                  Cash Collateral Funds. If a Trigger Period shall be continuing, all Available Cash shall be paid to Lender, which amounts shall be transferred by Lender into an Account established to hold such funds (the “Cash Collateral Account”) which will be held by Lender as cash collateral for the Debt. Amounts on deposit from time to time in the Cash Collateral Account pursuant to this Section 6.10 are referred to as the “Cash Collateral Funds”. Provided no Event of Default has occurred or is continuing, any Cash Collateral Funds on deposit in the Cash Collateral Account not previously disbursed or applied shall be disbursed to Borrower within five (5) Business Days of the termination of any Low Debt Service Period. Notwithstanding the foregoing, Lender shall have the right, but not the obligation, at any time during the continuance of an Event of Default, in its sole and absolute discretion to apply any and all Cash Collateral Funds then on deposit in the Cash Collateral Account to the Debt or the

 

73

 

Obligations, in such order and in such manner as Lender shall elect in its sole and absolute discretion, including to make a prepayment of principal (if such Lender’s application to the prepayment of principal occurs following acceleration of the Loan, Borrower shall pay the applicable Prepayment Fee, if any, applicable thereto) or any other amounts due hereunder. In the event a Letter of Credit or cash collateral is delivered to Lender to avoid the occurrence of a Trigger Period or to end a Trigger Period, then, provided no Event of Default shall have occurred and be continuing, such Letter of Credit or cash collateral shall be returned to Borrower promptly following any subsequent Calculation Date on which the Debt Service Coverage Ratio (without giving effect to such Letter of Credit or cash collateral) equals or is greater than 1.90:1.00.

 

Section 6.11.                          Property Cash Flow Allocation.

 

6.11.1              Order of Priority of Funds in Deposit Account. Provided no Trigger Event has occurred and is continuing, on each Business Day all funds deposited in the Clearing Account shall be disbursed to or as directed by Borrower by wire transfer or via the automated clearinghouse system. During the continuance of any Low Debt Service Period, on each Monthly Payment Date during the Term, except upon the occurrence and during the continuance of an Event of Default, all funds on deposit in the Clearing Account shall be swept each Business Day to the Deposit Account and applied on such Monthly Payment Date in the order of priority set forth in the Cash Management Agreement (after the transfer to the Casualty and Condemnation Account of any Net Proceeds required to be deposited therein pursuant to Section 6.9).

 

6.11.2              Failure to Make Payments. Notwithstanding anything to the contrary contained herein, during the existence of a Low Debt Service Period, Borrower shall have no further obligation to transfer or deposit any Reserve Funds pursuant to Section 6.3, 6.4, 6.5, 6.6 or 6.9 hereof so long as adequate funds are available in the Deposit Account for such deposits, Lender’s access to such funds has not been restricted in any manner and an Event of Default has not occurred which is then continuing, and the failure by the Deposit Bank to allocate such funds into the appropriate Accounts shall not constitute an Event of Default.

 

6.11.3              Application After Event of Default. Notwithstanding anything to the contrary contained in this Article VI, upon the occurrence and during the continuance of an Event of Default, Lender, at its option, may apply any Gross Revenue then in the possession of Lender, Clearing Bank or Deposit Bank (including any Reserve Funds on deposit in any Cash Management Account to the payment of the Debt in such order, proportion and priority as Lender may determine in its sole and absolute discretion. Lender’s right to withdraw and apply any of the foregoing funds shall be in addition to all other rights and remedies provided to Lender under the Loan Documents.

 

Section 6.12.                  Security Interest in Reserve Funds. As security for payment of the Debt and the performance by Borrower of all Other Obligations, Borrower hereby pledges and assigns to Lender, and grants to Lender a security interest in, all of Borrower’s right, title and interest in and to all payments to or monies held in the Clearing Account, the Deposit Account and Accounts (collectively, the “Cash Management Accounts”). Borrower 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 Deposit Account. Borrower shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any Cash Management

 

74

 

Account, or permit any Lien to attach thereto, or any levy to be made thereon, or any UCC Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto (other than the Liens created pursuant to the Loan Documents and the Permitted Encumbrances). 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 any Cash Management Account to the payment of the Debt in any order and in any manner as Lender shall elect in Lender’s discretion without seeking the appointment of a receiver and without adversely affecting the rights of Lender to foreclose the Lien of the Mortgage or exercise its other rights under the Loan Documents. Cash Management Accounts shall not constitute trust funds and may be commingled with other monies held by Lender; provided however, that Reserve Funds shall not be commingled. The Reserve Funds shall be held in Eligible Accounts. Provided no Event of Default has occurred and is continuing, all interest which accrues on the funds in any Account shall accrue for the benefit of Borrower and shall be taxable to Borrower and shall be added to and disbursed in the same manner and under the same conditions as the principal sum on which said interest accrued. Notwithstanding anything to the contrary contained herein, upon repayment in full of the Debt, all remaining funds in the Accounts, if any, shall, within five (5) Business Days, be disbursed to Borrower (or credited against the payoff amount of the outstanding Obligations on the payoff statement).

 

Section 6.13.                  Intentionally Omitted.

 

Section 6.14.                  Intentionally Reserved.

 

Section 6.15.                          Limitations on Letters of Credit/Alteration Deficiency Guaranties/Bottom Dollar Guaranties. The aggregate amount of all Letters of Credit, Alteration Deficiency Guaranties, Bottom Dollar Guaranties and other guaranties provided pursuant to this Agreement including, but without limitation, Section 4.3, Section 4.6 and Section 4.11.5(c), shall not exceed ten percent (10%) of the Outstanding Principal Balance, unless (i) Borrower delivers to Lender an opinion of counsel to the effect that delivery of such Letter of Credit or guaranties does not alter the conclusion reached in the Insolvency Opinion or a new non-consolidation opinion, in each case which opinion and any counsel delivering such opinion (if not counsel who delivered the Insolvency Opinion) shall be reasonably acceptable to Lender and only to the extent required by any Rating Agency rating any Securities secured by the Loan in connection with a Securitization, or the Insolvency Opinion included or otherwise contemplated such Letter of Credit, Alteration Deficiency Guaranties, Bottom Dollar Guaranties or other guaranties and (ii) in the case of a Letter of Credit, Borrower shall have no reimbursement obligations with respect to such Letter of Credit and such Letter of Credit shall be a capital contribution to Borrower and shall be accompanied by the execution and delivery of a contribution agreement in the form attached hereto as Exhibit E.

 

VII.                                   PERMITTED TRANSFERS

 

Section 7.1.                         Permitted Transfer of the Entire Property.

 

(a)                                 Notwithstanding the provisions of Section 4.2, Borrower shall have, following the earlier to occur of (i) a Securitization of the Loan or (ii) the date that is six (6) months subsequent to the Closing Date, the right to convey the entire Property to a new borrower (the “Transferee Borrower”) and have Transferee Borrower assume all of Borrower’s

 

75

 

obligations under the Loan Documents, and have one or more replacement guarantors assume all of the obligations of Guarantor under the Loan Documents from and after the date of such transfer (collectively, a “Transfer and Assumption”), subject to the terms and full satisfaction of all of the conditions precedent set forth in Section 7.1(b).

 

(b)                                 Each Transfer and Assumption (other than the Permitted Transfers) shall be subject to the following conditions:

 

(i)                      Borrower shall have provided Lender with not less than thirty (30) days prior written notice, which notice shall contain sufficient detail to enable Lender to reasonably determine that the Transferee Borrower complies with the requirements set forth herein;

 

(ii)                      no Event of Default shall have occurred and be continuing;

 

(iii)                       Transferee Borrower shall be a Special Purpose Bankruptcy Remote Entity in accordance with Section 4.4 and Schedule V;

 

(iv)                     Transferee Borrower shall be Controlled by a Person who (x) is a Qualified Transferee owning, directly or indirectly, not less than fifty-one percent (51%) of the equity interests in Transferee Borrower (y) prior to a Securitization, whose identity and experience is reasonably acceptable to Lender and (z) is a Qualified Owner;

 

(v)                     the Property shall be managed by a Qualified Manager or by any other property manager reasonably acceptable to Lender;

 

(vi)                     Transferee Borrower shall have executed and delivered to Lender an assumption agreement in form and substance reasonably acceptable to Lender;

 

(vii)                      the replacement guarantor or, if more than one, the replacement guarantors collectively, shall constitute an Approved Replacement Guarantor;

 

(viii)                       each Approved Replacement Guarantor shall deliver to Lender a guaranty of recourse obligations (in substantially the same form as the Guaranty) and an environmental indemnity agreement (in substantially the same form as the Environmental Indemnity), pursuant to which, in each case, the Approved Replacement Guarantor(s) agree(s) to be liable under each such guaranty of recourse obligations and environmental indemnity agreement at least from and after the date of such Permitted Transfer (whereupon the previous guarantor shall be released from all or any further liability, as applicable, under the guaranty of recourse obligations for acts that arise from and after the date of such Permitted Transfer and such Approved Replacement Guarantor(s) shall be the “Guarantor” for all purposes set forth in this Agreement);

 

(ix)                    Transferee Borrower shall submit to Lender true, correct and complete copies of all documents reasonably requested by Lender concerning the organization, existence and authority of Transferee Borrower and each Approved Replacement Guarantor;

 

76

 

(x)                    satisfactory Patriot Act, OFAC and similar searches shall have been received by Lender with respect to (A) each Approved Replacement Guarantor, (B) Transferee Borrower, (C) any Person that Controls Transferee Borrower or owns a direct or indirect equity interest in Borrower which equals or exceeds twenty percent (20%) and (D) any other Person reasonably required by Lender in order for Lender to fulfill Patriot Act compliance guidelines required by the Patriot Act and other applicable law in connection with such Transfer and Assumption;

 

(xi)                    Lender shall have received a Rating Agency Confirmation from each of the applicable Rating Agencies;

 

(xii)                     counsel to Transferee Borrower and each Approved Replacement Guarantor(s) shall deliver to Lender opinions in form and substance reasonably satisfactory to Lender as to such matters as Lender shall reasonably require, which may include opinions as to substantially the same matters as were required in connection with the origination of the Loan (including a new substantive non-consolidation opinion);

 

(xiii)                      Transferee Borrower and/or Borrower shall deliver to Lender, upon such conveyance, a transfer fee equal to one-quarter of one percent (0.25%) of the Outstanding Principal Balance; provided that the transfer fee with respect to the first Assumption subject to and in accordance with this Section 7.1 shall be $250,000;

 

(xiv)                    Borrower shall pay all of Lender’s reasonable out-of-pocket costs (including, without limitation, reasonable attorney’s fees and disbursements and Rating Agency Fees) and expenses in connection with the Transfer and Assumption (which amount shall be in addition to any Assumption fees payable hereunder); and

 

(xv)                   Lender shall have received all other customary legal documentation it may reasonably require including, without limitation, evidence of property insurance and endorsements to the Title Insurance Policy.

 

Section 7.2.                         Permitted Transfers. Notwithstanding anything to the contrary contained in Section 4.2, the following Transfers (herein, the “Permitted Transfers”) shall be permitted hereunder without any consent or approval of Lender and without the requirement to satisfy any other conditions:

 

(a)                                 all Leases and all equipment leases that satisfy the requirements of Section 4.21;

 

(b)                                 any Transfer and Assumption entered into in compliance with Section 7.1;

 

(c)                                  all Permitted Encumbrances;

 

(d)                                 the transfer of publicly traded shares or other publicly traded interests in any indirect equity owner of Borrower;

 

77

 

(e)                                 Transfers of (but not a mortgage, pledge, hypothecation, encumbrance or grant of a security interest in) the direct or indirect beneficial interests in Borrower, provided that:

 

(i)                     Lender receives thirty (30) days’ prior written notice thereof, unless such Transfer is between or among the direct or indirect beneficial owners of Borrower, and/or the Affiliates of the direct or indirect beneficial owners of Borrower, as of the Closing Date (except if such Transfer triggers the requirement for delivery of an opinion pursuant to clause (vi) below, in which case notice will be required),

 

(ii)                    subsequent to such Transfer, VRLP or VRT shall directly or indirectly own at least thirty-five percent (35%) of the direct or indirect equity interests in Borrower and VRLP or VRT shall directly or indirectly Control Borrower,

 

(iii)                      immediately prior to such Transfer, no Event of Default shall have occurred and be continuing,

 

(iv)                     subsequent to such Transfer, Borrower will continue to be a Special Purpose Bankruptcy Remote Entity,

 

(v)                     such Transfer does not result in a violation of any Legal Requirements, including, without limitation, ERISA and the Patriot Act,

 

(vi)                     if (A) such Transfer causes the transferee to own, in the aggregate with the ownership interests of its Affiliates and family members, more than a forty-nine percent (49%) interest in Borrower and the transferee (together with its Affiliates and family members) did not, prior to such Transfer, own more than a forty-nine percent (49%) interest in Borrower, or (B) such Transfer, together with all other Transfers by Borrower, whether in a single Transfer or in a series of Transfers and whether or not effected simultaneously, results in a direct transfer of more than forty-nine percent (49%) of the aggregate limited liability company interests in Borrower, then a reasonably acceptable non-consolidation opinion as evidenced by a Rating Agency Confirmation is delivered to the holder of the Loan and to each of the Rating Agencies rating Securities secured by the Loan in connection with a Securitization concerning, as applicable, Borrower, the new transferee and/or their applicable owners, and

 

(vii)                      the Property shall continue to be managed by a Qualified Manager or any other property manager reasonably acceptable to Lender and, if all or any part of the Loan is part of a Securitization, the applicable Rating Agencies;

 

(f)                                   intentionally omitted;

 

(g)                                  intentionally omitted;

 

(h)                                 all Permitted Bergen Transfers;

 

78

 

(i)                                     Transfers or disposal of building equipment which is being replaced or which is no longer necessary in connection with the operation of the Property free from the Lien of the Mortgage, provided that such Transfer or disposal would not reasonably be expected to and does not have a Material Adverse Effect on the value of the Property taken as a whole, will not materially impair the utility or condition of the Property, and will not result in a reduction or abatement of, or right of offset against, the Rents payable under any Lease, in any such case as a result thereof, and provided, further, that any new building equipment acquired by Borrower (and not so disposed of) shall be subject to the Lien of the Mortgage, it being agreed that Lender shall, from time to time, upon receipt of an Officer’s Certificate requesting the same and confirming satisfaction of the conditions set forth above, execute a written instrument in form reasonably satisfactory to Lender to confirm that such building equipment which is to be, or has been, sold or disposed of is free from the Lien of the Mortgage. Borrower shall execute and deliver, or cause to be executed and delivered, to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect Lender’s security interest in any such new building equipment, as Lender may reasonably require; and

 

(j)                                    (I) immaterial Transfers of (A) portions of the Property to Governmental Authorities for dedication or public use or (B) portions of such Property to third parties for the purpose of erecting and operating additional structures whose use is integrated with the use of the Property, and (II) granting of easements, restrictions, covenants, reservations and rights-of-way in the ordinary course of business for access, water and sewer lines, telephone or other fiber optic or other data transmission lines, electric lines or other utilities or for other similar purposes, provided that no such Transfer, conveyance or encumbrance set forth in the foregoing clauses (I) and (II) shall materially impair the utility and operation of the Property or would reasonably be expected to or does result in a Material Adverse Effect, it being agreed that, in connection with any Transfer permitted pursuant to this clause (j), Lender shall execute and deliver any instrument reasonably necessary or appropriate, in the case of the Transfers referred to in clause (I) above, to release the portion of the Property affected by such dedication or such Transfer from the Lien of the Mortgage or, in the case of clause (II) above, to subordinate the Lien of the Mortgage to such easements, restrictions, covenants, reservations and rights-of-way or other similar grants upon receipt by Lender of: (w) thirty (30) days’ prior written notice thereof; (x) a copy of the instrument or instruments of Transfer; (y) an Officer’s Certificate stating (I) with respect to any Transfer, the consideration, if any, being paid for the Transfer, (II) that such Transfer does not materially impair the utility, condition and operation of the Property or materially reduce the value of the Property, and (III) that such Transfer complies with all Legal Requirements and would not reasonably be expected to, and does not result in, a Material Adverse Effect and (z) reimbursement of all of Lender’s reasonable out-of-pocket costs and expenses (including reasonable attorney’s fees and disbursements) incurred in connection with such Transfer. Notwithstanding the foregoing, if the Loan is included in a REMIC Trust and, immediately following a release of a portion of the Lien of the Mortgage pursuant to clause (I) of this Section 7.2(j), if the ratio of the unpaid principal balance of the Loan to the value of the remaining Property is greater than one hundred twenty-five percent (125%) (such value to be determined by Lender by any commercially reasonable method permitted to a REMIC Trust, and which shall exclude the value of personal property and going concern value, if any), the Outstanding Principal Balance must be paid down by a “qualified amount” as that term is defined in IRS Revenue Procedure 2010-30, as the same may be amended, replaced, supplemented or modified from time to time, unless Lender receives an opinion of counsel that if

 

79

 

such amount is not paid, the applicable Securitization will not fail to maintain its status as a REMIC Trust as a result of such release.

 

Notwithstanding anything to the contrary contained in this Section 7.2, if, as a result of any Permitted Transfer, Guarantor no longer either Controls or owns any direct or indirect interest in Borrower, it shall also be a condition hereunder that one or more Approved Replacement Guarantors shall execute and deliver a guaranty of recourse obligations (in the same form as the guaranty of recourse obligations delivered to Lender by Guarantor on the date hereof) on or prior to the date of such Permitted Transfer, pursuant to which, in each case, the Approved Replacement Guarantor(s) agree(s) to be liable under each such guaranty of recourse obligations and environmental indemnity agreement from and after the date of such Permitted Transfer (whereupon the previous guarantor shall be released from any further liability under the guaranty of recourse obligations from acts that arise from and after the date of such Permitted Transfer and such Approved Replacement Guarantor(s) shall be the “Guarantor” for all purposes set forth in this Agreement).

 

Section 7.3.                         Cost and Expenses; Searches; Copies.

 

(a)                                 Borrower shall pay all reasonable out-of-pocket costs and expenses of Lender in connection with any Transfer, whether or not such Transfer is deemed to be a Permitted Transfer, including, without limitation, all reasonable fees and expenses of Lender’s counsel, and the cost of any required counsel opinions related to REMIC or other securitization or tax issues and any Rating Agency fees, if applicable.

 

(b)                                 Borrower shall provide Lender with copies of all revised and/or new organizational documents (if any) relating to any Permitted Transfer (excluding Transfers of interests in VRT or VRLP) and provide an updated, certified organizational chart.

 

(c)                                  In connection with any Permitted Transfer (excluding Transfers of interests in VRT or VRLP), to the extent a transferee, together with its Affiliates, shall own twenty percent (20%) or more of the direct or indirect ownership interests in Borrower immediately following such transfer (provided such transferee, together with its Affiliates, owned less than twenty percent (20%) of the direct or indirect ownership interests in Borrower as of the Closing Date), Borrower shall deliver (and Borrower shall be responsible for any reasonable out of pocket costs and expenses in connection therewith), customary searches reasonably requested by Lender in writing (such as, without limitation, credit, judgment, lien, litigation, bankruptcy, criminal and watch list) with respect to such transferee.

 

VIII.                     DEFAULTS

 

Section 8.1.                         Events of Default. Each of the following events shall constitute an event of default hereunder (an “Event of Default”):

 

(i)                    if (A) the Obligations are not paid in full on the Maturity Date, (B) any regularly scheduled monthly payment of interest, and, if applicable, principal due under the Note is not paid in full on the applicable Monthly Payment Date, (C) any prepayment of principal due under this Agreement or the Note is not paid when due, or (D) the Prepayment Fee is not paid when due, except to the extent that aggregate sums are on deposit in the Clearing Account, Deposit Account and/or in the Cash

 

80

 

Collateral Account sufficient to make such payment and all other payments required to be made pursuant to clauses (i) and (ii) of Section 5(b) of the Cash Management Agreement and Lender’s access to such sums is not restricted or constrained in any manner;

 

(ii)                   if any other amount payable pursuant to this Agreement, the Note or any other Loan Document (other than as set forth in the foregoing clause (i)) is not paid in full when due and payable in accordance with the provisions of the applicable Loan Document, with such failure continuing for ten (10) Business Days after Lender delivers written notice thereof to Borrower, except to the extent that either (x) sums sufficient to make such payments are on deposit in the Account established to hold funds for making such payment or (y) aggregate sums are on deposit in the Clearing Account, the Deposit Account and/or in the Cash Collateral Account sufficient to make such payment and all other payments required to be made in advance of such payment pursuant to Section 5(b) of the Cash Management Agreement and, in either case, Lender’s access to such sums is not restricted or constrained in any manner;

 

(iii)                     subject to Borrower’s right to contest pursuant to the terms of this Agreement, if any of the Taxes or Other Charges are not paid when due, except to the extent that either (x) sums sufficient to make such payments are on deposit in the Tax Account or (y) aggregate sums are on deposit in the Clearing Account, the Deposit Account and/or in the Cash Collateral Account sufficient to make such payment and, in either case, Lender’s access to such sums is not restricted or constrained in any manner;

 

(iv)                    (x) if the Policies are not kept in full force and effect, except to the extent that such Policies lapse due to the nonpayment of Insurance Premiums and either (a) sums sufficient to make such payments are on deposit in the Insurance Account or (b) aggregate sums are on deposit in the Clearing Account, the Deposit Account and/or in the Cash Collateral Account sufficient to make such payment and the other payments required to be made pursuant to clause (i) of Section 6.11.1 and, in either case, Lender’s access to such sums is not restricted or constrained in any manner; or (y) (A) if Lender has not received evidence of the insurance required hereunder being renewed at least three (3) Business Days prior to expiration of the Policies or (B) copies of the Policies (or other evidence of required insurance reasonably acceptable to Lender) are not delivered to Lender on or prior to the date the same are to be delivered hereunder and such failure specified in this clause (B) continues for ten (10) days following written notice from Lender to Borrower thereof;

 

(v)                    if, except as permitted under this Agreement (including all Permitted Transfers), a Transfer occurs;

 

(vi)                    if any representation or warranty made by Borrower or Guarantor herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender shall have been false or misleading in any material respect as of the date such representation or warranty was made; provided, however, that with respect to any

 

81

 

such breach which is susceptible of being cured, such breach shall not be deemed an Event of Default hereunder unless and until it shall remain uncured for thirty (30) days after Borrower receives notice of such breach and, if such breach cannot reasonably be cured within such thirty (30) day period and Borrower commences to cure such breach within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure same, Borrower shall have such additional time as is reasonably necessary to cure such breach, but not in excess of sixty (60) days from the date the original notice from Lender was received by Borrower plus time necessary for Excusable Delay; provided that Borrower acknowledges and agrees that the representations and warranties set forth in Sections 3.1.4, 3.1.5 (the last sentence only), 3.1.7(d), 3.1.8, 3.1.10, 3.1.17, 3.1.19, 3.1.20, 3.1.23, 3.1.26, and 3.1.31 are not capable of being cured; provided, further, however, that in the case of a breach of Section 3.1.1, such breach shall not constitute an Event of Default in the event that such breach shall be remedied within a timely manner and in any event within not more than thirty (30) days of Lender’s request and within thirty (30) days following the request of Lender, Borrower delivers to Lender a new non-consolidation opinion or an opinion of counsel to the effect that such breach does not impair, negate or adversely change the opinions rendered in the Insolvency Opinion, in each case, to the extent required by any Rating Agency rating any Securities secured by the Loan in connection with a Securitization;

 

(vii)               if Borrower, or Guarantor shall make a general assignment for the benefit of creditors;

 

(viii)                if a receiver, liquidator or trustee shall be appointed for Borrower, or Guarantor or if Borrower, or Guarantor shall be adjudicated a bankrupt or insolvent, or if 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 Guarantor, or if any proceeding for the dissolution or liquidation of Borrower, or Guarantor shall be instituted, or if Borrower is substantively consolidated with any other Person; provided, however, if such appointment, adjudication, petition, proceeding or consolidation was involuntary and not consented to by Borrower, or Guarantor, upon the same not being discharged, stayed or dismissed within ninety (90) days following its filing;

 

(ix)              if Borrower attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;

 

(x)               if any of the assumptions contained in the Insolvency Opinion, or in any other non-consolidation opinion delivered to Lender in connection with the Loan, is or shall become untrue unless such matter is cured in a timely manner and in a manner that would not cause an impairment or a negative or adverse change in the Insolvency Opinion or such other non-consolidation opinion so delivered; provided, however, that in the case of a breach pursuant to this Section 8.1(x), such breach shall not constitute an Event of Default in the event that such breach shall be remedied within a timely manner and in any event within not more than thirty (30) days of Lender’s request and within thirty (30) days following the request of Lender, Borrower delivers to Lender a new non-consolidation opinion or an opinion

 

82

 

of counsel to the effect that such breach does not impair, negate or adversely change the opinions rendered in the Insolvency Opinion, in each case, to the extent required by any Rating Agency rating any Securities secured by the Loan in connection with a Securitization;

 

(xi)             a breach of the covenants set forth in Sections 4.4, 4.23 or 4.31 hereof; provided, however, that in the case of a breach of Section 4.4, such breach shall not constitute an Event of Default in the event that such breach shall be remedied within a timely manner and in any event within not more than thirty (30) days of Lender’s request and within thirty (30) days following the request of Lender, Borrower delivers to Lender a new non-consolidation opinion or an opinion of counsel to the effect that such breach does not impair, negate or adversely change the opinions rendered in the Insolvency Opinion, in each case, to the extent required by any Rating Agency rating any Securities secured by the Loan in connection with a Securitization;

 

(xii)              subject to Borrower’s right to contest set forth in Section 4.3 of this Agreement, if the Property becomes subject to any mechanic’s, materialman’s or other Lien except a Permitted Encumbrance or a Lien for Taxes not then due and payable and such liens are not discharged or bonded within sixty (60) days after Lender’s written notice to Borrower;

 

(xiii)               the alteration, improvement, demolition or removal of any of the Improvements without the prior consent of Lender, other than in accordance with this Agreement and the Leases at the Property entered into in accordance with the Loan Documents and such alteration, improvement, demolition or removal would reasonably be expected to or does have a Material Adverse Effect on Borrower’s use or operation of the Property; provided, however, that with respect to any such breach which is susceptible of being cured, such breach shall not be deemed an Event of Default hereunder unless and until it shall remain uncured for thirty (30) days after Borrower receives notice of such breach and, if such breach cannot reasonably be cured within such thirty (30) day period and Borrower commences to cure such breach within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure same, Borrower shall have such additional time as is reasonably necessary to cure such breach, but not in excess of one hundred twenty (120) days from the date the original notice from Lender was received by Borrower plus time necessary for Excusable Delay;

 

(xiv)             if (A) the Management Agreement is terminated and a Qualified Manager, or any other property manager reasonably approved by Lender, is not appointed as a replacement manager pursuant to the provisions of this Agreement within thirty (30) days following such termination, (B) Borrower has received notice that it is in material default under the Management Agreement and such default is not waived by Manager or cured by Borrower within sixty (60) days or (C) Borrower materially amends, modifies or otherwise changes, without the prior written consent of Lender, the Management Agreement in a manner materially adverse to Borrower and/or Lender and such amendment is not revoked within ten (10) Business Days following notice from Lender to Borrower thereof;

 

83

 

(xv)           if Borrower or any Person owning a direct or indirect ownership interest in Borrower shall be convicted of a Patriot Act Offense by a court of competent jurisdiction and such conviction subjects Lender to action and/or liability by any Governmental Authority; provided, however, that with respect to any such breach which is susceptible of being cured, such breach shall not be deemed an Event of Default hereunder unless and until it shall remain uncured for ten (10) days after Borrower receives notice of such breach;

 

(xvi)            if Borrower breaches any covenant contained Section 4.9 hereof and fails to cure such breach within ten (10) days after Lender’s written notice to Borrower; or

 

(xvii)             if 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 clauses (i) to (xvi) above, and such Default shall continue for ten (10) days after notice to Borrower from Lender, in the case of any such Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice to Borrower from Lender, in the case of any such other Default; provided, however, that if such Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that Borrower shall have commenced to cure such Default within such 30-day period shall and thereafter diligently and expeditiously proceed to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed ninety (90) days plus time necessary for Excusable Delay.

 

Section 8.2.                         Remedies.

 

8.2.1                     Acceleration. Unless waived in writing by Lender, upon the occurrence and during the continuance of an Event of Default (other than an Event of Default described in clauses (vii) or (viii) of Section 8.1 above), Lender may, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action, without notice or demand (and Borrower hereby expressly waives any such notice or demand), that Lender deems advisable to protect and enforce its rights against Borrower and in and to the Property, including declaring the Obligations to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents against Borrower and the Property, including all rights or remedies available at law or in equity; and upon any Event of Default described in clauses (vii) or (viii) of Section 8.1 above (as to Borrower only), the Obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable in full, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.

 

8.2.2                     Remedies Cumulative. Unless waived in writing by Lender, upon the occurrence and during the continuance 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 this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower 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 Obligations shall be declared due and payable, and whether or

 

84

 

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 with respect to the Property. The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies 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 herein or in the other Loan Documents. Without limiting the generality of the foregoing, if an Event of Default is continuing (i) Lender shall not be 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 Property and the Mortgage has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Obligations or the Obligations have been paid in full. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall 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 with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon. In addition to the covenants contained in Section 4.29(a)(v), during the continuance of an Event of Default, Borrower shall pay for all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender in connection with inspections and appraisals.

 

8.2.3                     Severance.

 

(a)                                 Upon the occurrence and during the continuance of an Event of Default, Lender shall have the right from time to time to partially foreclose the Mortgage in any manner and for any amounts secured by the Mortgage then due and payable as determined by Lender in its sole discretion, including the following circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and interest, Lender may foreclose the Mortgage to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire Outstanding Principal Balance, Lender may foreclose the Mortgage to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by the Mortgage as Lender may elect. Notwithstanding one or more partial foreclosures, the Property shall remain subject to the Mortgage to secure payment of the sums secured by the Mortgage and not previously recovered.

 

(a)                                 Upon the occurrence and during the continuance of an Event of Default, 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 (the “Severed Loan Documents”) in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. 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, provided that no such agreement shall increase Borrower’s obligations or decrease Borrower’s

 

85

 

rights under the Loan Documents. 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 such severance agreement to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such severance agreement under such power until five (5) Business Days after notice has been given to Borrower by Lender of Lender’s intent to exercise its rights under such power.

 

(b)                                 Upon the occurrence and during the continuance of an Event of Default, any amounts recovered from the Property or any other collateral for the Loan after an Event of Default may be applied by Lender toward the payment of any interest and/or principal of the Loan and/or any other amounts due under the Loan Documents, in such order, priority and proportions as Lender in its sole discretion shall determine.

 

8.2.4                     Lender’s Right to Perform. Upon the occurrence and during the continuance of an Event of Default only, if Borrower fails to perform any covenant or obligation contained herein and such failure shall continue for a period of ten (10) 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, powers or remedies as provided hereunder, or under any of the other Loan Documents, Lender may, but shall have no obligation to, perform, or cause the performance of, such covenant or obligation, and all costs, expenses, liabilities, penalties and fines of Lender incurred or paid in connection therewith shall be payable by Borrower to Lender upon demand and if not paid shall be added to the Obligations (and to the extent permitted under applicable laws, secured by the Mortgage and the other Loan Documents) and shall bear interest thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to send notice to Borrower of any such failure, but such notice shall be a precondition to Lender exercising the rights set forth in the immediately preceding sentence.

 

IX.                                     SALE AND SECURITIZATION OF MORTGAGE

 

Section 9.1.                         Sale of Mortgage and Securitization.

 

(a)                                 Lender shall have the right (i) to sell or otherwise transfer the Loan or any portion thereof as a whole loan, (ii) to sell participation interests in the Loan or (iii) to securitize the Loan or any portion thereof in a single asset securitization or a pooled loan securitization. The transactions referred to in clauses (i), (ii) and (iii) above shall hereinafter be referred to collectively as “Secondary Market Transactions” and the transactions referred to in clause (iii) shall hereinafter be referred to as a “Securitization”. Any certificates, notes or other securities issued in connection with a Securitization are hereinafter referred to as “Securities”. Lender shall not make any such assignment to any of the parties set forth on Schedule IX without Borrower’s prior written consent, which consent may be withheld or granted in Borrower’s sole discretion; provided, however, that such limitation on assignment shall not apply (a) to any Person that purchases or holds any Securities pursuant to a Securitization and such prohibition does not apply to retention of a primary servicer, master servicer or special servicer as permitted hereunder, or (b) during the continuance of an Event of Default, Additionally, in connection with any Secondary Market Transaction subject to the foregoing restriction, Lender shall be entitled to rely in good faith on a representation from any transferee that such transferee is not a “prohibited transferee” without any need for independent investigation.

 

86

 

(b)                                 If reasonably requested by Lender, Borrower shall (at no cost or expense to Borrower, except to the extent expressly set forth in Section 9.4) assist Lender in satisfying the market standards to which Lender customarily adheres or which may be reasonably required in the marketplace or by the Rating Agencies in connection with any Secondary Market Transactions, at Borrower’s cost and expense, including, without limitation, to:

 

(i)                     (A) provide updated financial and other information with respect to the Property, the business operated at the Property, Borrower, Guarantor and Manager, (B) provide updated budgets relating to the Property and (C) cooperate with Lender in obtaining updated appraisals, market studies, environmental reviews (Phase I’s and, if appropriate, Phase II’s), property condition reports and other due diligence investigations of the Property, subject to Borrower’s reasonable and customary safety requirements and the rights of Tenants under Leases (the “Updated Information”), together, if customary, with appropriate verification of the Updated Information through letters of auditors reasonably acceptable to Lender and acceptable to the Rating Agencies;

 

(ii)                    use commercially reasonable efforts to provide customary updates or customary modifications to the opinions of counsel provided by Borrower at Closing, as may be reasonably requested by Lender in order to effect the Securitization, including updates or modifications requested by or for the benefit of the Rating Agencies (it being agreed that in no event shall Borrower be required to provide an opinion of counsel with respect to “10b-5” matters);

 

(iii)                      provide updated, as of the closing date of the Secondary Market Transaction, representations and warranties made in the Loan Documents and such additional representations and warranties as the Rating Agencies may require; and

 

(iv)                                            execute such amendments to the Loan Documents and Borrower’s organizational documents as may be reasonably requested by Lender or requested by the Rating Agencies in order to effect the Securitization including, without limitation, bifurcation of the Loan into two or more components and/or separate notes and/or creating a senior/subordinate note structure (any of the foregoing, a “Loan Bifurcation”); provided, however, that (I) Borrower shall not be required to modify or amend any Loan Document if such modification or amendment would (a) change the principal amount, interest rate, the stated maturity or the amortization of principal set forth in the Note, except in connection with a Loan Bifurcation which may result in varying fixed interest rates and amortization schedules, but which shall have the same initial weighted average coupon and same aggregate principal amount as the original Note, or (b) modify any other economic or non-economic term of the Loan in a manner that is adverse (except to a de minimis extent) to Borrower, Guarantor or any Affiliate thereof or that would result in any operational changes that are materially burdensome to Borrower or the Property, and (II) in no event shall Lender be entitled to convert any portion of the Loan into a mezzanine loan.

 

(c)                                  If, at the time one or more Disclosure Documents are being prepared for a Securitization, Lender reasonably expects that Borrower alone or Borrower and one or more Affiliates of Borrower collectively, or the Property alone or the Property and Related Properties

 

87

 

collectively, will be a Significant Obligor for purposes of such Securitization, Borrower shall furnish (or cause to be furnished) to Lender upon reasonable request (i) the selected financial data or, if applicable, net operating income, described in Item 1112(b)(1) of Regulation AB, if Lender reasonably expects that the principal amount of the Loan together with any Related Loans as of the cut-off date for such Securitization may, or if the principal amount of the Loan together with any Related Loans as of the cut-off date for such Securitization and at any time during which the Loan (or portion of the Loan included in such Securitization) and any Related Loans are included in a Securitization does, equal or exceed ten percent (10%) (but less than twenty percent (20%)) of the aggregate principal amount of all mortgage loans included or expected to be included, as applicable, in such Securitization or (ii) the financial statements described in Item 1112(b)(2) of Regulation AB, if Lender expects that the principal amount of the Loan (or portion of the Loan included in such Securitization) together with any Related Loans as of the cut-off date for such Securitization may, or if the principal amount of the Loan together with any Related Loans as of the cut-off date for such Securitization and at any time during which the Loan (or portion of the Loan included in such Securitization) and any Related Loans are included in a Securitization does, equal or exceed twenty percent (20%) of the aggregate principal amount of all mortgage loans included or expected to be included, as applicable, in the Securitization. Such financial data or financial statements shall be furnished to Lender (A) within ten (10) Business Days after notice from Lender in connection with the preparation of Disclosure Documents for the Securitization, (B) not later than forty-one (41) days after the end of each fiscal quarter of Borrower and (C) not later than eighty-five (85) days after the end of each fiscal year of Borrower (the “Exchange Act Financials”); provided, however, that Borrower shall not be obligated to furnish financial data or financial statements pursuant to clauses (B) or (C) of this sentence with respect to any period for which an Exchange Act Filing is not required. Any reasonable incremental costs and expenses incurred by Borrower in connection with the delivery to Lender of any financial data or financial statements within the time periods set forth in clauses (B) and (C) of this Section rather than the time periods provided in Section 4.9 and/or in the form required pursuant to this Section rather than in the form required in Section 4.9, shall be paid by Lender. If requested by Lender, and to the extent not prohibited by any applicable lease, other agreement or order, Borrower shall furnish to Lender financial data and/or financial statements for any tenant of the Property if, in connection with a Securitization, Lender expects there to be, with respect to such tenant or group of affiliated tenants, a concentration within all of the mortgage loans included or expected to be included, as applicable, in the Securitization such that such tenant or group of affiliated tenants would constitute a Significant Obligor.

 

(d)                                 If requested by Lender, Borrower shall provide Lender, as promptly as reasonably practicable following Lender’s request therefor, and in any event, within the time periods that would be required to comply with Regulation AB or other Legal Requirements relating to a Securitization (but no earlier than three (3) Business Days following notice from Lender) with any other or additional financial statements, or financial, statistical or operating information, as Lender shall reasonably determine that would be required pursuant to Regulation AB, or any amendment, modification or replacement thereto or other Legal Requirements relating to a Securitization or as shall otherwise be reasonably requested by the Lender.

 

(e)                                  All financial statements provided by Borrower hereunder pursuant to this Section 9.1 shall be prepared in accordance with GAAP, and shall meet the requirements of Regulation AB and other applicable Legal Requirements. All annual financial statements

 

88

 

referred to in Section 9.1(c) above shall be audited by Independent Accountants of Borrower in accordance with Regulation AB and all other applicable Legal Requirements, shall be accompanied by the manually executed report of the Independent Accountants thereon, which report shall meet the requirements of Regulation AB and all applicable Legal Requirements and shall be accompanied by a manually executed written consent of the Independent Accountants, in form and substance reasonably acceptable to Lender and such Independent Accountants, to the inclusion of such financial statements in any Disclosure Document and any Exchange Act Filing and to the use of the name of such Independent Accountants and the reference to such Independent Accountants as “experts” in any Disclosure Document and Exchange Act Filing, all of which shall be provided at the same time as the related financial statements are required to be provided. All financial data and financial statements (audited or unaudited) provided by Borrower under Section 9.1(c) shall be accompanied by an Officer’s Certificate stating that such financial statements meet the requirements set forth in the first sentence of this Section 9.1(d).

 

Section 9.2.                         Securitization Indemnification.

 

(a)                                 Borrower understands that information provided to Lender by Borrower and its agents, counsel and representatives may be included in disclosure documents in connection with the Securitization, including, without limitation, an offering circular, a prospectus, prospectus supplement, private placement memorandum, term sheet or other offering document (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”), and may be made available to investors or prospective investors in the Securities, the Rating Agencies, and service providers relating to the Securitization.

 

(b)                                 In connection with each of (i) a preliminary and a final private placement memorandum or (ii) a preliminary and final prospectus or prospectus supplement, as applicable, and (iii) the final term sheet, Borrower agrees to provide, at Lender’s request, an indemnification certificate (at no cost to Borrower other than its counsel fees and internal administrative costs): (A) certifying that Borrower has examined those portions of such Disclosure Documents reasonably designated in writing by Lender for Borrower’s review pertaining to Borrower, Borrower’s Affiliates, Manager, Guarantor, the Property and/or the Provided Information insofar as such sections or portions thereof that relate to Borrower, Borrower’s Affiliates, Manager, Guarantor, the Property and/or the Provided Information (such portions, including risk factors related to the Property, the “Relevant Portions”), the Relevant Portions do not, as of the time of sale (as designated by Lender in advance in writing to Borrower and provided Borrower has reasonable time to update same) for the Securities to be issued in the Securitization, as of the date of the preliminary and final offering document for such Securities and as of the closing date of the Securitization (as designated by Lender in advance in writing to Borrower and provided Borrower has reasonable time to update same), 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, provided, however, in no event shall Borrower be required to provide such certification with respect to any description of the terms and provisions of the Loan Documents, (B) indemnifying Lender (and for purposes of this Section 9.2, Lender hereunder shall include its officers and directors), the Affiliate of Wells Fargo that has filed the registration statement relating to the Securitization (the “Registration Statement”) or otherwise acts as the “depositor” in the Securitization, each of its directors, each

 

89

 

of its officers who have signed the Registration Statement and each Person that controls the Affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Wells Group”), and Wells Fargo, and any other placement agent or underwriter with respect to the Securitization, each of their respective directors and each Person who controls Wells Fargo or any other placement agent or underwriter within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act (collectively, the “Underwriter Group”) for any out-of-pocket losses, third-party claims, damages or liabilities arising out of third-party claims (excluding consequential damages) (collectively, the “Liabilities”) to which Lender, the Wells Group or the Underwriter Group may become subject insofar as the Liabilities arise out of, or are based upon, (1) any untrue statement or alleged untrue statement of any material fact contained in any Disclosure Document or any other written information provided to potential investors or the rating agencies that is in conformity with the Provided Information (such other written information, the “Other Distributed Information”), (2) the omission or alleged omission to state in the Relevant Portions or Other Distributed Information a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made (and, in the case of the Term Sheet and Other Distributed Information only, when read together with the related offering circular), not misleading or (3) a breach of the representations and warranties made by Borrower in Section 3.1.31 of this Agreement (Full and Accurate Disclosure) and (C) agreeing to reimburse Lender, the Wells Group and/or the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Wells Group and the Underwriter Group in connection with investigating or defending the Liabilities; provided, however, that Borrower will be liable in any such case under clauses (B) or (C) above only to the extent that any such loss claim, damage or liability arises out of or is based upon any such untrue statement or omission or alleged untrue statement or alleged omission made (i) in the Relevant Portions or (ii) in any other document in reliance upon and in conformity with information furnished to Lender by or on behalf of Borrower in connection with the preparation of the Disclosure Document or in connection with the underwriting or closing of the Loan, including, without limitation, financial statements of Borrower, operating statements and rent rolls with respect to the Property but only to the extent the same is identified in writing by Lender to Borrower in advance of the printing of the preliminary offering circular, preliminary prospectus or preliminary private placement memorandum, as the case may be ((i) and (ii) are collectively, the “Provided Information”), provided, that with respect to the Provided Information, Borrower shall not have any liability under clauses (B) or (C) with respect to an incorrect particular piece of Provided Information (“Deficient Information”) to the extent Borrower delivers additional Provided Information that supersedes or corrects such Deficient Information in a reasonably sufficient time prior to the printing of the preliminary offering circular, preliminary prospectus or preliminary private placement memorandum, as the case may be, and Borrower indicates to Lender in writing that such updated Provided Information is updated and supersedes the specifically identified previously delivered Deficient Information and such updates or corrections are not accurately reflected in the Disclosure Documents or Other Distributed Information. The indemnification provided for in clauses (B) and (C) above shall be effective whether or not the indemnification agreement described above is provided; provided, however, such indemnity shall be limited to the Provided Information and shall only be effective to the extent that Lender accurately states the Provided Information in the applicable Disclosure Document. The aforesaid indemnity will be in addition to any liability which Borrower may otherwise have.

 

90

 

(c)                                  In connection with Exchange Act Filings, Borrower shall (i) indemnify Lender, the Wells Group and the Underwriter Group for Liabilities to which Lender, the Wells 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 Disclosure Document and/or the Provided Information a material fact required to be stated in the Disclosure Document and/or the Provided Information in order to make the statements in the Disclosure Document and/or the Provided Information, in light of the circumstances under which they were made, not misleading and (ii) reimburse Lender, the Wells Group or the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Wells Group or the Underwriter Group in connection with defending or investigating the Liabilities; provided, however, such indemnity shall be limited to the Provided Information and shall only be effective to the extent that Lender accurately states the Provided Information in the applicable Disclosure Document.

 

(d)                                 Promptly after receipt by an indemnified party under this Section 9.2 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9.2, notify the indemnifying party in writing of the commencement thereof, but the omission to so notify the indemnifying party will not relieve the indemnifying party from any liability which the indemnifying party may have to any indemnified party hereunder except to the extent that failure to notify causes prejudice to the indemnifying party. In the event that any action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party 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 from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party under this Section 9.2 that the indemnifying party will assume such defense, the indemnified party shall not be liable to pay for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the 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 the indemnifying party, 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 at the cost of the indemnifying party. The indemnifying party shall not be liable for the expenses of more than one separate counsel unless an indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to another indemnified party. No indemnified party may settle any action or proceeding for which an indemnifying party is liable under this Section 9.2(d) without the prior written consent of the indemnifying party; provided that if at any time an indemnified party shall have requested the indemnifying party in writing to reimburse the indemnified party for fees and expenses of counsel or any other expenses for which the indemnifying party is obligated under this subsection and indemnifying party has not reimbursed such expenses, indemnified party may enter into a settlement of such proceeding or action and the indemnifying party agrees that it shall be liable for any settlement of any action or proceeding effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by the indemnifying party of the aforesaid request and (ii) the indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such

 

91

 

settlement. Without the prior written consent of Lender (which consent shall not be unreasonably withheld or delayed), no indemnifying party shall settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action, suit or proceeding) unless the indemnifying party shall have given Lender reasonable prior written notice thereof and shall have obtained an unconditional release of each indemnified party hereunder from all liability arising out of such claim, action, suit or proceedings with no admission of fault by or on behalf of any indemnified party.

 

(e)                                  In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 9.2(b) or (c) hereof is for any reason held to be unenforceable as to an indemnified party in respect of any Liabilities (or action in respect thereof) referred to therein which would otherwise be indemnifiable under Section 9.2(b) or (c) hereof, the indemnifying party 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 who was 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 indemnified party’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 Borrower hereby agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation.

 

(f)                                   Borrower shall jointly and severally indemnify Lender and its officers, directors, partners, employees, representatives, agents and Affiliates against any losses to which Lender or its officers, directors, partners, employees, representatives, agents and Affiliates, may become subject in connection with any indemnification to the Rating Agencies in connection with issuing, monitoring or maintaining the Securities insofar as the losses arise out of or are based upon any untrue statement of any material fact in any information provided by or on behalf of Borrower to the Rating Agencies (the “Covered Rated Agency Information”) or arise out of or are based upon the omission to state a material fact in the Covered Rating Agency Information required to be stated therein or necessary in order to make the statements in Covered Rating Agency Information, in light of the circumstances under which they were made, not misleading. Notwithstanding anything to the contrary contained herein, (i) Borrower shall not be responsible for any Liabilities relating to an untrue statement or omission in Covered Rating Agency Information if Borrower provided notice to Lender in writing a reasonable amount of time prior to the pricing of the subject Securities with a reasonably sufficient amount of time for Lender to correct such information prior to pricing such Securities and (ii) Borrower shall not be liable for any misstatements or omissions in the Covered Rating Agency Information resulting solely from Lender’s failure to accurately transcribe written information by or on behalf of Borrower.

 

(g)                                  The liabilities and obligations of both Borrower and Lender under this Section 9.2 shall survive the termination of this Agreement and the satisfaction and discharge of the Debt.

 

Section 9.3.                         Conversion to Registered Form. At the request of Lender and at no cost or expense to Borrower, Borrower shall appoint, as its agent, a registrar and transfer

 

92

 

agent (the “Registrar”) reasonably acceptable to Lender which shall maintain, subject to such reasonable regulations as it shall provide, such books and records as are necessary for the registration and transfer of the Note in a manner that shall cause the Note to be considered to be in registered form for purposes of Section 163(f) of the IRS Code. The option to convert the Note into registered form once exercised may not be revoked. Any agreement setting out the rights and obligation of the Registrar shall be subject to the reasonable approval of Lender. Borrower may revoke the appointment of any particular person as Registrar, effective upon the effectiveness of the appointment of a replacement Registrar. The Registrar shall not be entitled to any fee from Borrower or Lender or any other lender in respect of transfers of the Note and other Loan Documents.

 

Section 9.4.                         Costs and Expenses. Notwithstanding anything to the contrary contained in this Article IX, Borrower shall not be required to incur any taxes, reserves, adjustments or other costs or expenses in the performance of its obligations under this Article IX (excluding the indemnity obligations set forth in Section 9.2) in excess of $25,000.00. Borrower shall not be obligated to perform its obligations under this Article IX (excluding the indemnity obligations set forth in Section 9.2) to the extent such performance would cause Borrower to have incurred or expended amounts in excess of $25,000.00 (excluding any costs for Borrower’s or Guarantor’s third-party legal fees and expenses) unless Lender agrees to reimburse such excess to Borrower.

 

X.                              MISCELLANEOUS

 

Section 10.1.                   Exculpation. Subject to the qualifications below, Lender shall not enforce the liability and obligation of Borrower to perform and observe the Obligations contained in the Note, this Agreement, the Mortgage or the other Loan Documents by any action or proceeding wherein a money judgment or any deficiency judgment or other judgment establishing personal liability shall be sought against Borrower or any Affiliate of Borrower or any legal representatives, successors or assigns of Borrower or its Affiliate or any principals, directors, officers, employees, beneficiaries, shareholders, partners, members, trustees, agents, or Affiliates of any of the foregoing (collectively, but specifically excluding Guarantor to the extent of Guarantor’s liability under the Environmental Indemnity, the Guaranty, any Alterations Deficiency Guaranty or any other guaranty provided in connection with the Loan, the “Exculpated Parties”), 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 under the Note, this Agreement, the Mortgage and the other Loan Documents, or in the 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 Property, in the Rents and in any other collateral given to Lender, and Lender, by accepting the Note, this Agreement, the Mortgage and the other Loan Documents, shall not sue for, seek or demand any deficiency judgment against any Exculpated Party in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Mortgage or the other Loan Documents. The provisions of this Section 10.1 shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Mortgage; (c) affect the validity or enforceability of any of the Loan Documents, the Guaranty or any other guaranty

 

93

 

made in connection with the Loan or any of the rights and remedies of Lender thereunder; (d) impair the right of Lender to obtain the appointment of a receiver; (e) impair the enforcement of the Assignment of Leases; (f) impair the enforcement of the Environmental Indemnity; (g) constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to fully realize the security granted by the Mortgage or to commence any other appropriate action or proceeding in order for Lender to exercise its remedies against the Property; or (h) 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 reasonably incurred by Lender (including out-of-pocket attorneys’ fees and costs reasonably incurred but excluding any consequential, special or punitive damages) arising out of or in connection with the following (all such liability and obligation of Borrower for any or all of the following being referred to herein as “Borrower’s Recourse Liabilities”):

 

(i)                         fraudulent acts, willful misconduct or material intentional misrepresentation by Borrower or any Affiliate of Borrower in connection with the Loan;

 

(ii)                         the breach by Borrower of any representation, warranty, covenant or indemnification provision in the Environmental Indemnity;

 

(iii)                          the intentional misappropriation of any Rents, security deposits or other income (including, without limitation, the proceeds of any letters of credit held in lieu of a security deposit) by Borrower or any Affiliate of Borrower, except to the extent such amounts are applied to the payment of the Obligations or to the payment of operating expenses or Capital Expenditures or otherwise applied in accordance with the terms of the Loan Documents;

 

(iv)                        any intentional material physical waste of the Property by Borrower or any Affiliate of Borrower;

 

(v)                         the commission of any criminal act by Borrower or any Affiliate of Borrower which results in the forfeiture of the Property;

 

(vi)                         the intentional misapplication by Borrower or any Affiliate of Borrower of (A) any Insurance Proceeds actually received by Borrower or any Affiliate of Borrower and not paid to Lender or otherwise applied as required pursuant to the terms of this Agreement, (B) any Awards or other amounts received in connection with the Condemnation of all or a portion of the Property actually received by Borrower or any Affiliate of Borrower and not paid to Lender or otherwise applied as required pursuant to the terms of this Agreement;

 

(vii)                         all or any portion of the Property being encumbered by a Lien voluntarily granted by Borrower in violation of the Loan Documents;

 

(viii)                          the voluntary incurrence by Borrower of any Indebtedness for borrowed money in violation of the provisions of this Agreement or any other Loan Document (other than Permitted Encumbrances and Permitted Indebtedness);

 

(ix)                         the failure by Borrower to deliver to Lender any security deposits, advance deposits or any other deposits collected by Borrower or any Affiliated Manager

 

94

 

with respect to the Property upon a foreclosure by Lender or any action in lieu thereof under the Loan Documents (except to the extent that such deposits were applied in accordance with the applicable lease or other governing document or Borrower did not have the legal right, because of a bankruptcy, receivership or similar judicial proceeding, to direct disbursement of such deposits); and/or

 

(x)                        the voluntary Transfer of all or any material portion of the Property or any direct or indirect interest therein or any Transfer of any direct or indirect interest in Borrower, in either case, in violation of the Loan Documents.

 

Notwithstanding anything to the contrary in this Agreement or any of the other 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 Bankruptcy Code to file a claim for the full amount of the Obligations or to require that all collateral shall continue to secure all of the Obligations owing to Lender in accordance with the Loan Documents, and (B) the Obligations shall be fully recourse to Borrower in the event that any of the following occur (each, a “Springing Recourse Event”): (i) a breach of the covenants set forth in Schedule V hereof (other than those single purpose entity covenants that relate to solvency or adequacy of capital) that results in a substantive consolidation of the assets and liabilities of Borrower with any other Person in connection with a proceeding under the Bankruptcy Code or under federal, state or foreign insolvency law (other than on motion or pleading seeking a substantive consolidation brought or actively supported by Lender); (ii) Borrower or any Affiliate, officer, director or representative which controls Borrower consents to or files a voluntary petition with respect to Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (iii) Borrower files an application for the appointment of a receiver, trustee or examiner for Borrower or any portion of the Property, except at the request of or with the consent of Lender, (iv) the filing of an involuntary petition against Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by any other Person in which Guarantor or an Affiliate of Guarantor colludes with and/or Guarantor or an Affiliate of Guarantor solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower by any Person; (v) Borrower files an answer consenting to, or joining in, any involuntary petition filed against it by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; or (vi) Borrower makes a general assignment for the benefit of creditors or admits, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due, which admission is used as evidence of Borrower’s insolvency in connection with an involuntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by a Person other than Lender (except for (A) any admissions that Borrower believes in good faith are truthful when made and (B) any such admission to Lender or any servicer of the Loan that Borrower cannot pay its operating expenses (including Debt Service payments due in respect of the Loan) or that Borrower cannot refinance the Loan on the Maturity Date).

 

Notwithstanding anything to the contrary contained herein, Borrower shall not have any liability hereunder (A) for or as a result of any unpaid obligation, lien or encumbrance (such as, without limitation, an obligation, lien or encumbrance for unpaid real estate taxes) resulting from insufficient cash flow at the Property or any Transfer resulting from any such unpaid obligation or Lien, except to the extent that such lack of cash flow arises from the misappropriation or conversion of revenue with respect to the Property, or (B) with respect to any acts, events or

 

95

 

circumstances first arising after (1) the date on which Lender or a Person that is not an Affiliate of Borrower or Guarantor acquires title to the Property, whether through foreclosure, private power of sale, the acceptance of a deed-in-lieu of foreclosure or otherwise, except with respect to acts taken by Borrower, Guarantor or any Affiliate of the foregoing on or after such date or (2) the date on which a receiver, trustee, liquidator or conservator, other than any such Person appointed at the request of Borrower, Guarantor or any Affiliate of the foregoing, takes control of the Property, except with respect to acts taken by Borrower, Guarantor or any Affiliate of the foregoing prior to or on or after such date, and further provided that the appointment of a receiver, trustee, liquidator or conservator shall not diminish, reduce or terminate Borrower’s or Guarantor’s liability pursuant to the Environmental Indemnity, or (C) until such time that any notice and cure periods set forth in this Agreement or the other Loan Documents applicable to the action, event or circumstance from which such liability would arise, have expired.

 

Section 10.2.                          Survival; Successors and Assigns. 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 all or any of the Obligations are outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal successors and assigns of Lender.

 

Section 10.3.                          Lender’s Discretion; Rating Agency Review Waiver.

 

(a)                                 Whenever pursuant to this Agreement Lender exercises any right given to it to approve or disapprove any matter, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove such matter or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the reasonable discretion of Lender and shall be final and conclusive. Prior to all or any portion of the Loan being included in a Securitization, whenever pursuant to this Agreement the Rating Agencies are given any right to approve or disapprove any matter, or any arrangement or term is to be satisfactory to the Rating Agencies, the decision of Lender to approve or disapprove such matter or to decide whether arrangements or terms are satisfactory or not satisfactory, based upon Lender’s determination of Rating Agency criteria, shall be substituted therefor.

 

(b)                                 Whenever, pursuant to this Agreement or any other Loan Documents, a Rating Agency Confirmation is required from each applicable Rating Agency, in the event that any applicable Rating Agency “declines review”, “waives review” or otherwise indicates in writing that no Rating Agency Confirmation will or needs to be issued with respect to the matter in question (each, a “Review Waiver”), then the Rating Agency Confirmation requirement shall be deemed to be satisfied with respect to such matter. It is expressly agreed and understood, however, that receipt of a Review Waiver (i) from any one Rating Agency shall not be binding or apply with respect to any other Rating Agency and (ii) with respect to one matter shall not apply or be deemed to apply to any subsequent matter for which Rating Agency Confirmation is required.

 

96

 

Section 10.4.                          Governing Law.

 

(a)                                 THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND 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, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, 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 (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED ACCORDING TO, THE LAW OF THE STATE, COMMONWEALTH OR DISTRICT, AS APPLICABLE, IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, COMMONWEALTH OR DISTRICT, AS APPLICABLE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. 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 SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER AGREES THAT SERVICE OF PROCESS UPON BORROWER AT THE ADDRESS FOR BORROWER SET FORTH HEREIN AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGE IN THE ADDRESS FOR BORROWER SET FORTH HEREIN, (II) MAY AT ANY TIME AND FROM

 

97

 

TIME TO TIME DESIGNATE AN AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE AN AUTHORIZED AGENT IF BORROWER CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.

 

Section 10.5.                          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 therefrom, shall in any event be effective unless the same shall be in a writing signed by the party or parties 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. 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 this Agreement or any other 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 this Agreement or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount. Lender shall have the right to waive or reduce any time periods that Lender is entitled to under the Loan Documents in its sole and absolute discretion.

 

Section 10.6.                          Notices. All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a “Notice”) required or permitted to be given hereunder shall be given in writing and shall be sent by (i) facsimile (with answer back acknowledged) or (ii) by registered or certified mail, postage prepaid, return receipt requested, or (iii) delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 10.6. Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of sending by facsimile if sent prior to 5:00 P.M. (New York time) on a Business Day (otherwise on the next Business Day), (c) on the date of delivery by hand if delivered prior to 5:00 P.M. (New York time) on a Business Day (otherwise on the next Business Day), and (d) on the next Business Day if sent by a reputable courier, in each case addressed to the parties as follows:

 

	
If to Lender:
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
Wells Fargo Center
    
	
 
    	
1901 Harrison Street, 2nd Floor
    
	
 
    	
MAC A0227-020
    
	
 
    	
Oakland, California 94612
    
	
 
    	
Attention: Commercial Mortgage Servicing
    
	
 
    	
Facsimile No.: 866-359-5352
    

 

98

 

	
with a copy to:
    	
Cadwalader, Wickersham & Taft LLP
    
	
 
    	
227 West Trade Street, Suite 2400
    
	
 
    	
Charlotte, North Carolina 28202
    
	
 
    	
Attention: James P. Carroll, Esq.
    
	
 
    	
Facsimile No.: (704) 348-5200
    
	
 
    	
 
    
	
and:
    	
Cadwalader, Wickersham & Taft LLP
    
	
 
    	
One World Financial Center
    
	
 
    	
New York, New York 10281
    
	
 
    	
Attention: Steven M. Herman, Esq.
    
	
 
    	
Facsimile No.: (212) 504-6666
    
	
 
    	
 
    
	
If to Borrower:
    	
Vornado Bergen Mall LLC (as applicable)
    
	
 
    	
c/o Vornado Realty Trust
    
	
 
    	
210 Route 4 East
    
	
 
    	
Paramus, New Jersey 07652
    
	
 
    	
Attention: Chief Financial Officer
    
	
 
    	
Facsimile No.: (201) 843-2198
    
	
 
    	
 
    
	
with a copy to:
    	
Vornado Realty Trust
    
	
 
    	
888 Seventh Avenue
    
	
 
    	
New York, New York 10106
    
	
 
    	
Attention: Corporation Counsel
    
	
 
    	
Facsimile No.: (212) 894-7996
    
	
 
    	
 
    
	
with a copy to:
    	
Vornado Realty Trust
    
	
 
    	
888 Seventh Avenue
    
	
 
    	
New York, New York 10106
    
	
 
    	
Attention: Executive Vice President – Capital Markets
    
	
 
    	
Facsimile No.: (212) 894-7073
    
	
 
    	
 
    
	
with a copy to:
    	
Sullivan & Cromwell LLP
    
	
 
    	
125 Broad Street
    
	
 
    	
New York, New York 10004
    
	
 
    	
Attention: Arthur S. Adler, Esq.
    
	
 
    	
Facsimile No.: (212) 291-9001
    

 

Any party may change the address or facsimile number to which any such Notice is to be delivered by furnishing ten (10) days written notice of such change to the other parties in accordance with the provisions of this Section 10.6. Notices shall be deemed to have been given on the date as set forth above, even if there is an inability to actually deliver any such Notice because of a changed address of which no Notice was given, or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel, provided that it is given in accordance with this Section 10.6 as set forth above. Additionally, Notice from Lender may also be given by Servicer and Lender hereby acknowledges and agrees that Borrower shall be entitled to rely on any Notice given by Servicer as if it had been sent by Lender.

 

99

 

Section 10.7.                          Waiver of Trial by Jury. BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES 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. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

 

Section 10.8.                          Headings, Schedules and Exhibits. The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. The Schedules and Exhibits annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

 

Section 10.9.                          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.

 

Section 10.10. Preferences. Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the Obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are 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 Obligations hereunder 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.

 

Section 10.11. 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 the other Loan Documents specifically and expressly provide 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 this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Lender to Borrower.

 

Section 10.12. Remedies of Borrower. In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where, by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, neither Lender nor its agents shall be liable for any monetary damages (unless it is determined pursuant to a final judgment that Lender acted in bad faith) and Borrower’s sole remedy shall be limited to commencing an

 

100

 

action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

 

Section 10.13. Offsets, Counterclaims and Defenses. Any assignee of Lender’s interest in and to this Agreement and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated 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.

 

Section 10.14. 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 Property other than that of mortgagee, beneficiary or lender.

 

(b)                                 The Loan Documents are solely for the benefit of Lender and Borrower and nothing contained in any Loan Document shall be deemed to confer upon anyone other than the Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained therein.

 

Section 10.15. Publicity. All news releases, publicity or advertising by any party hereto or their respective Affiliates through any media intended to reach the general public (but excluding, for clarity, any filings or news releases necessary or appropriate under applicable Legal Requirements, including securities laws and regulations) which refers to the Loan Documents or the financing evidenced by the Loan Documents, to Lender or any Affiliate of Lender that acts as the issuer with respect to a Securitization of all or any portion of the Loan or any of their other Affiliates shall be subject to the prior consultation between the parties hereto. Notwithstanding the foregoing, prior to Securitization of the Loan, Borrower shall maintain internal practices and policies which prohibit persons working for, or on behalf of, Borrower from disclosing information (other than press releases or information distributed to the general public at the same time) regarding the Loan without the prior written consent of Lender, it being acknowledged by Borrower that the restrictions set forth in this sentence are intended to avoid violation of Legal Requirements in connection with the Securitization of the Loan.

 

Section 10.16.                   Waiver of Marshalling of Assets. To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s members or partners, as applicable, and others with interests in Borrower, and of the Property, and shall not 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 Property for the collection of the Obligations without any prior or different resort for collection, or of the right of

 

101

 

Lender to the payment of the Obligations out of the net proceeds of the Property in preference to every other claimant whatsoever.

 

Section 10.17. Certain Waivers. 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 or otherwise to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations hereunder shall be a valid defense to, or result in any offset against, any payments which Borrower is obligated to make under any of the Loan Documents. Without limiting any of the other provisions contained herein, each of Borrower and Lender hereby unconditionally and irrevocably waives, to the maximum extent not prohibited by applicable law, any rights it may have to claim or recover against the other party in any legal action or proceeding any special, exemplary, punitive or consequential damages.

 

Section 10.18. Conflict; Construction of Documents; Reliance. 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 they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan, without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

 

Section 10.19. Brokers and Financial Advisors. Borrower and Lender each hereby represent to each other that they have not dealt with any brokers or finders in connection with the transactions contemplated by the Loan Documents or made any agreements or promises which will in any way create or give use to any obligation or liability for payment by it for any brokerage fee or commission or any other similar compensation to any other Person with respect to the transactions contemplated herein. Each of Lender and Borrower shall indemnify, defend and hold the other harmless from and against any and all claims, liabilities, losses, costs and expenses of any kind (including Lender’s attorneys’ fees and expenses) in any way relating to or arising out of a claim by any Person that such Person acted on behalf of Borrower or Lender, as the case may be, in connection with the transactions contemplated herein. The provisions of this Section 10.19 shall survive the expiration and termination of this Agreement and the payment of the Obligations.

 

Section 10.20. Prior Agreements. This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto and their respective affiliates in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, including any confidentiality agreements or any similar

 

102

 

agreements between or among any such parties, whether oral or written, are superseded by the terms of this Agreement and the other Loan Documents.

 

Section 10.21. Servicer.

 

(a)                                 At the option of Lender, the Loan may be serviced by a servicer and special servicer (the “Servicer”) selected by Lender and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between Lender and Servicer. Borrower shall not be responsible for any set-up fees or any other initial costs relating to or arising under the Servicing Agreement. Notwithstanding anything to the contrary in this Agreement, Borrower shall not be responsible for payment of the monthly master servicing fee due to the Servicer under the Servicing Agreement. Borrower shall pay the Borrower Reimbursable Trust Fund Expenses incurred or payable from time to time, including pursuant to the Servicing Agreement or otherwise in connection with the Securitization. At no time shall Borrower be required to deal with or pay for more than one master servicer and one special servicer in connection with the Loan.

 

(b)                                 In addition to, but without duplication of, the costs and expenses contemplated by Section 4.29 of this Agreement, Borrower shall pay any fees, costs and expenses (including taxes), any reasonable out-of-pocket third-party fees and expenses or any reasonable costs or expenses due or reimbursable to, or payable by, any Servicer, trustee, certificate administrator or trust advisor in connection with (i) a prepayment or release of the Property; (ii) approvals or requests by Borrower under the Loan Documents including the negotiation, preparation, execution and delivery of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters, in each case requested by Borrower (including the fees of any Rating Agencies payable in connection therewith); (iii) defeasance, prepayment, assumption of Borrower’s obligations, or modification of the Loan; (iv) any breach of the Loan Documents by Borrower, Guarantor or any of their respective affiliates; (v) any exercise by Lender of any remedies permitted under the Loan Documents; (vi) during the continuance of an Event of Default and after and for so long as the Loan is specially serviced, inspections (or updates to existing inspections) and appraisals; (vii) enforcing or preserving any rights in response to third party claims or the commencement, prosecution or defense of any action or proceeding or other litigation, in each case against, under or affecting Borrower, the Loan Documents, the Property, or any other security given for the Loan, subject to and in accordance with any servicing agreement or similar agreement entered into in connection with a Securitization, as well as (w) any amounts payable or reimbursable in respect of advances (including protective advances, special servicer fee advances and advances of delinquent debt service payments), together with interest thereon, made pursuant to the servicing agreement, in each case, to the extent late charges and default interest actually paid by Borrower in respect of such payments are insufficient to pay the same, (x) “liquidation fees” in the amounts set forth in the servicing agreement, which amounts shall not exceed one-half of percent (0.5%) of liquidation proceeds, (y) “workout fees” in the amounts set forth in the servicing agreement, which amounts shall not exceed one-half of one percent (0.5%) of interest and principal collections on the Loan so long as the Loan is a “corrected” mortgage loan, and (z) “special servicing fees” for the Loan for so long as the Loan is a specially serviced loan pursuant to the servicing agreement in the amounts set forth in the servicing agreement, which amounts shall not exceed one-quarter of one percent (0.25%) per annum, and (viii) the cost of Rating

 

103

 

Agency Confirmations as set forth in Section 4.29(b) (and also including any required indemnities related thereto) (clauses (i) – (viii) are collectively, “Borrower Reimbursable Trust Fund Expenses”).

 

Section 10.22. Joint and Several Liability. If more than one Person has executed this Agreement as “Borrower,” the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

 

Section 10.23. Creation of Security Interest. Notwithstanding any other provision set forth in this Agreement, the Note, the Mortgage or any of the other Loan Documents, Lender may at any time create a security interest in all or any portion of its rights under this Agreement, the Note, the Mortgage and any other Loan Document (including the advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

 

Section 10.24. Assignments and Participations. Except as expressly permitted herein, Borrower may not assign its rights, title, interests or obligations under this Agreement or under any of the Loan Documents.

 

Section 10.25. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

 

[NO FURTHER TEXT ON THIS PAGE]

 

104

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeffery L. Cirillo
    
	
 
    	
 
    	
Name: Jeffery L. Cirillo
    
	
 
    	
 
    	
Title: Director
    

 

[signatures continue on following page]

 

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
VNO BERGEN MALL OWNER LLC,
   a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
Vornado Bergen Mall LLC, a New Jersey limited liability company, its   sole economic member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Vornado Realty L.P., a Delaware limited partnership, its sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
Vornado Realty Trust, a Maryland real estate investment trust, its   sole general partner
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
By:
    	
/s/ Alan Rice
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Name: Alan Rice
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Title: Senior Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00237-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00237-of-00352.parquet"}]]