Document:

Exhibit 10.39

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
 AND SECURITY AGREEMENT

 

Dated:  September     , 2012
 in the amount of
 $9,000,000
 (the “Mortgage Amount”)

 

From

 

TEACHERS VILLAGE PROJECT A QALICB URBAN RENEWAL ENTITY, LLC,

a New Jersey limited liability company

 

having its principal office at:
  c/o RBH Group

89 Market Street, 8th Floor

Newark, New Jersey 07102

 

(the “Mortgagor”)

 

To

 

GOLDMAN SACHS BANK USA,
  a New York banking corporation

 

having an office at:
 200 West Street

New York, New York 10282

 

(the “Mortgagee”)

 

LOCATION OF PREMISES:

 

Street Address: Halsey Street, Pearl Street, Maiden Lane

 

City of: Newark

 

County of: Essex

 

State of: New Jersey

 

Block 57,  Lot 31

 

Block 58, Lot 1 (f.k.a. Lots 1, 2, 4, and 41, and portions of Lots 5, 35.02, and 43)

 

Block 95, Lot 1.02(f.k.a. Lot 10 and portions of Lots 9 and 16)

 

 

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS AND SECURES OBLIGATIONS CONTAINING PROVISIONS FOR CHANGES IN INTEREST RATES, EXTENSIONS OF TIME FOR PAYMENT AND OTHER “MODIFICATIONS,” AS DEFINED IN N.J. LAWS 1985, CH. 353, IN TERMS OF SUCH OBLIGATIONS.  UPON ANY SUCH MODIFICATION, THIS MORTGAGE SHALL HAVE THE BENEFIT OF THE LIEN PRIORITY PROVISIONS OF THAT LAW.

 

After recording, please return to:
 Jones Day
 222 East 41st Street
 New York, New York 10017
 Attn: Aviva Yakren, Esq.

 

This instrument was prepared by the above named attorney.

 

 

Recital

 

The Mortgagor is the owner of the fee simple interest in the premises described in Exhibit A hereto.  The Mortgagor proposes to construct or rehabilitate improvements on the Premises (as defined below) and, in order to finance the construction thereof, will borrow amounts up to the Mortgage Amount (the “Loan”) from Mortgagee pursuant to a Building Loan Agreement between the Mortgagor and Mortgagee dated the date hereof (such agreement, together with any modifications and/or amendments thereof, the “Loan Agreement”).  The Mortgagor has executed and delivered to Mortgagee a certain promissory note (together with any modifications, extensions and amendments thereto hereinafter collectively referred to as the “Note”), dated the date hereof, obligating it to pay the Mortgage Amount, or so much thereof as may be advanced in accordance with the terms of the Loan Agreement.

 

Certain Definitions

 

The Mortgagor and Mortgagee agree that, unless the context otherwise specifies or requires the following terms shall have the meanings herein specified, such definitions to be applicable equally to the singular and the plural forms of such terms.

 

“Chattels” means all fixtures, fittings, appliances, apparatus, equipment, machinery and articles of personal property and replacements thereof, other than those owned by lessees, now or at any time hereafter affixed to, attached to, placed upon, or used in any way in connection with the complete and comfortable use, enjoyment, occupancy or operation of the Improvements on the Premises.

 

“Events of Default” means the events and circumstances described as such in Section 2.1 hereof.

 

“Family Members” shall mean the spouses, parents, children and grandchildren of the partners, members or other equity interest holders in Mortgagor and any trust established for estate planning purposes for the benefit of such partners, members or other equity interest holders in Mortgagor or any of the foregoing specified family members.

 

“Improvements” means all structures and/or buildings, and replacements thereof, to be erected or now or hereafter located upon the Premises by the Mortgagor, including all plant equipment, apparatus, machinery and fixtures of every kind and nature whatsoever forming part of said structures and/or buildings.

 

“Intangibles” means all “general intangibles” (as such quoted term is defined in the Uniform Commercial Code of the state wherein the Premises are located) in any way relating to the Premises and/or the Improvements and in which the Mortgagor has any interest, all licenses, trade names, good will and books and records relating to the business operated or to be operated on the premises or any part thereof, and all unearned premiums, accrued, accruing or to accrue under all insurance policies now or hereafter obtained by the Mortgagor insuring the Mortgaged Property, as hereinafter defined, and all rights and interest of the Mortgagor thereunder and all rights, claims and/or causes of action which the Mortgagor may have now or may have in the future against any party or parties with respect to the Premises, the Chattels and/or the Premises.

 

 

“Involuntary Rate” means eighteen percent (18%), but in no event to exceed the maximum rate allowed by law.

 

“Premises” means the premises situated in the City of Newark, County of Essex and State of New Jersey and more fully described in Exhibit A attached hereto and made a part hereof, including all of the air space, easements, rights, privileges, royalties and appurtenances thereunto belonging or in anywise appertaining, and all of the estate, right, title interest, claim or demand whatsoever of the Mortgagor therein and in the streets, alleys and ways adjacent thereto, either in law or in equity, in possession or expectancy, now or hereafter acquired.

 

“Upper Tier Entity” shall mean, individually and collectively as the context requires, (a) TRB Newark Assemblage, LLC, (b) TRB Newark TRS, LLC, (c) RBH Partners, LLC and RBH Capital, LLC.

 

The terms used in this Mortgage, Assignment of Leases and Rents and Security Agreement (this “Mortgage”) which are not defined above or in the text of this Mortgage shall have the meanings ascribed thereto in the Loan Agreement.

 

Granting Clause

 

NOW, THEREFORE, for the purposes of securing the payment and performance of the following obligations (collectively, all of such obligations are hereinafter referred to as the “Indebtedness”):

 

(i)                                     the payment of both the principal of, and the interest and any other sums payable on, the Note or under this Mortgage, together with interest thereon and any and all fees with respect thereto as may be set forth in the Note and/or the Loan Agreement, and all amounts expended by Mortgagee to maintain the lien of this Mortgage or protect any of the Mortgaged Property, including, without limitation, all amounts in respect of insurance premiums and real estate taxes, charges and assessments, reasonable litigation expenses to prosecute or defend the rights, remedies and lien of this mortgage or title to the Mortgaged Property, and any costs, charges or amounts to which Mortgagee becomes subrogated upon payment, whether under recognized principles of law or equity or under express statutory authority; and

 

(ii)                                  the performance and observance of all the provisions hereof and of the Note and of the Loan Agreement, including the payment of any sums advanced by Mortgagee to complete the Improvements contemplated by the Loan Agreement to the extent the aggregate of such sums and any other sums expended pursuant hereto exceed the sum of the Mortgage Amount

 

the Mortgagor, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound hereby, gives, grants, bargains, sells, warrants, aliens, remises, releases, conveys, assigns, transfers, mortgages, hypothecates, deposits, pledges, sets over and confirms unto Mortgagee, all its estate, right, title and interest in, to and under any and all of the following described property (the “Mortgaged Property”) whether now owned or held or hereafter acquired:

 

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(i)                                     the Premises;

 

(ii)                                  the Improvements:

 

(iii)                               the Chattels;

 

(iv)                              the Intangibles;

 

(v)                                 all rents, royalties, issues, profits, revenue, income and other benefits of the Premises and the Improvements (the “Rents”), the Master Lease (as such term is defined in the Loan Agreement), the Leases (as such term is defined in the Loan Agreement) and all leases and lettings of the Premises now or hereafter entered into and all right, title and interest of the Mortgagor thereunder, including, without limitation, cash or securities deposited thereunder to secure performance by the lessees of their obligations thereunder, whether such cash or securities are to be held until the expiration of the terms of such leases or applied to one or more of the installments of rent coming due immediately prior to the expiration of such terms, including further, the right upon the happening of an Event of Default, to receive and collect the Rents thereunder;

 

(vi)                              all real estate tax refunds;

 

(vii)                           all contracts of sale now or hereafter entered into in connection with the Premises and/or the Improvements or any part thereof and all right, title and interest of Mortgagor thereunder, including, without limitation, cash or securities deposited thereunder to secure performance of buyers of their obligations thereunder and also including the right upon the happening of an event of default thereunder to enforce the obligations of such buyers and to receive and collect the amounts deposited thereunder and any and all further amounts which may be due under such contracts of sale or due upon the consummation of such contracts of sale;

 

(viii)                        all right, title and interest of Mortgagor in and to all agreements, or contracts, now or hereafter entered into for the sale, leasing, brokerage, development, construction, management, maintenance and/or operation of the Premises (or any part thereof), including all moneys due and to become due thereunder, and all permits, licenses, bonds, insurance policies, plans and specifications relative to the construction and/or operation of the Improvements upon the Premises;

 

(ix)                              all Mortgagor’s rights and remedies at any time arising under or pursuant to Subsection 365(h) of the Bankruptcy Code, including, without limitation, all of Mortgagor’s rights to remain in possession of the Premises;

 

(x)                                 all of Mortgagor’s claims and rights to the payment of damages arising from any rejection of a lease under or pursuant to the Bankruptcy Code, 11 U.S.C. § 101 et seq.;

 

(xi)                              any other property and rights which are, by the provisions of any document entered into in connection with the making of the Loan (collectively, the “Loan Documents”), required to be subject to the lien hereof, and any additional

 

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property and rights that may from time to time hereafter by installation in the Improvements and/or the Premises, or by writing of any kind, or otherwise, be subjected to the lien hereof by Mortgagor or by anyone on its behalf;

 

(xii)                           all deposits in, and proceeds of, all operating accounts of Mortgagor maintained at Mortgagee and at Provident  Bank; and

 

(xiii)                        all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of hazard and title insurance and condemnation awards and all rights of the Mortgagor to refunds of real estate taxes and assessments.

 

TO HAVE AND TO HOLD unto Mortgagee, its successors and assigns forever.

 

ARTICLE I

 

PARTICULAR COVENANTS OF THE MORTGAGOR

 

The Mortgagor covenants and agrees as follows:

 

1.1                               The Mortgagor represents and warrants that it has a good and marketable title to an indefeasible fee estate in the Premises subject to no lien, charge or encumbrance except such as are listed as exceptions to title in the title policy insuring the lien of this Mortgage; that it will own the Chattels free and clear of liens and claims; that this Mortgage is and will remain a valid and enforceable first lien on the Mortgaged Property and the exceptions referred to above; that the execution and delivery of this Mortgage and the Note has been duly authorized by the Mortgagor and that there is no provision in any document which evidences or establishes the existence of the Mortgagor requiring further consent for such action by any other entity or person; that it is duly organized, validly existing and is in good standing under the laws of the state of its formation or incorporation, as the case may be; that it has (i) all necessary licenses, authorizations, registrations, permits and approvals and (ii) full power and authority to own its properties and carry on its business as presently conducted and the execution and delivery by it of and performance of its obligations under, this Mortgage and the Note will not result in the Mortgagor being in default under any provisions of any document which evidences or establishes the existence of the Mortgagor or of any mortgage, credit or other agreement to which the Mortgagor is a party or which affects the Mortgagor or the Premises, or any part thereof; that it will preserve such title, and will forever warrant and defend the same to Mortgagee and will forever warrant and defend the validity and priority of the lien hereof against the claims of all Persons and parties whomsoever.

 

1.2                               The Mortgagor will, at the cost of the Mortgagor, and without expense to Mortgagee, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall from time to time require, for the better assuring, conveying, assigning, transferring and confirming unto Mortgagee the property and rights hereby conveyed or assigned or intended now or hereafter so to be, or which the Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee, or for carrying out the intention or facilitating the

 

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performance of the terms of this Mortgage, or for filing, registering or recording this Mortgage and, on demand, will execute and deliver, and hereby authorizes Mortgagee to execute and file in the name of the Mortgagor to the extent it may lawfully do so, one or more financing statements, chattel mortgages or comparable security instruments, to evidence more effectively the lien hereof upon the Mortgaged Property or any part thereof.  Mortgagor will, at its sole cost and expense, do, execute, acknowledge and deliver all and every such acts, information reports, returns and withholding of monies as shall be necessary or appropriate to comply fully, or to cause full compliance, with all applicable information reporting and back-up withholding requirements of the Internal Revenue Code of 1986, as amended (including all regulations promulgated thereunder) in respect of the Premises and all transactions related to the Premises, and will at all times upon Mortgagee’s request provide Mortgagee with satisfactory evidence of such compliance and notify Mortgagee of the information reported in connection with such compliance.

 

1.3                               (a)                                 The Mortgagor forthwith upon the execution and delivery of this Mortgage, and thereafter from time to time, will cause this Mortgage, the Loan Agreement and any security instrument creating a lien or evidencing the lien hereof upon the Chattels and/or the Intangibles and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien hereof upon, and the interest of Mortgagee in, the Mortgaged Property.

 

(b)                                 Subject to the right of Mortgagor to in good faith contest such claims with the applicable authority, the Mortgagor will pay all filing, registration or recording fees, and all expenses incident to the execution and acknowledgment of this Mortgage, any mortgage supplemental hereto, any security instrument with respect to the Chattels or the Intangibles, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposes, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage or any mortgage supplemental hereto, any security instrument with respect to the Chattels and/or the Intangibles or any instrument of further assurance.

 

1.4                               The Mortgagor will punctually pay the principal and interest and all other sums to become due in respect of the Note and the Loan Agreement at the time and place and in the manner specified in the Note, according to the true intent and meaning thereof, all in any coin or currency of the United States of America which at the time of such payment shall be legal tender for the payment of public and private debts and all such principal and interest due in respect of the Note and the Loan Agreement is hereby deemed an obligation due under this Mortgage.

 

1.5                               The Mortgagor will, so long as it is owner of the Mortgaged Property or any part thereof, do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges as a business and/or limited liability company under the laws of the state of its formation and will comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental authority or court applicable to the Mortgagor or to the Mortgaged Property or any part thereof.

 

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1.6                               All right, title and interest of the Mortgagor in and to all extensions, improvements, betterments, renewals, substitutes and replacements of, and all additions and appurtenances to, the Mortgaged Property, hereafter acquired by, or released to, the Mortgagor or constructed, assembled or placed by the Mortgagor on the Premises or any part thereof, and all conversions of the security constituted thereby, immediately upon such acquisition, release, construction, assembling, placement or conversion, as the case may be, and in each such case, without any further mortgage, conveyance, assignment or other act by the Mortgagor, shall become subject to the lien of this Mortgage as fully and completely, and with the same effect, as though now owned by the Mortgagor and specifically described in the granting clause hereof, but at any and all times the Mortgagor will execute and deliver to Mortgagee any and all such further assurances, mortgages, conveyances or assignments thereof as Mortgagee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien of this Mortgage.

 

1.7                               (a)                                 The Mortgagor, from time to time when the same shall become due and payable, will pay and discharge all taxes of every kind and nature, all general and special assessments, levies, permits, inspection and license fees, all water and sewer rents and charges, and all other public charges whether of a like or different nature, imposed upon or assessed against the Mortgaged Property, or any part thereof, or upon the revenues, rents, issues, income and profits of the Mortgaged Property or arising in respect of the occupancy, use or possession thereof.  The Mortgagor will, upon the reasonable request of Mortgagee, deliver to Mortgagee receipts evidencing the payment of all such taxes, assessments, levies, fees, rents and other public charges imposed upon or assessed against the Mortgaged Property, or any part thereof, or the revenues, rents, issues, income or profits thereof.

 

Mortgagee may, at its reasonable option to be exercised by thirty (30) days written notice to the Mortgagor, require the deposit by the Mortgagor, at the time of each payment of an installment of interest or principal under the Note, of an additional amount sufficient to discharge the obligations under this subsection (a) when they become due.  The determination of the amount so payable and of the fractional part thereof to be deposited with Mortgagee, so that the aggregate of such deposit shall be sufficient for this purpose, shall be made by Mortgagee in its reasonable discretion.  Such amounts shall be held by Mortgagee with interest and applied to the payment of the obligations in respect to which such amounts were deposited or, at the option of Mortgagee, to the payment of said obligations in such order or priority as Mortgagee shall determine, on or before the respective dates on which the same or any of them would become delinquent.  If one month prior to the due date of any of the aforementioned obligations the amounts then on deposit therefor shall be insufficient for the payment of such obligation in full, the Mortgagor within ten (10) days after demand shall deposit the amount of the deficiency with Mortgagee.  Nothing herein contained shall be deemed to affect any right or remedy of Mortgagee under any provisions of this Mortgage or of any statute or rule of law to pay any such amount and to add the amount so paid to the Indebtedness.

 

(b)                                 The Mortgagor will pay, from time to time when the same shall become due, all lawful claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Mortgaged Property or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will

 

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do or cause to be done everything necessary so that the lien of this Mortgage shall be fully preserved, at the cost of the Mortgagor, without expense to Mortgagee.

 

(c)                                  Nothing in this Section 1.7 shall require the payment or discharge of any obligation imposed upon the Mortgagor by this Section so long as the Mortgagor shall in good faith and at its own expense bond such obligation, contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection thereof or other realization thereon and the sale or forfeiture of the Premises or any part thereof to satisfy the same; provided that during such contest the Mortgagor shall, at the option of Mortgagee, provide security reasonably satisfactory to Mortgagee, assuring the discharge of the Mortgagor’s obligation hereunder and of any additional charge, penalty or expense arising from or incurred as a result of such contest; and provided further, that if at any time payment of any obligation imposed upon the Mortgagor by subsection (a) of this Section shall become necessary to prevent the delivery of a tax deed, or its equivalent, conveying the Mortgaged Property, or any part thereof, because of non-payment, then the Mortgagor shall pay the same in sufficient time to prevent the delivery of such tax deed or its equivalent.

 

1.8                               The Mortgagor will pay any and all taxes, governmental charges, fees and/or levies by reason of Mortgagee’s ownership of the Note or this Mortgage and/or resulting from the exercise by Mortgagee of any of its rights and/or remedies provided for under this Mortgage, except for income taxes of Mortgagee, and any similar gains tax law which may hereafter be enacted.  The obligations assumed by the Mortgagor pursuant to this Section 1.8 shall survive the exercise by Mortgagee of any of its rights and/or remedies under this Mortgage.

 

1.9                               (a)                                 Mortgagor shall keep the Premises and Chattels insured against such perils and hazards, and in such amounts and with such limits, as Mortgagee may from time to time require, and in any event will continuously maintain, at Mortgagor’s sole cost and expense, the following described policies of insurance (collectively, the “Insurance Policies”):

 

(i)                         During any period of construction, repair or restoration, “All Risk” Builder’s Risk insurance policy for the Project on which the work is to be executed or which is to be constructed, for the full completed value of Improvements and shall also cover material, equipment, and supplies of all kinds incident to the Improvements, in temporary structures, in vehicles, or in the open.

 

(ii)                      Property insurance, covering the Mortgaged Property, including 100% of the insurable replacement cost value of all tenant improvements and betterments that any agreement requires Mortgagor to insure, against all risks of loss to the Improvements customarily covered by so-called “Cause of Loss — Special Form” policies as available in the insurance market as of the closing date.  Such policy shall cover at least the following perils: building collapse, fire, flood, back-up of sewers and drains, water damage, tsunami, windstorm, earthquake, earth movement, landslide, mudslide, subsidence, acts of terrorism, impact of vehicles and aircraft, lightning, machinery breakdown, malicious mischief, and vandalism.  The policy shall cover (i) 100% of the insurable replacement cost value of the Mortgaged Property; (ii) 100% of the insurable replacement cost value of all tenant improvements and betterments that any agreement requires Mortgagor to insure; (iii) loss of the undamaged portion of the Mortgaged Property and additional expense of demolition and

 

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increased cost of construction, including, without limitation, increased costs that arise from any changes in laws or other legal requirements with respect to such restoration, in an amount as is acceptable to Mortgagee. Coverage to include replacement cost valuation, no margin clause and a waiver of coinsurance or agreed amount endorsement, and include such clauses as may be necessary to ensure that Mortgagee will not be deemed to be a co-insured thereunder.  The policy shall have no deductible more than $25,000, except as agreed to by Mortgagee, and shall be written with an unexpired term of at least one year, issued by an insurer acceptable to Mortgagee.  The policy shall also cover business interruption and/or rent loss, on an actual loss sustained basis, in an amount at least equal to 18 months of the Mortgagor’s actual or projected gross revenue, and if applicable Mortgagor’s income, with respect to tenants, at 80% occupancy during such period. The amount of such insurance shall be increased from time to time during the term of the Note as and when receipts from the Premises increase, and shall be endorsed to include an extended period of indemnity of at least 180 days. The policy shall name Mortgagee on a standard mortgagee endorsement for real property and lender loss payee endorsement for loss of income coverage on forms acceptable to Mortgagee.  With respect to property insurance sub limits and/or annual or policy-term aggregate limits applicable to any insured peril, including but not limited to earthquake, flood, named storm and any other peril that may be subject to such sub limit and/or aggregate limit, Mortgagor agrees that if the limit of insurance applicable to any insured peril is subject to an annual aggregate or a policy-term aggregate, Mortgagor will notify Mortgagee if and when applicable policy aggregate limits are eroded due to incurred losses by 50% or more of applicable limits during the term of the loan, and further, that Mortgagor, as commercially reasonable, (as agreed to between the Mortgagor and Mortgagee), will immediately cause the aggregate limits to be restored to 100% of the pre-loss aggregate limit;

 

(iii)                   Commercial general liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Mortgaged Property (such coverage to include provisions waiving subrogation against the Authority and the Purchaser), including coverage for: (i) commercial general liability insurance; (iii) umbrella liability insurance,  Liability insurance shall be in the so-called “occurrence” form and shall provide coverage in amounts not less than $25,000,000 per occurrence and $25,000,000 in the annual aggregate.  All Liability Insurance shall name Mortgagee as an “Additional Insured”, including both on-going and completed operations, by endorsements satisfactory to Mortgagee;

 

(iv)                  Worker’s Compensation and Employer’s Liability insurance shall be provided in accordance with the requirements of the laws of New Jersey.

 

(v)                     During any period of construction Mortgagor shall provide or ensure that the following coverage is maintained:

 

(A)                               “Special Perils” builders’ all risk insurance written in “100% builders risk completed value, non-reporting form”, including coverage therein for “completion and/or premises occupancy”, such insurance to be in the amounts and terms specified in subparagraph (ii) above, plus, (1) coverage for all materials which will become a part of the new building, whether at the construction site, stored elsewhere, or in transit; (2) soft costs coverage including 100% of the loan interest, and coverage for recurring expenses including but not limited to plans, specifications, blueprints and models, real estate taxes, real estate commissions,

 

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advertising, architectural and engineering supervisory costs, legal and accounting costs, and delayed completion business income/rental interruption (if any) on an actual loss sustained basis; (3) provide for permission for partial occupancy.

 

(B)                               Mortgagor shall ensure that the general contractor for this project maintains (i) commercial general liability coverage, including products and completed operations coverage, containing no EIFS (Exterior Insulation Finish System) exclusion with respect to this project if the project will use EFIS, that shall be continuously renewed for the statutory period during which claims can be made following completion of the project, (ii) automobile liability insurance (including owned, hired and non-owned liability) and (iii) umbrella/excess liability insurance with no less than $25,000,000 in limits per occurrence and in the annual aggregate per project or $50,000,000 if aggregates are shared among multiple projects, and in addition all trade contractors shall provide similar liability insurance coverage with umbrella liability limits that are commensurate with the risks presented by their operations at the site as determined by the general contractor, provided that any crane subcontractor shall provide limits of at least $10,000,000 or such other amount as is acceptable to Mortgagee.  All parties engaged in work on the Improvements or on any restoration shall maintain any workers’ compensation and employer’s liability insurance required by law in force for all workers on the job. A certificate of insurance shall be issued to Mortgagee, naming Mortgagee as Additional Insured (except with respect to workers’ compensation and employer’s liability), and evidencing all insurance required in this subsection.  Mortgagee shall be named as Additional Insured with respect to general contractor’s ongoing operations and completed operations by endorsements satisfactory to Mortgagee.  Such insurance shall be primary and any other insurance maintained by the additional insured shall be excess only and not contributing with this insurance.

 

(C)                               Contractor’s Pollution Legal Liability Insurance for the entire term of the construction project, in a minimum amount of $5,000,000, and including coverage for mold. Such policy shall name Mortgagee as Additional Insured on a form acceptable to Mortgagee.

 

(D)                               Architects and Engineers Professional Liability Insurance.  Mortgagor shall cause the Architect and Engineers to obtain and maintain Architect’s and Engineer’s Professional Liability Insurance during the period commencing on the date of the Architect’s agreement or the date of contract with the engineers, respectively, and continuously renewing for a period no less than the statute of limitations in the state where the project is located during which claims can be made after substantial completion.  Such insurance shall be in an amount equal to at least $3,000,000 per claim and in the annual aggregate, or such other amount acceptable to Mortgagee.  Any subcontractor to the Architect shall maintain such insurance in an amount not less than $1,000,000 per claim and in the annual aggregate or such other amount acceptable to Mortgagee.

 

(vi)                  Borrower shall maintain environmental insurance covering unknown environmental hazards in an amount not less than $10,000,000 per discovery and in the Aggregate.  Such coverage shall identify Mortgagee as an “Additional Named Insured” through an endorsement satisfactory to Mortgagee.  The carrier shall agree that the policy rights for the project shall be automatically assigned to Mortgagee, with no further action required by any person, if control of the Mortgaged Property passes to Mortgagee or to any of

 

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their respective designees as the direct or indirect result of an event of default or as the direct or indirect result of the enforcement of any rights or remedies of Mortgagee hereunder or under any of the Loan Documents (including, without limitation, the transfer of the property and/or Improvements or any interest therein to Mortgagee or its designee through foreclosure, by deed-in-lieu of foreclosure or otherwise);

 

(vii)               Insurance against loss or damage from (A) leakage of sprinkler systems and (B) explosion of steam boilers, air conditioning equipment, high pressure piping, machinery and equipment, pressure vessels or similar apparatus now or hereafter installed in the Improvements (without exclusion for explosions or testing procedures), in an amount at least equal to the outstanding principal amount of the Note or $5,000,000, whichever is less;

 

(viii)            If the Premises, or any part thereof, are located in an area that has been identified by the Federal Emergency Management Agency as being located in a special flood hazard area, Mortgagor will keep, for as long as any Indebtedness remains unpaid, the Improvements covered by flood insurance in an amount equal to the lesser of (A) the full replacement cost of the Premises or (B) the maximum limit of coverage available for the Premises under the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as the same may have been or may hereafter be amended or modified (and any successor act thereto); and

 

(ix)                  Such other types and amounts of insurance coverage as shall be reasonably requested by Mortgagee and are customarily (A) maintained by owners or operators of properties similarly situated to the Premises, or (B) required by institutional lenders in like transactions.

 

(b)                                 Each of the Insurance Policies shall be endorsed to name Mortgagee and its successors and assigns as mortgagee or lender loss payee, with loss greater than $250,000.00 payable to Mortgagee and its successors and assigns, without contribution or assessment, pursuant to a standard first mortgage endorsement in the form of, or substantially equivalent to, the standard mortgagee or lender loss payee endorsement used in the State of New Jersey, provided that with respect to liability insurance or other policies of insurance required hereunder where a mortgagee or lender loss payee endorsement is not available, Mortgagee shall, to the fullest extent available, be named as an additional insured in any such Insurance Policies.  All Insurance Policies and endorsements required pursuant to this Section 1.9 shall be fully paid as premiums are due and contain such provisions and expiration dates and be in such form and amounts as indicated above and shall be issued by an insurance company authorized to sell insurance in the State of New Jersey, and having an A.M. Best General policyholders’ rating of A or better and a financial size category of 8 or better.  Without limiting the foregoing, each policy shall specifically provide that (A) such policy may not be cancelled except upon thirty (30) days’ prior written notice to Mortgagee and that no act or thing done by Mortgagor shall invalidate the policy as against Mortgagee and (B) any and all insurance proceeds will be paid to Mortgagee so long as Mortgagee certifies to the insurer that the unpaid Indebtedness exceeds the proceeds of insurance.  Each policy shall provide a waiver of any right of subrogation of the insurers thereunder against any Person insured under such policy, and a waiver of any right of the insurers to any set off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of any Person insured under such policy; and each policy

 

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shall provide such other terms and provisions as any owner or operator of facilities similar to the Mortgagor’s would, in the prudent management of its properties, require to be provided in policies, binders or interim insurance contracts with respect to facilities similar to the Project or the collateral owned or operated by it.  At least thirty (30) days prior to the expiration of any such policy, the Mortgagor shall furnish Mortgagee with evidence that such policy has been renewed or replaced, in formats acceptable to Mortgagee.  Mortgagor shall provide copies of all renewal or replacement policies within 60 days of the renewal date.  Mortgagor shall assign and deliver the Insurance Policies to Mortgagee and Mortgagee shall have and hold said Insurance Policies as collateral and further security for the payment of the Indebtedness until the full payment of the Indebtedness, or, if reasonably acceptable to Mortgagee, certificates of such policies together with such other information regarding such policy as Mortgagee shall reasonably require.  In addition, from time to time, upon occurrence of any change in the use, operation or value of the Premises, or in the availability of insurance in the area in which the Premises are located, Mortgagor shall, within twenty (20) days after reasonable demand by Mortgagee, take out such additional amounts and/or such other kinds of insurance as Mortgagee may require. The Insurance Policies delivered by Mortgagor to Mortgagee on the date hereof shall be deemed acceptable to Mortgagee.

 

(c)                                  Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 1.9, unless Mortgagee is included thereon as a named insured with loss payable to Mortgagee under the standard mortgage endorsement of the character above described.  Mortgagor shall immediately notify Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to Mortgagee the policy or policies of such insurance.

 

(d)                                 Mortgagor shall give Mortgagee prompt written notice of any damage to, or destruction of, the Improvements, or any part thereof, or of any other casualty or loss at or affecting the Premises or the Chattels, and Mortgagee shall have the right to approve the adjustment of any insurance claim in respect of any such damage, destruction, casualty or loss in excess of $250,000.  To the fullest extent permitted by applicable law, the proceeds of any insurance coming into the possession of Mortgagee in respect of any damage, destruction, casualty or loss shall not be deemed trust funds, and Mortgagee shall have the option, in its sole discretion, to apply any insurance proceeds it may receive pursuant hereto or otherwise to the payment of the Indebtedness, or to allow all or a portion of such proceeds to be used for the restoration of the Mortgaged Property.  In the event any such insurance proceeds shall be used to reduce the Indebtedness, the same shall be applied by Mortgagee, after the deduction therefrom and repayment to Mortgagee of any and all costs incurred by Mortgagee in the recovery thereof (including reasonable attorneys’ fees and disbursements), in any manner it shall designate, including, but not limited to, the application of such proceeds to the then unpaid installments of the principal balance due under the Note in the inverse order of their maturity, such that the regular payments, if any, under the Note shall not be reduced or altered in any manner.  Any prepayment of the Note from the proceeds of insurance shall be without prepayment premium.  Notwithstanding the foregoing, if the Improvements have been damaged or destroyed, Mortgagee shall allow Mortgagor to use any such insurance proceeds for the restoration of the Improvements, provided that Mortgagee shall reasonably determine that the restoration of the Improvements can be completed prior to the Maturity Date (as defined in the Note) of the Note, and that insurance proceeds shall be sufficient to complete the restoration, or if the amount of

 

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such insurance proceeds shall be insufficient to complete such restoration, Mortgagor deposits with Mortgagee an amount equal to the difference between the estimate of the Architect (as hereinafter defined) (as derived in accordance with subsection (e) below) of the cost of such restoration and the insurance proceeds received.

 

(e)                                  Unless the Indebtedness is paid in full to Mortgagee within thirty (30) days of the date of any damage, destruction, loss or other casualty to the Improvements, and provided that casualty insurance proceeds are made available to Mortgagor, Mortgagor shall promptly commence and diligently continue to perform the repairs, restoration and rebuilding of the portion of the Improvements so damaged or destroyed (hereinafter the “Work”) so as to restore the Improvements and Chattels in full compliance with all legal requirements and so that the Mortgaged Property shall be at least equal in value and general utility as they were prior to such damage or destruction, and if such damage or destruction, in the reasonable judgment of Mortgagee, shall exceed Two Hundred Fifty Thousand ($250,000) Dollars  (hereinafter, collectively “Major Work”), Mortgagor shall, prior to the commencement of the Major Work, furnish to Mortgagee for its approval:  (1) complete plans and specifications for the Major Work, with satisfactory evidence of the approval thereof (i) by all governmental authorities whose approval is required and (ii) by Borrower’s Architects (as defined in the Loan Agreement) or other architect satisfactory to Mortgagee (hereinafter, the “Architect”) and which shall be accompanied by the Architect’s signed estimate, bearing the Architect’s seal, of the entire cost of completing the Major Work; and (2) certified or photostatic copies of all permits and approvals required by law in connection with the commencement and conduct of the Major Work.  Mortgagor shall not commence any of the Major Work until Mortgagor shall have complied with applicable requirements referred to in this subsection (e), and after commencing the Major Work, Mortgagor shall perform the Major Work diligently and in good faith in accordance with the plans and specifications referred to in this subsection (e), if applicable.

 

(f)                                   If the insurance proceeds, less the cost, if any, to Mortgagee of such recovery and of paying out such proceeds (including reasonable attorneys’ fees and costs allocable to inspecting the Work and the plans and specifications therefor) should be paid towards restoration of the Improvements and Chattels or if such insurance proceeds are applied toward such restoration, then such insurance proceeds shall be applied by Mortgagee to the payment of the cost of the Work and shall be paid out from time to time to Mortgagor and/or, at Mortgagee’s option, directly to the contractor, subcontractors, materialmen, laborers, engineers, architects and other persons rendering services or materials for the Work, as said Work progresses except as otherwise hereinafter provided, but subject to the following conditions, any of which Mortgagee may freely waive, at Mortgagee’s sole discretion:

 

(i)                         If the Work to be done is Major Work, as determined by Mortgagee, the Architect shall be in charge of such Major Work;

 

(ii)                      Each request for payment shall be made on fifteen (15) days prior notice to Mortgagee and shall be accompanied by a certificate of the Architect if one is required under subsection (e) above, otherwise by a certificate of an officer of Mortgagor, stating (A) that all of the Work completed has been done in compliance with the approved plans and specifications, if any be required under said subsection (e) above, and in accordance with all provisions of law; (B) the sum requested is justly required to reimburse Mortgagor for

 

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payments by Mortgagor to, or is justly due to, the contractor, subcontractor, materialmen, laborers, engineers, architects or other persons rendering services or materials for the Work (giving a brief description of such services and materials), and that when added to all sums, if any, previously paid out by Mortgagee does not exceed the value of the Work done to date of such certificate, and (C) that the amount of such proceeds and other deposits remaining in the hands of Mortgagee will be sufficient on completion of the Work to pay for the same in full (giving in such reasonable detail as Mortgagee may require an estimate of the cost of such completion);

 

(iii)                   Each request shall be accompanied by waivers of liens satisfactory to Mortgagee covering that part of the Work previously paid for, if any, and by a search prepared by the title company which insured the lien of the Mortgage or by other evidence satisfactory to Mortgagee, that there has not been filed with respect to the Premises or any part thereof any mechanic’s lien or other lien or instrument for the retention of title in respect of any part of the Work not discharged of record and that there exist no encumbrances on or affecting the Premises or any part thereof or any part of the other Mortgaged Property, other than the Other Mortgages (as hereinafter defined);

 

(iv)                  The request for any payment after the Work has been completed shall be accompanied by a copy of all certificates, permits, licenses, waivers and/or other documents required by law to render occupancy of the Premises legal; and

 

Upon completion of the Work and payment in full therefor, or upon failure on the part of Mortgagor to commence, as provided in Section 1.9(e) above, or diligently to continue the Work, or at any time upon request by Mortgagor, Mortgagee may apply the amount of any such proceeds then or thereafter in the hands of Mortgagee to the payment of the Indebtedness; provided, however, that nothing herein contained shall prevent Mortgagee from applying at any time the whole or any part of such proceeds to the curing of any default after expiration of applicable notice and cure periods under this Mortgage, the Note or any other Loan Documents.

 

(g)                                  Notwithstanding the foregoing, provided no Event of Default exists hereunder, Mortgagee shall allow the use of such proceeds for the restoration of the “Improvements”, as defined in the Loan Agreement and Chattels, provided Mortgagee and “Construction Consultant,” as such term is defined in the Loan Agreement, determine that the amount of such insurance proceeds plus the undisbursed portion of the Loan for “Direct Costs”, as defined in the Loan Agreement, and any available equity or other funds of the Mortgagor shall be sufficient to complete the Improvements on or before the “Completion Date”, as defined in the Loan Agreement.  In the event Mortgagee shall allow the use of such proceeds for the restoration of the “Improvements,” as defined in the Loan Agreement, the Mortgagor shall diligently prosecute completion of the Improvements in accordance with the terms of the Loan Agreement, and the insurance proceeds and/or the amount of any such deposits shall be disbursed to Mortgagor under the same terms and conditions for the advancing of loan proceeds under the Loan Agreement except that if the damage is less than $250,000.00, then the proceeds shall be disbursed to Mortgagor in one advance upon completion of the restoration; amounts not required for such purposes shall be applied, at Mortgagee’s option, to the prepayment of the Note and to interest, if any, accrued and unpaid thereon in such order and proportions as Mortgagee may elect.  In the event that such proceeds are reasonably determined by Mortgagee to be

 

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inadequate, Mortgagee shall receive from Mortgagor a cash deposit equal to the excess of said estimated cost of restoration over the amount of said available proceeds.  If the conditions for the advance of insurance proceeds for restoration set forth above are not satisfied within sixty (60) days of Mortgagee’s receipt thereof or if the actual restoration shall not have been commenced within such period, each Mortgagee shall have the option at any time thereafter to apply such insurance proceeds to the payment of the Note and to interest, if any, accrued and unpaid thereon in such order and proportions as Mortgagee may elect.

 

(h)                                 Notwithstanding the foregoing, the Mortgagor shall comply with all insurance requirements contained in the Loan Agreement, and in the case that this Section 1.9 conflicts with the insurance requirements contained in the Loan Agreement, the requirements set forth in the Loan Agreement shall control.

 

1.10                        If the Mortgagor shall fail to perform any of the covenants contained in Section 1.1, 1.3, 1.7, 1.8, 1.9, 1.12 or 1.15, Mortgagee may make advances to perform the same on Mortgagor’s behalf, and all sums so advanced shall be a lien upon the Mortgaged Property and shall be secured hereby.  The Mortgagor will repay on demand all sums so advanced on its behalf with interest at the Involuntary Rate.  The provisions of this Section 1.10 shall not prevent or delay any default in the observance of any covenant contained in said Section 1.1, 1.3, 1.7, 1.8, 1.9, 1.12 or 1.15 from constituting an Event of Default.

 

1.11                        (a)                                 The Mortgagor will keep adequate records and books of account in accordance with generally accepted accounting principles and will permit Mortgagee, by its respective agents, accountants and attorneys, to visit and inspect the Premises and examine its records and books of account and to discuss its affairs, finances and accounts with the officers of the Mortgagor, at such reasonable times as may be requested by Mortgagee.

 

(b)                                 The Mortgagor will deliver to Mortgagee with reasonable promptness, but in no event later than ninety (90) days after the close of its fiscal year, an audited balance sheet and statement of profit and loss setting forth in each case, in comparative form, figures for the preceding year.  Throughout the term of this Mortgage, the Mortgagor, with reasonable promptness, will deliver to Mortgagee such other information with respect to the Mortgagor as Mortgagee may reasonably request from time to time.  All financial statements of the Mortgagor shall be prepared in accordance with generally accepted accounting principles, shall be delivered in duplicate, and shall be accompanied by the certificate of a principal financial or accounting officer of the Mortgagor, dated within five (5) business days of the delivery of such statements to Mortgagee, stating that he knows of no Event of Default, nor of any default which after notice or passage of time or both would constitute an Event of Default, which has occurred and is continuing, or, if any such default or Event of Default has occurred and is continuing, specifying the nature and period of existence thereof and what action the Mortgagor has taken or proposes to take with respect thereto, and, except as otherwise specified, stating that the Mortgagor has fulfilled all its obligations under this Mortgage which are required to be fulfilled on or prior to the date of such certificate.

 

(c)                                  The Mortgagor, within five (5) days after request therefor, shall furnish a written statement duly acknowledged of the amount due whether for principal or interest on the

 

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Note and whether any offsets, counterclaims or defenses exist against Mortgagee or the Indebtedness or any part thereof.

 

1.12                        The Mortgagor will not commit any waste on the Mortgaged Property, or any part thereof, or make any change in the use of the Mortgaged Property, or any part thereof, which will in any material way increase any ordinary fire or other hazard arising out of construction or operation.  The Mortgagor will, at all times, maintain the Improvements in good operating order and condition and will promptly make, from time to time, all repairs, renewals, replacements, additions and improvements in connection therewith which are needful or desirable to such end.

 

1.13                        The Mortgagor, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the Premises, or any part thereof, will notify Mortgagee of the pendency of such proceedings.  Mortgagee may participate in any such proceedings and the Mortgagor from time to time will deliver to Mortgagee all instruments requested by it to permit such participation.  In the event of such condemnation proceedings, the award or compensation payable is hereby assigned to and shall be paid to Mortgagee.  Mortgagee shall be under no obligation to question the amount of any such award or compensation and may accept the same in the amount in which the same shall be paid subject to Mortgagor’s consent, which shall not be unreasonably withheld.  In any such condemnation proceedings Mortgagee may be represented by counsel selected by Mortgagee.  The proceeds of any award or compensation so received shall, at the option of Mortgagee, either be applied toward the payment of the Indebtedness, notwithstanding the fact that the Indebtedness may not then be due and payable, or to the restoration of the Improvements.  In the event that any portion of the condemnation awards or compensation shall be used to reduce the Indebtedness, the same shall be applied by Mortgagee in any manner it shall designate, including, but not limited to, the application of such award or compensation to the then unpaid installments of the principal balance due under the Note in the inverse order of their maturity such that the regular payments under the Note shall not be reduced or altered in any manner.  The Mortgagor, upon request by Mortgagee, shall make, execute and deliver any and all instruments requested for the purpose of confirming the assignment of the aforesaid awards and compensation to Mortgagee free and clear of any liens, charges or encumbrances of any kind or nature whatsoever.  Mortgagee shall not be limited to the interest paid on the proceeds of any award or compensation, but shall be entitled to the payment by the Mortgagor of interest at the applicable rate provided for in the Note.

 

1.14                        (a)                                 The Mortgagor will not (i) execute an assignment of the rents, or any part thereof, from the Premises, except pursuant to the Other Mortgages, (ii) terminate or consent to the cancellation or surrender of any lease of the Premises, or any part thereof, now existing or hereafter to be made, other than in the ordinary course of business with respect to Residential Leases (as such term is defined in the Loan Agreement), (iii) modify or amend or consent to the modification or amendment of any other lease or sublease of the Premises, or any part thereof, now existing or hereafter to be made, other than in the ordinary course of business with respect to Residential Leases, or (iv) accept prepayments of any installments of rents to become due under such leases, except prepayments in the nature of security for the performance of the lessees thereunder, in any other manner materially impair the value of the Mortgaged Property or the security of this Mortgage without the written consent of Mortgagee, which consent shall not be unreasonably withheld.

 

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(b)                                 Except for Residential Leases executed in the standard form previously approved by Mortgagee and the Master Lease and the Leases, the Mortgagor will not execute any lease of all or any portion of the Premises, without first obtaining the written consent of Mortgagee, and will at all times promptly and faithfully perform, or cause to be performed, all of the covenants, conditions and agreements contained in all such approved leases, on the part of the lessor thereunder to be kept and performed and will at all times do all things necessary to compel performance by the lessee under each lease of all obligations, covenants and agreements by such lessee to be performed thereunder.  Any and all Leases entered into shall, unless otherwise consented to by Mortgagee in writing, be subject and subordinate to the terms of this Mortgage.  All Leases entered into shall provide, and if any Residential Lease provide, for the giving by the lessee thereunder of certificates with respect to the state of such Leases, and Mortgagor shall exercise its right to request such certificates within ten (10) business days of any demand thereof by Mortgagee.  Mortgagor shall furnish to Mortgagee, within ten (10) business days after a request by Mortgagee to do so, an executed counterpart of all such Leases. All lessees under such Leases shall execute such estoppel certificates, subordinations, attornments and other agreements as Mortgagee may require. Under no circumstances shall Mortgagee be liable for any obligation to pay any leasing commission, brokerage fee or similar fee or charge in connection with any Lease nor shall Mortgagee be obligated to complete any Improvements for the benefit of any lessee.

 

(c)                                  The Mortgagor shall furnish to Mortgagee, within fifteen (15) business days after a request by Mortgagee to do so, a written statement containing the names of all lessees of the Premises, the terms of their respective leases, the space occupied and the rentals payable thereunder.

 

1.15                        The Mortgagor will cause the Improvements to be constructed substantially in accordance with the terms of the Loan Agreement, will prosecute such construction with due diligence, and will comply with the covenants made by it in the Loan Agreement, all of which are incorporated herein by reference as though set forth herein, and will permit no “Event of Default”, as therein defined, to occur thereunder.

 

1.16                        To the extent not so provided by applicable law each lease of the Premises, or of any part thereof, shall provide that, in the event of the enforcement by Mortgagee of the remedies provided for by law or by this Mortgage, the lessee thereunder will, upon request of any person succeeding to the interest of the Mortgagor as a result of such enforcement, automatically become the lessee of said successor in interest, without change in the terms or other provisions of such lease, provided, however, that said successor in interest shall not be bound by (i) any payment of rent or additional rent for more than one month in advance, except prepayments in the nature of security for the performance by said lessee of its obligations under said lease or (ii) any amendment or modification of the lease made without the consent of Mortgagee or such successor in interest.  Each lease shall also provide that, upon request by said successor in interest, such lessee shall execute and deliver an instrument or instruments confirming such attornment.

 

1.17                        In the event any payment provided for herein or in the Note shall become overdue for a period in excess of fifteen (15) days, a late charge of five (5) cents for each dollar so overdue shall become immediately due to Mortgagee for the purpose of defraying the expenses

 

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incident to handling such delinquent payment, and such charge shall be deemed to be part of the Indebtedness and therefore secured by the lien of this Mortgage. Late charges shall be payable with the next installment of principal and/or interest due under the Note.

 

1.18                        [RESERVED.]

 

1.19                        The Mortgagor agrees that it shall indemnify and hold Mortgagee harmless against any loss or liability, cost or expense, including, without limitation, any judgments, reasonable attorneys’ fees, costs of appeal bonds and printing costs, arising out of or relating to any proceeding instituted by any claimant alleging priority over the lien of this Mortgage.

 

1.20                        The Mortgagor expressly covenants and agrees to pay in full the reasonable fees and expenses of Mortgagee’s counsel, promptly upon receipt of a statement therefor, which are incurred prior to and after the date hereof and which fees and expenses arise in connection with any matter incidental to the loan which is evidenced by the Note and secured by this Mortgage.

 

1.21                        The Mortgagor hereby represents, warrants, covenants and agrees that other than as set forth in the Environmental Report (as defined in the Loan Agreement), to the best of Mortgagor’s knowledge after due inquiry, the Premises and the Improvements comply and shall hereafter comply with all laws, rules, regulations and ordinances of the state and the local governmental authorities where the Premises are located and the United States of America relating to the storage, use, disposal, generation, transportation, and/or treatment of hazardous, toxic and/or radioactive matter and/or waste, including without limitation asbestos (collectively “Toxic Materials”).  If the presence of Toxic Materials on the Premises or in any Improvements has resulted in, and/or shall hereafter result in (a) contamination or deterioration of water or soil to a level of contamination greater than the levels permitted or established by any governmental agency or authority having jurisdiction over such contamination, (b) the termination or modification of any permit or authorization as to the use and/or occupancy of the Premises or Improvements and/or (c) the inability to obtain or maintain insurance policies satisfactory to Mortgagee, then the Mortgagor covenants and agrees to promptly take any and all action necessary to clean up such contamination to the extent required by any such governmental agency or authority and/or issuer of an insurance policy. The Mortgagor covenants and agrees to indemnify Mortgagee and any affiliate or nominee of Mortgagee and hold Mortgagee and any affiliate or nominee of Mortgagee harmless from any and all liabilities, losses, costs and/or expenses arising out of and/ or resulting from the existence and/or the removal of any Toxic Materials at, on, and/or in the Premises or any part or parts thereof or the Improvements or any part or parts thereof and/or the effects of any such Toxic Materials located at, on and/or in the Premises or any part or parts thereof or the Improvements or any part or parts thereof except for matters caused by Mortgagee.  The foregoing indemnity shall survive any foreclosure sale of the Premises and any delivery by the Mortgagor and the acceptance by Mortgagee of a deed in lieu of foreclosure of the Premises.

 

1.22                        Mortgagor will not consent to, join in, permit or allow any change in the zoning laws or ordinances relating to or affecting the Premises, and will promptly notify Mortgagee of any changes to the zoning laws affecting the Premises of which it has received written notice thereof.

 

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1.23                        Except for the Other Mortgages, the Master Lease, the Leases and the Residential Leases, Mortgagor will not, directly or indirectly, transfer, mortgage, convey, sell, assign, lease, pledge or encumber the Mortgaged Property, or any part thereof or any direct or indirect interest therein, without the express prior written consent of Mortgagee.  Mortgagor shall not, directly or indirectly, create, incur, assume or suffer to exist any liability for indebtedness (including subordinated indebtedness), whether secured or unsecured, except indebtedness due with respect to the Loan.  Neither the structure of Mortgagor nor the direct or indirect ownership of Mortgagor may be changed from that existing on the date hereof, nor may Mortgagor consolidate with, be acquired by, or merge into or with any Person (as defined in the Loan Agreement), without the express prior written consent of Mortgagee.  Mortgagor shall not change the management structure of the Mortgagor or the Premises, nor shall Mortgagor enter into any management and/or leasing agency or similar agreements with respect to the Premises without the prior written consent of Mortgagee.  Notwithstanding anything contained herein in or in the Loan Documents to the contrary, the following transfers shall be permitted hereunder: (a) the direct or indirect transfer in any Upper Tier Entity to one or more Family Members for estate planning purposes, provided that the transferor of any such interest shall at all times retain all decision-making authority with respect to such transferred interest, including all voting and consent rights with respect thereto, (b) the direct or indirect transfer, in one or a series of transactions, in any Upper Tier Entity; provided, however, that as a condition to each such transfer set forth in (a) or (b) above: (i) Mortgagee shall receive not less than thirty (30) days prior written notice with respect to any direct transfer by an Upper Tier Entity of its direct interests in RBH-TRB Newark Holdings LLC, including, without limitation, the name of the proposed transferee and the date the transfer is expected to be effective, and Mortgagee shall be informed of any indirect transfer of any interests in the direct or indirect constituent members of any Upper Tier Entity which such Upper Tier Entity receives, or has the right to consent to, pursuant to its organizational documents, by such Upper Tier Entity delivering notice thereof to Mortgagee, (ii) the transferee must be in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury and must not be listed on any restricted list published by the Federal Government of the United States of America, (iii) at all times Nicolas Berggruen shall continue to own (legally and beneficially), directly or indirectly, no less than a forty percent (40%) interest in RBH Partners, LLC, and (iv) at all times Ron Beit-Halachmy shall (A) continue to control, directly or indirectly, Mortgagor, and (B) continue to own (legally and beneficially), directly or indirectly, no more than a twenty-five percent (25%) interest in Mortgagor.

 

1.24                        In the event of any sale, conveyance, transfer, pledge or further encumbrance, by operation of law or otherwise, of all or any part of the Mortgaged Property, of any interest therein, or in the event of any change in the ownership or composition of Mortgagor, or (except for the Other Mortgages) any further assignment of rents from the Mortgaged Property, or (except for the Master Lease, the Leases or the Residential Leases) any lease of all or substantially all of the Mortgaged Property, the Premises or the Improvements, without the prior written consent of Mortgagee, then, at Mortgagee’s option (and in addition to any other rights Mortgagee may have pursuant to the terms of this Mortgage), Mortgagee may declare that portion of the Loan secured by this Mortgage to be due and payable immediately, and upon such declaration such portion shall immediately become and be due and payable without demand or notice.  Mortgagee’s consent shall be within its sole and absolute discretion, and Mortgagee specifically reserves the right to condition its consent upon (by way of illustration but not by way

 

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of limitation) its approval of the financial and/or management ability of the purchaser, transferee, lessee, pledge or assignee, upon an agreement to escalate the interest rate of the Note to Mortgagee’s then current interest rate for similarly situated properties, upon the assumption of the obligations and liabilities of the Note and this Mortgage by the purchaser, transferee, lessee, pledge or assignee, upon the receipt of guarantees of the Loan satisfactory to Mortgagee and/or additional collateral satisfactory to Mortgagee and upon payment to Mortgagee of an assumption fee.  Mortgagor covenants and agrees that it shall not take any of the actions, or suffer any of the events, that would be a cause for acceleration of the portion of the Loan secured by this Mortgage pursuant to this Section, without the prior written consent of Mortgagee.  Any purchaser, transferee, lessee, pledge or assignee referred to above shall be deemed to have assumed and agreed to pay the portion of the Loan secured by this Mortgage and to have assumed and agreed to be bound by the terms and conditions of this Mortgage (including, without limitation, the terms of this Section 1.24) unless Mortgagee specifically agrees in writing to the contrary.  Mortgagor agrees that, in the event ownership of all or any part of the Mortgaged Property becomes vested in a person other than Mortgagor, Mortgagee may, without notice to the Mortgagor, deal in any way with such successor or successors in interest with reference to this Mortgage, the other Loan Documents and the indebtedness, without in any way vitiating or discharging Mortgagor’s liability with respect thereto.  No sale, conveyance, transfer, pledge, encumbrance, assignment or lease referred to above, and no forbearance, extension or assumption by or to any person with respect to the Indebtedness or any of the Loan Documents, shall operate to release, discharge, modify, change or affect the liability of Mortgagor either in whole or in part, unless Mortgagee specifically agrees in writing to the contrary.

 

ARTICLE II

 

EVENTS OF DEFAULT AND REMEDIES

 

2.1                               If one or more of the following Events of Default shall happen, that is to say:

 

(a)                                 if (i) default shall be made in the payment of any interest due under the Note, or in the payment of any installment of principal due under the Note, in either such case, when and as the same shall become due and payable, and such default shall have continued for a period of five (5) days or (ii) default shall be made in any other payment of the principal of the Note, when and as the same shall become due and payable, whether at maturity or by acceleration or as part of any prepayment or otherwise, in each case, as in the Note and this Mortgage provided or (iii) default in the payment of any other Indebtedness due to Mortgagee under this Mortgage and such default shall have continued for a period of five (5) days after written notice thereof, or (iv) default shall be made in the payment of any tax required by Section 1.7 to be paid and said default shall have continued for a period of five (5) days after written notice thereof; provided, however, that if Mortgagor, within any twelve (12) month period, shall fail to make more than two (2) such payments by their due dates, said five (5) day period shall become null and void and of no further force or effect and failure to make payment shall become an immediate Event of Default, or

 

(b)                                 if default shall be made in the due observance or performance of any covenant or agreement on the part of the Mortgagor contained in Section 1.1, 1.3, 1.8, or 1.9, and such default shall have continued for a period of thirty (30) days after written notice thereof shall

 

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have been given to the Mortgagor by Mortgagee.  For the purposes of this clause if any representation made in Section 1.1 shall be incorrect, it shall be deemed to be a default; or

 

(c)                                  if default shall be made in the due observance or performance of any other covenant or condition on the part of the Mortgagor in the Note, the Loan Agreement or in this Mortgage contained, and such default shall have continued for a period of thirty (30) days after written notice specifying such default and demanding that the same be remedied shall have been given to the Mortgagor by Mortgagee; provided, however, that if, in Mortgagee’s sole judgment, said failure to comply is not capable of being cured within said thirty (30) day period and is not curable by the payment of money, then the Mortgagor shall have such additional time as Mortgagee deems reasonably necessary to cure such failure (but in no event will such additional time exceed ninety (90) days after the initial notice of such default) provided that (i) Mortgagor promptly proceeds to commence curing said failure to comply upon receipt of notice of said failure from Mortgagee, (ii) in the sole judgment of Mortgagee, Mortgagor thereafter diligently and continuously proceeds to cure said failure so as to cure said failure in the shortest time possible, (iii) such additional time to cure does not materially impair any rights and/or remedies of Mortgagee and will not adversely affect the completion of the Improvements by the Completion Date and (iv) the Mortgagor furnishes to Mortgagee, upon demand of Mortgagee, such documents and information with respect to Mortgagor’s curing of said failure to comply, as Mortgagee may reasonably request; or

 

(d)                                 if by the order of a court of competent jurisdiction, a trustee, receiver or liquidator of the Mortgaged Property, or any part thereof, or of the Mortgagor shall be appointed and such order shall not be discharged or dismissed within ninety (90) days after such appointment; or

 

(e)                                  if the Mortgagor shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Mortgagor or of any substantial part of its property, or if the Mortgagor shall make any general assignment for the benefit of creditors, or if the Mortgagor shall fail generally to pay its debts as such debts become due, or if the Mortgagor shall take any action in furtherance of any of the foregoing; or

 

(f)                                   if any of the creditors of the Mortgagor shall commence against the Mortgagor an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect and if such case shall not be discharged or dismissed within ninety (90) days after the date on which such case was commenced; or

 

(g)                                  if final judgment for the payment of money in excess of $50,000 in the aggregate shall be rendered against the Mortgagor and the Mortgagor shall not discharge the same or cause it to be discharged within sixty (60) days from the entry thereof, or shall not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, and secure a stay of execution pending such appeal; or

 

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(h)                                 except with respect to the Other Mortgages, if any sale, conveyance, transfer, pledge or further encumbrance, by operation of law or otherwise, of all or any part of the Mortgaged Property, of any interest therein, or in the event of any change in the ownership or composition of Mortgagor, or any further assignment of rents from the Mortgaged Property (except for the Other Mortgages), or any lease of all or substantially all of the Mortgaged Property (except for the Master Lease, the Residential Leases and the Leases), the Premises or the Improvements, shall occur, without the prior written consent of Mortgagee; or

 

(i)                                     if Mortgagor shall fail to maintain its legal existence in good standing in its state of formation; or

 

(j)                                    if the Mortgagor defaults beyond any applicable notice and cure periods under any other agreement with Mortgagee; or

 

(k)                                 if any easement over, across, under or otherwise affecting the Mortgaged Property or any portion thereof shall be granted or released without Mortgagee’s prior written consent or if there shall be a default by Mortgagor under any easement, covenant or restriction affecting the Premises or any portion thereof or if any easement in favor of the Premises or any portion thereof shall be terminated or modified; or

 

(l)                                     except with respect to the Other Mortgages, if Mortgagor shall assign any lease or the rents from any lease for all or a part of the Premises other than the Other Mortgages, without the prior written consent of Mortgagee, or shall enter into, amend, extend, renew, abridge or otherwise modify, any lease, or shall cancel or consent to the cancellation or surrender of any lease unless in the ordinary course and in accordance with reasonably prudent management practice, or shall in any other manner materially impair the security of Mortgagee for the payment of the debt secured by this Mortgage; or

 

(m)                             if Mortgagor incurs any additional indebtedness, with the exception of the Loan and trade payables customarily incurred in the ordinary course of business without the prior written consent of Mortgagee; or

 

(n)                                 if the Mortgaged Property or any material part thereof shall be condemned; or

 

(o)                                 if any material adverse change in the Mortgagor, any Guarantor, or the Mortgaged Property shall occur; or

 

(p)                                 if any person or entity having or claiming an interest in the Mortgagor or the Mortgaged Property commences an action or proceeding against the Mortgagor, the Mortgaged Property or any person or entity having or claiming an interest in the Mortgagor or the Mortgaged Property and such action or proceeding shall be finally determined in a manner that adversely affects Mortgagee’s rights, remedies and/or position hereunder,

 

then and in every such case:

 

(I)                                   During the continuance of any such Event of Default, Mortgagee, by written notice given to the Mortgagor, may declare the entire principal of the Note then outstanding (if

 

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not then due and payable), and all accrued and unpaid interest thereon together with all other Indebtedness, to be due and payable immediately, and upon any such declaration the principal of the Note, said accrued and unpaid interest thereon and all other Indebtedness shall become and be immediately due and payable, anything in the Note, in this Mortgage or in the Loan Agreement to the contrary notwithstanding;

 

(II)                              During the continuance of any such Event of Default, Mortgagee personally, or by its agents or attorneys, may enter into and upon all or any part of the Premises, and each and every part thereof, and may exclude the Mortgagor, its agents and servants wholly therefrom; and having and holding the same, may use, operate, manage and control the Premises and conduct the business thereof, either personally or by its superintendents, managers, agents, servants, attorneys or receivers; and upon every such entry, Mortgagee, at the expense of the Mortgaged Property, from time to time, either by purchase, repairs or construction, may maintain and restore the Mortgaged Property, whereof it shall become possessed as aforesaid, may complete the construction of the Improvements and in the course of such completion may make such changes in the contemplated Improvements as it may deem desirable and may insure the same; and likewise, from time to time, at the expense of the Mortgaged Property, Mortgagee may make all necessary or proper repairs, renewals and replacements and such useful alterations, additions, betterments and improvements thereto and thereon as to it may seem advisable; and in every such case Mortgagee shall have the right to manage and operate the Mortgaged Property and to carry on the business thereof and exercise all rights and powers of the Mortgagor with respect thereto either in the name of the Mortgagor or otherwise as it shall deem best; and Mortgagee shall be entitled to collect and receive all earnings, revenues, rents, issues, profits and income of the Mortgaged Property and every part thereof, all of which shall for all purposes constitute property of the Mortgagor; and after deducting the expenses of conducting the business thereof and of all maintenance, repairs, renewals, replacements, alterations, additions, betterments and improvements and amounts necessary to pay for taxes, assessments, insurance and prior or other proper charges upon the Mortgaged Property, or any part thereof, as well as just and reasonable compensation for the services of Mortgagee and for all attorneys, counsel, agents, clerks, servants and other employees by it properly engaged and employed, Mortgagee shall apply the moneys arising as aforesaid, first, to the payment of the principal of the Note and the interest thereon, when and as the same shall become payable and second, to the payment of any other Indebtedness and sums required to be paid by the Mortgagor under this Mortgage;

 

(III)                         Mortgagee, with or without entry, personally or by its agents or attorneys, insofar as applicable, may:

 

(1)                                 [Reserved]

 

(2)                                 institute proceedings for the complete or partial foreclosure of this Mortgage; or

 

(3)                                 take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition or agreement in the Note or in the Loan Agreement or in this Mortgage, or in aid of the execution of any power herein granted, or for any foreclosure hereunder, or for the

 

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enforcement of any other appropriate legal or equitable remedy or otherwise as Mortgagee shall elect.

 

(IV)                          Mortgagee also shall have such other rights and/or remedies provided to a mortgagee and/or secured party by the Uniform Commercial Code, as that model statute is enacted and in effect in the jurisdiction wherein the Premises are situated.

 

2.2                               (a)                                 Mortgagee may adjourn from time to time any sale by it to be made under or by virtue of this Mortgage by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable provision of law, Mortgagee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned.

 

(b)                                 Upon the completion of any sale or sales made by Mortgagee under or by virtue of this Article II, Mortgagee, or an officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold and shall execute and deliver to the appropriate governmental authority any affidavit, instrument, document and/or filing required pursuant to any applicable statute, ordinance, rule and/or regulation.  Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the Mortgaged Property and rights so sold and for that purpose Mortgagee may execute all necessary instruments of conveyance, assignment and transfer, including, without limitation, any affidavit, instrument, document or filing required pursuant to any applicable statute, rule or regulation and may substitute one or more persons with like power, the Mortgagor hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof.  Nevertheless the Mortgagor, if so requested by Mortgagee, shall ratify and confirm any such sale or sales by executing and delivering to Mortgagee or to such purchaser or purchasers all such instruments as may be advisable, in the reasonable judgment of Mortgagee, for that purpose, and as may be designated in such request.  Any such sale or sales made under or by virtue of this Article II, whether made under the power of sale herein granted or under or by virtue of judicial proceedings of sale, herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of the Mortgagor in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against the Mortgagor and against any and all persons claiming or who may claim the same, or any part thereof, from, through or under the Mortgagor.  In addition, Mortgagor expressly agrees that any powers of attorney executed by Mortgagor subsequent to the date hereof shall expressly state that the power of attorney provided for in this Mortgage shall continue to be in full force and effect until terminated in accordance with the terms of this Mortgage.

 

(c)                                  In the event of any sale made under or by virtue of this Article II (whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale), the entire principal of, and interest on, the Note, if not previously due and payable, and all other sums required to be paid by the Mortgagor

 

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pursuant to this Mortgage, immediately thereupon shall, anything in the Note or in this Mortgage to the contrary notwithstanding, become due and payable.

 

(d)                                 The purchase money, proceeds or avails of any sale made under or by virtue of this Article II, together with any other sums which then may be held by Mortgagee under this Mortgage, whether under the provisions of this Article II or otherwise, shall be applied as follows:

 

First:  To the payment of the costs and expenses of such sale, including, but not limited to, the reasonable compensation to Mortgagee, the agents and counsel of each, and any sums that may be due under and/or pursuant to any statute, rule, regulation and/or law which imposes any tax, charge, fee and/or levy in connection with and/or arising from the exercise of any right and/or remedy under this Mortgage or the requirement that any sum be paid in order to record and/or file any deed, instrument of transfer or other such document in connection with any such sale, and of any judicial proceedings wherein the same may be made, and of all expenses, liabilities and advances made or incurred by Mortgagee under this Mortgage, together with interest at the Involuntary Rate on all advances made by Mortgagee and all taxes or assessments, except any taxes, assessments or other charges subject to which the Mortgaged Property shall have been sold.

 

Second:  To the payment of the whole amount then due, owing or unpaid upon the Note for principal and interest, with interest on the unpaid principal at the Involuntary Rate from and after the happening of any Event of Default described in Section 2.1 from the due date of any such payment of principal until the same is paid.

 

Third:  To the payment of any other Indebtedness and any other sums required to be paid by the Mortgagor pursuant to any provision of this Mortgage, the Note or the Loan Agreement.

 

Fourth:  To the payment of the surplus, if any, to whomsoever may be lawfully entitled to receive the same.

 

(e)                                  Upon any sale made under or by virtue of this Article II whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged Property, or any part thereof, and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the indebtedness of the Mortgagor secured by this Mortgage the net sales price after deducting therefrom the expenses of the sale and the costs of the action and any other sums which Mortgagee is authorized to deduct under this Mortgage.

 

2.3                               (a)                                 In case an Event of Default described in Section 2.1 shall have happened and be continuing, then, upon written demand of Mortgagee, the Mortgagor will pay to Mortgagee the whole amount which then shall have become due and payable on the Note, for principal or interest or both, as the case may be, and after the happening of said Event of Default will also pay to Mortgagee interest at the Involuntary Rate on the then unpaid principal of the Note, and the sums required to be paid by the Mortgagor pursuant to any provision of this Mortgage, and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to Mortgagee, its agents, and

 

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counsel and any reasonable expenses incurred by Mortgagee hereunder.  In the event the Mortgagor shall fail forthwith to pay such amounts upon such demand, Mortgagee shall be entitled and empowered to institute such action or proceedings at law or in equity as may be advised by its counsel for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Mortgagor and collect, out of the property of the Mortgagor wherever situated, as well as out of the Mortgaged Property, in any manner provided by law, money adjudged or decreed to be payable.

 

(b)                                 Mortgagee shall be entitled to recover judgment as aforesaid either before or after or during the pendency of any proceedings for the enforcement of the provisions of this Mortgage; and the right of Mortgagee to recover such judgment shall not be affected by any entry or sale hereunder, or by the exercise of any other right, power or remedy for the enforcement of the provisions of this Mortgage, or the foreclosure of the lien hereof; and in the event of a sale of the Mortgaged Property, or any part thereof, and of the application of the proceeds of sale, as in this Mortgage provided, to the payment of the debt hereby secured, Mortgagee shall be entitled to enforce payment of, and to receive all amounts then remaining due and unpaid upon the Note, and to enforce payment of all other charges, payments, costs and amounts due under this Mortgage, and shall be entitled to recover judgment for any portion of the debt remaining unpaid, with interest at the Involuntary Rate.  In case of the commencement of any case against the Mortgagor under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect or any proceedings for its reorganization or involving the liquidation of its assets, then Mortgagee shall be entitled to prove the whole amount of principal and interest due upon the Note to the full amount thereof, and all other payments, charges, costs and amounts due under this Mortgage, without deducting therefrom any proceeds obtained from the sale of the whole or any part of the Mortgaged Property, provided,  however, that in no case shall Mortgagee receive a greater amount than such principal and interest and such other payments, charges and costs from the aggregate amount of the proceeds of the sale of the Mortgaged Property and the distribution from the estate of the Mortgagor.

 

(c)                                  No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property or upon any other property of the Mortgagor shall affect in any manner or to any extent, the lien of this Mortgage upon the Mortgaged Property, or any part thereof, of any liens, rights, powers or remedies of Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee shall continue unimpaired as before.

 

(d)                                 Any moneys thus collected by Mortgagee under this Section 2.3 shall be applied by Mortgagee in accordance with the provisions of subsection (d) of Section 2.2.

 

2.4                               After the happening of any Event of Default and immediately upon the commencement of any action, suit or other legal proceedings by Mortgagee to obtain judgment for the principal of, or interest on, the Note and/or all other Indebtedness and/or other sums required to be paid by the Mortgagor pursuant to any provision of this Mortgage, or of any other nature in aid of the enforcement of the Note or of this Mortgage, the Mortgagor will (a) waive the issuance and service of process and enter its voluntary appearance in such action, suit or proceeding, and (b) if required by Mortgagee, consent to the appointment of a receiver or receivers of the Mortgaged Property, or any part thereof, and of all the earnings, revenues, rents,

 

25

 

issues, profits and income thereof. After the happening of any Event of Default and during its continuance, or upon the commencement of any proceedings to foreclose this Mortgage or to enforce the specific performance hereof or in aid thereof or upon the commencement of any other judicial proceeding to enforce any right of Mortgagee, Mortgagee shall be entitled, as a matter of right, if it shall so elect, without the giving of notice to any other party and without regard to the adequacy or inadequacy of any security for the Indebtedness, forthwith either before or after declaring the unpaid principal of the Note to be due and payable, to the appointment of such a receiver or receivers.

 

2.5                               Notwithstanding the appointment of any receiver, liquidator or trustee of the Mortgagor, or of any of its property, or of the Mortgaged Property or any part thereof, the Mortgagor shall be entitled to retain possession and control of all Property now or hereafter held under this Mortgage.

 

2.6                               No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or under the Loan Agreement or now or hereafter existing at law or in equity or by statute.  No delay or omission of Mortgagee to exercise any right or power accruing upon any Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Event of Default or any acquiescence therein; and every power and remedy given by this Mortgage to Mortgagee may be exercised from time to time as often as may be deemed expedient by Mortgagee.  Nothing in this Mortgage or in the Note shall affect the obligation of the Mortgagor to pay the principal of, and interest on, the Note in the manner and at the time and place therein respectively expressed.

 

2.7                               The Mortgagor will not at any time insist upon, or plead, or in any manner whatever claim or take any benefit or advantage of any stay or extension or moratorium law, any exemption from execution or sale of the Mortgaged Property, or any part thereof, wherever enacted, now or at any time hereafter in force, which may affect the covenants and terms of performance of this Mortgage, nor claim, take or insist upon any benefit or advantage of any law now or hereafter in force providing for the valuation or appraisal of the Mortgaged Property, or any part thereof, prior to any sale or sales thereof which may be made pursuant to any provision herein, or pursuant to the decree, judgment or order of any court of competent jurisdiction; nor, after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted to redeem the property so sold, or any part thereof, and the Mortgagor hereby expressly waives all benefit or advantage of any such law or laws, and covenants not to hinder, delay or impede the execution of any power herein granted or delegated to Mortgagee, but to suffer and permit the execution of every power as though no such law or laws had been made or enacted. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it lawfully may, all right to have the Mortgaged Property marshaled upon any foreclosure hereof.

 

2.8                               During the continuance of any Event of Default and pending the exercise by Mortgagee of its right to exclude the Mortgagor from all or any part of the Mortgaged Property, Mortgagor agrees to pay the fair and reasonable rental value for the use and occupancy of the Mortgaged Property, or any part thereof, which are in its possession for such period, and upon default of any such payment, will vacate and surrender possession of the Mortgaged Property to Mortgagee or to a receiver, if any, and if in default thereof may be evicted by any summary

 

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action or proceeding for the recovery of possession of premises for non-payment of rent, however designated.

 

ARTICLE III

 

MISCELLANEOUS

 

3.1                               In the event any one or more of the provisions contained in this Mortgage or in the Note or in the Loan Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall, at the option of Mortgagee, not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein or therein.

 

3.2                               All notices and/or consents, hereunder shall be in writing and shall be deemed to have been sufficiently given or served for all purposes when delivered in person or one (1) day after being sent by a nationally recognized overnight delivery service (e.g. FedEx) or three (3) days after being sent by registered or certified mail, return receipt requested, to Mortgagor at its address above stated, with a copy to McManimon, Scotland & Baumann, L.L.C.,  Attention: Glenn F. Scotland, Esq.; in the case of Mortgagee, at its respective address above stated, with copy to Mortgagee at 200 West Street, New York, New York 10282, Attention: Maraget Anadu (and with a copy to the attention of Andrea Gift and with a copy to gs-uig-docs@gs.com), or at such other address of which it shall have notified the party giving such notice in writing as aforesaid.

 

3.3                               Whenever in this Mortgage the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person or persons entitled to receive such notice.

 

3.4                               All of the grants, terms, conditions, provisions and covenants of this Mortgage shall run with the land, shall be binding upon the Mortgagor and shall inure to the benefit of Mortgagee, subsequent holders of this Mortgage and their respective successors and assigns.  For the purpose of this Mortgage, the term “Mortgagor” shall include and refer to the Mortgagor named herein, any subsequent owner of the Mortgaged Property, or any part thereof, and their respective heirs, executors, legal representatives, successors and assigns. If there is more than one Mortgagor, all their undertakings hereunder shall be deemed joint and several.

 

3.5                               The enforcement of this Mortgage shall be governed, construed and interpreted by the laws of the State where the Premises are located.  Nothing in this Mortgage, the Note or in any other agreement between the Mortgagor and Mortgagee shall require the Mortgagor to pay, or Mortgagee to accept, interest in an amount which would subject Mortgagee to pay any penalty or forfeiture under applicable law.  In the event that the payment of any charges, fees or other sums due hereunder or under the Note or any such other agreement which are or could be held to be in the nature of interest and which would subject Mortgagee to any penalty or forfeiture under applicable law, then ipso facto the obligations of the Mortgagor to make such payment shall be reduced to the highest rate authorized under applicable law.  Should Mortgagee receive any payment which is or would be in excess of the highest rate authorized under law, such payment

 

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shall have been, and shall be deemed to have been, made in error and shall automatically be applied to reduce the outstanding balance of the Indebtedness.

 

3.6                               The truth, accuracy, adequacy and completeness of the representations, warranties and covenants contained in this Mortgage and the Note shall survive, and not merge with, the execution and delivery of this Mortgage and the Note.

 

3.7                               Whenever the consent or approval of Mortgagee is required, the decision whether to consent or approve shall be in the sole and absolute but reasonable discretion of Mortgagee.

 

3.8                               This Mortgage, the Note and all other documents executed and delivered in connection herewith or therewith shall be given a fair and reasonable construction in accordance with the intention of the parties as expressed herein and therein and without regard for any rule of law requiring construction against the party who prepares such instruments.

 

3.9                               The Mortgagor expressly agrees, intending that Mortgagee rely thereon, that this Mortgage also shall constitute a “security agreement,” as such term is defined in the Uniform Commercial Code in the jurisdiction wherein the Premises are situated (the “Code”) the Mortgaged Property includes, and shall be deemed to include, inter alia, the Chattels and the Intangibles, regardless of whether they are held or hereafter acquired, of the Mortgagor in, to and under the Mortgaged Property.  By executing and delivering this Mortgage, the Mortgagor has granted, in the same manner and with the same effect described in the Granting Clause hereof, to Mortgagee, as additional security, a security interest in the Chattels and the Intangibles which are subject to the Code.  If any Event of Default shall occur, Mortgagee shall have, in addition to any and all other rights and remedies set forth in this Mortgage, and may exercise without demand, any and all rights and remedies granted to a secured party under the Code, including, but not limited to, the right to take possession of the Chattels and the Intangibles, or any part thereof, and the right to advertise and sell the Chattels and the Intangibles, or any part thereof, pursuant to and in accordance with the power of sale provided for in this Mortgage.  The Mortgagor agrees that any notice of sale or other action intended by Mortgagee with respect to the Chattels and the Intangibles, or any part thereof, shall constitute reasonable notice if it is sent to the Mortgagor not less than ten (10) days prior to any such sale or intended action.  The proceeds of any such sale of the Chattels and the Intangibles, or any part thereof, shall be applied in the manner set forth in clauses First through Fourth of Section 2.2(d) of this Mortgage.

 

3.10                        [RESERVED.]

 

3.11                        This Mortgage and all of the terms, covenants, provisions, conditions and grants contained in this Mortgage cannot be altered, amended, waived, modified or discharged orally and no executory agreement shall be effective to modify, waive or discharge, in whole or in part, anything contained in this Mortgage unless it is in writing and signed by the party against whom enforcement of the modification, alteration, amendment, waiver or discharge is sought.

 

3.12                        The Mortgagor acknowledges that it has received a true copy of this Mortgage.

 

3.13                        This Mortgage may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same mortgage.

 

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3.14                        The information set forth on the cover hereof is hereby incorporated herein.

 

3.15                        The Mortgagor represents and warrants that it has no offsets, defenses or counterclaims to the payment of the Mortgage Amount.

 

3.16                        The Mortgage and the rights and obligations of the parties hereunder shall in all respects be governed by, and construed and enforced in accordance with the laws of the State of New Jersey (without giving effect to New Jersey’s principles of conflicts of law).  Mortgagor and Mortgagee hereby irrevocably submit to the non-exclusive jurisdiction of any New Jersey State or Federal court sitting in the City of Newark (or any county where the property is located) over any suit, action or proceeding arising out of or relating to this Mortgage, and Mortgagor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable law, all service of process in any such suit, action or proceeding in any New Jersey State or Federal court sitting in the City of Newark (or such other county in New Jersey State) may be made by certified or registered mail, return receipt requested, directed to Mortgagor at the address indicated on the cover page hereof, with a copy to the Mortgagor’s Counsel, and service so made shall be complete five (5) days after the same shall be complete five (5) days after the same shall have been so mailed.

 

3.17                        Mortgagee hereby notifies the Mortgagor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (Signed into law October 26, 2001) (the “Act”), Mortgagee is required to obtain, verify and record information that identifies the Mortgagor, which information includes the name and address of the Mortgagor and other information that will allow Mortgagee to identify the Mortgagor in accordance with the Act.

 

3.18                        The Mortgagor hereby knowingly, voluntarily and intentionally waives any right it may have to consequential or punitive damages arising out of, under or in connection with the Loan Documents or the transactions contemplated therein.  Further, the Mortgagor hereby certifies that no representative of Mortgagee, or counsel to Mortgagee, has represented, expressly or otherwise, that Mortgagee would not, in the event of such litigation, seek to enforce this wavier of consequential and punitive damages. The Mortgagor acknowledges that Mortgagee has been induced to accept this Mortgage by, inter alia, the provisions of this Section.

 

3.19                        The lien of this Mortgage is co-equal in lien priority to that certain Mortgage, Assignment of Leases and Rents and Security Agreement (the “Co-Equal Mortgage”), dated the date hereof made by Mortgagor for the benefit of NCIF New Markets Capital Fund IX CDE, LLC, Carver CDC — Subsidiary 21, LLC, BACDE NMTC Fund 4, LLC and GSNMF Sub-CDE 2-LLC, in the principal amount of $15,699,999, (collectively, the “QLICI Lenders”).  The lien of this Mortgage is superior in lien priority to that certain (i) Mortgage and Security Agreement, dated the date hereof, made by Mortgagor for the benefit of the Casino Reinvestment Development Authority (“CRDA”), in the principal amount of $5,250,000 and that certain Assignment of Leases and Rents made by Mortgagor for the benefit of CRDA, (ii) that certain Mortgage, Assignment of Leases and Rents and Security Agreement made by Mortgagor for the benefit of the QLICI Lenders, in the principal amount of $9,968,000, and (iii) that certain Mortgage, Assignment of Leases and Rents and Security Agreement made by Mortgagor for the benefit of the QLICI Lenders, in the principal amount of $14,107,001 (collectively, the “Subordinate Mortgages,” and together with the Co-Equal Mortgage, the “Other Mortgages”).

 

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Further, the liens and security interests granted hereunder and under the Other Mortgages, and the exercise of any rights or remedies by the Mortgagee hereunder or by the lenders under the Other Mortgages, are subject to the limitations and provisions of the Subordination and Intercreditor Agreement dated as of the date hereof (the “Intercreditor Agreement”), among Mortgagor, Mortgagee, CRDA, NCIF New Markets Capital Fund IX CDE, LLC, Carver CDC — Subsidiary 21, LLC, BACDE NMTC Fund 4, LLC, GSNMF Sub-CDE 2 LLC and GSB NMTC Investor LLC.  To the extent of any conflict between the terms of this Mortgage and the Intercreditor Agreement, the terms of the Intercreditor Agreement shall govern and control.

 

3.20                        THE MORTGAGOR AND MORTGAGEE WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF OR IN ANY WAY CONNECTED TO THIS MORTGAGE AND/OR ANY OTHER LOAN DOCUMENTS.

 

3.21                        THE MORTGAGOR ACKNOWLEDGES THAT THE MORTGAGOR HAS RECEIVED, WITHOUT CHARGE, A TRUE AND CORRECT COPY OF THIS MORTGAGE.

 

[Signature Page Follows]

 

30

 

IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor as of the date first above written.

 

	
 
    	
TEACHERS   VILLAGE PROJECT A QALICB URBAN RENEWAL ENTITY, LLC,
    
	
 
    	
a   New Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:   Ron Beit-Halachmy
    
	
 
    	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
STATE   OF NEW YORK
    	
)
    	
 
    
	
ss
    	
.:
    	
 
    
	
COUNTY   OF NEW YORK
    	
)
    	
 
    

 

On the        day of September in the year 2012 before me, the undersigned, a notary public in and for said state, personally appeared Ron Beit-Halachmy, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that s/he executed the same in his/her capacity and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

	
 
    	
 
    	
 
    
	
 
    	
Notary   Public
    	
 
    

 

Signature Page

Direct Loan Mortgage

 

 

EXHIBIT A

 

DESCRIPTION OF PREMISES

 

[Follows on Next Page]Exhibit 10.40

 

LOAN AGREEMENT

 

 

Dated as of September 11, 2012

 

 

between

 

 

GOLDMAN SACHS BANK USA,

 

Lender,

 

and

 

 

RBH-TRB NEWARK HOLDINGS, LLC,

 

Borrower.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE I
    	
DEFINITIONS;   PRINCIPLES OF CONSTRUCTION
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
Section 1.1
    	
Definitions
    	
 
    	
2
    
	
Section 1.2
    	
Principles   of Construction
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II
    	
GENERAL
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.1
    	
Commitment   and Loan
    	
 
    	
9
    
	
Section 2.2
    	
Repayment   of Loan
    	
 
    	
10
    
	
Section 2.3
    	
Interest   Rate
    	
 
    	
10
    
	
Section 2.4
    	
Payments   and Computations
    	
 
    	
11
    
	
Section 2.5
    	
Future   Project Financing Rights
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III
    	
CONDITIONS   PRECEDENT
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.1
    	
Conditions   Precedent to the Making of the Initial Funding
    	
 
    	
13
    
	
Section 3.2
    	
Conditions   Precedent to the Making of the Second Funding
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
REPRESENTATIONS   AND WARRANTIES OF THE BORROWER
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.1
    	
Representations   and Warranties of the Borrower
    	
 
    	
16
    
	
Section 4.2
    	
Survival   of Representations
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V
    	
AFFIRMATIVE   COVENANTS
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
Section 5.1
    	
Information   Covenants
    	
 
    	
20
    
	
Section 5.2
    	
Preservation   of Existence and Franchises
    	
 
    	
22
    
	
Section 5.3
    	
Books,   Records and Inspections
    	
 
    	
22
    
	
Section 5.4
    	
Compliance   with Law
    	
 
    	
22
    
	
Section 5.5
    	
Ownership   and Management of Borrower
    	
 
    	
22
    
	
Section 5.6
    	
Covenants   re: UTHTCs
    	
 
    	
23
    
	
Section 5.7
    	
Net   Worth Covenant
    	
 
    	
24
    
	
Section 5.8
    	
Costs   of Enforcement
    	
 
    	
24
    
	
Section 5.9
    	
Estoppel   Statement
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
NEGATIVE   COVENANTS
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.1
    	
Indebtedness
    	
 
    	
25
    
	
Section 6.2
    	
No   Amendment of Documents
    	
 
    	
25
    
	
Section 6.3
    	
Liens
    	
 
    	
25
    
	
Section 6.4
    	
Nature   of Business
    	
 
    	
25
    
	
Section 6.5
    	
Consolidation,   Merger, Sale or Purchase of Assets, Etc
    	
 
    	
25
    
	
Section 6.6
    	
Intentionally   Deleted
    	
 
    	
26
    
	
Section 6.7
    	
Transactions   with Affiliates
    	
 
    	
26
    
	
Section 6.8
    	
Intentionally   Deleted
    	
 
    	
26
    
	
Section 6.9
    	
Intentionally   Deleted
    	
 
    	
26
    
	
Section 6.10
    	
Intentionally   Deleted
    	
 
    	
26
    
	
Section 6.11
    	
Bankruptcy
    	
 
    	
26
    
	
Section 6.12
    	
Limitation   on Certain Activities
    	
 
    	
26
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
DEFAULTS
    	
 
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.1
    	
Events   of Default
    	
 
    	
27
    
	
Section 7.2
    	
Remedies
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VIII
    	
WAIVERS
    	
 
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
Section 8.1
    	
Waiver   of Defenses
    	
 
    	
30
    
	
Section 8.2
    	
Reinstatement
    	
 
    	
31
    
	
Section 8.3
    	
Certain   Additional Waivers
    	
 
    	
31
    
	
Section 8.4
    	
Costs   of Enforcement
    	
 
    	
32
    
	
Section 8.5
    	
Exculpation
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IX
    	
MISCELLANEOUS
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.1
    	
Survival
    	
 
    	
32
    
	
Section 9.2
    	
Governing   Law; Consent to Jurisdiction
    	
 
    	
33
    
	
Section 9.3
    	
Modification,   Waiver in Writing
    	
 
    	
34
    
	
Section 9.4
    	
Delay   Not a Waiver
    	
 
    	
34
    
	
Section 9.5
    	
Notices
    	
 
    	
34
    
	
Section 9.6
    	
Trial   by Jury
    	
 
    	
35
    
	
Section 9.7
    	
Headings
    	
 
    	
36
    
	
Section 9.8
    	
Severability
    	
 
    	
36
    
	
Section 9.9
    	
Preferences
    	
 
    	
36
    
	
Section 9.10
    	
Waiver   of Notice
    	
 
    	
36
    
	
Section 9.11
    	
Sole   Discretion of Lender
    	
 
    	
36
    
	
Section 9.12
    	
Remedies   of the Borrower
    	
 
    	
37
    
	
Section 9.13
    	
Expenses;   Indemnity
    	
 
    	
37
    
	
Section 9.14
    	
Exhibits   and Schedules Incorporated
    	
 
    	
37
    
	
Section 9.15
    	
No   Joint Venture or Partnership
    	
 
    	
37
    
	
Section 9.16
    	
Publicity
    	
 
    	
38
    
	
Section 9.17
    	
Waiver   of Marshaling of Assets
    	
 
    	
38
    
	
Section 9.18
    	
Conflict;   Construction of Documents
    	
 
    	
38
    
	
Section 9.19
    	
Brokers   and Financial Advisors
    	
 
    	
38
    
	
Section 9.20
    	
No   Third Party Beneficiaries
    	
 
    	
39
    
	
Section 9.21
    	
Prior   Agreements
    	
 
    	
39
    
	
Section 9.22
    	
Counterparts
    	
 
    	
39
    
	
Section 9.23
    	
Payment   of Expenses, Etc
    	
 
    	
39
    
	
Section 9.24
    	
Amendments,   Waivers and Consents
    	
 
    	
40
    
	
Section 9.25
    	
Transfers,   Sales and Participations
    	
 
    	
40
    
	
Section 9.26
    	
No   Fiduciary Duty
    	
 
    	
40
    
	
Section 9.27
    	
Confidentiality
    	
 
    	
40
    
	
Section 9.28
    	
Patriot   Act
    	
 
    	
41
    
	
Section 9.29
    	
Benefit   of Agreement
    	
 
    	
41
    

 

ii

 

EXHIBITS

 

	
Exhibit A
    	
-
    	
Intentionally Deleted
    
	
Exhibit B
    	
-
    	
Pledge and Security Agreement
    
	
Exhibit C
    	
-
    	
Form of Note
    
	
Exhibit D
    	
-
    	
NJEDA Approval Letter
    
	
Exhibit E
    	
-
    	
Form of Tax Credit Transfer Certificate
    
	
Exhibit F
    	
-
    	
Intentionally Deleted
    
	
Exhibit G
    	
-
    	
Amortization Schedule
    
	
Exhibit H
    	
-
    	
Evaluation Materials
    

 

iii

 

LOAN AGREEMENT (this “Agreement”), dated as of September 11, 2012, between GOLDMAN SACHS BANK USA, a New York banking corporation (together with its successors and assigns, the “Lender”), and RBH-TRB NEWARK HOLDINGS, LLC, a New York limited liability company (the “Borrower”).

 

All capitalized terms used herein shall have the respective meanings set forth in Section 1.1 hereof or elsewhere in this Agreement.

 

W I T N E S S E T H:

 

WHEREAS, the Borrower has requested that the Lender provide certain financing to the Borrower in the amount of up to Eighteen Million Seven Hundred Ninety Four Thousand Two Hundred Fifty One and 00/100 Dollars ($18,794,251.00)  (the “Loan”);

 

WHEREAS, a portion of the proceeds of the Loan in the amount of $9,397,082 will be used by the Borrower to make a capital contribution to its Affiliate (as hereinafter defined), RBH-TRB West I Mezz Urban Renewal Entity, LLC, a New Jersey limited liability company (“Leverage Lender”);

 

WHEREAS, Leverage Lender will use such capital contribution, along with other sources of capital, in a New Markets Tax Credit financing structure (“NMTC Transaction”) to make a leverage loan in the aggregate amount of $30,207,000 (the “Leverage Loan”) to GS Halsey 2 NMTC Investment Fund LLC (the “Investment Fund”);

 

WHEREAS, the Investment Fund shall use the proceeds of the Leverage Loan, along with an equity contribution by an equity investor, to make an equity investment in various “qualified community development entities” (collectively, the “CDEs”) formed for the purpose of serving or providing investment capital for low-income communities or low-income persons (as such terms are defined for the purposes of Section 45D of the Code, consistent with the requirements of Section 45D of the Code);

 

WHEREAS, the CDEs shall make loans (the “QLICIs”), from proceeds of the equity investments, to Teachers Village Project A QALICB Urban Renewal Entity, LLC (the “QALICB”), which has acquired the Property (as hereinafter defined) and shall construct thereon a portion of the Project (as hereinafter defined);

 

WHEREAS, the Lender shall make a direct loan in the amount of $9,000,000 (the “Direct Loan”) to the QALICB to finance the construction on the Property of a portion of the Project;

 

WHEREAS, the Casino Reinvestment Development Authority shall make a loan in the amount of $5,250,000 (the “CRDA Loan”) to the QALICB to finance the construction on the Property of a portion of the Project;

 

WHEREAS, a portion of the Loan in the amount of $5,302,670 will be used by the Borrower to make a capital contribution to the QALICB and will be used by the QALICB to fund construction costs of the Project;

 

 

WHEREAS, a portion of the Loan in the amount of $4,094,500 will be used by the Borrower to repay a portion of the outstanding amount of a predevelopment loan made by the Lender to the Borrower on September 14, 2010 (the “Predevelopment Loan”) and to fund a six (6) month interest reserve for the extension of the repayment date of said Predevelopment Loan;

 

WHEREAS, the Lender is willing to provide the Loan to the Borrower upon the terms and conditions set forth in this Agreement and the other Loan Documents;

 

WHEREAS, the Lender and the Borrower acknowledge that the Loan is being made in connection with the anticipation of the Project receiving Urban Transit Hub Tax Credits (“UTHTCs”).

 

NOW, THEREFORE, in consideration of the funding of the financing described herein 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:

 

“Acceptable Third Party Terms” has the meaning provided in Section 2.5(d).

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all partners, directors, officers and members of such Person), controlled by or under direct or indirect common control with such Person.  For purposes of this definition, a Person shall be deemed to control a corporation, a partnership, a trust or a limited liability company if such Person possesses, directly or indirectly, the power (i) to vote 10% or more of the securities having ordinary voting power for the election of directors of such corporation or to vote 10% or more of the partnership, trust or limited liability company interests of such partnership, trust or limited liability company, respectively, or (ii) to direct or cause direction of the management and policies of such corporation, partnership, trust or limited liability company, whether through the ownership of voting securities, as managing or general partner, as managing member, by contract or otherwise.

 

“Agreement” means this Agreement, as amended, supplemented or modified from time to time.

 

“Amortization Schedule” has the meaning set forth in Section 2.2(a).

 

“Annual Compliance Letters” mean the letters issued annually by the NJEDA to the holder of the Certificate or the Tax Credit Transfer Certificate certifying the Borrower is in compliance with its annual reporting requirements, and defined as the “Letter of Compliance” in

 

2

 

N.J. Admin. Code 19:31-9.2, and as provided for in N.J. Admin. Code 19:31-9.7(h), 19:31-9.8, 19:31-9.14.

 

“Bankruptcy Code” means any rules promulgated by a Governmental Authority of the applicably jurisdiction relating to bankruptcy, insolvency, corporate reorganization, appointment of a trustee, receiver, administrator or similar insolvency officer, or similar debtor relief under any applicable law.

 

“Borrower” has the meaning provided in the first paragraph of this Agreement.

 

“Borrower’s Knowledge” means the knowledge of Ron Beit-Halachmy.

 

“Borrower’s Operating Agreement” has the meaning set forth in Section 5.5.

 

“Business Day” means any day other than a Saturday, Sunday or any other day on which national banks in New York are not open for business.

 

“Business Plan” means the business plan for the Project, which shall include, but not be limited to, a description of the proposed financing strategy and all required projected subsidies and projected financing sources for the acquisition, development and construction of the Project, as approved by Lender prior to the date hereof.

 

“CDEs” has the meaning set forth in the Recitals.

 

“Certificate” means the certificate evidencing all of the UTHTCs granted to Borrower for the Project and issued by the Director of the Division of Taxation of the State of New Jersey.

 

“Closing Date” means the date hereof.

 

“Controlling Person” means, when used with reference to a Person, any Person that directly or indirectly through one or more intermediaries controls the specified Person.

 

“CRDA Loan” has the meaning set forth in the Recitals.

 

“Debt” means the outstanding principal amount set forth in, and evidenced by, the Note, together with all interest accrued and unpaid thereon and all other sums due to the Lender in respect of the Loan, including any sums due under the Note, this Agreement, the Pledge or any other Loan Document.

 

“Default” means 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 be an Event of Default.

 

“Default Rate” means an interest rate equal to the lesser of (i) twenty-five percent (25%) per annum and (ii) the maximum interest rate permitted by applicable law.  The Default Rate shall be calculated on the basis of a 360 day year for the actual number of days elapsed.

 

3

 

“Direct Loan” has the meaning set forth in the Recitals.

 

“Event of Default” has the meaning provided in Section 7.1.

 

“Family Members” shall mean the spouses, parents, children and grandchildren of the partners, members or other equity interest holders in the Borrower and any trust established for estate planning purposes for the benefit of such partners, members or other equity interest holders in the Borrower or any of the foregoing specified family members.

 

“Financing” means any investment or financing for the Project, which may be in the form of an equity investment, tax credit investment, mezzanine debt, senior construction financing, credit enhancement for senior construction financing or otherwise, including, without limitation, any and all government subsidies and/or grants.

 

“Future Project” has the meaning provided in Section 2.5(a).

 

“GAAP” means generally accepted accounting principles in the United States of America, consistently applied, as of the relevant date in question.

 

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

 

“Guarantor” means Ron Beit-Halachmy, an individual.

 

“Guaranty Obligations” means any obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing any Indebtedness, leases, dividends or other obligations of any other Person in any manner, whether direct or indirect, and including, any obligation, whether or not contingent, (i) to purchase any such Indebtedness or other obligation or any property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of such Indebtedness or obligation or to maintain working capital, solvency or other balance sheet condition of such other Person (including, without limitation, keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements), (iii) to lease or purchase property, securities or services primarily for the purpose of assuring the owner of such Indebtedness or obligation, or (iv) otherwise assure or hold harmless the owner of such Indebtedness or obligation against loss in respect thereof.

 

“Guaranty of Recourse Obligations” means that certain Guaranty of Recourse Carveouts, to be executed on the date hereof and to be made by the Guarantor for the benefit of the Lender.

 

“Indebtedness” means, with respect to any Person, without duplication, the following, whether direct or contingent:

 

(a)                                 all indebtedness for borrowed money;

 

4

 

(b)                                 the deferred purchase price of assets or services which in accordance with GAAP would be shown to be a liability (or on the liability side of a balance sheet);

 

(c)                                  all Guaranty Obligations;

 

(d)                                 the maximum amount of all letters of credit issued or acceptance facilities established for the account of such Person and, without duplication, all drafts drawn thereunder (other than letters of credit (i) supporting other Indebtedness of the Borrower or (ii) offset by a like amount of cash or government securities held in escrow to secure such letter of credit and draws thereunder);

 

(e)                                  all capitalized lease obligations;

 

(f)                                   all Indebtedness of another Person secured by any lien on any property of the Borrower, whether or not such indebtedness has been assumed;

 

(g)                                  all obligations under take-or-pay or similar arrangements or under interest rate, currency, or commodities agreements;

 

(h)                                 indebtedness created or arising under any conditional sale or title retention agreement (other than conditional sale and title retention agreements entered into in the ordinary course of business for assets incidental to the management and operation of the Project, or any portion thereof); and

 

(i)                                     obligations of such Person with respect to withdrawal liability to or on behalf of any “multiemployer plan” as defined in Section 4001(a) of ERISA;

 

provided, however, that Indebtedness shall not include (i) current accounts payable (other than for borrowed money or purchase money obligations) incurred in the ordinary course of business or in the development of the Project consistent with the terms of this Agreement and the Business Plan; provided, further, however, that all such liabilities, accounts and claims shall be paid when due (or in conformity with customary trade terms or customary dispute resolution procedures or, in the case of accounts payable in connection with the development of the Project, in conformity with the provisions of this Agreement and the Business Plan) and accrued expenses (other than for borrowed money or purchase money obligations) incurred in the ordinary course of business and (ii) indemnification, recourse carve-out and similar contingent obligations which are not assurances of payment of the items described in sub-clauses (a) through (i) of this definition.

 

“Initial Funding” has the meaning set forth in Section 2.1(a).

 

“Investment Fund” has the meaning set forth in the Recitals.

 

“Lender” has the meaning provided in the first paragraph of this Agreement.

 

“Leverage Lender” has the meaning set forth in the Recitals.

 

“Leverage Loan” has the meaning set forth in the Recitals.

 

5

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice perfecting a security interest under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction, or other similar recording or notice statute, and any lease in the nature thereof).

 

“Loan” has the meaning set forth in the Recitals.

 

“Loan Documents” means, collectively, this Agreement, the Note, the Pledge (including any financing statements executed and delivered in connection therewith), the Guaranty of Recourse Obligations, as well as all other documents now or hereafter executed and/or delivered in connection with the Debt or hereafter delivered by or on behalf of the Borrower pursuant to the requirements hereof or of any other Loan Document, as the same may be amended from time to time.

 

“Material Adverse Effect” means any event or condition that has a material adverse effect upon (i) the business operations, economic performance, properties, assets or condition (financial or otherwise) of the Borrower, the Guarantor or the Project, in each case taken as a whole, (ii) the ability of the Borrower or the Guarantor to perform, in all material respects, its obligations under each Loan Document, (iii) the enforceability or validity of any Loan Document or the perfection or priority of any Lien created under any Loan Document, (iv) the value of the Project, taken as a whole, (v) the ability of the Borrower to receive the Certificates, or (vi) the rights, interests and remedies of the Lender under the Loan Documents.

 

“Maturity Date” means the date on which the Loan becomes due and payable as herein provided, whether on December 31, 2023, or such earlier date as may be the result of acceleration of the Loan or otherwise.

 

“NJEDA” means the New Jersey Economic Development Authority.

 

“NMTC Transaction” has the meaning set forth in the Recitals.

 

“Note” means the promissory note of the Borrower in favor of the Lender evidencing the Loan and provided in accordance with Section 2.2 hereof, as such promissory note may be amended, modified, supplemented or replaced from time to time.

 

“Officer’s Certificate” means one or more certificates certified by an individual authorized to act on behalf of the Borrower and, to the extent applicable, any constituent Person with respect to the Borrower.

 

“Permits” has the meaning provided in Section 4.1(h).

 

“Permitted Lender Transferees” One or more of the following:  (i) one or more of the following: an insurance company, bank, savings and loan association, investment bank, trust company, commercial credit corporation, pension plan, pension fund, pension fund advisory firm, mutual fund, real estate investment trust or governmental entity or plan; or (ii) an investment company, money management firm or a “qualified institutional buyer” within the

 

6

 

meaning of Rule 144A under the Securities Act of 1933, as amended; or (iii) an institution substantially similar to any of the foregoing, which, in the case of each of the sub-clauses of this definition, has at least $300,000,000 in total assets (in name or under management), and is regularly engaged in the business of making or owning commercial real estate loans or commercial loans or mezzanine loans (or interests therein) similar to the loans described herein; (iv) any entity Controlled (as defined below) by or Controlling, or under common Control with, any of the entities described in clauses (i)-(iii) above, or (v) a governmental entity. (“Control” means the ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial ownership interests of an entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through the ability to exercise voting power, by contract or otherwise, and “Controlled” and “Controlling” have the meaning correlative thereto).

 

“Permitted Liens” means (i) Liens created by, under or in connection with this Agreement or the other Loan Documents, if any, in favor of the Lender, including, without limitation, the lien created by the Pledge, (ii) Liens which exist for taxes and assessments not yet due and payable and (iii) any Liens of record which exist with respect to the Project at the time of the acquisition of the Project, are approved by the Lender hereunder and which do not have a Material Adverse Effect on the UTHTCs and/or the Certificates.

 

“Permitted Transfer” means (a) the direct or indirect transfer in any Upper Tier Entity to one or more Family Members for estate planning purposes, provided that the transferor of any such interest shall at all times retain all decision-making authority with respect to such transferred interest, including all voting and consent rights with respect thereto, (b) the direct or indirect transfer, in one or a series of transactions, in any Upper Tier Entity; provided, however, that as a condition to each such transfer set forth in (a) or (b) above: (i) the Lender shall receive not less than thirty (30) days prior written notice with respect to any direct transfer by an Upper Tier Entity of its direct interests in the Borrower, including, without limitation, the name of the proposed transferee and the date the transfer is expected to be effective, and the Lender shall be informed of any indirect transfer of any interests in the direct or indirect constituent members of any Upper Tier Entity which such Upper Tier Entity receives, or has the right to consent to, pursuant to its organizational documents, by such Upper Tier Entity delivering notice thereof to the Lender, (ii) the transferee must be in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury and must not be listed on any restricted list published by the Federal Government of the United States of America, (iii) at all times Nicolas Berggruen shall continue to own (legally and beneficially), directly or indirectly, no less than a forty percent (40%) interest in RBH Partners, LLC, and (iv) at all times Ron Beit-Halachmy shall (A) continue to control, directly or indirectly, the Borrower, and (B) continue to own (legally and beneficially), directly or indirectly, no more than a twenty-five percent (25%) interest in the Borrower.

 

“Person” means any individual, sole proprietorship, corporation, general partnership, limited partnership, limited liability company or partnership, joint venture, association, joint stock company, bank, trust, estate, unincorporated organization, any federal, state, county or municipal government (or any agency or political subdivision thereof), endowment fund or any other form of entity.

 

7

 

“Pledge” means, that certain Pledge and Security Agreement made by the Borrower for the benefit of the Lender, in the form attached hereto as Exhibit B, to be executed on the date hereof.

 

“Pledged Collateral” means all of the Borrower’s (or an Affiliate’s) right, title and interest as the owner of the Certificate (prior to transferring same to Lender), including, without limitation, all of the following now owned or at any time hereafter acquired by the Borrower, or in which the Borrower now has or at any time in the future may acquire any right, title or interest: (a) all certificates, instruments or other writings representing or evidencing interest in the UTHTCs, including, but not limited to, the Certificate, the Annual Compliance Letters, the Tax Credit Transfer Certificate or any of the other items referred to in the preceding clause, and all accounts and general intangibles arising out of, or with respect to any of the foregoing interests; (b) any and all moneys or property due and to become due to the Borrower now or in the future with respect to the foregoing interests, or to which the Borrower may now or in the future be entitled in its capacity as owner of the foregoing interests, as may be applicable; (c) all rights of the Borrower pursuant to all agreements, if any, to which the Borrower is a party from time to time that relate to its ownership of the foregoing interests; and (d) to the extent not otherwise included, all proceeds of or from any or all of the foregoing.

 

“Project” means the Teachers Village Project, an approximately 422,628 square foot mixed use development consisting of three (3) charter schools, a day care center, approximately 205 residential rental housing units (each component thereof as described in the Business Plan being a “Residential Component”) and approximately 63,000 square feet of retail space to be located on and/or adjacent to Halsey Street in the City of Newark, New Jersey.

 

“Project Budget” means the budget for the Project, as approved by the Lender.

 

“Property” means the land identified on Exhibit A attached hereto and the building, structures and improvements now or hereafter situated thereon.

 

“Proposed Financing” has the meaning provided in Section 2.5(b).

 

“Proposed Financing Notice” has the meaning provided in Section 2.5(b).

 

“Proposed Term(s)” has the meaning provided in Section 2.5(b).

 

“QALICB” has the meaning provided in the Recitals of this Agreement.

 

“QLICIs” has the meaning provided in the Recitals of this Agreement.

 

“Second Funding” has the meaning provided in Section 2.1(a).

 

“Taxes” means all real estate and personal property taxes, assessments, fees, taxes on rents or rentals, water rates or sewer rents, and other governmental charges now or hereafter levied or assessed or imposed against the Borrower and/or the Property (or any portion thereof) or rents therefrom or which may become Liens.

 

“Tax Credit Transfer Certificate” has the meaning set forth in Section 5.6(e).

 

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“Term” means 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 the Borrower and any other Person which is an Affiliate of the Borrower pursuant to the Loan Documents.

 

“Third Party Terms” has the meaning provided in Section 2.5(d).

 

“Upper Tier Entity” shall mean, individually and collectively as the context requires, (a) TRB Newark Assemblage, LLC, (b) TRB Newark TRS, LLC, (c) RBH Partners, LLC and RBH Capital, LLC.

 

“UTHTCs” has the meaning provided in the Recitals of this Agreement.

 

Section 1.2                                    Principles of Construction.

 

All references to sections, schedules and exhibits are to sections, schedules and exhibits 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, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The words “includes”, “including” and similar terms shall be construed as if followed by the words “without limitation”.  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.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP, as may be modified herein.

 

ARTICLE II

 

GENERAL

 

Section 2.1                                    Commitment and Loan.

 

(a)                                 Commitment and Advances of the Loan.  Provided that no Event of Default has occurred and is continuing (provided, however, that the Lender shall have no obligation to accept a cure of any Event of Default) hereunder and the Borrower has satisfied, or caused to be satisfied all of the conditions precedent set forth in this Agreement with respect to each advance, the Lender will advance and the Borrower will accept installments of the Loan.  Advances of the Loan shall be made available to the Borrowers in two tranches, as follows: (i) an initial tranche (the “Initial Funding”) in the amount of Thirteen Million Four Hundred Ninety One Thousand Five Hundred Eighty Two Dollars ($13,491,582), which tranche shall be made available upon the terms and conditions of this Agreement, including, without limitation, the satisfaction of the conditions set forth in Section 3.1, and (ii) a second tranche (the “Second Funding”) in the amount of Five Million Three Hundred Two Thousand Six Hundred Sixty Nine Dollars ($5,302,669), which tranche shall be made available upon the terms and conditions of this Agreement, including, without limitation, the satisfaction of the conditions set forth in Section 3.2.

 

(b)                                 Uses.  The parties acknowledge and agree that a portion of the proceeds of the Initial Funding in the amount of $9,397,082 shall be used by the Borrower to make a capital

 

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contribution to the Leverage Lender in order for the Leverage Lender to make the Leverage Loan and the remaining portion of the Initial Funding, in the amount of $4,094,500, shall be used by the Borrower to repay a portion of the outstanding amount of the Predevelopment Loan and to fund a six (6) month interest reserve for the extension of the repayment date of said Predevelopment Loan.  In addition, the parties acknowledge and agree that the Borrower shall use proceeds of the Second Funding to make a capital contribution to the QALICB which the QALICB will use for construction costs of the Project.

 

(c)                                  The Note.  The Borrower’s obligation in respect of the Loan shall be evidenced by the Note, in the form of Exhibit C attached hereto, in the principal amount of $18,794,251, delivered to the Lender on the date hereof.  The Note shall bear interest as provided herein.  The Note shall be entitled to the benefits of this Agreement and secured by the Pledge and the other Loan Documents.

 

(d)                                 Security.  As security for the Loan, on the Closing Date, the Borrower shall grant to the Lender a first priority security interest in the Pledged Collateral, in the form of the Pledge.

 

Section 2.2                                    Repayment of Loan.

 

(a)                                 Amortization.  During the construction of the Project, interest shall accrue on a quarterly basis and shall be added to the principal amount outstanding under the Loan, but shall not be payable, on the Loan at the Interest Rate.  Commencing on December 31, 2014, the Loan shall be repaid in equal annual installments of principal and interest, on the last day of each calendar year, pursuant to the attached amortization schedule, attached hereto as Exhibit G (the “Amortization Schedule”).

 

(b)                                 Prepayment of the Loan.  The Loan may be repaid at any time without a prepayment fee or charge.

 

(c)                                  Additional Borrowing.  Amounts borrowed hereunder and repaid may not be re-borrowed.

 

(d)                                 Principal Outstanding.  Notwithstanding any prepayment of the Loan, any and all amounts of the Loan that remain unpaid, whether, principal, interest or otherwise, shall be immediately due and payable on the Maturity Date.

 

Section 2.3                                    Interest Rate.

 

(a)                                 Interest.  The Loan shall bear interest at a rate of 8.65319% per annum.

 

(b)                                 Default Rate.  Notwithstanding the foregoing, from and after the occurrence and during the continuance of an Event of Default (provided, however, that the Lender shall have no obligation to accept a cure of any Event of Default), the Loan shall bear interest at the Default Rate.  Payment or acceptance of the increased rates provided for in this Section 2.3(b) is not a permitted alternative to timely payment or full performance by the Borrower and shall not constitute a waiver of any Default or Event of Default or a waiver in

 

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respect of this Agreement or any other Loan Document and shall not otherwise prejudice or limit any rights or remedies of the Lender.

 

Section 2.4                                    Payments and Computations.

 

(a)                                 Making of Payments.  All payments hereunder or under any other Loan Document shall be made to the Lender, in U.S. Dollars in immediately available funds to such account as the Lender may instruct the Borrower in a written notice delivered to the Borrower at least five (5) Business Days prior to the applicable payment date no later than 3:00 PM (New York time) on the date when due.  Payments received after such time shall be deemed to have been received on the next succeeding Business Day.  Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and shall include interest for the period of such extension.  Commencing on December 31, 2014 or the next Business Day thereafter and continuing on the annual anniversary of said date (each a “Payment Date”), payments of principal and interest shall be made pursuant to the Amortization Schedule.

 

(b)                                 Payments by Tax Credit Transfer Certificates.  Notwithstanding anything in Section 2.4(a) to the contrary, in lieu of making a payment in cash on a Payment Date, the Borrower may, on or prior to a Payment Date, deliver to the Lender an Annual Compliance Letter, which entitles the Lender, via the Tax Credit Transfer Certificate, to claim ten percent (10%) of the total UTHTCs transferred to the Lender by the Borrower as evidenced by the Tax Credit Transfer Certificate.  As a result of the transfer and assignment of such Annual Compliance Letter, together with the Tax Credit Transfer Certificate to Lender, a portion of the amount of the principal and interest outstanding with respect to the Loan in the amount set forth on the Tax Credit Transfer Certificate (i.e. ten percent (10%) of the total UTHTCs as transferred) shall be deemed to have been repaid and the UTHTCs so transferred shall be deemed to have been conveyed at a value that is not less than 75% of each such UTHTC.

 

(c)                                  Computations.  Interest payable on the Loan shall be calculated on an annual basis and computed on the basis of the actual number of days elapsed in the period in question (i.e., with respect to the interest due on a given date, from and including the date of the last payment, as applicable, to but excluding the date of current payment) over a year of 365 days and the actual number of days in such year.

 

(d)                                 Compensation for Taxes.  The Borrower shall indemnify the Lender for the full amount of taxes (other than income taxes, franchise taxes or taxes imposed on or measured by net capital) imposed by any Governmental Authority on (i) the Loan, (ii) amounts payable or paid to the Lender hereunder or under any other Loan Document, or (iii) any taxes payable under this Section 2.4(c), and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto.  Payment under this indemnification shall be made within fifteen (15) Business Days after the date the Lender makes written demand therefor. The agreements and obligations of the Borrower contained in this Section 2.4(c) shall survive the payment in full of the Loan and the termination of this Agreement.

 

(e)                                  Interest on Late Payments.  Any amount that is not paid when due and payable hereunder or under any other Loan Document shall bear interest at the Default Rate

 

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(provided that, if the terms of Section 2.3(b) shall be applicable with respect to an amount owed to the Lender, then this Section 2.4(d) shall not be applicable).  Payment or acceptance of the increased rates provided for in this Section 2.4(d) is not a permitted alternative to timely payment or full performance by the Borrower and shall not constitute a waiver of any Default or Event of Default or a waiver in respect of this Agreement or any other Loan Document and shall not otherwise prejudice or limit any rights or remedies of the Lender.

 

Section 2.5                                    Future Project Financing Rights.

 

(a)                                 Financing of Phase III of the Project.  The Borrower and the Lender acknowledge and agree that if the Borrower (or any Affiliate or subsidiary thereof) seeks to finance any remaining portion of the Project, then Borrower is hereby committed to do so with the Lender on terms and conditions which are substantially the same terms and conditions as have been entered into with respect to the rest of the Project that was financed as of February, 2012 and on the date hereof so long as the Lender agrees to provide all such sought financing (i.e., debt and equity).

 

(b)                                 Financing.  The Borrower shall provide the Lender with a first opportunity to provide Financing that the Borrower may be seeking in connection with any and all real estate projects within a one-quarter (1/4) mile radius of the Project (a “Future Project”), because the parties recognize that any future financing with a third party for such a Future Project may put the Loan and/or the Lender at additional risk.

 

(c)                                  Proposal.  If the Borrower (or an Affiliate thereof) seeks Financing for a Future Project (the “Proposed Financing”), the Borrower (or an Affiliate thereof), shall provide the Lender with written notice (the “Proposed Financing Notice”) of the Proposed Financing.  In connection with the delivery of the Proposed Financing Notice, the Borrower (or an Affiliate thereof) shall deliver to the Lender (i) the information with respect to such Proposed Financing as described on Exhibit H attached hereto to the extent relevant to such Proposed Financing, and (ii) the following terms from the applicable Proposed Financing (each, a “Proposed Term” and collectively, the “Proposed Terms”): (A) the principal amount; (B) the term; (C) the interest rate; (D) the items to be guaranteed and the indemnities to be provided; and/or (E) equity pricing and contribution schedule, depending on the type of Proposed Financing.

 

(d)                                 Response.  Following the Lender’s receipt of a Proposed Financing Notice, the Lender shall have the one-time option, exercisable by written notice to the Borrower (or its Affiliate), given within fifteen (15) Business Days after the Lender’s receipt of the information with respect to the Proposed Financing described in Section 2.5(b) above, to elect to provide the Proposed Financing upon the Proposed Terms.  If the Lender exercises such option, the Borrower (or its Affiliate) and the Lender shall thereafter negotiate the definitive documents in respect of such Financing upon the Proposed Terms and upon such other reasonable terms as the Borrower (or its Affiliate) and Lender mutually agree upon.  Notwithstanding the forgoing, if the parties fail to close on the Proposed Financing for any reason on or before the outside date for closing set forth in Lender’s term sheet or commitment, then the Borrower (or its Affiliate) may proceed to consummate such Proposed Financing with any third party but solely on Third Party Terms (as such term is defined below) and the Lender shall be deemed to have waived its rights under this Section 2.5 to provide the Proposed Financing that was the subject of the

 

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Proposed Financing Notice (but shall retain such rights with respect to any other Proposed Financing).

 

(e)                                  Rejection.  If the Lender fails to exercise its right to provide the Proposed Financing that is the subject of the Proposed Financing Notice by providing to the Borrower a term sheet for all portions of such Proposed Financing or confirming, in writing, that the Lender will provide such Proposed Financing on the terms and conditions set forth in the Proposed Terms, as aforesaid, within fifteen (15) Business Days of the date that the Lender receives the information described in Section 2.5(b) above, then the Lender shall be deemed to have waived its rights under this Section 2.5 to provide the Proposed Financing that is the subject of the applicable Proposed Financing Notice and the Borrower (or its Affiliate) shall have the absolute right to consummate such Proposed Financing with any third party upon the Proposed Terms or upon terms which are more favorable to the Borrowers or the Companies, as applicable (the “Third Party Terms”), provided, however, that if one or more of the Proposed Terms of the Third Party Terms is less favorable to the Borrower (or its Affiliate) than the corresponding Proposed Term, then the Borrower (or its Affiliate) shall provide the Lender with the right to provide the Proposed Financing, to be exercised upon ten (10) Business Days of receipt of the applicable Third Party Terms, upon any such Third Party Terms as the Borrower (or its Affiliate) is willing to accept (the “Acceptable Third Party Terms”); provided, further, however, that if the Lender elects not to provide the Proposed Financing upon the Acceptable Third Party Terms, then the Borrower (or its Affiliate) shall have the absolute right to consummate such Proposed Financing upon the Acceptable Third Party Terms with any third party other than Lender.

 

(f)                                   The terms and provisions of this Section 2.5 shall be in force and effect for until September 12, 2022.  Furthermore, in the event of any termination of this Agreement, the terms and provisions of this Section 2.5 shall nevertheless survive and be applicable, without modification, until September 12, 2022.

 

ARTICLE III

 

CONDITIONS PRECEDENT

 

Section 3.1                                    Conditions Precedent to the Making of the Initial Funding.  The obligation of the Lender to make the Initial Funding of the Loan to the Borrower is subject to the fulfillment of the following conditions precedent to the satisfaction of the Lender:

 

(a)                                 Representations and Warranties; Compliance with Conditions.  The representations and warranties of the Borrower contained in this Agreement or any other Loan Document shall be true and correct in all material respects on and as of the Closing Date with the same effect as if made on and as of such date, and no Event of Default shall have occurred and be continuing (provided, however, that Lender shall have no obligation to accept a cure of any Event of Default); and the Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each other Loan Document on its part to be observed or performed;

 

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(b)                                 Agreement, Note and Pledge.  The Lender shall have received (i) this Agreement, duly executed and delivered by the Borrower, (ii) the Note, duly executed and delivered by the Borrower, and (iii) the Pledge, duly executed and delivered by the Borrower;

 

(c)                                  Guaranty.  The Lender shall have received the Guaranty of Recourse Obligations, duly executed and delivered by the Guarantor;

 

(d)                                 Costs; Expenses; Fees.  The Borrower shall have paid all of the Lender’s reasonable out-of-pocket costs, expenses and fees (including the legal fees and expenses of counsel for the Lender) incurred with respect to the Loan;

 

(e)                                  Delivery of Other Loan Documents.  The Lender shall have received fully executed copies of any and all other Loan Documents required to be executed as of the Closing Date;

 

(f)                                   Related Documents.  Each additional document not specifically referenced herein, but relating to the transactions contemplated herein, shall have been duly authorized, executed and delivered by the Borrower, the Guarantor and/or any other applicable party, as applicable, and the Lender shall have received and approved certified copies thereof;

 

(g)                                  Delivery of Organizational Documents.  The Borrower shall deliver or cause to be delivered to the Lender copies certified by the Borrower of all of its organizational documentation and/or the formation, structure, existence, good standing and/or qualification to do business, including good standing certificates, qualifications to do business in the appropriate jurisdictions, resolutions authorizing the entering into of the Loan Documents and incumbency certificates;

 

(h)                                 Opinions of Counsel.  The Lender shall have received opinions of the Borrower’s counsel with respect to due execution, delivery, authority, enforceability of the Loan Documents by the Borrower and such other matters as the Lender may reasonably require with respect to the Borrower’s receipt of the UTHTCs and the Certificates, all such opinions in form, scope and substance satisfactory to the Lender and its counsel in their discretion, reasonably exercised;

 

(i)                                     Completion of Proceedings.  All limited liability company proceedings taken or to be taken by the Borrower (and any other applicable entities) in connection with the transactions contemplated by this Agreement and other Loan Documents shall be reasonably satisfactory in form and substance to the Lender, and the Lender shall have received all such counterpart originals or certified copies of such documents as the Lender may reasonably request;

 

(j)                                    Searches.  The Lender shall have received and approved satisfactory judgment, lien, UCC, bankruptcy and litigation searches with respect to the Borrower and the Guarantor;

 

(k)                                 Insurance.  The Lender shall have received and approved valid certificates of insurance evidencing property (to the extent applicable) and liability insurance coverage, satisfactory to the Lender in its reasonable discretion, and evidence of the payment of all

 

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premiums for the existing policy period.  The Lender shall be included as an “additional named insured” under such policies;

 

(l)                                     Financial Statements.  A copy of the most recent financial statements of the Guarantor and the Borrower that have been prepared in accordance with cash basis accounting;

 

(m)                             Compliance With Law.  Lender shall have received and approved satisfactory evidence that the Borrower is in compliance with all governmental rules and regulations including, without limitation, compliance with the PATRIOT Act;

 

(n)                                 Survey.  The Lender shall have received and approved surveys of the Property (and any existing improvements thereon);

 

(o)                                 Intentionally Deleted.

 

(p)                                 Environmental Reports.  The Lender shall have received copies of the Phase I environmental reports in respect of the Property, together with any remedial action plan with respect to any environmental condition noted for remediation in any such report;

 

(q)                                 Appraisal.  The Lender shall have received an appraisal of the Property, which appraisal shall be reasonably satisfactory in form and substance to the Lender from an appraiser reasonably satisfactory to the Lender;

 

(r)                                    Zoning.  The Lender shall have received a zoning opinion of the Property or other evidence of site plan approvals in form and substance satisfactory to the Lender;

 

(s)                                   Tax:  The Lender shall have received and reviewed all tax matters pertaining to the UTHTCs and the receipt of reasonably satisfactory tax opinions with respect to the UTHTCs;

 

(t)                                    NMTC:  The NMTC Transaction shall close simultaneously with the transaction contemplated by this Agreement;

 

(u)                                 Direct Loan:  The Direct Loan shall close simultaneously with the transaction contemplated by this Agreement;

 

(v)                                 CRDA Loan:  The CRDA Loan shall close simultaneously with the transaction contemplated by this Agreement;

 

(w)                               Due Diligence:  The Lender shall have completed all of its due diligence that is reasonable and customary for an investment in UTHTCs; and

 

(x)                                 Other Documents.  The Lender shall have received such other documents and materials in respect of the Borrower, the Guarantor, the Project and the UTHTCs, as may be reasonably requested by the Lender.

 

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Section 3.2                                    Conditions Precedent to the Making of the Second Funding.  The obligation of the Lender to make the Second Funding of the Loan to the Borrower is subject to the fulfillment of the following conditions precedent to the satisfaction of the Lender:

 

(a)                                 Representations and Warranties; Compliance with Conditions.  The representations and warranties of the Borrower contained in this Agreement or any other Loan Document shall be true and correct in all material respects on and as of the date of the funding of the Second Funding with the same effect as if made on and as of such date, and no Event of Default shall have occurred and be continuing (provided, however, that Lender shall have no obligation to accept a cure of any Event of Default); and the Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each other Loan Document on its part to be observed or performed;

 

(b)                                 Back-Up Documentation.  The Lender shall have received evidence satisfactory to it in its reasonable discretion, that the proceeds of the Second Funding shall be used for costs set forth in the Project Budget for the Project.

 

(c)                                  Date:  The Second Funding shall not be advanced prior to September 30, 2013.

 

(d)                                 Gap Analysis.  The Borrower shall provide to Lender evidence satisfactory to Lender that that gap analysis permitting only a portion of the Project to be completed in order to obtain a sufficient amount of UTHTCs for the Borrower to satisfy its obligations under this Loan Agreement has been approved by NJEDA.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF
 THE BORROWER

 

Section 4.1                                    Representations and Warranties of the Borrower.  The Borrower hereby represents and warrants to the Lender on and as of the Closing Date, and on and as of the date of any advance of the Loan, that:

 

(a)                                 Organization.  The Borrower has been duly formed or organized and is validly existing and is in good standing with requisite power and authority to own its properties and to transact its businesses in which it is now engaged.  The Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its respective properties, businesses and operations.  The Borrower, and to Borrower’s Knowledge, the Guarantor, possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own their properties and to operate the businesses in which it is now engaged (or will be engaged).

 

(b)                                 Proceedings.  All necessary action has been taken by the Borrower to authorize the execution, delivery and performance of this Agreement and the other Loan Documents to which the Borrower is a party.  This Agreement and such other Loan Documents have been duly authorized, executed and delivered by the Borrower and, to Borrower’s Knowledge, the Guarantor and constitute the Borrower’s and, to Borrower’s Knowledge,

 

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Guarantor’s legal, valid and binding obligations enforceable against them in accordance with their respective terms, subject, as to enforceability, to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally and general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

 

(c)                                  No Conflicts.  The execution, delivery and performance of this Agreement and the other Loan Documents to which the Borrower is a party will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien (other than pursuant to the Loan Documents) upon any of its properties or assets pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, partnership agreement, operating agreement, trust agreement or other material agreement or instrument to which the Borrower is a party or by which the Borrower or any of the Borrower’s properties or assets is subject, nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Borrower or the Borrower’s properties or assets, and any consent, approval, authorization, order, registration or qualification of or with any court or any such regulatory authority or other governmental agency or body required for the execution, delivery and performance by the Borrower of this Agreement or any other Loan Documents to which the Borrower is a party has been obtained and is in full force and effect in all material respects.

 

(d)                                 Litigation.  There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority or other agency now pending or, to Borrower’s Knowledge, threatened in writing against or affecting the Borrower, the Project, the Property or, to Borrower’s Knowledge, the Guarantor, which actions, suits or proceedings, alone or in the aggregate would have a Material Adverse Effect on the Borrower, the Guarantor, the Project or the Property.

 

(e)                                  Agreements.  None of the Borrower nor, to Borrower’s Knowledge, the Guarantor 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 is bound, which would have a Material Adverse Effect on the Guarantor or the Project or the Borrower.

 

(f)                                   No Bankruptcy Filing.  Neither the Borrower, nor to Borrower’s Knowledge, the Guarantor is contemplating either the filing of a petition under any state or federal bankruptcy or insolvency laws or the liquidation of its assets or property, and to Borrower’s Knowledge, no Person is contemplating the filing of any such petition against them.

 

(g)                                  Full and Accurate Disclosure.  No statement of fact made by the Borrower, or to Borrower’s Knowledge, the Guarantor in this Agreement or in any of the other Loan Documents to which same is a party 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.

 

(h)                                 Compliance.  The Borrower, and, to Borrower’s Knowledge, the Guarantor, has obtained and maintains (or will obtain and maintain) in full force and effect all

 

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applicable licenses, permits, certificates and waivers (“Permits”) from all Governmental Authorities having jurisdiction thereover required as of the date hereof to operate its businesses and to occupy, operate and use all of its properties in the manner in which they are currently operated, and all such Permits are valid and in full force and effect.

 

(i)                                     Taxes.  The Borrower, and, to Borrower’s Knowledge, the Guarantor, have filed, caused to be filed or will file, all material tax returns (federal, state, local and foreign) required to be filed (subject to extensions permitted by applicable law) and paid all amounts of taxes shown thereon to be due (including interest and penalties) and have paid all other taxes (including intangible fees, assessments and other governmental charges taxes) owing (or necessary to preserve any Liens in favor of the Lender), by them, except for such taxes which are not yet delinquent.  The Borrower, and to Borrower’s Knowledge, the Guarantor, are not aware of any proposed material tax assessments against it.  No extension of time for assessment or payment by it of any federal, state or local tax is in effect, except as permitted by applicable law.

 

(j)                                    Not a Foreign Person.  The Borrower is not a “foreign person” within the meaning of §1445(f)(3) of the Bankruptcy Code.

 

(k)                                 Enforceability.  The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by the Borrower, including the defense of usury, nor would the exercise of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable.

 

(l)                                     Organizational Structure.  The Borrower shall be a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of New York and shall not:

 

(i)                                     Merge into or consolidate with any Person or dissolve, terminate or liquidate in whole or in part without the prior written consent of the Lender;

 

(ii)                                  Other than pursuant to a Permitted Transfer, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure without the prior written consent of the Lender;

 

(iii)                               Fail to preserve its existence as an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, or amend, modify or terminate any provisions of its organizational documents which relate to separateness or which may hereafter be required by any of the Loan Documents;

 

(iv)                              Commingle its assets with the assets of any of its general partners, managing members, affiliates or principals, or of any other Person;

 

(v)                                 Incur any Indebtedness for borrowed money not existing as of the date hereof which would cause the Borrower to breach the terms of Section 5.7 hereof;

 

(vi)                              Fail to maintain its records, books of account and bank accounts (if any) separate and apart from those of any other Person;

 

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(vii)                           Enter into any contract or agreement with any Affiliate, except upon terms and conditions that are on an arm’s length basis;

 

(viii)                        Fail to diligently endeavor to correct any known misunderstandings regarding the separate identity of itself and/or the QALICB;

 

(ix)                              Hold itself out to be responsible for the debts of another Person in such amount or manner as would cause the Borrower to breach the terms of Section 5.7 hereof;

 

(x)                                 Fail to file its own tax returns, if required, unless part of the consolidated returns of another Person;

 

(xi)                              Enter into or consummate any transaction which would, at the time entered into or consummated, render the Guarantor insolvent, unable to meet their debts as they mature and without adequate capital to conduct the business in which it is or proposes to be engaged;

 

(xii)                           Fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name in order not to (A) mislead others as to the identity with which such other party is transacting business or (B) suggest that it is responsible for the debts of any third party;

 

(xiii)                        Hold itself out as or be designated as a department or division of any other Person; and/or

 

(xiv)                       File or consent to the filing of any bankruptcy or insolvency petition or otherwise institute insolvency proceedings with respect to itself or any entity in which it has a direct or indirect ownership interest.

 

(m)                             UTHTCs.  The Borrower hereby represents and warrants to Lender with respect to the UTHTCs that:

 

(i)                                     The Project is located within the urban transit hub;

 

(ii)                                  The Project is a “mixed use” project as defined under the New Jersey statutes governing the UTHTCs, and the entire Project is being treated as a “qualified residential project” as defined in N.J. Rev. Stat. § 34:1B-209.2, with capital investments totaling not less than $50,000,000;

 

(iii)                               The Project is a “qualified residential project” as defined in N.J. Rev. Stat. § 34:1B-209.2;

 

(iv)                              The Borrower, or an Affiliate thereof, has successfully submitted all the relevant documentation required to be submitted prior to the date hereof and received conditional approval of its UTHTC amount from the NJEDA as required under N.J. Rev. Stat. § 34:1B-207, et. Seq., in the amount of $39,456,741, as set forth in the “Approval Letter” from the NJEDA, as such term is defined in N.J. Admin. Code 19:31-9.2, attached hereto Exhibit D;

 

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(v)                                 The Borrower, or an Affiliate thereof, is not participating in the Business Employment Incentive Program grant pursuant to N.J. Rev. Stat. § 34:1B-124, et seq., not receiving assistance from the Business Retention and Relocation Assistance Grant Program pursuant to N.J. Rev. Stat. § 34:1B-112, et seq., not receiving incentives authorized by Municipal Rehabilitation and Economic Recovery pursuant to N.J. Rev. Stat. § 52:27BBB-1, et seq., and not receiving grants authorized by the InvestNJ Business Grant Program Act pursuant to N.J. Rev. Stat. § 34:1B-237, et seq., based upon or relating to the same capital investment and site that qualify for the UTHTCs, or any other programs or grants that would jeopardize the Borrower’s, or an Affiliate thereof, entitlement to the UTHTCs.

 

(n)                                 Project.  The Borrower has received, or shall cause the QALICB to receive, all necessary approvals, permits and any other documentation necessary from any Governmental Authorities, or otherwise, to construct the Project as contemplated.

 

Section 4.2                                    Survival of Representations.  All of the representations and warranties set forth in Section 4.1 hereof and elsewhere in this Agreement and in the other Loan Documents shall survive the issuance of the Loan.  All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by the Borrower shall be deemed to have been relied upon by the Lender, notwithstanding any investigation heretofore or hereafter made by the Lender and shall be deemed to be relied on by the Lender in connection with each advance of the Loan made hereunder.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

Section 5.1                                    Information Covenants.  The Borrower will furnish to Lender:

 

(a)                                 Annual Financial Statements.  As soon as available and in any event within one hundred twenty (120) days after the close of each fiscal year of the Borrower, a balance sheet of the Borrower at the end of such fiscal year together with related statements of income, and retained earnings and of cash flows for such fiscal year (and annual cash flow projections), all in reasonable detail and examined by independent certified public accountants reasonably acceptable to the Lender whose opinion shall be to the effect that such financial statements have been prepared in accordance with accrual basis accounting (except for changes with which such accountants concur) and shall not be qualified as to the scope of the report or as to the status of the Borrower as a going concern, all of the foregoing to be in reasonable detail and in form and substance satisfactory to Lender in its reasonable discretion.

 

(b)                                 Business Plan. Annually, not later than upon the anniversary of this of this Agreement, the Borrower shall provide to the Lender any and all updates that have occurred to the Business Plan.

 

(c)                                  Officer’s Certificate.  At the time of delivery of the financial statements provided for in Section 5.2(a) hereof, an Officer’s Certificate of the applicable Borrower, certified by Ron Beit-Halachmy, which, if it includes a statement that a Default or an Event of

 

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Default exists, shall specify the nature and extent thereof and what action the Borrower proposes to take with respect thereto.

 

(d)                                 Auditor’s Reports: Tax Returns.  Promptly upon receipt thereof, (i) a copy of any other report or “management letter” submitted by independent accountants to the Borrower in connection with any annual, interim or special audit or review of the books of the Borrower and (ii) if requested by the Lender, a copy of the Borrower’s federal tax return.

 

(e)                                  Environmental Reports.  Promptly upon transmission thereof, or receipt by, the Borrower or the QALICB, copies of any filings and registrations with, and reports to, the United States Environmental Protection Agency, or any state or local agency responsible for environmental matters, the United States Occupational Health and Safety Administration, or any state or local agency responsible for health and safety matters, or any successor agencies or authorities concerning environmental, health or safety matters.

 

(f)                                   Status of the Project.  Promptly upon receipt thereof (but in any event within five (5) Business Days), copies of any and all notices or information of any material adverse effect on the Project or the ability to complete the Project, develop same in accordance with the Business Plan and/or the ability to receive the UTHTCs and the Certificates.

 

(g)                                  Other Information.  With reasonable promptness upon any such request, such other information regarding the business, properties or financial condition of the Borrower, as the Lender may reasonably request.

 

(h)                                 Notice of Default, Casualty, Condemnation or Litigation.  Promptly after (but in any event within five (5) Business Days after) the Borrower obtains knowledge thereof, the Borrower will give written notice to the Lender, of the occurrence of any of the following with respect to the Borrower: (i) the occurrence of a Default which is reasonably likely to have a Material Adverse Effect, specifying the nature and existence thereof and what action the Borrower proposes to take with respect thereto, (ii) commencement of any litigation, arbitration or governmental proceeding against the Borrower in respect of environmental matters in which damages are sought or environmental remediation demanded which exceeds $250,000 in any instance or $350,000 in the aggregate or which is reasonably likely to otherwise materially adversely affect the business, properties, assets or condition (financial or otherwise) of the Borrower, (iii) the commencement of any litigation, arbitration or governmental proceeding against the Borrower in which damages are sought which exceeds $50,000 in any instance or $100,000 in the aggregate and which is reasonably likely to otherwise materially adversely affect the business, properties, assets or condition (financial or otherwise) of the Borrower, taken as a whole, (iv) any levy of an attachment, execution or other process against its assets which exceeds $150,000 in the aggregate, (v) with respect to the Borrower, the occurrence of a Default by reason of an event of default under any other agreement for borrowed money, (vi) any casualty or condemnation of the Property likely to result in award or proceeds in excess of $100,000 or (vii) the institution of any proceedings involving, or the receipt of written notice of potential liability or responsibility for, any violation, or alleged violation of any federal, state or local law, rule or regulation, including but not limited to, regulations promulgated under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., regulating the generation, handling or disposal of any toxic or hazardous waste or substance or the release into the

 

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environment or storage of any toxic or hazardous waste or substance, the violation of which could give rise to a material liability of, or a Material Adverse Effect on the business, assets, properties or condition (financial or otherwise) of the Borrower.

 

Section 5.2                                    Preservation of Existence and Franchises.  The Borrower will do or cause to be done, all things necessary to preserve and keep in full force and effect its existence, rights, franchises and authority.

 

Section 5.3                                    Books, Records and Inspections.  The Borrower will keep complete and accurate books and records of its transactions in accordance with accrual basis accounting (or other reasonable accounting standards reasonably acceptable to the Lender) applied on a consistent basis.  The Borrower will permit, on reasonable notice and during reasonable hours, officers or designated representatives of the Lender to visit and inspect the Borrower’s books of account and records and any of its properties or assets (in whomever’s possession) and to discuss the affairs, finances and accounts of the Borrower with, and be advised as to the same by, its officers, directors, partners and independent accountants. The Borrower shall pay the reasonable out-of-pocket costs of (i) one such inspection on an annual basis (provided the Lender determines to conduct such inspection) if Lender retains a third party to conduct such inspection and (ii) any such inspection and audit that may be conducted from time to time following an Event of Default; otherwise, the costs of any such inspection and audit shall be borne by the Lender.

 

Section 5.4                                    Compliance with Law.  The Borrower shall comply, and shall cause the QALICB to comply, in all material respects with all applicable laws, rules, regulations and orders of, and all applicable restrictions imposed by all Governmental Authorities, in respect of the Project, the conduct of its businesses and the UTHTCs.

 

Section 5.5                                    Ownership and Management of Borrower.

 

(a)                                 The ownership structure of the Borrower shall, at all times during the term of this Agreement, remain as it is on the date hereof, subject to Permitted Transfers.

 

(b)                                 Ron Beit-Halachmy or an entity directly or indirectly controlled by Ron Beit-Halachmy shall at all times control the day-to-day operations of the Borrower with respect to the Project and all financing pertaining thereto, including, but not limited to, this Loan and all decision to be made with respect thereto and under the Borrower’s Operating Agreement which are reasonably likely to have an effect on the Borrower as the borrower of the Loan or on the Project.

 

(c)                                  In the event that Ron Beit-Halachmy or an entity directly or indirectly controlled by Ron Beit-Halachmy is removed as the manager of the Borrower pursuant to the terms of the Borrower’s Operating Agreement, the manager may be replaced with a manager acceptable to the Lender in the Lender’s sole and absolute discretion; provided, however, that such replacement manager or an Affiliate thereof shall replace the Guarantor under the Guaranty of Recourse Obligations and the determination as to whether such replacement guarantor is an acceptable replacement shall also be in the sole and absolute discretion of the Lender.

 

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Section 5.6                                    Covenants re: UTHTCs.  In connection with the UTHTCs, the Borrower, or an Affiliate thereof, shall, and/or shall cause the QALICB, to:

 

(a)                                 timely comply with the terms and the conditions set forth in the Approval Letter including, but not limited to, a timely submission of progress reports that may be required by the NJEDA to preserve the approval of the UTHTCs;

 

(b)                                 timely submit to the NJEDA a certification of a certified public accountant of the eligible capital investment, or any other additional information requested by the NJEDA, as required pursuant to N.J. Admin. Code 19:31-9.7;

 

(c)                                  timely obtain, not less frequently than annually, an Annual Compliance Letter.  Specifically, in the context of obtaining the Annual Compliance Letter, the Borrower, or an Affiliate thereof, shall timely furnish a report to the NJEDA in a format as may be determined by the NJEDA which shall contain the following information:

 

(i)                                     documentary evidence that a deed restriction has been recorded against each Residential Component of the Project.  The deed restriction shall require that all residential units remain residential units until the eligibility period has expired;

 

(ii)                                  evidence that the residential units of the Project are not being used for non-residential purposes. Such evidence may include, but is not restricted to, rental receipts, municipal records, and/or a certification by a MAI appraiser or governmental official. Failure to submit a copy of the annual report or submission of the annual report, without the information required above, will result in forfeiture of any annual tax credits to be received by the business or tax credit holder unless the NJEDA determines that there are extenuating circumstances excusing the business or tax credit transferee from the timely filing required. The NJEDA reserves the right to audit any of the representations made and documents submitted in the annual report; and

 

(iii)                               any other information requested by the NJEDA;

 

(d)                                 comply with the requirement of the NJEDA that twenty percent (20%) of the residential units within the Project are required to be reserved for low or moderate income households, as those terms are defined by the New Jersey Department of Community Affairs;

 

(e)                                  to the extent the Borrower repays the Lender by transferring UTHTCs, the Borrower shall obtain from the Director of the New Jersey Division of Taxation and the Chief Executive Office of the NJEDA, a “Tax Credit Transfer Certificate,” as provided under N.J. Admin. Code 19:31-9.10, and in the form attached hereto as Exhibit E (a “Tax Credit Transfer Certificate”).  Additionally, the Borrower (or an Affiliate thereof) shall submit to the NJEDA an executed copy of this Agreement which states that the consideration received by the business is not less than 75% of the transferred UTHTCs, as provided under N.J. Admin. Code 19:31-9.10(b);

 

(f)                                   in the event of the sale or other conveyance of the Project, in whole or in part, the Borrower (or an Affiliate thereof) shall retain the UTHTCs and shall not assign UTHTCs to the purchaser, unless explicitly agreed to by the Lender;

 

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(g)                                  at all times during the period the Loan remains outstanding, the residential components of the Project shall constitute the preponderance thereof as it existed at the time of certification of the UTHTC amount (however, additions of commercial space to the Project shall not be considered in this determination); and

 

(h)                                 not later than September 15, 2014 submit all documentation necessary to receive from the Director of the Division of Taxation the Certificate, which documentation shall detail, among other items, (i) the total amount of the approved UTHTCs, (ii) the commencement of the eligibility period and (iii) the annual reporting requirements of the business; provided, however, notwithstanding anything to the contrary contained herein, if the Borrower is unable to provide such documentation with respect to the entire Project by September 15, 2014, the Borrower shall provide such documentation as is necessary to enable the Borrower to receive a Certificate for an amount of UTHTCs sufficient to repay the Loan on or before the Maturity Date and as contemplated on the Amortization Schedule.

 

Section 5.7                                    Net Worth Covenant.  At all times during the term of this Loan, the Borrower shall maintain a Net Worth (as hereinafter defined) of not less than $20,000,000.  Furthermore, at all times the Borrower shall not permit its ratio of contingent liabilities (other than that for environmental indemnities) and Indebtedness to Net Worth to exceed 6 to 1.  For purposes of this Agreement, the term “Net Worth” means total assets plus non-cash items (e.g., depreciation) minus total liabilities (exclusive of that portion of the QLICIs made to the QALICB which are evidenced by (x) the Loan B Notes and Loan C Notes (as such terms are defined in that certain Building Loan Agreement, dated as of the date hereof, by and among the QALICB, the CDEs and GSB NMTC Investor LLC, as administrative agent and (y) the Loan B Notes, Loan C Notes and Loan D Notes (as such terms are defined in that certain Building Loan Agreement, dated as of February 3, 2012, by and among Teacher’s Village School QALICB Urban Renewal, LLC, NJCC CDE Essex LLC, Gateway SubCDE I, LLC and TD Bank, N.A., as administrative agent) to the extent reflected as a liability in the books and records of the Borrower), all as set forth in a financial statement prepared by Borrower.  The Borrower shall provide to the Lender a certification of compliance with the terms of this Section 5.7 annually upon the anniversary of the date of this Agreement and otherwise within ten (10) business days after a request therefor from the Lender.

 

Section 5.8                                    Costs of Enforcement.  In the event (i) that this Agreement, the Note or any other Loan Document is put into the hands of any attorney for collection, or for any other claim, suit or action as against the Borrower, (ii) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of the Borrower or the Guarantor or an assignment by the Borrower or the Guarantor for the benefit of its creditors, or (iii) the Lender shall attempt to remedy any Default hereunder or incur any expense with respect to any Default (whether or not involving collection efforts), the Borrower shall be chargeable with and hereby agrees to pay all reasonable costs incurred by the Lender as a result thereof, including costs of collection and defense, including reasonable attorney’s fees (and experts’, consultants’ and witnesses’ fees) in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes; provided, however, that the Borrower shall not have any obligation to the Lender under this section for any expense arising from any litigation commenced by the Lender

 

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to the extent the same is determined adversely to the Lender or otherwise arises from the Lender’s gross negligence or willful misconduct.

 

Section 5.9                                    Estoppel Statement.  After written request by the Lender, the Borrower shall within ten (10) Business Days furnish the Lender with a statement, duly acknowledged and certified, setting forth (i) the outstanding principal amount of the Loan, (ii) to Borrower’s Knowledge, the then-current outstanding Debt, (iii) any offsets or defenses known to Borrower’s Knowledge to the payment of the Debt, (iv) that this Agreement, the Pledge and the other Loan Documents are in full force and effect as the valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification and (v) such other matters as the Lender may reasonably request.

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

The Borrower hereby covenants and agrees that, without prior written consent of the Lender:

 

Section 6.1                                    Indebtedness.  The Borrower will not incur any Indebtedness for borrowed money that will result in a breach by the Borrower of the provisions of Section 5.7 hereof.

 

Section 6.2                                    No Amendment of Documents.  It will not amend, modify or terminate, or permit the amendment, modification or termination of, or waive any rights or consent to any matters under (i) the Business Plan in any manner materially adverse to the Lender, or (ii) any of the organizational documents of the Borrower; provided, however, that modifications or amendments may be made to the Borrower’s Operating Agreement without Lender’s consent if such modifications or amendments do not relate to the Pledged Collateral, the Project, the Property or the management of Borrower (other than a modification or amendment solely for the purposes of reflecting a change in the manager or a change in the membership interests which is permitted pursuant to the terms of this Agreement) and does not result in any impairment to the rights of Lender with respect to the Loan, and notice of same is provided to Lender no later than five (5) Business Days after the execution of such modification or amendment.

 

Section 6.3                                    Liens.  Except for Permitted Liens, the Borrower will not (i) contract, create, incur, assume or permit to exist any Lien with respect to the UTHTCs and the Certificates unless same are released from the Pledged Collateral pursuant to the terms of the Pledge, (ii) sell any part of its properties or assets such that it shall cause a breach by the Borrower of the terms of Section 5.7 hereof or (iii) assign any of its right to receive income.

 

Section 6.4                                    Nature of Business.  It will not engage in any business other than the businesses in which it is currently engaged, and activities incidental thereto.

 

Section 6.5                                    Consolidation, Merger, Sale or Purchase of Assets, Etc.  (a) The Borrower will not dissolve, liquidate, or wind up its affairs, and (b) the Borrower will not (i) enter into any transaction of merger or consolidation, (ii)  other than with respect to Permitted

 

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Transfers, issue or permit or suffer the issuance of any direct or indirect ownership interests in the Borrower; or (iii) other than with respect to Permitted Transfers, permit or suffer any direct or indirect transfers of interest, including change in control, in the Borrower without the prior written consent of the Lender.

 

Section 6.6                                    Intentionally Deleted.

 

Section 6.7                                    Transactions with Affiliates.  The Borrower will not enter into any agreement, transaction or series of transactions with any Affiliate other than such agreements as are entered into on an arm’s length basis.

 

Section 6.8                                    Intentionally Deleted.

 

Section 6.9                                    Intentionally Deleted.

 

Section 6.10                             Intentionally Deleted.

 

Section 6.11                             Bankruptcy.  The Borrower will not file a voluntary proceeding under the Bankruptcy Code.

 

Section 6.12                             Limitation on Certain Activities.  The Borrower will not (and will not permit the QALICB to), without the prior written consent of the Lender, which shall not be unreasonably withheld:

 

(a)                                 engage in any activity other than the activities in which it is engaged in as of the Closing Date or any activities incidental thereto;

 

(b)                                 execute any material agreements not in the ordinary course of business or not required in accordance with a Business Plan;

 

(c)                                  commence, defend or settle any litigation, or confess a judgment in excess of $250,000;

 

(d)                                 use the name “Goldman Sachs” or any variant or representation thereof on any press release or other publicity or promotional information issued by the Borrower or the Guarantor (or any of their Affiliates) or any documents issued by or on behalf of the Borrower or the Guarantor (or any of their Affiliates) and disseminated beyond their legal counsel, and the parties to this transaction, or permit any such press release or other publicity or promotional information to be disseminated without first offering the Lender an opportunity to be referred to therein in a manner reasonably approved by the Lender;

 

(e)                                  except as permitted pursuant to Section 6.2 hereof, amend or modify the organizational documents of the Borrower;

 

(f)                                   modify the Business Plan;

 

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(g)                                  cause the QALICB to sell or otherwise dispose of the Project or any portion thereof if the Loan and all interest accrued and fees thereon are not paid in full simultaneously therewith in accordance with the terms of this Agreement;

 

(h)                                 other than as contemplated in the Business Plan, cause the QALICB to commence or allow, without the prior written consent of the Lender, any demolition, construction or other activity with respect to the Project that is of a nature that any party performing such demolition, construction or other activity would have a right to place a mechanic’s or materialmen’s lien on the Property;

 

(i)                                     amend, modify or terminate, or permit the amendment, modification or termination of, or waive any rights or consent to any matters under the documents evidencing the NMTC Transaction, the Direct Loan and/or the CRDA Loan;

 

(j)                                    alter the residential components of the Project such that the residential components do not constitute the preponderance thereof as it existed at the time of certification of the tax credit amount; and/or

 

(k)                                 engage in any activities that could result in recapture, reduction or forfeiture of UTHTCs.

 

ARTICLE VII

 

DEFAULTS

 

Section 7.1                                    Events of Default.  An Event of Default shall exist upon the occurrence of any of the following specified events (each, an “Event of Default”):

 

(a)                                 if any payment owed hereunder or under any other Loan Document shall not be paid within five (5) Business Days of the date that it is due;

 

(b)                                 if any portion of the Pledged Collateral is transferred or encumbered in any manner, other than as contemplated herein or in the Pledge, or any direct or indirect interest in the Borrower is transferred or assigned, except for Permitted Liens or Permitted Transfers or as otherwise permitted hereunder; or Section 5.5 shall be violated, and except for any transfer of interests in the Borrower to trusts or entities wholly owned by the Guarantor and/or immediate family members of the Guarantor established for the purposes of, or to immediate family members in connection with, estate planning, provided that the Guarantor continues to be the Controlling Person of the Borrower and notice of same is provided to the Lender;

 

(c)                                  if any representation or warranty made by the Borrower herein (including, but not limited to, Section 4.1(m) hereof) or in any other Loan Document shall be knowingly false or misleading in any material respect on or as of the date the representation or warranty was made;

 

(d)                                 if the Borrower, the Guarantor or the QALICB shall make an assignment for the benefit of creditors, or if the Borrower or the Guarantor shall generally not be paying their debts as they become due;

 

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(e)                                  if a receiver, liquidator or trustee shall be appointed for the Borrower or the QALICB, or if the Borrower, the QALICB or the Guarantor shall be adjudicated 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, the Borrower, the QALICB or the Guarantor nor if any proceeding for the dissolution or liquidation of the Borrower or the QALICB shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by the Borrower, the QALICB or the Guarantor, as applicable, upon the same not being discharged, stayed or dismissed within one hundred twenty (120) days;

 

(f)                                   if the Borrower attempts to assign or encumber its rights under this Agreement or under any other Loan Document or any interest herein or therein;

 

(g)                                  if an Event of Default as defined or described in any of the other Loan Documents occurs;

 

(h)                                 if any Loan Document shall fail to be in full force and effect or to give the Lender, in all material respects, the liens, rights, powers and privileges purported to be created thereby for thirty (30) days after the written notice to the Borrower from the Lender, or if the Borrower or any other Person shall assert that the Pledge or any other Loan Document is not in full force and effect or fails to give the Lender the liens, rights, powers and privileges purported to be created thereby;

 

(i)                                     if there shall be a default on the part of the Borrower with respect to this Agreement which is not otherwise specified in any other subsection of this Section 7.1 where such failure continues for (i) more than thirty (30) Business Days after written notice thereof, where the same can be cured by the payment of money, and (ii) more than thirty (30) days after written notice thereof, where the same cannot be cured by the payment of money; provided, however, that, with respect to a default described in clause (ii), if the failure is reasonably susceptible of cure but not within said 30-day period, then so long as the Borrower has promptly commenced and is diligently prosecuting such cure to completion, said 30-day period shall be extended by an additional sixty (60) days;

 

(j)                                    if the Borrower shall default beyond any applicable notice, grace or cure periods in any of its obligations with respect to any other Indebtedness for borrowed money in excess of $250,000, and the exercise by the lender thereunder of any of its rights with respect thereto is reasonably likely to have a Material Adverse Effect on the Borrower;

 

(k)                                 if the Borrower shall default beyond any applicable notice, grace or cure periods in the observance or performance of any material agreement or condition relating to any other Indebtedness in excess of $250,000 or contained in any instrument or agreement evidencing, or relating thereto, or any other event or condition shall occur or condition exist, the effect of which default or other event or condition causes the holder or holders of such Indebtedness (or trustee or the agent on behalf of such holders) to cause any such Indebtedness to become due prior to its stated maturity and such action is reasonably likely to have a Material Adverse Effect on the Borrower;

 

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(l)                                     if any Indebtedness in excess of $250,000 of the Borrower shall not be paid upon its scheduled maturity (as same may be extended), shall be declared (or shall become) due and payable prior to the stated maturity thereof or shall be required to be prepaid other than by a regularly scheduled required prepayment prior to the stated maturity thereof;

 

(m)                             one or more final judgments or decrees in excess of $250,000 shall be entered against the Borrower (not paid or fully covered by insurance provided by a carrier who has acknowledged coverage) and any such judgments or decrees shall not have been vacated, discharged, paid or stayed or bonded pending appeal within the time permitted to appeal therefrom and same is reasonably likely to have a Material Adverse Effect;

 

(n)                                 if the Guarantor fails (within applicable notice and cure periods) to comply with any covenants or are otherwise in default under the Guaranty;

 

(o)                                 any felony criminal conviction of the Borrower or the Guarantor;

 

(p)                                 if any federal tax lien exceeding $75,000 is filed against the Borrower or the Guarantor, or if any federal tax lien less than or equal to $250,000 is filed against the Borrower or the Guarantor and the same is not discharged of record within thirty (30) days after the same is filed;

 

(q)                                 if the Borrower fails to comply with the requirements set forth in Section 5.6 hereof or any other requirements of the NJEDA with respect to the UTHTCs (whether now or hereafter imposed) such that the Project fails to receive UTHTCs or if the Borrower engages in any activities or fails to engage in any applicable activities resulting in any recapture, reduction or forfeiture of UTHTCs whatsoever;

 

(r)                                    if the Project ceases to be constructed;

 

(s)                                   if there is a default under any of the construction financing for the Project, including, but not limited to, the NMTC Transaction, the Direct Loan and/or the CRDA Loan, and/or

 

(t)                                    if there is a material adverse change in the control (including a change in the Borrower), which may, in the reasonable opinion of the Lender, impair the Borrower’s ability to meet its obligations.

 

Section 7.2                                    Remedies.  Upon the occurrence and during the continuance of an Event of Default (provided, however, that the Lender has no obligation to accept a cure of an Event of Default), the Lender, by written notice to the Borrower, may take any of the following actions without prejudice to the rights of the Lender to enforce its claims against the Borrower:

 

(a)                                 Acceleration of Accrued Balance.  Declare all outstanding Debt to be due, whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; provided, however, that, notwithstanding the foregoing, if an Event of Default specified in Section 7.1(d) or (e) shall occur, then the outstanding Debt shall immediately become due and payable without the giving of any notice or other action by the Lender.

 

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(b)                                 Enforcement of Rights.  Enforce any and all Liens and security interests in favor of the Lender in respect of the outstanding Debt and any other amounts due, including, without limitation, all rights and interests created and existing under the Loan Documents and all rights of set-off.

 

(c)                                  Remedies with Respect to the Pledged Collateral.  Apply the proceeds of any exercise of remedies by the Lender with respect to any Pledged Collateral to payment of the following obligations, and the Lender may account for the purchase price of any sale by crediting the sales price against: (A) first, the expenses of the liquidation, sale or collection, the costs of any action and any other costs or expenses for which the Borrower is obligated; and (B) then, all other Debt, including, without limitation, all amounts then due, owing and unpaid for principal, interest and other amounts under this Agreement in such order and proportions as the Lender, in its discretion, may choose.

 

(d)                                 Other Remedies.  Exercise any other right or remedy available to the Lender under applicable law or in equity.

 

ARTICLE VIII

 

WAIVERS

 

Section 8.1                                    Waiver of Defenses.  The Borrower agrees that its obligations under this Agreement and the other Loan Documents are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents, or any other agreement or instrument referred to therein, or any substitution, release or exchange of any other guaranty of or security for the Debt, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense, it being the intent of this Section 8.1 that the obligations of the Borrower hereunder shall be absolute and unconditional under any and all circumstances.  Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Borrower hereunder which shall remain absolute and unconditional as described above:

 

(a)                                 at any time or from time to time, without notice to the Borrower, the time for any performance of, or compliance with, any obligations for the payment of all or any portion of the Debt may be extended, or such performance or compliance may be waived;

 

(b)                                 any of the acts required or contemplated in any of the provisions of any of the Loan Documents or any other agreement or instrument referred therein may be performed or omitted;

 

(c)                                  the maturity of all or any portion of the Debt may be accelerated as may be provided hereunder, or the Maturity Date may be extended, or all or any of portion of the Debt may be waived, modified, supplemented or amended in any respect, or any right under any of the Loan Documents or any other agreement or instrument referred to therein may be waived or extended or any other guaranty of all or any portion of the Debt or any security therefor may be released or exchanged in whole or in part or otherwise dealt with;

 

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(d)                                 the Lender receives and holds security for the payment of the Debt or any other indebtedness of the Borrower to the Lender and exchanges, enforces, waives, releases, fails to perfect, sells, or otherwise disposes of any such security;

 

(e)                                  the Lender applies such security and directs the order or manner of sale thereof as the Lender in its discretion may determine;

 

(f)                                   the Lender releases or substitutes all or any portion of the Debt or any other indebtedness of the Borrower to the Lender;

 

(g)                                  any Lien granted to, or in favor of, the Lender as security for all or any portion of the Debt shall fail to attach or be perfected;

 

(h)                                 all or any portion of the Debt or any Lien granted or purported to be granted in respect thereof shall be determined to be void or voidable or shall be subordinated to the claims of any Person; or

 

(i)                                     there shall occur any insolvency, bankruptcy, reorganization or dissolution of the Borrower.

 

With respect to its obligations hereunder, the Borrower hereby expressly waives diligence, presentment, demand of payment (except for such demands provided for in the Loan Documents), protest and all notices (except for notices provided for in the Loan Documents) whatsoever, and any requirement that the Lender exhaust any right, power or remedy or proceed against any Person under any of the Loan Documents or any other agreement or instrument referred to therein, or against any other Person under any other guaranty of, or security for, or obligation relating to, all or any portion of the Debt.

 

Section 8.2                                    Reinstatement.  The obligations of the Borrower hereunder shall be automatically reinstated if and to the extent that for any reason any payment or performance by or on behalf of any Person in respect of the Debt is rescinded or must be otherwise restored by any holder of any of the Debt, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and the Borrower agrees that it will pay to the Lender on demand all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable fees of counsel) incurred by the Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

 

Section 8.3                                    Certain Additional Waivers.  Without limiting the generality of the provisions of any other provision of this Article VIII, the Borrower hereby specifically waives: (a) promptness, diligence, notice of acceptance and any other notice (except for notices provided for in the Loan Documents) with respect to all or any portion of the Debt or any other obligations under the Loan Documents or this Article VIII, (b) any requirement that the Lender or any other Person protect, secure or insure any Lien or any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral or undertake any marshalling of assets, (c) any right to direct the order of enforcement of remedies, (d) any defense arising by reason of any claim or defense based upon an election of remedies by the

 

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Lender which in any manner impairs, reduces, releases or otherwise adversely affects its subrogation, contribution or reimbursement rights or other rights to proceed against the Borrower or any other Person or any collateral, (e) any duty on the part of the Lender to disclose to the Borrower any matter, fact or thing relating to the business, operation or condition of the Borrower or any other party to any of the Loan Documents and their assets now known or hereafter known by the Lender, and (f) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of the guaranty provided for in this Article VIII (except for demands and notices provided for in the Loan Documents) and, without Lender’s prior written consent, the existence, creation, or incurrence of new or additional Indebtedness.

 

Section 8.4                                    Costs of Enforcement.  In the event (i) that this Agreement or any other Loan Document is put into the hands of an attorney for collection, suit or action as against the Borrower, (ii) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of the Borrower or assignment by the Borrower for the benefit of its creditors, or (iii) the Lender shall attempt to remedy any Default hereunder, the Borrower, its successors or assigns, shall be chargeable with and agrees to pay all reasonable costs and expenses incurred by the Lender as a result thereof, including costs of collection and defense, including reasonable attorneys’ fees (and experts’, consultants’ and witnesses’ fees) in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes; provided, however, that the Borrower shall not have any obligation to the Lender under this section for any expense arising from any litigation commenced by the Lender to the extent the same is determined adversely to the Lender or otherwise arises from the Lender’s gross negligence or willful misconduct.

 

Section 8.5                                    Exculpation. The obligations under this Agreement and the Loan Documents (other than the Guaranty of Recourse Obligation which shall be recourse to the Guarantor) shall be recourse only to the Borrower but, notwithstanding anything to the contrary herein, at law or in equity (other than in the Guaranty of Recourse Obligations with respect to the Guarantor) shall in all events be non-recourse to the members of the Borrower and their respective officers, directors, employees, members, partners and affiliates (collectively, the “Exculpated Parties”), and accordingly, the Lender shall not enforce the liability and obligation of the Borrower to perform and observe the obligations contained in this Agreement or any other Loan Document or any other obligation or liability of the Borrower hereunder by an action or proceeding wherein a money judgment or any other remedy shall be sought against any of the Exculpated Parties or their respective assets. The Lender, by entering into this Agreement, agrees that it shall not sue for, seek or demand any deficiency judgment or take any other action or seek any other legal or equitable remedy against any Exculpated Party in any action or proceeding, under, by reason of or in connection with this Agreement or any of the Loan Documents (other than the Guaranty of Recourse Obligations with respect to the Guarantor thereunder).

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1                                    Survival.  This Agreement and all covenants, agreements, indemnities, representations and warranties made herein and in the certificates delivered pursuant

 

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hereto shall survive the issuance of the Loan and the execution and delivery to the Lender of the Note, and shall continue in full force and effect so long as all or any of the Debt is outstanding and unpaid.  Whenever in this Agreement any Person is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such Person (provided that the foregoing shall not be deemed to permit any transfer of any ownership interest that is otherwise prohibited hereunder).  All covenants, promises and agreements in this Agreement contained, by or on behalf of the Borrower shall inure to the benefit of the successors and assigns of the Lender.

 

Section 9.2                                    Governing Law; Consent to Jurisdiction.

 

(a)                                 THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY THE LENDER AND ACCEPTED BY THE BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.  TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND ANY OTHER LOAN DOCUMENT, 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 § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.  NOTWITHSTANDING THE FOREGOING, THE PROVISIONS OF THIS AGREEMENT RELATING TO THE UTHTCs AND THE CERTIFICATES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY.

 

(b)                                 ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST THE LENDER OR THE BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO § 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING AND HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.  EACH BORROWER DOES HEREBY AGREE THAT SERVICE OF PROCESS UPON THE BORROWER MAILED OR DELIVERED TO THE BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.

 

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(c)                                  The Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Loan Document brought in the courts referred to in subsection (b) hereof and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.

 

Section 9.3                                    Modification, Waiver in Writing.  No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, the Note or any other Loan Document, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given.  Except as otherwise expressly provided herein, no notice to, or demand on the Borrower shall entitle the Borrower to any other or future notice or demand in the same, similar or other circumstances.

 

Section 9.4                                    Delay Not a Waiver.  Neither any failure nor any delay on the part of the 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, the 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 9.5                                    Notices.  All notices, consents, approvals and requests required or permitted hereunder or under any other Loan Document shall be given in writing (regardless whether the provision in question requires that notice be in writing) and shall be effective for all purposes if hand delivered or sent by expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery, 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):

 

If to the Lender:

 

Goldman Sachs Bank USA 
 200 West Street
 New York, New York  10282-2198 
 Attention: Margaret Anadu

 

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with a copy to:

 

Goldman Sachs Bank USA
 200 West Street
 New York, New York  10282-2198
 Attention: Andrea Gift

 

with an electronic copy to:

 

gs-uig-docs@gs.com

 

with a copy to:

 

Jones Day
 222 East 41st Street
 New York, New York  10017
 Attention:  Steven C. Koppel, Esq.

 

If to Borrower:

 

c/o RBH Group 
 89 Market Street, 8th Floor
 Newark, New Jersey 07102
 Attention: Ron Beit-Halachmy

 

with a copy to:

 

McManimon, Scotland & Baumann, LLC 
 75 Livingston Avenue, 2nd Floor
 Roseland, New Jersey 07068
 Attention: Leah Sandbank, Esq.

 

with a copy to:

 

Hunton & Williams LLP 
 200 Park Avenue
 New York, New York 10166
 Attention: Laure A. Grasso, Esq.

 

A notice shall be deemed to have been given: in the case of hand delivery, at the time of delivery; or in the case of expedited prepaid delivery, upon the delivery (or refusal) thereof.

 

Section 9.6                                    Trial by Jury.  THE BORROWER AND THE LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION

 

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ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY THE BORROWER AND THE LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  EITHER PARTY HERETO IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.

 

Section 9.7                                    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 9.8                                    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 9.9                                    Preferences.  The Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by the Borrower to any portion of the obligations of the Borrower hereunder.  To the extent the Borrower makes a payment or payments to the 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 the Lender.  The foregoing is without limitation of the rights in favor of the Lender set forth in Article VIII.

 

Section 9.10                             Waiver of Notice.  The Borrower shall not be entitled to any notices of any nature whatsoever from the 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 the Lender to the Borrower and except with respect to matters for which the Borrower is not, pursuant to applicable law, permitted to waive the giving of notice.  The Borrower hereby expressly waives the right to receive any notice from the 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 the Lender to the Borrower.

 

Section 9.11                             Sole Discretion of Lender.  Except as may otherwise be expressly provided to the contrary, wherever pursuant to this Agreement, the Note, the Pledge or any other Loan Document now or hereafter executed and delivered in connection therewith or otherwise with respect to the Loan, Lender exercises any right given to it to consent or not consent, or to approve or disapprove, or any arrangement or term is to be satisfactory to the Lender, the decision of the Lender to consent or not consent, or to approve or disapprove or to decide that arrangements or terms are satisfactory or not satisfactory, shall be in the sole and absolute discretion of the Lender and shall be final and conclusive.

 

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Section 9.12                             Remedies of the Borrower.  In the event that a claim or adjudication is made that the Lender has acted unreasonably or unreasonably delayed acting in any case where by law or under this Agreement or the other Loan Documents, the Lender has an obligation to act reasonably or promptly, the Borrower agrees that the Lender, and its agents, shall not be liable for any monetary damages, and the Borrower’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment, except in any case where it is determined that the Lender has acted with willful misconduct or gross negligence.  The parties hereto agree that any action or proceeding to determine whether the Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

 

Section 9.13                             Expenses; Indemnity.

 

(a)                                 The Borrower covenants and agrees to reimburse the Lender upon receipt of written notice from the Lender for all reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable attorneys’ fees and disbursements) incurred by or on behalf of the Lender in connection with: (i) the negotiation, preparation, execution, delivery and administration of all Loan Documents and taking of collateral, including, but not limited to, any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by the Lender; (ii) 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 this Agreement, the other Loan Documents or any other security given for the Loan; and (iii) enforcing any obligations of or collecting any payments due from the Borrower under this Agreement or the other Loan Documents 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.

 

(b)                                 The Borrower shall indemnify and hold harmless the Lender and its Affiliates, officers, partners, directors, employees and agents, from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for the Lender in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not the Lender shall be designated a party thereto), that may be imposed on, incurred by, or asserted against the Lender in any manner relating to or arising out of the transactions contemplated hereby, including environmental liabilities, as well as, any breach by the Borrower of its obligations under, or any material misrepresentation by the Borrower contained in this Agreement or the other Loan Documents.

 

(c)                                  For the avoidance of doubt, the Lender will not have any liability for any special, punitive, consequential, or indirect damages in connection with the Loan Documents.

 

Section 9.14                             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 9.15                             No Joint Venture or Partnership.  The parties hereto intend that the relationships created hereunder and under the other Loan Documents be solely that of creditor

 

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and debtor.  Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between or among the parties hereto nor to grant the Lender any interest other than that of a lender/creditor secured pursuant to the terms of the Loan Documents.

 

Section 9.16                             Publicity.  All news releases, publicity or advertising by the Borrower or its Affiliates which it controls through any media intended to reach the general public which refers to the Loan Documents, the financing evidenced by the Loan Documents, the Lender or its Affiliates shall be subject to the prior written approval of the Lender.

 

Section 9.17                             Waiver of Marshaling of Assets.  To the fullest extent the Borrower may legally do so, the Borrower waives all rights to a marshalling of the assets of the Borrower, its owners, if any, and others with interests in such Person, or to a sale in inverse order of alienation in the event of foreclosure of the interests hereby created, 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 the Lender under the Loan Documents to a sale of the Pledged Collateral for the collection of the Debt without any prior or different resort for collection, of the right of the Lender to the payment of the Debt out of the net proceeds of the Pledged Collateral or any interest therein in preference to every other claimant whatsoever.  In addition, the Borrower, for itself and its successors and assigns, waives in the event of foreclosure of any or all of the Liens, any equitable right otherwise available to the Borrower which would require the separate sale of the Pledged Collateral or require the Lender to exhaust its remedies against any part of the Pledged Collateral before proceeding against any other part or parts thereof; and further in the event of such foreclosure the Borrower does hereby expressly consent to and authorize, at the option of the Lender, the foreclosure and sale either separately or together of any or all of the Pledged Collateral.

 

Section 9.18                             Conflict; Construction of Documents.  In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control.  The parties hereto acknowledge that they were represented by counsel in connection with the negotiation and drafting 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.  In case any provision in or obligation hereunder or under any other of the Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or such provision or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default of an Event of Default if such action is taken or condition exists.

 

Section 9.19                             Brokers and Financial Advisors.  Other than as disclosed by the Borrower in the Business Plan, each of the Lender and the Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, lenders or finders in connection with the transactions contemplated by this Agreement.  The Borrower hereby

 

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indemnifies the Lender and holds it harmless from and against any and all claims, liabilities, costs and expenses of any kind in any way relating to or arising from a claim by any Person that such Person acted on behalf of the Borrower in connection with the transactions contemplated herein.  The provisions of this Section shall survive the expiration and termination of this Agreement and the repayment of the Debt.

 

Section 9.20                             No Third Party Beneficiaries.  This Agreement and the other Loan Documents are solely for the benefit of the Borrower and the Lender, and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than such Persons 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 the issuance of the Loan hereunder are imposed solely and exclusively for the benefit of the 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 the Lender will refuse to issue all or any portion of 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 the Lender if, in its sole discretion, it deems it advisable or desirable to do so.

 

Section 9.21                             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, between the Borrower and the Lender with respect to the subject matter hereof, are superseded by the terms of this Agreement and the other Loan Documents.

 

Section 9.22                             Counterparts.  This Agreement may be executed in any number of counterparts, each of which were so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

 

Section 9.23                             Payment of Expenses, Etc.  The Borrower agrees to:

 

(a)                                 pay and hold the Lender harmless from and against any and all present and future stamp and other similar taxes arising out of the transactions contemplated hereby and save the Lender harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to the Lender) to pay such taxes; and

 

(b)                                 indemnify the Lender, its officers, directors, employees, representatives and agents (each a “Lender Party”) from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investigation, litigation or other proceeding (whether or not the Lender is a party thereto) related to the entering into and/or performance of any Loan Document or the use of proceeds of the Loan hereunder or the consummation of any other transactions contemplated in any Loan Document, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of gross negligence, willful misconduct or fraudulently

 

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on the part of any Lender Party to be indemnified as determined by a final, non-appealable judgment of a court of competent jurisdiction).

 

Section 9.24                             Amendments, Waivers and Consents.  Neither this Agreement nor any other Loan Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated, nor shall any consent or approval be deemed granted hereunder, unless such amendment, change, waiver, discharge, termination, consent or approval is in writing signed by the Borrower and the Lender.

 

Section 9.25                             Transfers, Sales and Participations.  Notwithstanding anything to the contrary contained herein, the Lender shall have the right to transfer, sell, convey or participate any or all of the Loan to any Permitted Lender Transferee of its choosing without any consent of the Borrower and, in connection therewith, each Borrower acknowledges that the Lender shall have the right to deliver to such party information relating to the Borrower and its Affiliates, the Guarantor, the Loan and the Loan Documents, as is reasonably necessary to facilitate such transfer, sale, conveyance or participation, subject to the provisions of Section 9.26 hereof.

 

Section 9.26                             No Fiduciary Duty.  The Lender and its Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Borrower and/or their Affiliates.  The Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Lender or its Affiliates, on the one hand, and Borrower or its Affiliates, on the other.  The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrower or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise the Borrower, its stockholders or its Affiliates on other matters) or any other obligation to the Borrower except the obligations expressly set forth in the Loan Documents and (y) the Lender is acting solely as principal and not as the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other Person.  The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  The Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transaction or the process leading thereto.

 

Section 9.27                             Confidentiality.  The Lender shall hold all non-public information regarding the Guarantor, the Borrower and their respective subsidiaries and their businesses identified as such by the Borrower and/or Guarantor and obtained by the Lender pursuant to the requirements hereof in accordance with the Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed by the Borrower that, in any event, the Lender may make (i) disclosures of such information to Affiliates of the Lender

 

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and to its agents and advisors (and to other Persons authorized by the Lender to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this section), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation of the Loan or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) (provided, such assignees, transferees, participants, counterparties and advisors are advised of and agree to be bound by either the provisions of this section or other provisions at least as restrictive as this section), (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Borrower or Guarantor received by it from the Lender, (iv) disclosures in connection with the exercise of any remedies hereunder or under any other Loan Document and (v) disclosures required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, the Lender shall make reasonable efforts to notify Borrower and/or the Guarantor of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of the Lender by such governmental agency) for disclosure of any such non public information prior to disclosure of such information.

 

Section 9.28                             Patriot Act.  The Lender hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the PATRIOT Act.

 

Section 9.29                             Benefit of Agreement.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided, however, that the Borrower may not assign and transfer any of its rights or obligations hereunder without prior written consent of the Lender.

 

[Signatures appear on following pages]

 

41

 

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.

 

 

	
 
    	
 
    	
Borrower:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
RBH-TRB   NEWARK HOLDINGS, LLC,
    
	
 
    	
 
    	
a   New York limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Ron Beit-Halachmy
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Lender:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GOLDMAN   SACHS BANK USA,
    
	
 
    	
 
    	
a   New York State chartered bank
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

 

EXHIBIT A

 

Intentionally Deleted

 

 

EXHIBIT B

 

Form of Pledge Agreement

 

 

EXHIBIT C

 

Form of Note

 

 

EXHIBIT D

 

NJEDA Approval Letter

 

 

EXHIBIT E

 

Form of Tax Credit Transfer Certificate

 

 

EXHIBIT F

 

Intentionally Deleted

 

 

EXHIBIT G

 

Amortization Schedule

 

 

EXHIBIT H

 

Evaluation Materials

 

The Borrower shall initiate the Lender’s 15 Business Day review period of any Proposed Financing with delivery of standard and customary underwriting information as well as any other materials that the Lender shall reasonably request.  These materials should include but are not limited to:

 

·                  Project location

 

·                  Street address and/or block and lot information

 

·                  Description of area

 

·                  Project overview / description

 

·                  Highlights

 

·                  Approximate gross square footage with breakdown for parking, residential, retail/commercial, etc.

 

·                  Approximate net square footage with breakdown for parking, residential, retail/commercial, etc

 

·                  Approximate number of units

 

·                  Projected number of floors

 

·                  Type of construction

 

·                  Anticipated amenities

 

·                  Current site use

 

·                  Projected project timeline

 

·                  Information regarding land purchase as well as any existing land loan

 

·                  Current site zoning information and necessary adjustments and variances to execute the Project as conceived

 

·                  Project Budget that distinguishes between what is required for land acquisition/pre-development versus the Project construction phase(s)

 

·                  Sources and uses of capital as well as projected profits

 

·                  Market overview

 

·                  Comparable sales or rental information regarding all that apply: residential, parking, retail/commercial, etc.

 

·                  Description of any known product in the pipeline

 

Such other materials as may be reasonably requested by the Lender during its 15 Business Day review period based upon a review of the materials submitted in accordance with the foregoing list

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