EXHIBIT 10 (xiii)
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LOAN AGREEMENT
Dated as of May 22, 1998
Between
BSRT Lexington B Corp. and
BSRT Lexington Trust,
as Borrower
and
NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation
as Lender
TABLE OF CONTENTS
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Page
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION . . . . . 1
Section 1.1 DEFINITIONS. . . . . . . . . . . . . . . . 1
Section 1.2 PRINCIPLES OF CONSTRUCTION . . . . . . . . 11
ARTICLE II. GENERAL . . . . . . . . . . . . . . . . . . . . 12
Section 2.1 THE LOAN . . . . . . . . . . . . . . . . . 12
2.1.1 COMMITMENT. . . . . . . . . . . . . . . . . 12
2.1.2 DISBURSEMENT TO BORROWER. . . . . . . . . . 12
2.1.3 THE NOTE. . . . . . . . . . . . . . . . . . 12
2.1.4 USE OF PROCEEDS OF LOAN . . . . . . . . . . 12
Section 2.2 INTEREST; MONTHLY PAYMENTS . . . . . . . . 12
2.2.1 GENERALLY . . . . . . . . . . . . . . . . . 12
2.2.2 ACCRUED INTEREST. . . . . . . . . . . . . . 13
2.2.3 PROPERTY CASH FLOW ALLOCATION AFTER THE OPTIONAL
PREPAYMENT DATE. . . . . . . . . . . . . . . . . . . . . . . 13
2.2.4 DEFAULT RATE. . . . . . . . . . . . . . . . 13
2.2.5 PROPERTY CASH FLOW ALLOCATION AFTER AN EVENT OF
DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2.6BUSINESS PURPOSE. . . . . . . . . . . . . . . 14
Section 2.3 LOAN REPAYMENT; REPAYMENT AT THE EARNOUT DATE;
DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3.1 REPAYMENT . . . . . . . . . . . . . . . . . 14
2.3.2 THE EARNOUT; DETERMINATION OF DEBT SERVICE
COVERAGE RATIO AND NEED FOR LOAN BALANCING.. . . . . . . . . 14
2.3.3 ROLLOVER RESERVE DEPOSITS DURING THE EARNOUT
PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3.4 THE EARNOUT DATE; RESTATEMENT OF LOAN TERMS IF NO
REBALANCING EVENT OCCURS.. . . . . . . . . . . . . . . . . . 14
2.3.5 THE EARNOUT DATE; RESTATEMENT OF LOAN TERMS IF A
REBALANCING EVENT HAS OCCURRED.. . . . . . . . . . . . . . . 15
2.3.6 MANDATORY PREPAYMENTS . . . . . . . . . . . 15
2.3.7 VOLUNTARY DEFEASANCE OF THE NOTE. . . . . . 16
Section 2.4 RELEASE OF PROPERTY. . . . . . . . . . . . 18
2.4.1 RELEASE OF THE PROPERTY . . . . . . . . . . 18
2.4.2 RELEASE ON PAYMENT IN FULL. . . . . . . . . 18
2.4.3 PARTIAL RELEASE OF COLLATERAL . . . . . . . 18
2.4.4 SUBSTITUTION OF COLLATERAL. . . . . . . . . 18
2.4.5 ADDITION OF COLLATERAL AFTER EARNOUT DATE . 19
Section 2.5 PAYMENTS AND COMPUTATIONS. . . . . . . . . 19
2.5.1 MAKING OF PAYMENTS. . . . . . . . . . . . . 19
2.5.2 COMPUTATIONS. . . . . . . . . . . . . . . . 20
2.5.3 LATE PAYMENT CHARGE . . . . . . . . . . . . 20
Section 2.6 CASH MANAGEMENT ARRANGEMENTS . . . . . . . 20
2.6.1 THE CLEARING ACCOUNTS . . . . . . . . . . . 20
2.6.2 THE DEPOSIT ACCOUNT . . . . . . . . . . . . 20
2.6.3 ALL RENTS TO BE DEPOSITED INTO ACCOUNT A. . 20
2.6.4 SECURITY DEPOSITS . . . . . . . . . . . . . 20
2.6.5 FUNDS WHICH ARE NOT CURRENT RENTS . . . . . 20
2.6.6 CASH MANAGEMENT DEFINITIONS . . . . . . . . 20
2.6.7 CASH MANAGEMENT EVENT . . . . . . . . . . . 21
2.6.8 DEPOSIT ACCOUNT SUBACCOUNTS . . . . . . . . 21
2.6.9 DISBURSEMENTS TO BORROWER . . . . . . . . . 21
Section 2.7 INTEREST RATE BUY-UP . . . . . . . . . . . 22
2.7.1 THE BUY-UP. . . . . . . . . . . . . . . . . 22
2.7.2 RETURN-OF-AMOUNTS DEFINITIONS . . . . . . . 22
2.7.3 PAYMENT OF RETURN-OF-AMOUNTS. . . . . . . . 24
ARTICLE III. CONDITIONS PRECEDENT . . . . . . . . . . . . . 24
Section 3.1 CONDITIONS PRECEDENT TO THE LOAN . . . . . 24
ARTICLE IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . 27
Section 4.1 BORROWER REPRESENTATIONS . . . . . . . . . 27
Section 4.2 SURVIVAL OF REPRESENTATIONS. . . . . . . . 35
ARTICLE V. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . 35
Section 5.1 BORROWER COVENANTS . . . . . . . . . . . . 35
ARTICLE VI. NEGATIVE COVENANTS. . . . . . . . . . . . . . . 41
Section 6.1 BORROWER'S NEGATIVE COVENANTS. . . . . . 41
ARTICLE VII. CASUALTY; CONDEMNATION; ESCROWS. . . . . . . . 43
Section 7.1 INSURANCE; CASUALTY AND CONDEMNATION.. . . 43
7.1.1 INSURANCE.. . . . . . . . . . . . . . . . . 43
7.1.2 CASUALTY AND APPLICATION OF PROCEEDS. . . . 44
7.1.3 CONDEMNATION. . . . . . . . . . . . . . . . 46
Section 7.2 REQUIRED REPAIR; REQUIRED REPAIR FUNDS . . 47
7.2.1 REQUIRED REPAIRS: DEPOSITS. . . . . . . . . 47
7.2.2 GRANT OF SECURITY INTEREST. . . . . . . . . 48
7.2.3 RELEASE OF REQUIRED REPAIR FUNDS. . . . . . 48
7.2.4 FAILURE TO PERFORM REQUIRED REPAIRS . . . . 48
Section 7.3 TAX AND INSURANCE ESCROW FUND. . . . . . . 48
7.3.1 TAX AND INSURANCE ESCROW FUND . . . . . . . 48
7.3.2 GRANT OF SECURITY INTEREST. . . . . . . . . 49
7.3.3 APPLICATION OF TAX AND INSURANCE ESCROW FUND 49
Section 7.4 CAPITAL RESERVE FUND . . . . . . . . . . . 50
7.4.1 CAPITAL RESERVE FUND. . . . . . . . . . . . 50
7.4.2 GRANT OF SECURITY INTEREST. . . . . . . . . 50
7.4.3 APPLICATION OF CAPITAL RESERVE FUND . . . . 50
7.4.4 PAYMENT OF CAPITAL EXPENSES . . . . . . . . 50
Section 7.5 ROLLOVER RESERVE FUND. . . . . . . . . . . 51
7.5.1 ROLLOVER RESERVE FUND. . . . . . . . . . . . 51
7.5.2 ROLLOVER RESERVE FUND-LEASE TERMINATION PAYMENTS 51
7.5.3 GRANT OF SECURITY INTEREST. . . . . . . . . 51
7.5.4 APPLICATION OF ROLLOVER RESERVE FUND. . . . 51
7.5.5 PAYMENT OF APPROVED LEASING EXPENSES. . . . 52
Section 7.6 SECURITY DEPOSITS. . . . . . . . . . . . . 52
7.6.1 SECURITY DEPOSIT FUND . . . . . . . . . . . 52
7.6.2 GRANT OF SECURITY INTEREST. . . . . . . . . 52
7.6.3 APPLICATION OF SECURITY DEPOSIT ACCOUNT . . 52
7.6.4 PAYMENT OF SECURITY DEPOSIT ACCOUNT AMOUNTS 52
ARTICLE VIII. DEFAULTS. . . . . . . . . . . . . . . . . . . 53
Section 8.1 EVENT OF DEFAULT . . . . . . . . . . . . . 53
Section 8.3 REMEDIES CUMULATIVE. . . . . . . . . . . . 55
ARTICLE IX. SPECIAL PROVISIONS. . . . . . . . . . . . . . . 55
Section 9.1 SALE OF NOTE AND SECURITIZATION. . . . . . 55
Section 9.2 SECURITIZATION INDEMNIFICATION . . . . . . 56
Section 9.3 RATING SURVEILLANCE. . . . . . . . . . . . 58
Section 9.4 EXCULPATION. . . . . . . . . . . . . . . . 58
Section 9.5 TERMINATION OF MANAGER . . . . . . . . . . 60
Section 9.6 RETENTION OF SERVICER. . . . . . . . . . . 60
X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 60
Section 10.1 SURVIVAL . . . . . . . . . . . . . . . . . 60
Section 10.2 SUCCESSORS AND ASSIGNS . . . . . . . . . . 60
Section 10.3 LENDER'S DISCRETION . . . . . . . . . . . 60
Section 10.4 GOVERNING LAW . . . . . . . . . . . . . . 60
Section 10.5 MODIFICATION, WAIVER IN WRITING . . . . . 61
Section 10.6 DELAY NOT A WAIVER. . . . . . . . . . . . 61
Section 10.7 NOTICES . . . . . . . . . . . . . . . . . 62
Section 10.8 TRIAL BY JURY . . . . . . . . . . . . . . 62
Section 10.9 HEADINGS. . . . . . . . . . . . . . . . . 63
Section 10.10 SEVERABILITY . . . . . . . . . . . . . . 63
Section 10.11 PREFERENCES. . . . . . . . . . . . . . . 63
Section 10.12 WAIVER OF NOTICE . . . . . . . . . . . . 63
Section 10.13 JOINT AND SEVERAL LIABILITY. . . . . . . 63
Section 10.14 EXPENSES; INDEMNITY. . . . . . . . . . . 63
Section 10.15 EXHIBITS INCORPORATED. . . . . . . . . . 64
Section 10.16 OFFSETS, COUNTERCLAIMS AND DEFENSES. . . 64
Section 10.17 NO JOINT VENTURE OR PARTNERSHIP. . . . . 64
Section 10.18 PUBLICITY. . . . . . . . . . . . . . . . 64
Section 10.19 WAIVER OF MARSHALLING OF ASSETS. . . . . 65
Section 10.20 WAIVER OF COUNTERCLAIM . . . . . . . . . 65
Section 10.21 CONFLICT; CONSTRUCTION OF DOCUMENTS. . . 65
Section 10.22 BROKERS AND FINANCIAL ADVISORS . . . . . 65
Section 10.23 NO THIRD PARTY BENEFICIARIES . . . . . . 65
Section 10.24 PRIOR AGREEMENTS . . . . . . . . . . . . 65
SCHEDULES
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Schedule 1 Rent Roll
Schedule 2 Required Repairs
EXHIBITS
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Exhibit A The Note
Exhibit B Intentionally Omitted
Exhibit C Intentionally Omitted
Exhibit D The Property And The Allocated Loan Amounts
Exhibit E Permitted Encumbrances
Exhibit F Form of Zoning Letter
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is dated as of May 22, 1998 and is
made by BSRT Lexington B Corp., an Illinois corporation ("Lexington B") and
BSRT Lexington Trust, a Massachusetts business trust ("Lexington Trust")
(Lexington B and Lexington Trust are each referred to as an "Owner" and
collectively, together with their respective successors and assigns,
referred to as "Borrower"), and NOMURA ASSET CAPITAL CORPORATION, a
Delaware corporation (together with its successors and assigns, "Lender").
All capitalized terms used herein shall have the respective meanings
assigned to them in this Agreement, including the meanings set forth in
Section 1.1 hereof.
RECITALS
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WHEREAS, Borrower desires to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan
Documents;
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in
this Agreement, the parties hereto hereby covenant, agree, represent and
warrant as follows:
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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Section 1.1 DEFINITIONS. For all purposes of this Agreement, except
as otherwise expressly required or unless the context clearly indicates a
contrary intent:
"Account A" shall have the meaning set forth in Section 2.6.
"Account B" shall have the meaning set forth in Section 2.6.
"Accrued Interest" shall have the meaning set forth in Section 2.2.2.
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such Person
or of an Affiliate of such Person.
"Allocated Loan Amount" shall mean for any Parcel the amount of the
Loan indicated on Exhibit D as the Allocated Loan Amount for that Parcel.
"ALTA" shall mean the American Land Title Association, or any
successor thereto.
"Amortized Amount" shall have the meaning set forth in Section 2.7.2.
"Annual Budget" shall have the meaning set forth in Section 5.1(r).
"Approved Capital Expenses" shall mean Capital Expenses incurred by
Borrower with respect to the Property which (i) are included in the
approved Capital Budget for the Current Month for the Property, (ii) are
not included in the approved Capital Budget for the Current Month but do
not cause either (A) the relevant line item for the entire year covered by
the approved Capital Budget for the Property to be exceeded by more than 5%
or (B) the total of the approved Capital Budget for the Property for the
Current Month and all prior months covered by such approved Capital Budget
(i.e., year to date) to be exceeded, or (iii) have been approved by the
Lender; provided, however that prior to the occurrence of a Cash Management
Event, "Approved Capital Expenses" shall mean any Capital Expenses incurred
by Borrower with respect to the Property in the ordinary course of business
and are paid to third parties that are not Affiliates of any Owner or
Banyan.
"Approved Leasing Expenses" shall mean expenses incurred in leasing
space at the Property pursuant to Leases entered into in accordance with
the provisions of Section 5.1(u) and the applicable provisions of the
Mortgage, including brokerage commissions, tenant improvements and other
inducements, which expenses are incurred in the ordinary course of business
and are paid to third parties that are not Affiliates of any Owner or
Banyan.
"Approved Operating Expenses" shall mean Operating Expenses incurred
by Borrower with respect to the Property which (i) are included in the
approved Operating Budget for the Property for the Current Month, (ii) are
not included in the approved Operating Budget for the Property for the
Current Month but do not cause the relevant line item for the Current Month
or the total of such approved Operating Budget for the Current Month to be
exceeded by more than 5%, (iii) are for electric, gas, oil, water, sewer or
other utility service to the Property or (iv) have been approved by the
Lender; provided, however that prior to the Optional Prepayment Date,
"Approved Operating Expenses" shall mean Operating Expenses incurred by
Borrower with respect to the Property in the ordinary course of business
and are paid to third parties that are not Affiliates of any Owner or
Banyan.
"Assignment of Agreements" shall mean, with respect to the Property,
that certain first priority Assignment of Agreements, Licenses, Permits and
Contracts dated as of the date hereof, from Borrower, as assignor, to
Lender, as assignee, assigning to Lender as security for the Loan, to the
extent assignable under law, all of Borrower's interest in and to the
Management Agreements and all other licenses, permits and contracts
necessary for the use and operation of the Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time
to time.
"Assignment of Leases" shall mean, with respect to each of the
respective Parcels, those certain first priority Assignment of Leases and
Rents dated as of the date hereof, from each of the Owners, as assignor, to
Lender, as assignee, assigning to Lender as security for the Loan, to the
extent assignable under law, all of the respective Owners' interests in and
to the Rents and Leases for the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Award" shall have the meaning set forth in Section 7.1.3.
"Banyan" shall mean Banyan Strategic Realty Trust.
"Borrower" shall mean all of the Owners, jointly and severally.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York, New York or Chicago,
Illinois are not required to be open for business.
"Buy-Up Amount" shall have the meaning set forth in Section 2.7.1.
"Capital Budget" shall have the meaning set forth in Section 5.1(r).
"Capital Reserve Fund" shall have the meaning set forth in
Section 7.4.1.
"Capital Reserve Fund Payments" shall have the meaning set forth in
Section 7.4.1.
"Cash Management Event" shall have the meaning set forth in Section
2.6.6.
"Cash Management Restoration Event" shall have the meaning set forth
in Section 2.6.6.
"Casualty/Condemnation Prepayments" shall have the meaning set forth
in Section 2.3.6.
"Casualty/Prepayment Amount" shall have the meaning set forth in
Section 2.7.2.
"Casualty Return-of-Amount" shall have the meaning set forth in
Section 2.7.2.
"Clearing Account" shall have the meaning set forth in Section 2.6.
"Clearing Account Agreement" shall mean the Clearing Account
Agreement dated as of the date hereof among Borrower, Lender and the
Clearing Bank for collecting and retaining all rents from the Property.
"Clearing Bank" shall have the meaning set forth in Section 2.6.
"Closing Date" shall mean the date of the funding of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time, any successor statutes
thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"Collection Period" shall mean, with respect to any given Payment
Date, the period commencing on the preceding Payment Date and ending on the
day immediately prior to the Payment Date to which the Collection Period is
applicable.
"Condemnation" shall have the meaning set forth in Section 7.1.3.
"Condemnation/Prepayment Amount" shall have the meaning set forth in
Section 2.7.2.
"Condemnation Restoration" shall have the meaning set forth in Sec-
tion 7.1.3.
"Condemnation Return-of-Amount" shall have the meaning set forth in
Section 2.7.2.
"Consent and Subordination of Manager" shall mean that certain
Consent and Subordination of Manager dated the date hereof between Manager
and Lender.
"Control" shall mean with respect to any Person (i) ownership
directly or through other entities, of more than 50% of all beneficial
equity interest in such Person, and (ii) the power to direct the
management, operation and business of such Person.
"Current Month" shall mean, as of the date of determination, the then
current calendar month.
"Debt" shall mean 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 Lender in respect of the Loan, including
the Yield Maintenance Premium and any sums due under the Note, this
Agreement, the Mortgage or in any other Loan Document.
"Debt Service" shall mean, with respect to any particular period of
time, scheduled principal and interest payments due under the Note for such
period of time.
"Debt Service Coverage Ratio" shall mean, as of any date, a ratio in
which (a) the numerator is the Net Operating Income for the 12-month period
immediately preceding such date, and (b) the denominator is the aggregate
amount of principal and interest actually due and payable on the Note
(other than principal and interest under any Defeased Notes and principal
payable under Section 2.2.3(e)) for such period.
"Default" shall mean the occurrence of any event hereunder or under
any other Loan Document which, but for the giving of notice or passage of
time, or both, would be an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or
(b) five percent (5%) above the Interest Rate.
"Defeasance" shall have the meaning set forth in Section 2.3.7
hereof.
"Defeasance Date" shall have the meaning set forth in Section 2.3.7
hereof.
"Defeasance Deposit" shall mean for the Note an amount equal to the
sum of (i) the remaining principal amount of the Note (in the case of a
total Defeasance) or the principal amount of the Defeased Note (in the case
of a partial Defeasance), as applicable, (ii) the Yield Maintenance
Premium, (iii) any costs and expenses incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled Defeasance
Payments and (iv) any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note, the
creation of the Defeased Note and the Undefeased Note, if applicable, any
transfer of the Defeased Note or otherwise required to accomplish the
agreements of Sections 2.3 and 2.4 hereof.
"Defeased Note" shall have the meaning set forth in Section 2.3.7
hereof.
"Deposit Account" shall mean that account established and maintained
pursuant to the Deposit Account Agreement.
"Deposit Account Agreement" shall mean that certain Deposit Account
Agreement dated as of the date hereof among Borrower, Lender, Manager and
the Deposit Bank for collecting and retaining all the rents from the
Property.
"Deposit Bank" shall mean LaSalle National Bank.
"Disclosure Document" shall have the meaning set forth in Sec-
tion 9.2(a).
"Early Prepayment Return-of-Amount" shall have the meaning set forth
in Section 2.7.2.
"Earnout Date" shall mean June 11, 1999.
"Earnout Period" shall mean the period from the date of this
Agreement to the Earnout Date.
"Environmental Indemnity" shall mean that certain Environmental and
Hazardous Substance Indemnification Agreement executed by Borrower in
connection with the Loan for the benefit of Lender.
"Equipment" shall have the meaning set forth in the Mortgage.
"Event of Default" shall have the meaning set forth in Section 8.1.
"Event of Default Return-of-Amount" shall have the meaning set forth
in Section 2.7.2.
"Exchange Act" shall have the meaning set forth in Section 9.2(a).
"Facility Fee" shall have the meaning set forth in Section 2.1.
"Fiscal Year" shall mean each twelve month period commencing on
January 1 and ending on December 31 during each year of the term of the
Loan.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time and as in effect as
of the date on which the appraisal requirements of FIRREA are to be applied
under this Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect as of the date on which such
principles are to be applied under this Agreement.
"Governmental Authority" shall mean any one of the following: the
United States of America, the State, the county or counties in which the
Property is located, the municipality or municipalities in which the
Property is located, and any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental ▇▇▇▇ (▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether now or
hereafter in existence.
"Improvements" shall have the meaning set forth in the Mortgage.
"including" shall mean "including, without limitation".
"Indemnified Liabilities" shall have the meaning set forth in Section
10.14(b).
"Independent Director" shall have the meaning set forth in Sec-
tion 4.1(dd).
"Independent Trustee" shall have the meaning set forth in Sec-
tion 4.1(dd).
"Insurance Premiums" shall have the meaning set forth in Sec-
tion 7.1.1 hereof.
"Insurance Proceeds" shall have the meaning set forth in Section
7.1.2 hereof.
"Insured Casualty" shall have the meaning specified in Sec-
tion 7.1.1(d).
"Interest Rate" shall mean: (i) during the Earnout Period, a rate of
interest equal to seven percent (7.07%) per annum; and (ii) after the
Earnout Period, a rate of interest equal to eight and thirty eight
hundredths percent (8.38%) per annum.
"Lease" shall mean any lease, or, to the extent of the interest
therein of an Owner, any sublease or sub-sublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in
the Property, and every modification, amendment or other agreement relating
to such lease, sublease, sub-sublease, or other agreement entered into in
connection with such lease, sublease, sub-sublease, or other agreement and
every guarantee of the performance and observance of the covenants,
conditions and agreements to be performed and observed by the other party
thereto.
"Legal Requirements" shall mean, with respect to the Property, all
federal, state, county, municipal and other governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions
of any Governmental Authority affecting the Property or any part thereof or
the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to an Owner, at any time in force
affecting the Property or any part thereof, including any which may (i)
require repairs, modifications or alterations in or to the Property or any
part thereof, or (ii) in any way limit the use and enjoyment thereof.
"Lender" shall mean NACC, together with its successors and assigns.
"Lender's Certificate" shall have the meaning set forth in Section
2.3.4.
"Liabilities" shall have the meaning set forth in Section 9.2(b).
"Licenses" shall have the meaning set forth in Section 4.1(w).
"Lien" shall mean, with respect to the Property, any mortgage, deed
of trust, lien, pledge, hypothecation, assignment, security interest, or
any other encumbrance, charge or transfer of, on or affecting the Property
or any portion thereof or an Owner, or any interest therein, including any
conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, the
filing of any financing statement, and mechanic's, materialmen's and other
similar liens and encumbrances.
"Loan" shall mean the loan made to Borrower by Lender pursuant hereto
in the amount of Seven Million Seven Hundred Thousand Dollars ($7,700,000),
as evidenced by the Note and secured by the Mortgage and the other Loan
Documents.
"Loan Balancing Amount" shall have the meaning set forth in Section
2.3.5.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Assignment of Leases, the Assignment of Agreements, the
Environmental Indemnity, the Consent and Subordination of Manager, the
Clearing Account Agreement, the Deposit Account Agreement and all other
documents, agreements and instruments evidencing or securing the Loan.
"Management Agreement" shall mean, with respect to any Parcel, a
management agreement entered into by and between an Owner and a Manager,
pursuant to which such Manager is to provide management and other services
with respect to such Parcel.
"Management Fee" shall mean the fee payable to a Manager pursuant to
a Management Agreement.
"Manager" shall mean the property manager under a Management
Agreement.
"Maturity Date" shall mean for the Note, the date on which the final
payment of principal of the Note (or the Defeased Note, if applicable)
becomes due and payable as therein provided, whether at the Stated Maturity
Date, by declaration of acceleration, or otherwise.
"Monthly Debt Service Payment Amount" shall have the meaning set
forth in Section 2.2.1.
"Mortgage" shall mean that Mortgage, Assignment of Leases and Rents
and Security Agreement executed and delivered by Lexington B and Lexington
Trust as security for the Loan and encumbering those portions of the
Property owned by Lexington B and Lexington Trust which are located in
Fayette County, Kentucky.
"NACC" shall mean Nomura Asset Capital Corporation, a Delaware
corporation.
"Net Operating Income" shall mean, for any period, the difference
between all Operating Income during such period, minus all Operating
Expenses during such period. In determining Net Operating Income for
purposes hereof, all adjustments to Operating Income and Operating Expenses
shall be determined by Lender in its sole discretion consistent with its
due diligence findings and prevailing market conditions. Net Operating
Income shall be audited, or shall be determined in accordance with
procedures established by Lender.
"Nomura" shall have the meaning set forth in Section 9.2(b).
"Nomura Group" shall have the meaning set forth in Section 9.2(b).
"Note" shall mean that certain Note of even date herewith, made by
the Owners jointly and severally in favor of Lender, substantially in the
form of Exhibit A annexed hereto, as the same may be amended, restated,
replaced, supplemented, consolidated or otherwise modified from time to
time, including any Undefeased Note that may exist from time to time as a
result of the partial defeasance of that Note.
"Officers' Certificate" shall mean a certificate delivered to Lender
by Borrower which is executed by a senior executive officer of Lexington B
or Lexington Trust.
"Omnia" shall mean Omnia I, Inc., a Delaware corporation.
"Operating Budget" shall have the meaning set forth in Section
5.1(r).
"Operating Expenses" shall mean, as to any period, all operating
expenses relating to the Property during such period, including the
following items:
(1) all expenses for the operation of the Property including
management fees, insurance premiums and expenses, accounting expenses,
advertising expenses, expenses for architectural services, bank charges,
utility charges, expenses for extermination, cleaning and trash removal
services, expenses relating to window washing, landscaping and security
services, reasonable and necessary legal expenses incurred in connection
with the operation of the Property, and marketing costs;
(2) impositions, water charges, property and real estate taxes,
sewer rents, other than fines, penalties, interest or such impositions (or
portions thereof) that are payable by reason of an Owner's failure to pay
an imposition timely; and
(3) the cost of routine interior and exterior maintenance, repairs
and minor alterations, the cost of which can be expensed under GAAP.
Operating Expenses shall be subject to adjustment to provide for:
(a) a normalized allowance for tenant leasing incentives, including free
rent, moving allowances, tenant inducements, and any other similar expenses
incurred in leasing the Property; (b) a reserve for capital expenditures
and capital replacements in the annual amount which is equal to the greater
of: (i) $0.30 per square foot; or (ii) such greater amount as Lender may
reasonably require based upon the reasonably recommended capital repairs
and expenditures indicated in the independent engineering reports; and
(c) any other matters as reasonably determined by Lender that may have an
impact on Operating Expenses. Operating Expenses shall be subject to
adjustment to provide for any matters that may have an impact on Operating
Expenses. Operating Expenses will not include debt service, capital
expenses, non-cash items such as depreciation and amortization and any
extraordinary one-time expenditures not considered operating expenses under
GAAP.
"Operating Income" shall mean, as to any period, all income actually
received by an Owner from the Property during such period, including actual
rental income and other income, base rents, percentage rents, common area
maintenance charges, property tax recoveries, insurance recoveries,
Consumer Price Index rent adjustments and other miscellaneous income items.
For purposes of calculating Operating Income, reimbursement and other
income will be included in Operating Income to the extent that Lender, in
its reasonable discretion, determines that it is stabilized and recurring,
and any income from temporary or month-to-month tenants will not be
included in Operating Income. Operating Income shall be subject to
adjustment (a) for a vacancy allowance at the rate which is the greater of:
(i) the actual vacancy rate for the Property; (ii) Five Percent (5%); and
(iii) the market vacancy rate for the relevant market comparison area as is
reasonably determined by Lender; (b) for any tenants operating under
bankruptcy protection; (c) to address any rent incentives, rent adjustments
or cancellation options contained in the Leases; and (d) any other matters
which in Lender's reasonable judgment may have an impact on Operating
Income. Operating Income will not include income from non-recurring income
sources, advance payments, deposits (unless forfeited), escrows, a sale or
other capital item transaction or payments received in respect of U.S.
Obligations purchased in connection with a Defeasance.
"Optional Prepayment Date" shall mean June 11, 2009.
"Original Loan Amount" shall mean Seven Million Seven Hundred
Thousand Dollars ($7,700,000).
"Other Charges" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Property, now or hereafter levied or assessed or imposed
against the Property or any part thereof.
"Owner" shall mean each of Lexington B and Lexington Trust.
"Parcel" shall mean any portion of the Property identified on Exhibit
D as a "Parcel."
"Partial Defeasance Return-of-Amount" shall have the meaning
specified in Section 2.7.2.
"Payment Date" shall mean the eleventh (11th) day of each calendar
month or, if in any month the eleventh (11th) day is not a Business Day,
then the Payment Date for such month shall be the first Business Day
thereafter.
"Permitted Encumbrances" shall mean, with respect to the Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters identified on
Exhibit E, (c) Liens, if any, for Taxes or Other Charges not yet payable or
delinquent, and (d) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender's sole discretion.
"Permitted Indebtedness" shall mean (a) the Debt and (b) customary
unsecured trade debt (excluding Capital Expenses) incurred in the ordinary
course of business and customarily payable within thirty (30) days in an
aggregate amount not to exceed one-sixth (1/6th) of the annual amount
budgeted for operating expenses in the Operating Budget in effect from time
to time.
"Permitted Investments" shall have the meaning set forth in the
Deposit Account Agreement.
"Permitted Transfers" shall have the meaning specified in Section
6.1(k).
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated
association, any federal, state, county or municipal government or any
bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.
"Policies" shall have the meaning specified in Section 7.1.1(c).
"Pooling and Servicing Agreement" shall mean the Servicing Agreement
entered into with the Servicer in connection with any Securitization of the
Loan.
"Premises" shall have the meaning set forth in the Granting Clauses
of the Mortgage encumbering the Property.
"Principal Indebtedness" shall have the meaning specified in Section
2.7.2.
"Property" shall mean the Parcels and any improvements thereon owned
by the Owners and encumbered by the Mortgage, together with all rights
pertaining to such property and improvements, as more particularly
described in the Granting Clause of the Mortgage and referred to therein as
the "Property" or the "Mortgaged Property", as the case may be.
"Provided Information" shall have the meaning set forth in Sec-
tion 9.1.
"Qualified Survey" shall mean for any Parcel a current title survey
of that Parcel, certified to the title company and Lender and their
successors and assigns, that (A) is in form and content satisfactory to
Lender, (B) is prepared by a professional and properly licensed land
surveyor satisfactory to Lender in accordance with the 1992 Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys, (C) meets
the classification of an "Urban Survey" and includes the following
additional items from the list of "Optional Survey Responsibilities and
Specifications" (Table A): 1, 2, 3, 4, 6, 8, 9, 10, 11 and 13, (D) reflects
the same legal description contained in the Title Insurance Policy for that
Parcel, and (E) contains a certification in form and substance acceptable
to Lender.
"Qualified Title Insurance Policy" shall mean for any Parcel an ALTA
1992 Loan Policy of Title Insurance issued by First American Title
Insurance Company or another title company acceptable to Lender, which
Policy of Title Insurance shall (A) provide coverage in amounts
satisfactory to Lender, (B) insure Lender that the Mortgage creates a valid
lien on the Parcel encumbered thereby of the requisite priority, free and
clear of all exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the terms
of any endorsements), (C) contain such endorsements and affirmative
coverages as Lender may request, (D) name Lender as the insured and (E) be
assignable.
"Rating Agency" shall mean each of Standard & Poor's Ratings Group, a
division of ▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., Duff &
▇▇▇▇▇▇ Credit Rating Co. and Fitch Investors Service, Inc. or any other
nationally-recognized statistical rating agency which has been approved by
Lender.
"Rebalancing Event" shall have the meaning set forth in Section
2.3.2.
"Registration Statement" shall have the meaning set forth in Sec-
tion 9.2(b).
"Release Date" shall mean the earlier of (a) four (4) years after the
Closing Date, (b) three (3) years after the Earnout Date, and (c) two (2)
years from the "start-up day" (within the meaning of Section 860G(a)(9) of
the Code) of the REMIC Trust.
"REMIC" shall mean a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Trust" shall mean a REMIC which holds the Note.
"Rent Roll" shall have the meaning set forth in Section 4.1(aa).
"Rents" shall mean, with respect to the Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including all oil and gas or other mineral
royalties and bonuses), income, receivables, receipts, revenues, deposits
(including security, utility and other deposits, but exclusive of security
deposits deposited in the Security Deposit Account pursuant to 2.6.3
below), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or
for the account of or benefit of an Owner or its agents or employees from
any and all sources arising from or attributable to the Property, including
all receivables, customer obligations, installment payment obligations and
other obligations now existing or hereafter arising or created out of the
sale, lease, sublease, license, concession or other grant of the right of
the use and occupancy of the Property and proceeds, if any, from business
interruption or other loss of income insurance.
"Replaced Parcel" shall have the meaning set forth in Section 2.4.3
hereof.
"Replacement Parcel" shall have the meaning set forth in Section
2.4.3 hereof.
"Required Records" shall have the meaning set forth in Section 9.2
hereof.
"Required Repair Account" shall have the meaning set forth in Sec-
tion 7.2.1.
"Required Repair Fund" shall have the meaning set forth in Sec-
tion 7.2.1.
"Required Repairs" shall have the meaning set forth in Section 7.2.1.
"Reset Date" shall mean September 11, 2009.
"Restated Loan Amount" shall have the meaning set forth in Section
2.7.1.
"Restoration" shall have the meaning set forth in Section 7.1.2(b).
"Return-of-Amount" shall have the meaning specified in Section 2.7.2.
"Revised Interest Rate" shall mean the per annum rate of interest
which is equal to five percent (5%) plus that rate which is the greater of
(i) the Interest Rate and (ii) the Treasury Rate on the Reset Date plus
1.35%.
"Rollover Reserve Fund" shall have the meaning set forth in Section
7.5.1.
"Scheduled Defeasance Payments" shall have the meaning set forth in
Section 2.3.7.
"Secondary Market Transaction" shall mean any transaction in which
Lender (i) sells the Loan, the Note and the other Loan Documents to one or
more investors as a whole loan, (ii) participates the Loan to one or more
investors, (iii) deposits the Loan, the Note and other Loan Documents with
a trust, which trust may sell certificates to investors evidencing an
ownership interest in the trust assets, or (iv) otherwise sells the Loan,
the Note, and the other Loan documents or any interest therein to
investors.
"Security Deposits" shall have the meaning set forth in Section
7.6.1.
"Securities" shall have the meaning set forth in Section 9.1.
"Securities Act" shall have the meaning set forth in Section 9.2(a).
"Securitization" shall have the meaning set forth in Section 9.1.
"Security Agreement" shall have the meaning set forth in Sec-
tion 2.3.7(a)(vii).
"Servicer" shall mean the entity appointed by Lender to service the
Loan or its successor in interest, or if any successor servicer is
appointed pursuant to the Pooling and Servicing Agreement, such successor
servicer.
"State" shall mean with respect to any Parcel the State in which that
Parcel is located.
"Stated Maturity Date" shall mean June 11, 2028.
"Successor Borrower" shall have the meaning set forth in Sec-
tion 2.3.7(c).
"Tax and Insurance Escrow Fund" shall have the meaning set forth in
Section 7.3.1.
"Tax and Insurance Escrow Fund Payments" shall have the meaning set
forth in Section 7.3.1.
"Taxes" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or
assessed or imposed against the Property or part thereof.
"Term" shall mean the entire term of this Agreement, which shall
expire upon repayment in full of the Debt and full performance of each and
every obligation to be performed by Borrower pursuant to the Loan
Documents.
"Transfer" shall have the meaning set forth in Section 6.1(j).
"Treasury Rate" shall mean, as of the Reset Date, the linear
interpolation of the bond equivalent yields as reported in Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading "U.S.
Government Securities/Treasury Constant Maturities" for the week ending
prior to the Reset Date of U.S. Treasury constant maturities with maturity
dates (one longer and one shorter) most nearly approximating the remaining
term of the Note as of the Reset Date.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State of Illinois.
"Undefeased Note" shall have the meaning set forth in Section 2.3.7
hereof.
"Underwriter Group" shall have the meaning set forth in Sec-
tion 9.2(b).
"U.S. Obligation" shall mean direct non-callable obligations of the
United States of America.
"Yield Maintenance Premium" shall mean the amount (if any) which,
when added to the remaining principal amount of the Note or the principal
amount of Defeased Note, as applicable, will be sufficient to purchase U.S.
Obligations providing the required Scheduled Defeasance Payments.
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. 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 defined herein.
ARTICLE II. GENERAL
--------------------
Section 2.1 THE LOAN.
2.1.1 COMMITMENT. Subject to and upon the terms and conditions set
forth herein, including the conditions precedent set forth in Section 3.1,
Lender hereby agrees to make the Loan to Borrower on the Closing Date, in
the aggregate original principal amount set forth in the Note, with the
Loan to mature on the Maturity Date. Borrower hereby agrees to accept the
Loan on the Closing Date, subject to and upon the terms and conditions set
forth herein.
2.1.2 DISBURSEMENT TO BORROWER. Borrower may request and receive
only one borrowing hereunder in respect of the Loan. Borrower shall
receive the Loan upon the Closing, with disbursements of portions of the
Loan to be made to each Owner based upon the direction given by Borrower as
to the application of Loan proceeds for the uses set forth in Section
2.1.4. Any amount borrowed and repaid hereunder in respect of the Loan may
not be reborrowed.
2.1.3 THE NOTE. The Loan shall be evidenced by the Note which shall
be in the aggregate original principal amount of the Loan. The Note shall
bear interest as provided therein. The Note shall be subject to repayment
as provided in Section 2.3, shall be entitled to the benefits of this
Agreement and shall be secured by the Mortgage and the other Loan
Documents.
2.1.4 USE OF PROCEEDS OF LOAN. Borrower shall use the proceeds of
the Loan to: (i) make disbursements to the individual Owners to repay and
discharge any existing loans secured by their respective portions of the
Property, (ii) fund any reserve accounts or escrow accounts required to be
established by Lender on the Closing Date, and (iii) pay costs and expenses
incurred in connection with the closing of the Loan, including any mortgage
recording tax imposed on the recording of the Mortgage. Following
application of Loan proceeds to the foregoing items, all remaining Loan
proceeds shall be disbursed at the Borrower's direction.
Section 2.2 INTEREST; MONTHLY PAYMENTS.
2.2.1 GENERALLY.
(a) From the date hereof through but not including the Reset
Date, Borrower shall pay interest on the outstanding principal balance of
the Loan at the Interest Rate.
(b) On the Closing Date, Borrower shall pay interest on the
outstanding principal balance of the Loan from the date hereof through June
10, 1998. Commencing with the Payment Date on July 11, 1998, and on each
and every Payment Date thereafter through and including the Earnout Date,
the Borrower shall pay all accrued and unpaid interest on the outstanding
principal balance of the Loan, with such payments to be made monthly in
arrears.
(c) On the Earnout Date, as provided below, Lender shall
provide Borrower with a Lender's Certificate advising Borrower as to the:
(i) Restated Loan Amount; (ii) the Buy-Up Amount; (iii) the Interest Rate;
and (iv) the Monthly Debt Service Payment Amount. Commencing with the
Payment Date on July 11, 1999, and on each and every Payment Date
thereafter through and including the Maturity Date, the principal amount of
the Loan and interest thereon at the Interest Rate shall be payable in
equal monthly installments of principal and interest in the amount
determined below to be the "Monthly Debt Service Payment Amount". The
Monthly Debt Service Payment Amount due on any Payment Date shall first be
applied to the payment of interest accrued from the eleventh (11th) day of
month preceding the Payment Date to the tenth (10th) day of the month in
which the Payment Date occurs, notwithstanding that the Payment Date may
have been deferred because the eleventh (11th) day of such month is not a
Business Day. The remainder of such Monthly Debt Service Payment Amount
shall be applied to the reduction of the outstanding principal balance of
the Note.
(d) From and after the Reset Date, interest on the Loan shall
accrue at the Revised Interest Rate and shall be payable as provided in
Sections 2.2.2 and 2.2.3.
2.2.2 ACCRUED INTEREST. From and after the Reset Date, all
interest accruing on the Note in excess of the Interest Rate ("Accrued
Interest") shall be deferred, be added to the portion of the Debt evidenced
by such Note and, to the extent permitted by applicable law, accrue
interest at the Revised Interest Rate, compounded monthly. All Accrued
Interest shall be due and payable on the Maturity Date.
2.2.3 PROPERTY CASH FLOW ALLOCATION AFTER THE OPTIONAL PREPAYMENT
DATE. Commencing on the month following the Optional Prepayment Date and
continuing on each Payment Date thereafter until the entire Debt has been
paid in full, any Rents deposited into the Deposit Account (or otherwise
received by Borrower) during the immediately preceding calendar month shall
be applied as follows in the following order of priority:
(a) First, to make the required Tax and Insurance Escrow Fund
Payments;
(b) Second, to Lender to pay the Monthly Debt Service Payment
Amount (plus, if applicable, interest at the Default Rate);
(c) Third, payments for Approved Operating Expenses;
(d) Fourth, to make the required Capital Reserve Fund Payments and
Rollover Reserve Fund Payments;
(e) Fifth, payments to Lender to prepay the outstanding principal
balance under the Note in such order and in such amounts as Lender may
elect, until the Note is paid in full;
(f) Sixth, from and after the Reset Date, payments to Lender to be
applied against Accrued Interest and interest accrued thereon; and
(g) Lastly, payments to Borrower of any excess amounts.
Notwithstanding anything herein to the contrary, the failure of Borrower to
deposit all Rents into the Deposit Account or to cause funds in the Deposit
Account to be applied other than to the payments required under clauses (a)
through (g) above in the month following the Optional Prepayment Date and
on each Payment Date thereafter shall constitute an Event of Default under
this Agreement. Notwithstanding anything herein to the contrary, the
failure of Borrower to make all of the payments required under clauses (a)
through (d) above in full on the Optional Prepayment Date and on each
Payment Date thereafter shall constitute an Event of Default under this
Agreement. However, the failure of Borrower in any month after the Reset
Date to pay items (e) and (f) above, including any Accrued Interest on the
Payment Date in that month, shall not constitute an Event of Default
hereunder unless Borrower has received Rents in that month and applied
those Rents to matters other than the matters listed in clauses (a) through
(f) above, inclusive. All Accrued Interest shall nonetheless be due and
payable on the Maturity Date.
2.2.4 DEFAULT RATE. After the occurrence and during the continuance
of an Event of Default, the entire outstanding principal balance of the
Loan shall bear interest at the Default Rate, and Lender shall have the
right to accelerate the Maturity Date by declaring the Loan and the Note
immediately due and payable. Payment or acceptance of the increased rates
provided for in this subsection is not a permitted alternative to timely
payment and shall not constitute a waiver of any Default or Event of
Default or an amendment to this Agreement or any other Loan Document and
shall not otherwise prejudice or limit any rights or remedies of Lender.
2.2.5 PROPERTY CASH FLOW ALLOCATION AFTER AN EVENT OF DEFAULT.
After the occurrence and during the continuation of an Event of Default,
Lender shall have the right to obtain any amounts held in the Deposit
Account on demand as provided in the Deposit Account Agreement, and Lender
shall have the right to allocate and apply Rents and any amounts held in
the Deposit Account to payment of such matters in connection with the Loan
as Lender may deem appropriate, including interest due on the Note, the
principal balance of the Note, Approved Capital Expenses, Approved Leasing
Expenses, Approved Operating Expenses, or expenses of collection or other
amounts due under any Loan Document.
2.2.6BUSINESS PURPOSE. The proceeds of the Loan will be used solely
for the purposes specified in Section 205/4, paragraph (1)(c) of Chapter
815 of the Illinois Compiled Statutes, as amended from time to time, and
the principal sum advanced is for a business loan which comes within the
purview of such paragraph (1)(c).
Section 2.3 LOAN REPAYMENT; REPAYMENT AT THE EARNOUT DATE;
DEFEASANCE.
2.3.1 REPAYMENT. Borrower shall repay any outstanding principal
indebtedness of the Loan in full on the Maturity Date of the Loan, together
with interest thereon to (but excluding) the date of repayment. Other than
as set forth in Sections 2.3.2, 2.3.6, and 2.3.7 below, Borrower shall have
no right to prepay all or any portion of Loan during the period commencing
on the Closing Date to but not including that date which will occur ninety
(90) days before the Optional Prepayment Date. From and after that date
which will occur ninety (90) days before the Optional Prepayment Date, the
Loan may be prepaid in whole or in part without penalty or premium.
2.3.2 THE EARNOUT; DETERMINATION OF DEBT SERVICE COVERAGE RATIO AND
NEED FOR LOAN BALANCING.
(a) Borrower has advised Lender that a current tenant of the
Property, Omnia, has terminated its Lease effective as of November 30,
1998, with the result that the Debt Service Coverage Ratio of the Property
will be less than 1.65 to 1 following that termination. During the period
from the date hereof to the Earnout Date, the Borrower shall provide Lender
with prompt notice of any information received by Borrower regarding any
possible retenanting of the Omnia space. Not less than fifteen (15)
business days prior to the Earnout Date, Lender will compute the Net
Operating Income of the Property for the one (1) year period following the
Earnout Date, with the determination of Net Operating Income to be based on
the rent to be paid on executed Leases as to which the Tenants have
commenced occupancy. That calculation shall be made by Lender in its sole
discretion consistent with its due diligence findings and prevailing market
conditions.
(b) If, based on that calculation of Net Operating Income, Lender
determines that the Debt Service Coverage Ratio of the Property for the
twelve month period following the Earnout Date will be less than 1.65 to 1,
Borrower shall be required to rebalance the Loan, and a "Rebalancing Event"
shall be deemed to have occurred.
2.3.3 ROLLOVER RESERVE DEPOSITS DURING THE EARNOUT PERIOD.
Concurrently with the execution and delivery of this Agreement, the
Borrower shall deposit the amount of $314,800 into the Rollover Reserve
Fund. During the Earnout Period, Borrower shall make monthly deposits into
the Rollover Reserve Fund in the amount of $26,234 per month, as provided
in Section 7.5.1.
2.3.4 THE EARNOUT DATE; RESTATEMENT OF LOAN TERMS IF NO REBALANCING
EVENT OCCURS. If no Rebalancing Event has occurred as of the Earnout Date
and Borrower is not required to prepay any part of the Loan pursuant to
Section 2.3.2, then Lender shall deliver to Borrower on that date which
will occur fifteen (15) business days before the Earnout Date a Certificate
("Lender's Certificate") which shall state: (i) the Restated Loan Amount;
(ii) the Buy-Up Amount; (iii) the Interest Rate; and (iv) the Monthly Debt
Service Payment Amount. Concurrently therewith, Lender shall also deliver
to Borrower forms of an Amended and Restated Note, and amendments to this
Agreement and to the other Loan Documents which shall document the Restated
Loan Amount, the Buy-Up Amount, the Interest Rate, and the Monthly Debt
Service Payment Amount on terms consistent with the Lender's Certificate.
If no Rebalancing Event has occurred, the amount of the Restated Loan
Amount and the Buy-Up Amount shall equal the Original Loan Amount, the
Interest Rate shall equal eight and thirty eight hundredths percent (8.38%)
per annum, and the Monthly Debt Service Payment Amount shall be that amount
which would amortize the Restated Loan Amount at the Interest Rate
applicable after the Earnout Period over an amortization schedule of 360
months. In such event, Borrower shall not be required to prepay any part
of the Loan.
2.3.5 THE EARNOUT DATE; RESTATEMENT OF LOAN TERMS IF A REBALANCING
EVENT HAS OCCURRED.
(a) If a Rebalancing Event has occurred, no later than fifteen (15)
business days prior to the Earnout Date, Lender shall advise Borrower of
the amount of the Loan which shall be required to prepay (the "Loan
Balancing Amount") so that the Debt Service Coverage Ratio of the Property
is equal to or greater than 1.65 to 1. Such prepayment shall be made
without penalty, but Borrower shall be required to pay any breakage costs
or losses incurred by Lender for breaking a portion of the interest rate
lock which was in effect for the entire Loan as of the Closing Date, and
the Monthly Debt Service Payment Amount shall be restated by Lender to
reflect the reduction of the principal amount of the Loan. Upon such
prepayment by Borrower, Lender shall deliver to Borrower a Certificate
which shall state: (i) the Restated Loan Amount; (ii) the Buy-Up Amount;
(iii) the Interest Rate; and (iv) the Monthly Debt Service Payment Amount.
Concurrently therewith, Lender shall also deliver to Borrower forms of an
Amended and Restated Note, and amendments to this Agreement and to the
other Loan Documents which shall document the Restated Loan Amount, the
Buy-Up Amount, the Interest Rate, and the Monthly Debt Service Payment
Amount on terms consistent with the Lender's Certificate. The amount of
the Restated Loan Amount and the Buy-Up Amount shall equal the Original
Loan Amount less the Loan Balancing Amount, the Interest Rate shall equal
eight and thirty eight hundredths percent (8.38%) per annum, and the
Monthly Debt Service Payment Amount shall be that amount which would
amortize the Restated Loan Amount at the Interest Rate applicable after the
Earnout Period over an amortization schedule of 360 months.
(b) In the alternative, if a Rebalancing Event has occurred,
Borrower may elect to deliver to Lender within thirty (30) days after the
Earnout Date, in accordance with the procedure stated in Section 2.4.5,
that amount of additional collateral which, in Lender's sole discretion,
would increase the amount of Net Operating Income on a proforma basis for
the twelve (12) month period following the Earnout Date so that the Debt
Service Coverage Ratio of the Property for that period would be equal to or
greater than 1.65 to 1. Upon the delivery of such collateral by Borrower,
Lender shall recalculate the Net Operating Income for the twelve month
period following the Earnout Date, and if, based on that calculation, no
Rebalancing Event has occurred, then Lender will deliver to Borrower the
Certificate provided for in Section 2.3.4. Concurrently therewith, Lender
shall also deliver to Borrower forms of an Amended and Restated Note, and
amendments to this Agreement and to the other Loan Documents which shall
document the Restated Loan Amount, the Buy-Up Amount, the Interest Rate,
and the Monthly Debt Service Payment Amount on terms consistent with the
Lender's Certificate.
\82 Any amounts required to be paid to Lender under this Section
2.3 must be paid on or before the Earnout Date.
2.3.6 MANDATORY PREPAYMENTS. The Loan is subject to mandatory
prepayment, without premium or penalty, in certain instances of Insured
Casualty or Condemnation (each a "Casualty/Condemnation Prepayment"), in
the manner and to the extent set forth in Sections 7.1.2 and Section 7.1.3
hereof. Each Casualty/Condemnation Prepayment shall be made on a Payment
Date and include all accrued and unpaid interest on the amount prepaid up
to but not including such Payment Date or, if not paid on a Payment Date,
include interest that would have accrued on the amount prepaid to but not
including the next Payment Date. Each Casualty/Condemnation Prepayment
shall be accompanied by the applicable Return-of-Amount.
2.3.7 VOLUNTARY DEFEASANCE OF THE NOTE.
(a) Subject to the terms and conditions set forth in this Sec-
tion 2.3.7, Borrower may defease all or any portion of the Loan evidenced
by any or all of the Note (hereinafter, a "Defeasance"); provided, that no
such Defeasance may occur prior to the Release Date. Each Defeasance shall
be subject, in each case, to the satisfaction of the following conditions
precedent:
(i) Borrower shall provide not less than thirty (30) days prior
written notice to Lender specifying a Payment Date (the "Defeasance Date")
on which the Defeasance is to occur. Such notice shall indicate the Note
to be defeased and the principal amount of that Note to be defeased.
(ii) Borrower shall pay to Lender all accrued and unpaid interest on
the principal balances of the Note to but not including the Defeasance
Date. If for any reason the Defeasance Date is not a Payment Date,
Borrower shall also pay interest that would have accrued on the Note to but
not including the next Payment Date.
(iii)Borrower shall pay to Lender all other sums, not including
scheduled interest or principal payments, then due under the Note, this
Agreement, the Mortgage and the other Loan Documents.
(iv) No Event of Default shall exist.
(v) Borrower shall pay to Lender the required Defeasance Deposit
for the Defeasance.
(vi) Borrower shall pay to Lender the applicable Early Prepayment
Return-of-Amount or the Partial Defeasance Return-of-Amount, whichever is
applicable.
(vii)In the event only a portion of the Loan evidenced by the Note
is the subject of the Defeasance, Borrower shall execute and deliver all
necessary documents to amend and restate the Note and issue two substitute
notes: one having a principal balance equal to the defeased portion of the
original Note (the "Defeased Note") and one note having a principal balance
equal to the undefeased portion of the original Note (the "Undefeased
Note"). The Defeased Note and Undefeased Note shall have identical terms
as the Note, except for the principal balance. A Defeased Note cannot be
the subject of any further Defeasance. The Defeased Note and the
Undefeased Note shall thereafter be included in the definition of "Note"
under this Agreement.
(viii) Borrower shall execute and deliver a security agreement,
in form and substance satisfactory to Lender, creating a first priority
lien on the Defeasance Deposit and the U.S. Obligations purchased with the
Defeasance Deposit in accordance with this provision of this Section 2.3.7
(the "Security Agreement").
(ix) Borrower shall deliver an opinion of counsel for Borrower in
form satisfactory to Lender in its sole discretion stating, among other
things, that (A) Lender has a perfected first priority security interest in
the Defeasance Deposit and the U.S. Obligations delivered by Borrower and
(B) said U.S. Obligations have been validly assigned to the REMIC Trust.
(x) Lender shall receive evidence in writing from the applicable
Rating Agencies to the effect that such Defeasance will not result in a
reduction, withdrawal or requalification of the ratings in effect
immediately prior to such Defeasance for the Securities issued in
connection with the Securitization which are then outstanding.
(xi) If required by the applicable Rating Agencies, Borrower shall
also deliver or cause to be delivered a non-consolidation opinion with
respect to the Successor Borrower in form and substance satisfactory to
Lender and the applicable Rating Agencies.
(xii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.3.7(a) have
been satisfied.
(xiii) Borrower shall deliver such other certificates, documents
or instruments as Lender may reasonably request.
(xiv)Borrower shall pay all reasonable costs and expenses of Lender
incurred in the Defeasance, including any costs and expenses associated
with a release of Lien as provided in Section 2.4 hereof and reasonable
attorney's fees and expenses.
(b) In connection with each Defeasance of all or any portion of a
Note, Borrower hereby appoints Lender as its agent and attorney-in-fact for
the purpose of using the Defeasance Deposit to purchase U.S. Obligations
(which purchases, if made by Lender, shall be made by Lender on an arms-
length basis at then prevailing market rates) which provide payments on or
prior to, but as close as possible to, (i) in the case of a Defeasance for
the entire outstanding principal balance of a Note, all payments required
under that Note on successive Payment Dates after the Defeasance Date up to
the Optional Prepayment Date, when the entire outstanding balance and all
accrued interest on such Note shall be paid in full; or (ii) in the case of
a Defeasance for only a portion of the outstanding principal balance of a
Note, all payments required under that Defeased Note on successive Payment
Dates after the Defeasance Date up to the Optional Prepayment Date, when
the entire outstanding balance and all accrued interest on such Defeased
Note shall be paid in full (the "Scheduled Defeasance Payments").
Borrower, pursuant to the Security Agreement or other appropriate document,
shall irrevocably authorize and direct that the payments received from the
U.S. Obligations may be made directly to Lender and applied to satisfy the
obligations of Borrower under the Note or the Defeased Note, as applicable.
Any portion of the Defeasance Deposit in excess of the amount necessary to
purchase the U.S. Obligations required by this Section 2.3.7(b) and satisfy
Borrower's obligations under Sections 2.3 or 2.4 shall be remitted to
Borrower. Any amounts received in respect of the U.S. Obligations in
excess of the amounts necessary to make monthly payments pursuant to
Section 2.2 shall be retained by Lender until payment in full of the Loan.
Semi-annual payments in respect of U.S. Obligations shall be applied to
payments under the Note or the Defeased Note, as applicable, as the same
become due thereunder.
(c) If requested by Borrower in connection with any Defeasance
under this Section 2.3.7, NACC shall establish or designate a successor
entity (the "Successor Borrower") and Borrower shall transfer and assign
all obligations, rights and duties under and to the Note or the Defeased
Note, as applicable, together with the pledged U.S. Obligations to such
Successor Borrower. The obligation of NACC to establish or designate a
Successor Borrower shall be retained by NACC notwithstanding the sale or
transfer of this Agreement unless such obligation is specifically assumed
by the transferee. Such Successor Borrower shall assume the obligations
under the Note or the Defeased Note, as applicable, and the Security
Agreement and Borrower shall be relieved of its obligations thereunder.
Borrower shall pay $1,000 to any such Successor Borrower as consideration
for assuming the obligations under the Note or the Defeased Note, as
applicable, and the Security Agreement. Notwithstanding anything in this
Agreement to the contrary, no other assumption fee shall be payable upon a
transfer of the Note or the Defeased Note in accordance with this Sec-
tion 2.3.7, but Borrower shall pay all costs and expenses incurred by
Lender, including Lender's reasonable attorneys' fees and expenses,
incurred in connection therewith.
Section 2.4 RELEASE OF PROPERTY. Except as set forth in this Sec-
tion 2.4, no repayment, prepayment or defeasance of all or any portion of
the Note shall cause, give rise to a right to require, or otherwise result
in, the release of the Lien of any of the Mortgage on the Property.
2.4.1 RELEASE OF THE PROPERTY.
(a) If Borrower has elected to defease the Note in its entirety,
and the requirements of Section 2.3 have been satisfied, the Property shall
be released from the Lien of the applicable Mortgage and the U.S.
Obligations, pledged pursuant to the Security Agreement, shall be the sole
source of collateral securing the Note.
(b) In connection with the release of the Lien, Borrower shall
submit to Lender, not less than twenty (20) days prior to the Defeasance
Date, a release of Lien (and related Loan Documents) for the Property (for
execution by Lender) in a form appropriate in the State satisfactory to
Lender in its sole discretion and all other documentation Lender requires
to be delivered by Borrower in connection with such release, together with
an Officer's Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such release
in accordance with the terms of this Agreement.
2.4.2 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all
principal and interest on the Loan and all other amounts due and payable
under the Loan Documents in accordance with the terms thereof, release the
Liens of the Mortgage if not theretofore released.
2.4.3 PARTIAL RELEASE OF COLLATERAL. At any time after the Release
Date when the following conditions are satisfied with respect to a Parcel
and with respect to the Loan, Lender shall release the lien of the Mortgage
and any other Loan Documents from that Parcel: (i) Lender shall receive
written notice of the proposed partial release not less than thirty (30)
days prior to the date on which the release is to be completed, which date
must be a Payment Date; (ii) no Event of Default shall have occurred and be
continuing with respect to the Loan; (iii) Borrower shall defease in
accordance with all of the requirements of Section 2.3.7 a portion of the
Note pertaining to the Parcel to be released in an amount not less than one
hundred twenty five percent (125%) of the Allocated Loan Amount for the
Parcel to be released; and (iv) following the release of the Parcel, the
Debt Service Coverage Ratio for the Parcels remaining subject to the
Mortgage (assuming a paydown, and not a defeasance, of the Note in the
amount of one hundred twenty five percent (125%) of the Allocated Loan
Amount for the released Parcel) is greater than both (A) the Debt Service
Coverage Ratio for the Note at the Closing Date; and (B) the Debt Service
Coverage Ratio for the Note prior to the proposed release.
2.4.4 SUBSTITUTION OF COLLATERAL. At any time after the Release
Date but prior to the Optional Prepayment Date, upon satisfaction of the
following conditions, Lender shall, in the case of any of the Parcels
permit Borrower to substitute a different property (a "Replacement Parcel")
for an original Parcel (the "Replaced Parcel"), and following such
substitution, Lender shall release the Mortgage and any other Loan
Documents from the Replaced Parcel: (i) the sum of the Allocated Loan
Amount for the proposed Replaced Parcel and the Allocated Loan Amounts for
all other Replaced Parcels which have previously been substituted for shall
not exceed One Hundred Percent (100%) of the amount of the Loan; (ii) no
Event of Default shall have occurred and be continuing with respect to the
Loan; (iii) the Borrower amends this Agreement, the Note and the other Loan
Documents and executes such other documentation as Lender, the Servicer, or
a Rating Agency may require to evidence the addition of the Replacement
Parcel as collateral for the Loan and to confirm the enforceability of the
Loan Documents; (iv) Lender receives a Qualified Survey for the Replacement
Parcel; (v) Lender approves the status of title to the Replacement Parcel
and obtains a Qualified Title Insurance Policy for the Replacement Parcel;
(vi) Lender receives such environmental, engineering, soil, and other
property condition reports regarding the Replacement Parcel as Lender may
require, all of which reports must be satisfactory to Lender; (vii) Lender
shall have received appraisals prepared in accordance with FIRREA which are
satisfactory to Lender and which demonstrate that the fair market value of
the Replacement Parcel equals or exceeds the fair market value of the
Replaced Parcel; (viii) if the Replacement Parcel is a previously developed
property, for the twelve month period prior to the transfer, the Net
Operating Income for the Replacement Parcel shall have equaled or exceeded
the Net Operating Income for the Replaced Parcel; (ix) if the Replacement
Parcel is a newly developed property, the projected annualized Net
Operating Income for the Replacement Parcel shall have equaled or exceeded
the Net Operating Income for the Replaced Parcel for the twelve month
period prior to the transfer; (x) on a pro forma basis, for the twelve
month period after the transfer, the Net Operating Income for the
Replacement Parcel is projected to equal or exceed the Net Operating Income
for the Replaced Parcel; (xi) the Borrower confirms all warranties and
representations contained in the Loan Documents with respect to the
Property assuming the inclusion of the Replacement Property; (xii) the
Borrower delivers to Lender such due diligence items regarding the
Replacement Property as Lender or any Rating Agency may require, and such
due diligence items are satisfactory to Lender and the Rating Agencies; and
(xiii) each Rating Agency confirms in writing that any rating issued by
such Rating Agency in connection with a Securitization will not be
downgraded, qualified, or withdrawn as a result of the substitution of the
Replacement Parcel.
2.4.5 ADDITION OF COLLATERAL AFTER EARNOUT DATE. If Lender notifies
Borrower on or before the Earnout Date that a Rebalancing Event has
occurred, Borrower may elect to increase the Net Operating Income of the
Property by adding additional collateral (one or more "Additional Parcels")
to the Property. For Lender to permit Borrower to add any Additional
Parcel to the Property the following conditions must be satisfied: (i) no
Event of Default shall have occurred and be continuing with respect to the
Loan; (ii) the Borrower must amend this Agreement, the Note and the other
Loan Documents and execute such other documentation as Lender, the
Servicer, or a Rating Agency may require to evidence the addition of the
Additional Parcel as collateral for the Loan and to confirm the
enforceability of the Loan Documents; (iii) Lender receives a Qualified
Survey for the Additional Parcel; (iv) Lender approves the status of title
to the Additional Parcel and obtains a Qualified Title Insurance Policy for
the Additional Parcel; (v) Lender receives such environmental, engineering,
soil, and other property condition reports regarding the Additional Parcel
as Lender may require, all of which reports must be satisfactory to Lender;
(vi) Lender shall have received appraisals prepared in accordance with
FIRREA which are satisfactory to Lender and which demonstrate that the fair
market value of the Additional Parcel equals or exceeds the fair market
value of the Replaced Parcel; and (vii) the addition of any Additional
Parcels must be completed to Lender's satisfaction on or before the Earnout
Date. The determination by Lender of the amount of Net Operating Income
from the Additional Parcel shall be made by Lender in its sole discretion
consistent with its due diligence findings and prevailing market
conditions.
Section 2.5 PAYMENTS AND COMPUTATIONS.
2.5.1 MAKING OF PAYMENTS. Each payment by Borrower hereunder or
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to
Lender by 1:00 p.m., New York City time, on the date such payment is due,
to Lender by deposit to such account as Lender may designate by written
notice to Borrower. Whenever any payment hereunder or under the Note shall
be stated to be due on a day which is not a Business Day, such payment
shall be made on the first Business Day thereafter.
2.5.2 COMPUTATIONS. Interest payable hereunder or under the Note by
Borrower shall be computed on the basis of the actual number of days
elapsed in a 360-day year.
2.5.3 LATE PAYMENT CHARGE. If any principal, interest or any other
sum due under the Loan Documents is not paid by Borrower on the date on
which it is due, Borrower shall pay to Lender upon demand an amount equal
to the lesser of five percent (5%) of such unpaid sum or the maximum amount
permitted by applicable law in order to defray the expense incurred by
Lender in handling and processing such delinquent payment and to compensate
Lender for the loss of the use of such delinquent payment. Any such amount
shall be secured by the Mortgage and the other Loan Documents.
Section 2.6 CASH MANAGEMENT ARRANGEMENTS.
2.6.1 THE CLEARING ACCOUNTS. On or before the earlier to
occur of September 30, 1998, or the occurrence of the Securitization (as
hereinafter defined) (but in no event earlier than June 1, 1998) Borrower
shall establish accounts (the "Clearing Accounts") at such local banks
selected by Borrower or a bank in Chicago, Illinois, as Borrower may elect
(collectively, the "Clearing Bank"). The Clearing Accounts shall consist
of: "Account A," "Account B," the "Security Deposit Account." Account A
shall be maintained by Borrower but shall be under the control and
direction of Lender. It is acknowledged that Account A may in fact consist
of several separate accounts, each of which may be maintained at a local
bank selected by Borrower. Account B shall be maintained by Borrower and
shall be under the control and direction of Borrower. The Security Deposit
Account shall be maintained by Borrower but shall be under the control and
direction of Lender.
2.6.2 THE DEPOSIT ACCOUNT. On or before the date hereof,
Lender shall have established the Deposit Account at the Deposit Bank. Any
amounts deposited into the Deposit Account shall be applied and disbursed
in accordance with the terms and provisions of this Agreement and the
Deposit Account Agreement.
2.6.3 ALL RENTS TO BE DEPOSITED INTO ACCOUNT A. For all
purposes under this Section 2.6, the term "Rents" shall not include
Security Deposits. At all times during the term of this Loan, Borrower
shall cause the Tenants to deposit all Rents directly into Account A. Upon
written request from Lender at any time, Borrower shall direct one or more
Tenants to deposit Rents into Account A. All Rents or other income,
revenue, or funds which have been received by Borrower or by Manager on
Borrower's behalf in connection with the Property other than Security
Deposits will be transmitted directly to Account A on a daily basis. When
funds deposited into Account A are cleared, they shall be forwarded as
provided herein.
2.6.4 SECURITY DEPOSITS. As and to the extent provided in
Section 7.6, all Security Deposits shall be deposited into the Security
Deposit Account.
2.6.5 FUNDS WHICH ARE NOT CURRENT RENTS. As used herein,
the term "Current Rents" shall mean all cleared funds which are Rents and
which are not either Proceeds of an Insured Casualty or an Award. All
cleared funds which are not Current Rents or Security Deposits shall be
swept to the Deposit Account and deposited into the appropriate subaccount.
The Borrower shall deposit any Proceeds or Awards into Account A with
instructions to the Clearing Bank to forward those funds to the Deposit
Bank for deposit into the Casualty/Condemnation Subaccount.
2.6.6 CASH MANAGEMENT DEFINITIONS. As used herein, the term
"Cash Management Event" shall mean the first to occur of: (i) the Optional
Prepayment Date; or (ii) an Event of Default under this Agreement. As used
herein, the term "Cash Management Restoration Event" shall mean that date
which will occur one (1) year after the cure, to Lender's reasonable
satisfaction, of an Event of Default under this Agreement which resulted in
the Cash Management Event. If a Cash Management Event consists of the
occurrence of the Optional Prepayment Date, that Cash Management Event
shall not be susceptible of cure and shall be said to be continuing from
the occurrence of the Optional Prepayment Date to the repayment in full of
the Loan, and there shall be no Cash Management Restoration Event with
respect to that occurrence of the Optional Prepayment Date.
2.6.7 CASH MANAGEMENT EVENT. Prior to the occurrence of a
Cash Management Event, Current Rents deposited into Account A shall be
swept into Account B on a daily basis as those funds are cleared. After
the occurrence of a Cash Management Event, and until the occurrence of a
Cash Management Restoration Event, Current Rents deposited into Account A
shall be swept into the Deposit Account unless the Deposit Bank has given
other disbursement instructions to the Clearing Bank. Upon the occurrence
of a Cash Management Restoration Event, Lender shall promptly direct the
Deposit Bank and the Clearing Bank that Current Rents deposited into
Account A shall again be swept into Account B on a daily basis as those
funds are cleared.
2.6.8 DEPOSIT ACCOUNT SUBACCOUNTS. As provided in the
Deposit Account Agreement, the Deposit Bank shall establish the following
subaccounts: (i) the Tax and Insurance Escrow Fund Subaccount; (ii) the
Monthly Debt Service Payment Subaccount; (iii) the Capital Reserve Fund
Subaccount; (iv) the Required Repair Fund Subaccount; (v) the
Casualty/Condemnation Fund Subaccount; (vi) the Rollover Reserve Fund
Subaccount; and (vii) the Borrower's Subaccount. Prior to the occurrence
of a Cash Management Event, Borrower shall make monthly deposits by wire
transfer on or before each Payment Date in the following amounts, which
amounts shall be deposited as follows: (w) first, an amount equal to the
Monthly Debt Service Payment Amount, which shall be deposited into the
Monthly Debt Service Payment Subaccount; (x) second, an amount equal to the
monthly Tax and Insurance Escrow Fund Payments, which shall be deposited
into the Tax and Insurance Escrow Fund Subaccount; (y) third, an amount
equal to the monthly Capital Reserve Fund Payment, which shall be deposited
into the Capital Reserve Fund Subaccount; and (z) fourth, an amount equal
to the monthly Rollover Reserve Fund Payment, which shall be deposited into
the Rollover Reserve Fund Subaccount. Following the occurrence of a Cash
Management Event, and until the occurrence of a Cash Management Restoration
Event, as funds deposited into the Clearing Bank Account A are swept into
the Deposit Account, they shall be deposited in the following order: (A)
first, into the Monthly Debt Service Payment Subaccount until the amount on
deposit therein is equal to the Monthly Debt Service Payment Amount; (B)
second, an amount equal to the monthly Tax and Insurance Escrow Fund
Payments shall be deposited into the Tax and Insurance Escrow Fund
Subaccount; (C) third, an amount equal to the monthly Capital Reserve Fund
Payment shall be deposited into the Capital Reserve Fund Subaccount; and
(D) fourth, an amount equal to the monthly Rollover Reserve Fund Payment
shall be deposited into the Rollover Reserve Fund Subaccount. Funds
designated for deposit into the Casualty/Condemnation Fund Subaccount shall
be deposited into that subaccount.
2.6.9 DISBURSEMENTS TO BORROWER. Prior to the occurrence of
a Cash Management Event, all cleared Current Rents shall be swept to
Account B. After the occurrence of a Cash Management Event, and until a
Cash Management Restoration Event shall have occurred, when cleared Current
Rents have been swept from Account A to the Deposit Account in amounts
sufficient to make the deposits described in clauses (A), (B), and (C) of
Section 2.6.8 during any Collection Period, (i) the Deposit Bank shall
direct the Clearing Bank to continue to sweep cleared funds which are not
Current Rents to the Deposit Bank and to stop further payments of Current
Rents to the Deposit Bank for the remainder of that Collection Period; (ii)
for the duration of that Collection Period, the Clearing Bank shall daily
sweep all cleared Current Rents to Account B, from which account such funds
may be drawn by Borrower; and (iii) upon the occurrence of the next Payment
Date, the Deposit Bank shall stop disbursement of cleared Current Rents
from Account A to Account B and shall again sweep all Current Rents from
Account A to the Deposit Account. Upon the occurrence of a Cash Management
Restoration Event, all cleared Current Rents in Account A shall be swept to
Account B as provided above.
Section 2.7 INTEREST RATE BUY-UP.
2.7.1 THE BUY-UP. Notwithstanding anything in this Agreement
or any other Loan Document to the contrary: (A)(i) Borrower and Lender
agree that no payment of any Yield Maintenance Premium or any applicable
Return-of-Amount required to be paid by Borrower pursuant to this Agreement
or any other Loan Document is intended to be a penalty of any nature or
kind whatsoever; and (ii) Borrower acknowledges that, as of the Earnout
Date, Lender will divide the Original Loan Amount into two components: that
amount which shall be the principal amount due under the Note (the
"Restated Loan Amount"), and an amount to be paid to Borrower as stated in
the Lender's Certificate to Borrower for Borrower's agreement to pay an
increased interest rate over that which was initially intended (the "Buy-Up
Amount"). Borrower and Lender both intend that Lender shall recover the
Buy-Up Amount through the payment of interest on the Loan by Borrower to
Lender from the Earnout Date through the Optional Prepayment Date at the
Interest Rate. In consideration of Lender's payment to Borrower of the
Buy-Up Amount, Borrower hereby unconditionally and irrevocably waives any
and all rights of any nature or kind whatsoever that Borrower may have to
contest the validity and or the enforceability of any Buy-Up Amount,
Casualty Return-of-Amount, Condemnation Return-of-Amount, Event of Default
Return-of-Amount, Early Prepayment Return-of-Amount, Partial Defeasance
Return-of-Amount or Yield Maintenance Premium. In no event shall the Buy-
Up Amount or any amounts determined under Section 2.7.2 exceed the amount
stated in Lender's Certificate as the Buy-Up Amount.
2.7.2 RETURN-OF-AMOUNTS DEFINITIONS. As used herein, the
following terms shall have the following meanings:
(a) The term "Amortized Amount" means, with respect to
any time, an amount equal to the amount the Principal Indebtedness would
have been at such time if (i) the Restated Loan Amount on the Earnout Date
as stated in Lender's Certificate had been equal to the Original Loan
Amount, (ii) the Interest Rate on the Earnout Date had been seven and seven
hundred twenty seven ten thousandths percent (7.0727%), (iii) the
amortization schedule on the Earnout Date had been based on 315 months,
(iv) the amortization schedule referred to in clause (iii) had been
calculated based on interest payable on an actual/360 basis, and (v) all
payments that had been made on the Loan after the Earnout Date but prior to
the date of determination had instead been made on a loan with parameters
set forth in clauses (i) through (iv) above prior to such time.
(b) The term "Casualty Prepayment Amount" means, with
respect to any Insurance Proceeds received after the Earnout Date which the
Lender has elected to apply to the obligations under the Note, a portion of
the such Insurance Proceeds equal to (i) if the amount of the Insurance
Proceeds is less than the Amortized Amount at such time, the product
obtained by multiplying (a) the amount of such Insurance Proceeds by
(b) the quotient obtained by dividing (1) the Principal Indebtedness at
such time by (2) the Amortized Amount at such time or (ii) if the amount of
the Insurance Proceeds is greater than or equal to the Amortized Amount at
such time, the outstanding Principal Indebtedness at such time; PROVIDED,
HOWEVER, that after the Optional Prepayment Date, the Casualty Prepayment
Amount shall equal the amount of the Insurance Proceeds but shall not
exceed the amount of the Principal Indebtedness.
(c) The term "Casualty Return-of-Amount" means, with
respect to any Insurance Proceeds received after the Earnout Date which the
Lender has elected to apply to the obligations under the Note, a portion of
such Insurance Proceeds equal to (i) if the amount of the Insurance
Proceeds is less than the Amortized Amount at such time, the excess of the
amount of the Insurance Proceeds over the Casualty Prepayment Amount at
such time or (ii) if the amount of the Insurance Proceeds is greater than
or equal to the Amortized Amount at such time, the excess of the Amortized
Amount at such time over the outstanding Principal Indebtedness at such;
PROVIDED, HOWEVER, that after the Optional Prepayment Date, the Casualty
Return-of-Amount shall be zero.
(d) The term "Condemnation Prepayment Amount" means,
with respect to any Award received after the Earnout Date which the Lender
has elected to apply to the obligations under the Note, a portion of such
Award equal to (i) if the amount of the Award is less than the Amortized
Amount at such time, the product obtained by multiplying (a) the amount of
such Award by (b) the quotient obtained by dividing (1) the outstanding
Principal Indebtedness at such time by (2) the Amortized Amount at such
time or (ii) if the amount of the Award is greater than or equal to the
Amortized Amount at such time the outstanding Principal Indebtedness at
such time; PROVIDED, HOWEVER, that after the Optional Prepayment Date, the
Condemnation Prepayment Amount, shall equal the amount of the Award but
shall not exceed the amount of the Principal Indebtedness.
(e) The term "Condemnation Return-of-Amount" means,
with respect to any Award which the Lender has elected to apply under the
Note, a portion of such Award equal to (i) if the amount of the Award is
less than or equal to the Amortized Amount at such time, the excess of the
amount of the Award over the Condemnation Prepayment Amount at such time or
(ii) if the amount of the Award is greater than the Amortized Amount at
such time, the excess of the Amortized Amount at such time over the
outstanding Principal Indebtedness at such time; PROVIDED, HOWEVER, that
after the Optional Prepayment Date, the Condemnation Return-of-Amount shall
equal zero.
(f) The term "Early Prepayment Return-of-Amount" means
an amount which is equal to the excess of (i) the Amortized Amount
immediately prior to such prepayment over (ii) the outstanding Principal
Indebtedness immediately prior to such prepayment.
(g) The term "Event of Default Return-of-Amount" means,
with respect to any time, an amount which is intended to be a repayment by
Borrower to Lender on account of the amounts Lender would have credited to
Borrower as set forth in this Section 2.7.1 and in the Note, and which
amount is equal to the excess of (i) the Amortized Amount at such time over
(ii) the outstanding Principal Indebtedness at such time.
(h) The term "Partial Defeasance Return-of-Amount"
means an amount which is equal to the product of the Early Prepayment
Return-of-Amount, multiplied by the percentage obtained by dividing the
amount being paid to Lender on the Defeasance Date, by the original
principal amount of the Loan.
(i) The term "Principal Indebtedness" means the
outstanding principal balance under the Note as of any date of
determination of any principal then outstanding under the Note.
(j) The term "Return-of-Amount" means any applicable
Early Prepayment Return-of-Amount, Partial Defeasance Return-of-Amount,
Event of Default Return-of-Amount, Casualty Prepayment Amount, Casualty
Return-of-Amount, Condemnation Prepayment Amount or Condemnation Return-of-
Amount.
2.7.3 PAYMENT OF RETURN-OF-AMOUNTS.
(a) In the event of a Casualty/Condemnation Prepayment
occurring after the Earnout Date, Borrower shall pay any Return-of-Amount
which may be required in connection with such Casualty/Condemnation
Prepayment.
(b) In the event of a Defeasance or a partial
Defeasance occurring after the Earnout Date, Borrower shall pay any Early
Prepayment Return-of-Amount or any Partial Defeasance Return-of-Amount
which may be applicable to such Defeasance or partial Defeasance.
(c) Following the occurrence of an Event of Default
after the Earnout Date which results in a repayment of all or any portion
of the Debt prior to the Optional Prepayment Date, Borrower shall pay any
Event of Default Return-of-Amount which may be applicable to such
repayment.
ARTICLE III. CONDITIONS PRECEDENT
----------------------------------
Section 3.1 CONDITIONS PRECEDENT TO THE LOAN. The obligation of
Lender to make the Loan hereunder is subject to the fulfillment by Borrower
or waiver by Lender of the following conditions precedent no later than the
Closing Date:
(a) REPRESENTATION AND WARRANTIES: COMPLIANCE WITH CONDITIONS. The
representations and warranties of Borrower contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects
on and as of the Closing Date with the same effect as if made on and as of
such date, and no Default or Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material respects
with all terms and conditions set forth in this Agreement and in each other
Loan Document on its part to be observed or performed.
(b) LOAN AGREEMENT, NOTE AND OTHER LOAN DOCUMENTS. Lender shall
have received a copy of this Agreement and the Note, in each case, duly
executed and delivered on behalf of Borrower. Lender shall have received
from Borrower fully executed and acknowledged counterparts of the Mortgage,
Assignment of Leases, the Assignment of Agreements, the Environmental
Indemnity, the Clearing Account Agreement, the Deposit Account Agreement,
and the Consent and Subordination of Manager relating to the Property.
(c) TITLE INSURANCE; SURVEY; ZONING.
(i) TITLE INSURANCE. Lender shall have received a Qualified
Title Insurance Policy for each Parcel containing the following
endorsements: (A) ALTA 9 Comprehensive Endorsement; (B) ALTA 3.1 Zoning
Endorsement, with additional coverage for parking and loading docks; (C)
Survey Endorsement; (D) Access Endorsement; (E) Usury Endorsement; (F)
Separate Tax Lot Endorsement; (G) Environmental Protection Lien
Endorsement; (H) if a parcel consists of more than one lot, a Contiguity
Endorsement; and evidence that the premium in respect of such Title
Insurance Policy has been paid.
(ii) SURVEY. Lender shall have received a Qualified Survey
for each Parcel.
(iii)ENCUMBRANCES. Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender has a valid and
perfected Lien of the requisite priority as of the Closing Date with
respect to the Mortgage on the Property, subject only to applicable
Permitted Encumbrances and such other Liens as are permitted pursuant to
the Loan Documents, and Lender shall have received satisfactory evidence
thereof.
(iv) ZONING. Lender shall have received a zoning letter in
the form attached hereto as Exhibit F for each Parcel from the Municipality
in which that Parcel is located.
(d) PHYSICAL DUE DILIGENCE. Lender shall have received the
following items with respect to each Parcel in a form satisfactory to
Lender:
(i) ENVIRONMENTAL REPORTS. Lender shall have received a
Phase I environmental report for each Parcel which must be reasonably
satisfactory to Lender, and, if deemed necessary by Lender, a Phase II
environmental report satisfactory to Lender in respect of any or all of the
Parcels, with such reports to be prepared by a firm acceptable to Lender.
(ii) ENGINEERING REPORTS. Lender shall have received a
structural engineering report reasonably acceptable to Lender from a firm
approved by Lender identifying, among other things, (A) any deferred
maintenance at the Property; and (B) a ten (10) year schedule of
anticipated capital expenditures at the Property and the per annum cost
thereof.
(iii)COMPLIANCE WITH LAW. Evidence satisfactory to Lender
that each Parcel is in compliance in all material respects with all
applicable building, land use, environmental, and other laws applicable to
the Parcel, including a Certificate of Occupancy for each Parcel, if
available.
(iv) UTILITY AVAILABILITY. Evidence reasonably satisfactory
to Lender that each Parcel is served by all utilities deemed reasonably
necessary by Lender for operation of the Parcel, together with evidence
reasonably satisfactory to Lender confirming that all utility lines are
placed within easements and that no improvements encroach on any such
utility easements, which evidence may be provided by the Borrower's
existing surveys of the Property.
(e) GROUND LEASE ESTATE. If any Owner's interest in a Parcel is as
a ground lessee rather than as a fee owner, then such Owner must have
obtained Lender's approval of the form of the ground lease and must provide
Lender with an estoppel letter from the ground lessor in a form
satisfactory to Lender.
(f) UNDERWRITING. The following conditions shall be met to
Lender's satisfaction:
(i) DEBT SERVICE COVERAGE RATIO. The Debt Service Coverage
Ratio for the Property (assuming the debt service paid in such period would
have been the debt service due under the Note for the twelve month period
following the Earnout Date, plus the amount of principal payments which
would have been made if the Loan were being amortized on a three hundred
fifteen (315) month schedule) for the twelve month period following the
Earnout Date shall be not less than 1.65 to 1.
(ii) LOAN TO VALUE RATIO; APPRAISALS. Lender shall have
received an appraisal for each of the Parcels made by an appraiser
satisfactory to Lender in accordance with FIRREA appraisal requirements
(provided that the fact that Borrower rather than Lender may have ordered
and obtained such appraisals shall be acceptable to Lender) and otherwise
satisfactory to Lender indicating that the original principal balance of
the Loan is not more than seventy five percent (75%) of the fair market
value of the Property as of the date hereof.
(iii)CAPITAL BUDGET. Borrower shall have delivered, and
Lender shall have approved, a Capital Budget for the calendar year 1998.
(iv) FINANCIAL STATEMENTS. Borrower shall have delivered, and
Lender shall have approved, historical operating statements for each Parcel
for the three year period prior to the Closing Date (or any shorter period
reasonably acceptable to Lender); trailing twelve month operating
statements for each Parcel; and an operating budget for the period ending
December 31, 1998.
(v) BASIC CARRYING COSTS. Borrower shall have paid or
deposited into an applicable reserve fund: (i) a deposit with respect to
Insurance Premiums as required by Lender; and (ii) a deposit with respect
to Taxes as required by Lender; all of which shall be funded with proceeds
of the Loan.
(g) LEASES AND CONTRACTS.
(i) LEASES. Borrower shall have provided Lender with
certified copies of all of the Leases in effect as of the date hereof which
have been designated and requested by Lender, together with copies of all
material contracts affecting the Property which have been designated and
requested by Lender.
(ii) ESTOPPEL LETTERS. Borrower shall have provided Lender
with estoppel letters in a form satisfactory to Lender from all Tenants
whose Lease occupies more than Ten Percent (10%) of the net rentable space
of a Parcel and from Tenants whose Leases produce, in the aggregate, at
least Ninety Percent (90%) of the Operating Income from the Property.
(iii)SUBORDINATION AND NON-DISTURBANCE AGREEMENTS. Borrower
shall have provided Lender with subordination, non-disturbance and
attornment agreements in a form satisfactory to Lender from all Tenants for
which evidence of the Tenant's Lease has been recorded or for which
Borrower is unable to obtain title insurance over the Lease in a form
satisfactory to Lender, except for those Tenants that are agencies of the
federal or any applicable state government.
(iv) RENT ROLL. Borrower shall have provided Lender with an
updated copy of the Rent Roll dated not earlier than one (1) month prior to
the date hereof, which Rent Roll shall be satisfactory to Lender in all
material respects.
(h) INSURANCE. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period which period shall not be shorter
than quarterly. If requested by Lender, Lender shall have received
Probable Maximum Loss studies for the Property addressing the possibility
of earthquake damage to any Parcel designated by Lender, which studies must
be satisfactory to Lender.
(i) SPECIAL PURPOSE ENTITIES. Each Owner must be organized as a
special purpose entity in a form reasonably satisfactory to Lender, each
Owner which is a business trust must have a trustee which is an Independent
Trustee satisfying for that business trust all of the requirements stated
in this Agreement for an Independent Director, and each Owner which is a
corporation must have an Independent Director.
(j) DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the Closing
Date, Borrower shall deliver or cause to be delivered to Lender (i) copies
certified by Borrower of all organizational documentation related to such
Owner and/or the formation, structure, existence, good standing and/or
qualification to do business, as Lender may request in its sole discretion,
including good standing certificates, qualifications to do business in the
appropriate jurisdictions, resolutions authorizing the entering into of the
Loan and incumbency certificates as may be requested by Lender.
(k) HYPOTHECATION AGREEMENT. Each of the Owners shall enter into a
Hypothecation Agreement in a form satisfactory to Lender pursuant to which
the Owners will agree to pledge their respective Parcels for the benefit of
the Lender and pursuant to which the Owners will agree to account for the
deposit of Rents into the Clearing Accounts in a manner which will insure
that each Owner is properly credited for its respective share of the Rents.
(l) OPINIONS OF BORROWER'S COUNSEL. Lender shall have received
opinions of Borrower's counsel (i) that the Owners are properly organized
and has all necessary power and authority to own the Property and to enter
into this transaction, (ii) that the cross-collateralization of the Parcels
and the execution by the separate Owners of this Agreement, the Note and
other Loan Documents will not constitute a fraudulent transfer under 11
U.S.C. Section 548, (iii) with respect to non-consolidation issues, and
(iv) with respect to due execution, authority, enforceability of the Loan
Documents and such other matters as Lender may require, all such opinions
in form, scope and substance satisfactory to Lender and Lender's counsel in
their reasonable discretion. To the extent provisions of the Loan
Documents are governed by the law of a state other than the state of
Illinois, Borrower's counsel shall obtain an opinion of counsel in a form
satisfactory to Lender with respect to enforceability of the Loan Documents
under the laws of that state and such other matters as Lender may require.
(m) INTENTIONALLY OMITTED.
(n) 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 all parties
thereto and Lender shall have received and approved certified copies
thereof.
(o) COMPLETION OF PROCEEDINGS. All business trust, corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and the other Loan Documents and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to Lender, and Lender shall have received all such counterpart
originals or certified copies of such documents as Lender may reasonably
request. Borrower shall have caused each Mortgage to be a valid and
perfected first Lien as of the Closing Date on the portions of the Property
to which such Mortgage pertains, subject only to applicable Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents, and Lender shall have received satisfactory evidence thereof.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
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Section 4.1 BORROWER REPRESENTATIONS. Borrower represents and
warrants as of the date hereof and as of the Closing Date that:
(a) ORGANIZATION. Each Owner has been duly organized and is
validly existing and in good standing with requisite power and authority to
own its properties and to transact the businesses in which it is now
engaged. Each Owner is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations. Through each
Owner, Borrower possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to entitle it to own its properties
and to transact the businesses in which it is now engaged, and the sole
business of Borrower is the ownership, management and operation of the
Property.
(b) PROCEEDINGS. Each Owner has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have
been duly executed and delivered by or on behalf of each Owner and
constitute legal, valid and binding obligations of each Owner enforceable
against the Owners in accordance with their respective terms, subject to
applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(c) NO CONFLICTS. To the best of Borrower's knowledge, the
execution, delivery and performance of this Agreement and the other Loan
Documents by Borrower will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance (other than
pursuant to the Loan Documents) upon any of the property or assets of any
Owner pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, operating agreement, partnership agreement, trust agreement or
other agreement or instrument to which an Owner is a party or by which an
Owner's property 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 any
Owner or any of its 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 an Owner of this Agreement
or any other Loan Documents has been obtained and is in full force and
effect.
(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 the best of Borrower's knowledge threatened against or
affecting any Owner or any Parcel, which actions, suits or proceedings, if
determined against such Owner or such Parcel, might materially adversely
affect the condition (financial or otherwise) or business of such Owner or
the condition or ownership of such Parcel.
(e) AGREEMENTS. To the best of Borrower's knowledge, none of the
Owners is a party to any agreement or instrument or subject to any
restriction which might materially adversely affect an Owner or any Parcel
or an Owner's business, properties or assets, operations or condition,
financial or otherwise. To the best of Borrower's knowledge, none of the
Owners is in default in any material respect in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained
in any Permitted Encumbrance or any other agreement or instrument to which
it is a party or by which it or the Property is bound.
(f) TITLE. The Owners have good and indefeasible title in fee to
the real property comprising part of the Property, and good title to the
balance of the Property, free and clear of all Liens whatsoever except the
Permitted Encumbrances, such other Liens as are permitted pursuant to the
Loan Documents and the Liens created by the Loan Documents. The Mortgage,
when properly recorded in the appropriate records, together with any
Uniform Commercial Code financing statements required to be filed in
connection therewith, will in each case create (i) a valid, perfected first
priority lien on the portions of the Property to which such Mortgage
pertains, subject only to Permitted Encumbrances and the Liens created by
the Loan Documents and (ii) perfected security interests in and to, and
perfected collateral assignments of, all personalty (including the Leases),
all in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created or permitted by the
Loan Documents. The Permitted Encumbrances do not materially adversely
affect the value or use of the Property, or Borrower's ability to repay the
Loan. To the best of Borrower's knowledge, there are no claims for payment
for work, labor or materials affecting the Property which are or may become
a lien prior to, or of equal priority with, the Liens created by the Loan
Documents, other than expenses incurred in the ordinary course of
Borrower's business.
(g) NO BANKRUPTCY FILING. None of the Owners is contemplating
either the filing of a petition by it under any state or federal bankruptcy
or insolvency laws or the liquidation of all or a major portion of its
assets or property, and Borrower has no knowledge of any Person
contemplating the filing of any such petition against any Owner.
(h) FULL AND ACCURATE DISCLOSURE. No statement of fact made by any
Owner in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading.
There is no material fact presently known to any Owner which has not been
disclosed to Lender which materially adversely affects, nor as far as any
Owner can foresee, might materially adversely affect, the Property or the
business, operations or condition (financial or otherwise) of such Owner.
(i) NO PLAN ASSETS. None of the Owners is an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA,
and none of the assets of Borrower constitutes or will constitute "plan
assets" of one or more such plans within the meaning of 29 C.F.R. Sec-
tion 2510.3-101.
(j) COMPLIANCE. To the best of Borrower's knowledge, Borrower and
the Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including building and zoning ordinances and
codes. To the best of Borrower's knowledge, none of the Owners is in
default or violation of any order, writ, injunction, decree or demand of
any Governmental Authority, the violation of which might materially
adversely affect the condition (financial or otherwise) or business of such
Owner. To the best of Borrower's knowledge, there has not been and shall
never be committed by an Owner or any other person in occupancy of or
involved with the operation or use of the Property any act or omission
affording the federal government or any state or local government the right
of forfeiture as against the Property or any part thereof or any monies
paid in performance of such Owner's obligations under any of the Loan
Documents. Borrower hereby covenants and agrees not to knowingly commit,
permit or suffer to exist any act or omission affording such right of
forfeiture.
(k) CONTRACTS. All contracts affecting the Property have been
entered into at arms-length in the ordinary course of Borrower's business
or at competitive terms and provide for the payment of fees in amounts and
upon terms comparable to existing market rates.
(l) FINANCIAL INFORMATION. All financial data, including the
statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of the Property (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of the Property as of the date of such reports, and (iii) to the
extent prepared by an independent certified public accounting firm, have
been prepared in accordance with GAAP consistently applied throughout the
periods covered, except as disclosed therein. Borrower has no contingent
liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a
materially adverse effect on the Property or the operation thereof, except
as referred to or reflected in said financial statements. Since the date
of such financial statements, there has been no materially adverse change
in the financial condition, operations or business of Borrower from that
set forth in said financial statements.
(m) CONDEMNATION. No Condemnation or other proceeding has been
commenced or, to Borrower's best knowledge, is contemplated with respect to
all or any portion of the Property or for the relocation of roadways
providing access to the Property.
(n) FEDERAL RESERVE REGULATIONS. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors,
or for any purposes prohibited by Legal Requirements or by the terms and
conditions of this Agreement or the other Loan Documents.
(o) UTILITIES AND PUBLIC ACCESS. Each Parcel has rights of access
to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the Property for its respective
intended uses. To the best of Borrower's knowledge, all public utilities
necessary or convenient to the full use and enjoyment of each Parcel are
located in the public right-of-way abutting such Parcel or within
easements, and all such utilities are connected so as to serve such Parcel
without passing over other property. All roads necessary for the use of
each Parcel for its current respective purposes have been completed and
dedicated to public use and accepted by all Governmental Authorities.
(p) NOT A FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code.
(q) SEPARATE LOTS. Each Parcel is comprised of one (1) or more
parcels which constitutes a separate tax lot and does not constitute a
portion of any other tax lot which is not a part of such Parcel.
(r) ASSESSMENTS. To the best of Borrower' knowledge, and except as
disclosed in the Qualified Title Insurance Policies, there are no pending
or proposed special or other assessments for public improvements or
otherwise affecting any Parcel. To the best of Borrower's knowledge, there
are no contemplated improvements to or for the benefit of a Parcel that may
result in such special or other assessments.
(s) ENFORCEABILITY. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by an Owner,
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, and none of the Owners has asserted any right
of rescission, set-off, counterclaim or defense with respect thereto.
(t) NO PRIOR ASSIGNMENT. There are no prior assignments of the
Leases or any portion of the Rents due and payable or to become due and
payable which are presently outstanding.
(u) INSURANCE. Borrower has obtained and has delivered to Lender
insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement.
(v) USE OF PARCELS. Each Parcel is used exclusively for uses
permitted under applicable Legal Requirements.
(w) CERTIFICATE OF OCCUPANCY; LICENSES. All certifications,
permits, licenses and approvals, including certificates of completion and
occupancy permits and any applicable liquor licenses required for the legal
use, occupancy and operation of the Property (collectively, the
"Licenses"), have been obtained and are in full force and effect. Borrower
shall keep and maintain all licenses necessary for the operation of the
Property. The uses being made of each respective Parcel conform to the
certificate of occupancy issued for that Parcel.
(x) FLOOD ZONE. None of the Improvements on any Parcel are located
in an area as identified by the Federal Emergency Management Agency as an
area having special flood hazards.
(y) PHYSICAL CONDITION. To the best of Borrower's knowledge, the
Property, including all buildings, improvements, parking facilities,
sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems,
fire protection systems, electrical systems, equipment, elevators, exterior
sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material
respects. There exists no structural or other material defects or damages
in the Property, whether latent or otherwise. Borrower has not received
notice from any insurance company or bonding company of any defects or
inadequacies in the Property, or any part thereof, which would adversely
affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
(z) APPRAISED VALUE. All of the improvements which were included
in determining the appraised value of a Parcel lie wholly within the
boundaries and building restriction lines of such Parcel, and no
improvements on adjoining properties encroach in any material respect upon
any Parcel, and no easements or other encumbrances upon a Parcel encroach
upon any of the improvements on that Parcel, so as to affect the value or
marketability of that Parcel, except those which are insured against by
title insurance.
(aa) LEASES. Attached hereto as SCHEDULE 1 are the rent rolls
(collectively, the "Rent Roll") for each Parcel. Each Rent Roll is true,
correct and complete with respect to the subject matter thereof as of the
respective date of such Rent Roll. The only Leases affecting each Parcel
are those reflected in the applicable Rent Roll. Except as set forth in
SCHEDULE 1: (i) to the best of Borrower's knowledge, each Lease is in full
force and effect; (ii) the tenants under the Leases have accepted
possession of and are in occupancy of all of their respective demised
premises, have commenced the payment of rent under such Leases and Borrower
has not received written notice from any tenant of any offsets, claims or
defenses to the enforcement thereof, except to the extent provided in (iv)
below; (iii) all rents due and payable under the Leases have been paid and
no portion thereof has been paid for any period more than thirty (30) days
in advance (except that the County of Fayette, a tenant of the property
owned by Lexington Trust pays its rent quarterly in advance); (iv) the rent
payable under each Lease is the amount of fixed rent set forth in the Rent
Roll and there is no claim or basis for a claim by the tenant thereunder
for an adjustment to the rent, except that those tenants as have been
specified in a written notice delivered from Borrower to Lender have
disputed Borrower's calculations of real estate tax and common area
maintenance contributions; _8K no tenant has made any claim against the
landlord under the Leases which remains outstanding (except to the extent
provided in (iv) above) and there are no defaults in any material respect
on the part of the landlord under any Lease and to the best of Borrower's
knowledge, no event has occurred which, with the giving of notice or
passage of time, or both, would constitute such default; (vi) to the best
of Borrower's knowledge, there is no present monetary default or material
non-monetary default by any tenant under any Lease; and (vii) none of the
Leases contains any option to purchase or right of first refusal to
purchase the Property or any part thereof. The Leases have not been
assigned or pledged except to Lender, and no other person whatsoever has
any interest therein except the tenants thereunder and persons claiming by,
through, or under the tenants.
(bb) SURVEY. The Qualified Survey for each Parcel delivered to
Lender in connection with this Agreement does not fail to reflect any
material matter affecting that Parcel or the title thereto.
(cc) FILING AND RECORDING TAXES. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required
to be paid by any Person under applicable Legal Requirements currently in
effect in connection with the transfer of the Property to Borrower have
been paid. All mortgage, mortgage recording, stamp, intangible or other
similar tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of
any of the Loan Documents, including the Mortgage, have been paid or will
be paid from the disbursement of the Loan at the Closing Date, and, under
current Legal Requirements, the Mortgage is enforceable against the Owners
in accordance with its respective terms by Lender (or any subsequent holder
thereof), except as such enforceability may be limited by insolvency,
bankruptcy, moratorium or other laws affecting creditor's remedies in
general and principles of equity.
(dd) SINGLE-PURPOSE. Borrower hereby represents and warrants to,
and covenants with, Lender that, as of the date hereof and until such time
as the Debt shall be paid in full:
(i) None of the Owners does or will own any encumbered asset or
property other than (A) the Property, and (B) incidental personal property
necessary for or used in connection with the ownership or operation of the
Property.
(ii) None of the Owners will engage in any business other than the
ownership, management, operation, sale and refinancing of the Property, and
each Owner will conduct and operate its business as presently conducted and
operated.
(iii)None of the Owners will enter into any contract or agreement
with any of its affiliates or constituent parties, or any affiliate of any
constituent party, except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an
arms-length basis with third parties other than any such party.
(iv) None of the Owners has incurred or will incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than the Permitted Indebtedness and
other than indebtedness owing by an Owner to Banyan for customary and
ordinary debt service payments, leasing commissions, tenant improvement
costs, Operating Expenses and Capital Expenses advanced by Banyan in the
ordinary course of Banyan's business on behalf of such Owner. Except as
set forth in the immediately preceding sentence, no indebtedness other than
the Debt may be secured (subordinate or PARI PASSU) by the Property.
(v) None of the Owners has made or will make any advances to any
third party (including any affiliate or constituent party, or any affiliate
of any constituent party), other than advances and repayments made by Owner
to Banyan in the ordinary course of each such Owner's and Banyan's
business.
(vi) Each Owner is and will remain solvent and will pay its debts
and liabilities (including employment and overhead expenses) from its
assets as the same shall become due.
(vii)Each Owner that is a corporation has done or caused to be done
and will do all things necessary to observe corporate formalities and
preserve its existence.
(viii) Each Owner that is a business trust has done or caused to
be done and will do all things necessary to observe business trust
formalities and preserve its existence.
(ix) None of the Owners will permit any constituent party to amend,
modify or otherwise change the articles of organization, operating
agreement, articles of incorporation and bylaws, partnership certificate,
partnership agreement, trust or other organizational documents of such
Owner or such constituent party in a manner which would adversely affect an
Owner's existence as a single purpose entity; provided that the foregoing
shall not apply to an Owner if it no longer owns title to a Parcel that is
encumbered by the Mortgage by reason of a full defeasance of the Note
pursuant to Section 2.4.1 above, a partial release having been issued with
respect to such Parcel pursuant to Section 2.4.3 above or such Parcel
having become a Replaced Parcel pursuant to Section 2.4.4 above.
(x) Each Owner will maintain separate books and records of its
income and expenses.
(xi) Each Owner will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other entity
(including any affiliate, any constituent party, or any affiliate of any
constituent party) shall conduct business in its own name.
(xii)Each Owner will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations.
(xiii) None of the Owners nor any constituent party will seek
the dissolution or winding up, in whole or in part, of an Owner; provided
that the foregoing shall not apply to an Owner if it no longer owns title
to a Parcel that is encumbered by the Mortgage by reason of a full
defeasance of the Note pursuant to Section 2.4.1 above, a partial release
having been issued with respect to such Parcel pursuant to Section 2.4.3
above or such Parcel having become a Replaced Parcel pursuant to Section
2.4.4 above.
(xiv)Each Owner has and will maintain its assets in such a manner
that it will be possible to segregate, ascertain or identify its individual
assets from those of any affiliate or constituent party, or any affiliate
of any constituent party or any other person.
(xv) Except for the Loan, none of the Owners has and none of the
Owners will hold itself out to be responsible for the debts or obligations
of any other person.
(xvi)Each Owner that is a business trust shall at all times have one
duly appointed trustee (referred to herein as an "Independent Trustee")
reasonably satisfactory to Lender who shall either be a corporation with an
"Independent Director," as described below, or who shall be an individual
who shall not have been at the time of such individual's appointment, and
may not have been at any time during the preceding five years (i) a
shareholder of, or an officer or employee of, Borrower or any of its
shareholders, subsidiaries or affiliates, (ii) a customer of, or supplier
to, Borrower or any of its shareholders, subsidiaries or affiliates, (iii)
a person or other entity controlling any such shareholder, supplier or
customer, or (iv) a member of the immediate family of any such shareholder,
officer, employee, supplier or customer of any other trustee of the Owner.
As used herein, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a person or entity, whether through ownership of voting
securities, by contract or otherwise.
(xvii) An Owner which is a corporation and a corporation which
is an Independent Trustee shall at all times have at least one duly
appointed member of its board of directors (an "Independent Director")
reasonably satisfactory to Lender who shall not have been at the time of
such individual's appointment, and may not have been at any time during the
preceding five years (i) a shareholder of, or an officer or employee of,
Borrower or any of its shareholders, subsidiaries or affiliates, (ii) a
customer of, or supplier to, Borrower or any of its shareholders,
subsidiaries or affiliates, (iii) a person or other entity controlling any
such shareholder, supplier or customer, or (iv) a member of the immediate
family of any such shareholder, officer, employee, supplier or customer of
any other director of the Owner. As used herein, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether
through ownership of voting securities, by contract or otherwise.
(xviii) The board of directors, board of trustees, or sole
trustee of any Owner shall not take any action which, under the terms of
the Articles of Incorporation or ByLaws of the Owner or the Declaration of
Trust of the Owner, requires the unanimous vote of the board of directors,
board of trustees, or sole trustee of the Owner unless at the time of such
action there shall be at least one director or trustee who is an
Independent Director or an Independent Trustee.
(xix)Each Owner shall conduct its business so that the assumptions
made with respect to such Owner in that certain substantive consolidation
opinion letter delivered by Borrower's counsel in connection with the Loan
shall be true and correct in all respects.
(xx) None of the Owners will, without the consent of all directors
or trustees, as the case may be (which shall require the vote of an
Independent Director) (i) file or consent to the filing of any bankruptcy,
insolvency or reorganization case or proceeding; (ii) institute any
proceedings under any applicable insolvency law or otherwise seek any
relief under any laws relating to the relief from debts or the protection
of debtors generally; (iii) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any
similar official for the Owner or a substantial portion of its properties;
(iv) make any assignment for the benefit of the Owner's creditors; (v)
dissolve, liquidate or otherwise terminate the legal existence of any
Owner, except as expressly permitted in this Agreement; (vi) merge with or
consolidate into another Person, except as expressly permitted in this
Agreement; (vii) sell or refinance any Parcel, except if concurrently with
the closing of such sale or refinance, the Parcel will be partially
released from the lien of the Mortgage as provided in Section 2.4.3 above;
or (viii) take any action in furtherance of any of the foregoing.
(ee) INVESTMENT COMPANY ACT. None of the Owners is: (i) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (ii)
a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended;
or (iii) subject to any other federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.
(ff) FRAUDULENT TRANSFER. None of the Owners has entered into the
Loan or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor. Each Owner has received reasonably equivalent value
in exchange for its agreement to pledge its respective portion of the
Property as collateral for the Loan and in exchange for its obligations
under the Loan Documents. Giving effect to the transactions contemplated
by the Loan Documents, the fair saleable value of Borrower's assets equals
or exceeds and will, immediately following the execution and delivery of
the Loan Documents, exceed Borrower's total liabilities, including
subordinated, unliquidated, disputed or contingent liabilities. The fair
saleable value of Borrower's total assets is and will, immediately
following the execution and delivery of the Loan Documents, be greater than
Borrower's probable liabilities, including the maximum amount of its
contingent liabilities or its debts as such debts become absolute and
matured. Borrower's assets do not and, immediately following the execution
and delivery of the Loan Documents will not, constitute unreasonably small
capital to carry out its business as conducted or as proposed to be
conducted. Borrower does not intend to, and does not believe that it will,
incur debts and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking
into account the timing and amounts to be payable on or in respect of
obligations of Borrower).
(gg) MANAGEMENT AGREEMENT. Each Management Agreement is in full
force and effect and there is no default, breach or violation existing
thereunder by any party thereto and no event has occurred (other than
payments due but not yet delinquent) that, with the passage of time or the
giving of notice, or both, would constitute a default, breach or violation
by any party thereunder. Neither the execution and delivery of the Loan
Documents, Borrower's performance thereunder, the recordation of the
Mortgage, nor the exercise of any remedies by Lender, will adversely affect
Borrower's rights under any Management Agreement.
Section 4.2 SURVIVAL OF REPRESENTATIONS. Borrower agrees that all
of the representations and warranties of Borrower set forth in Section 4.1
and elsewhere in this Agreement and in the other Loan Documents shall
survive for so long as any amount remains owing to Lender under this
Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents by Borrower shall be deemed to
have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.
ARTICLE V. AFFIRMATIVE COVENANTS
----------------------------------
Section 5.1 BORROWER COVENANTS. From the date hereof and until
payment and performance in full of all obligations of Borrower under the
Loan Documents or the earlier release of the Lien of the Mortgage (and all
related obligations) in accordance with the terms of this Agreement and the
other Loan Documents, Borrower hereby covenants and agrees with Lender
that:
(a) EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE. Each
Owner shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, licenses, permits
and franchises and comply with all Legal Requirements applicable to it and
the Property. Each Owner shall at all times maintain, preserve and protect
all franchises and trade names and preserve all the remainder of its
property used or useful in the conduct of its business and shall keep the
Property in good working order and repair, and from time to time make, or
cause to be made, all reasonably necessary repairs, renewals, replacements,
betterments and improvements thereto, all as more fully provided in the
Mortgage. Borrower shall keep the Property insured at all times by
financially sound and reputable insurers, to such extent and against such
risks, and maintain liability and such other insurance, as is more fully
provided in this Agreement.
(b) TAXES AND OTHER CHARGES. Borrower shall pay all Taxes and
Other Charges now or hereafter levied or assessed or imposed against the
Property or any part thereof as the same become due and payable, except for
those Taxes and Other Charges for which a valid extension for payment has
been duly filed and payment of such Taxes and Other Charges is not required
until the extended deadline (or if payment is required earlier, such
payment has been made). Borrower will deliver to Lender receipts for
payment or other evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid or are not then delinquent on or prior to the
date on which the Taxes and/or Other Charges would otherwise be delinquent
if not paid (provided, however, that Borrower is not required to furnish
such receipts for payment of Taxes in the event that such Taxes have been
paid by Lender pursuant to Section 7.3 hereof). Borrower shall not suffer
and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Property,
and shall promptly pay for or cause to be paid for all utility services
provided to the Property for which Borrower is responsible. After prior
written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good
faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i) no
Default or Event of Default has occurred and remains uncured, (ii) such
proceeding shall suspend the collection of the Taxes or Other Charges from
the Property, (iii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to
which Borrower is subject and shall not constitute a default thereunder,
(iv) neither the Property nor any part thereof or interest therein will be
in danger of being sold, forfeited, terminated, canceled or lost, (v)
Borrower shall have furnished such security as may be required in the
proceeding, or as may be requested by Lender, to insure the payment of any
such Taxes or Other Charges, together with all interest and penalties
thereon; and (vi) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith.
Lender may pay over any such cash deposit or part thereof held by Lender to
the claimant entitled thereto at any time when, in the judgment of Lender,
the entitlement of such claimant is established.
(c) LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against any Owner which might materially adversely affect Borrower's
condition (financial or otherwise) or business or the Property.
(d) PREMISES. Borrower shall permit agents, representatives and
employees of Lender to inspect the Property or any part thereof at
reasonable hours upon reasonable advance notice.
(e) NOTICE OF DEFAULT. Borrower shall promptly advise Lender of
any material adverse change in any Owner's condition, financial or
otherwise, or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.
(f) COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate fully
with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way affect the rights of
Lender hereunder or any rights obtained by Lender under any of the other
Loan Documents and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.
(g) PERFORM LOAN DOCUMENTS. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall
pay when due all costs, fees and expenses to the extent required under the
Loan Documents executed and delivered by, or applicable to, Borrower.
(h) INSURANCE BENEFITS. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable in connection with the Property, and Lender shall be
reimbursed for any reasonable expenses incurred in connection therewith
(including reasonable attorneys' fees and disbursements, and the expense of
an appraisal on behalf of Lender in case of a fire or other casualty
affecting the Property or any part thereof) out of such Insurance Proceeds.
(i) FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost
and expense:
(A) furnish to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and
agreements, and each and every other document, certificate, agreement and
instrument required to be furnished by it pursuant to the terms of the Loan
Documents or reasonably requested by Lender in connection therewith;
(B) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such
other acts necessary or desirable, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure its obligations under
the Loan Documents, as Lender may reasonably require; and
(C) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the better and more effective carrying
out of the intents and purposes of this Agreement and the other Loan
Documents, as Lender shall reasonably require from time to time.
(j) SUPPLEMENTAL MORTGAGE AFFIDAVITS. As of the date hereof,
Borrower represents that it has paid all state, county and municipal
recording and all other taxes imposed upon the execution and recordation of
the Mortgage. If at any time Lender determines, based on applicable law,
that Lender is not being afforded the maximum amount of security available
from the Property as a direct or indirect result of applicable taxes not
having been paid with respect to the Property, Borrower agrees that
Borrower will execute, acknowledge and deliver to Lender, immediately upon
Lender's request, supplemental affidavits correctly stating the amount of
the Debt, and Borrower shall, on demand, pay any additional taxes required
to be paid with respect to the Mortgage.
(k) FINANCIAL REPORTING.
(i) Borrower will keep and maintain or will cause to be kept
and maintained on a Fiscal Year basis, in accordance with GAAP, proper and
accurate books, records and accounts reflecting all of the financial
affairs of Banyan and Borrower and all items of income and expense in
connection with the operation of the Property and in connection with any
services, equipment or furnishings provided in connection with the
operation of the Property, whether such income or expense be realized by
Borrower or by any other Person whatsoever, excepting lessees unrelated to
and unaffiliated with Borrower who have leased from Borrower portions of
the Property for the purpose of occupying the same. Lender shall have the
right from time to time at all times during normal business hours upon
reasonable notice (which notice may be simultaneous and telephonic) to
examine such books, records and accounts at the office of Banyan or any
other Person maintaining such books, records and accounts and to make such
copies or extracts thereof as Lender shall desire. After the occurrence of
an Event of Default, Borrower shall pay any costs and expenses incurred by
Lender to examine Banyan's and Borrower's accounting records with respect
to the Property, as Lender shall determine to be necessary or appropriate
in the protection of Lender's interest.
(ii) Borrower will furnish to Lender annually, within one
hundred five (105) days following the end of each Fiscal Year of each
Owner, a complete copy of Banyan's annual consolidated financial statements
audited by a "big six" accounting firm or another independent certified
public accountant reasonably acceptable to Lender in accordance with GAAP
covering Banyan (including each Owner and all other subsidiaries of Banyan)
for such Fiscal Year and containing balance sheets and statements of profit
and loss for Banyan in such detail as Lender may request. Such statements
shall set forth the financial condition and the income and expenses for
Banyan for the immediately preceding calendar year, including statements of
annual Net Operating Income. Banyan's annual financial statements shall be
accompanied by an Officer's Certificate certifying that each such annual
financial statement presents fairly the financial condition of Banyan (and
the Owners) and has been prepared in accordance with GAAP. Together with
Banyan's annual financial statements, Borrower shall furnish to Lender an
Officer's Certificate certifying, as of the date thereof (x) whether there
exists an event or circumstance which constitutes a Default or Event of
Default under the Loan Documents executed and delivered by, or applicable
to, Borrower, and if such Default or Event of Default exists, the nature
thereof, the period of time it has existed and the action then being taken
to remedy the same, and (y) that the representations and warranties of
Borrower set forth in Section 4.1(dd) are true and correct.
(iii)Borrower will furnish, or cause to be furnished, to
Lender on or before forty-five (45) days after the end of each calendar
month or calendar quarter, as the case may be, the following items,
accompanied by an Officer's Certificate certifying that such items are
true, correct, accurate, and complete and fairly present the financial
condition and results of the operations of the Owners and the Property in
accordance with GAAP (subject to normal year end adjustments) as
applicable: (A) on a monthly basis, monthly and year to date operating
statements prepared for each calendar month, noting Net Operating Income
and other information necessary and sufficient under GAAP to fairly
represent the financial position and results of operation of the Properties
during such calendar month, all in form satisfactory to Lender; and (B) on
a quarterly basis, a statement of the actual capital expenditures made by
Borrower during each calendar quarter as of the last day of such calendar
quarter.
(iv) Borrower will furnish, or cause to be furnished, to
Lender as soon as available and in any event on or before forty-five (45)
days after the end of each calendar quarter occupancy rates, rent rolls
(prepared by the Manager of each Parcel on such Manager's standard form of
rent roll) and a delinquency report for the Property and such other
relevant information with respect to the Property as reasonably requested
by the Lender, in each case accompanied by an Officer's Certificate
certifying to the best of such officer's knowledge, that such items are
true, correct, accurate, and complete.
(v) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such further detailed information with respect
to the operation of any of the Property and the financial affairs of
Borrower as may be reasonably requested by Lender or any applicable Rating
Agency, including without limitation, a comparison of the budgeted income
and expenses and the actual income and expenses for each requested period
and year to date for the Property together with a detailed explanation of
any variances of ten percent (10%) or more between budgeted and actual
amounts for such requested period and year to date. The financial
statements, certificates, reports or information required to be furnished
to Lender or its designee by this Section 5.1(k) are referred to as the
"Required Records." If Borrower fails to provide to Lender or its designee
any Required Record within thirty (30) days after the date upon which such
Required Record is due, and if Lender has given at least fifteen (15) days
prior written notice to Borrower of such failure by Borrower to timely
submit the applicable Required Record, then: (y) if such failure is not the
result of willful misconduct or gross negligence, then Borrower shall pay
to Lender, at Lender's option and in its sole discretion, an amount equal
to Five Hundred Dollars ($500) for each Required Record that is not
delivered; or (z) if such failure is the result of willful misconduct or
gross negligence, then Lender shall direct the Deposit Bank to make no
further disbursements to the Borrower's Subaccount of the Deposit Account
(as identified in the Deposit Account Agreement) until such Required Record
shall have been delivered.
(l) BUSINESS AND OPERATIONS. Borrower will continue to engage in
the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Property. Each Owner will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same
are required for the ownership, maintenance, management and operation of
the Property.
(m) TITLE TO THE PROPERTY. Borrower will warrant and defend (i)
the title to the Property and every part thereof, subject only to Liens
permitted under the Loan Documents (including Permitted Encumbrances), and
(ii) the validity and priority of the Lien of the Mortgage, subject only to
Liens permitted under the Loan Documents (including Permitted
Encumbrances), in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender
if an interest in the Property, other than as permitted hereunder, is
claimed by another Person.
(n) COSTS OF ENFORCEMENT. In the event (i) that a Mortgage is
foreclosed in whole or in part or is put into the hands of an attorney for
collection, suit, action or foreclosure, (ii) of the foreclosure of any
mortgage prior to or subsequent to a Mortgage encumbering the Property in
which proceeding Lender is made a party, or (iii) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of
Borrower or an assignment by Borrower for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and agrees to
pay all reasonable costs of collection and defense, including reasonable
attorneys' fees and expenses 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.
(o) ESTOPPEL STATEMENT.
(i) After request by Lender, Borrower shall within ten (10)
days furnish Lender with a statement, duly acknowledged and certified,
setting forth (A) the unpaid principal amount of the Note, (B) the Interest
Rate of the Note, (C) the date installments of interest and/or principal
were last paid, (D) any offsets or defenses to the payment of the Debt, if
any, and (E) whether the Note, this Agreement, the Mortgage and the other
Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification.
(ii) After request by Lender (but no more frequently than one
(1) time in any calendar year), Borrower shall within ten (10) days furnish
Lender with a certificate reaffirming all representations and warranties of
Borrower set forth herein and in the other Loan Documents as of the date
requested by Lender or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(iii)After request by Lender, Borrower shall deliver to Lender
tenant estoppel certificates from each tenant at the Property in form and
substance reasonably satisfactory to Lender provided that Borrower shall
not be required to deliver such certificates more frequently than one (1)
time in any calendar year or more frequently than may be permitted by the
terms of any Lease.
(p) LOAN PROCEEDS. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Sec-
tion 2.1.4.
(q) PERFORMANCE BY BORROWER. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of
each Loan Document executed and delivered by, or applicable to, Borrower,
and shall not enter into or otherwise suffer or permit any amendment,
waiver, supplement, termination or other modification of any Loan Document
executed and delivered by, or applicable to, Borrower without the prior
written consent of Lender.
(r) ANNUAL BUDGET. Borrower shall prepare and submit (or shall
cause Manager to prepare and submit) to Lender by December 15 of each year
during the Term a proposed pro forma budget for the Property during the
succeeding fiscal year commencing January 1 and ending December 31 (the
"Annual Budget") and, promptly after preparation thereof, any subsequent
revisions to such Annual Budget. The Annual Budget shall consist of (a) an
operating expense budget (the "Operating Budget") showing, on a
month-by-month basis, in reasonable detail, each line item of the
Borrower's anticipated income and Operating Expenses (on an accrual basis),
including amounts required to establish, maintain and/or increase reserves,
and (b) a Capital Expense Budget (the "Capital Budget") showing, on an
annual basis, in reasonable detail, each line item of anticipated Capital
Expenses. A copy of the Annual Budget for the period commencing on the
date hereof and ending on December 31, 1998 is attached hereto as Exhibit
C. From and after the occurrence of a Cash Management Event, the Capital
Budget shall be subject to Lender's approval, which approval shall not be
unreasonably withheld or delayed. Lender's failure to approve or
disapprove any Capital Budget within thirty (30) days after Lender's
receipt thereof shall be deemed to constitute Lender's approval thereof.
Following the Optional Prepayment Date, the Operating Budget shall be
subject to Lender's approval, which approval shall not be unreasonably
withheld or delayed. Lender's failure to approve or disapprove any
Operating Budget within thirty (30) days after Lender's receipt thereof
shall be deemed to constitute Lender's approval thereof. Following the
Optional Prepayment Date, Borrower shall make no expenditure related to the
Property in excess of one hundred five percent (105%) of the amount
budgeted for that expenditure without Lender's prior approval, which
approval shall not be unreasonably withheld or delayed.
(s) CONFIRMATION OF REPRESENTATIONS. In addition to and not in
limitation of the covenants and agreements of Borrower contained in Sec-
tion 7.1, Borrower shall deliver, in connection with any Secondary Market
Transaction, and not more than two (2) times in any calendar year, (i) one
or more Officer's Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of
the closing of such Secondary Market Transaction in all relevant
jurisdictions, and (ii) certificates of the relevant Governmental
Authorities in all relevant jurisdictions indicating the good standing and
qualification of Borrower as of the date of the Secondary Market
Transaction.
(t) NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real
property constituting a tax lot separate from the Property, and (ii) with
any portion of the Property which may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes which may be
levied against such personal property shall be assessed or levied or
charged to the Property.
(u) LEASING MATTERS. Borrower shall not, without Lender's prior
written consent, enter into, modify, amend or renew any Lease of space
located in any Parcel if the base rent payable under such Lease is in
excess of $100,000 in any calendar year, except in accordance with leasing
parameters approved by Lender from time to time; provided, however, that so
long as at the time that Borrower desires to enter into, modify, amend or
renew any Lease other than a Lease which represents a replacement in whole
or in part for Omnia, the Debt Service Coverage Ratio (which for purposes
of this subsection (u) shall be calculated by using a definition of
Operating Expenses that does not include the adjustments described in the
last grammatical paragraph of the definition of "Operating Expenses," but
rather includes a fixed adjustment of $322,236) for the Property is equal
to or greater than 1.65 to 1.0, Lender's consent to any such Lease,
modification, amendment or renewal shall not be required. Notwithstanding
anything to the contrary provided herein, Lender's consent shall be
required for any Lease which represents a replacement in whole or in part
for Omnia. Lender's failure to approve or disapprove any proposed Lease,
modification, amendment or renewal for which Lender's approval is required
within five (5) business days after Lender's receipt thereof shall be
deemed to constitute Lender's approval thereof. Upon request, Borrower
shall furnish Lender with executed copies of all Leases, and modifications,
amendments or renewals thereof. All proposed Leases shall be on
commercially reasonable terms and shall not contain any terms which would
materially adversely affect Lender's rights under the Loan Documents. All
Leases executed after the date hereof shall provide that they are
subordinate to the Mortgage encumbering the applicable portion of the
Property and that the lessee agrees to attorn to Lender. Borrower (i)
shall observe and perform in all material respects the obligations imposed
upon the lessor under the Leases; (ii) shall enforce the terms, covenants
and conditions contained in the Leases upon the part of the lessee
thereunder to be observed or performed, except to the extent that any such
non-enforcement by an Owner is the result of such Owner acting in the
ordinary course of business as a prudent operator of property similar to
the applicable Parcel; (iii) except for rents paid by the County of Fayette
to Lexington Trust, shall not collect any of the rents more than one (1)
month in advance (other than security deposits); (iv) shall not execute any
other assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change
the terms of the Leases in a manner inconsistent with the provisions of the
Loan Documents; and (vi) shall execute and deliver at the request of Lender
all such further assurances, confirmations and assignments in connection
with the Leases as Lender shall from time to time reasonably require.
(v) PRINCIPAL PLACE OF BUSINESS. Borrower shall not change its
principal place of business set forth on the first page of this Agreement
without first giving Lender thirty (30) days prior written notice.
(w) MANAGEMENT AGREEMENT. Borrower shall cause each Parcel to be
operated pursuant to the Management Agreement applicable thereto. Borrower
shall:
(i) promptly perform and/or observe in all material respects
all of the covenants and agreements required to be performed and observed
by it under each Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder;
(ii) promptly notify Lender of any default under any Management
Agreement of which it is aware; and
(iii)promptly enforce the performance and observance in all
material respects of all of the covenants and agreements required to be
performed and/or observed by the Manager under each Management Agreement.
ARTICLE VI. NEGATIVE COVENANTS
-------------------------------
Section 6.1 BORROWER'S NEGATIVE COVENANTS. From the date hereof
until payment and performance in full of all obligations of Borrower under
the Loan Documents or the earlier release of the Liens of the Mortgage in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that it will not do, directly or
indirectly, any of the following:
(a) OPERATION OF PROPERTIES. Borrower shall not, without Lender's
prior consent: (i) surrender, terminate or cancel the Management Agreement
or otherwise replace the Manager of any Parcel or enter into any other
management agreements with respect to the Property (except pursuant to
Section 9.5); provided, however that so long as no Event of Default then
exists, Borrower shall have the right to surrender, terminate or cancel any
Management Agreement or otherwise replace any Manager so long as the fee
payable to the replacement Manager is not greater than 5% of the gross
rents payable to the Owner of the applicable Parcel (unless as otherwise
provided below) and the replacement Manager executes and delivers to Lender
a consent agreement in form and substance substantially identical to the
one theretofore furnished by the Manager being replaced; (ii) reduce or
consent to the reduction of the term of the Management Agreement, except to
the extent that any Owner is acting in the ordinary course of business as a
prudent operator of property similar to the applicable Parcel;
(iii) increase or consent to the increase of the amount of any charges
under the Management Agreement which would result in the management fee
payable to any Manager exceeding 5% of the gross rents payable to the
Manager of the applicable Parcel; or (iv) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and
remedies under the Management Agreement in any material respect, except to
the extent that any Owner is acting in the ordinary course of business as a
prudent operator of property similar to the applicable Parcel.
Notwithstanding anything to the contrary provided in this Agreement or in
any Loan Document, Lender shall not unreasonably withhold its consent to a
request that Borrower shall pay a third party Manager, which shall not be
an Affiliate of Borrower, a management fee in excess of 5% of the gross
rents of a Parcel if the fee paid to the third party Manager is reasonably
determined by Lender to be a market rate fee and if the portion of such fee
which exceeds 5% of the gross rents from a Parcel consists of incentive
payments.
(b) LIENS. Borrower shall not, without the prior written consent
of Lender, create, incur, assume or suffer to exist any Lien on any portion
of any of the Property or permit any such action to be taken, except (i)
Permitted Encumbrances, (ii) Liens created by or permitted pursuant to the
Loan Documents and (iii) Liens for Taxes or Other Charges not yet due.
(c) DISSOLUTION. None of the Owners shall dissolve, terminate,
liquidate, merge with or consolidate into another Person, provided that the
foregoing shall not apply to any Owner that no longer owns title to a
Parcel that is encumbered by the Mortgage, by reason of a full defeasance
of the Note pursuant to Section 2.4.1 above, a partial release having been
issued with respect to such Parcel pursuant to Section 2.4.3 above or such
Parcel having become a Replaced Parcel pursuant to Section 2.4.4 above.
(d) CHANGE IN BUSINESS. None of the Owners shall enter into any
line of business other than the ownership and operation of the Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other
than the continuance of its present business.
(e) DEBT CANCELLATION. None of the Owners shall cancel or
otherwise forgive or release any claim or debt owed to such Owner by any
Person, except for adequate consideration and in the ordinary course of
Borrower's business in its reasonable judgment.
(f) AFFILIATE TRANSACTIONS. Except for loans made from Banyan in
the ordinary course of Banyan's business to any Owner for the payment of
customary and ordinary Operating Expenses and Capital Expenses advanced by
Banyan on behalf of such Owner, none of the Owners shall enter into, or be
a party to, any transaction with an Affiliate of an Owner or any of the
members of an Owner except in the ordinary course of business and on terms
which are fully disclosed to Lender in advance and are no less favorable to
the Owner or such Affiliate than would be obtained in a comparable
arm's-length transaction with an unrelated third party.
(g) ZONING. None of the Owners shall initiate or consent to any
zoning reclassification of any portion of any of the Property or seek any
variance under any existing zoning ordinance or use or permit the use of
any portion of any of the Property in any manner that could result in such
use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of
Lender.
(h) ASSETS. None of the Owners shall purchase or own any
properties other than the Property.
(i) DEBT. None of the Owners shall create, incur or assume any
debt other than the Debt and other than Permitted Indebtedness.
(j) TRANSFERS. None of the Owners shall, without the prior written
consent of Lender, cause, participate in, suffer or permit the sale,
mortgage, option, assignment or transfer of or conveyance of any interest
in any of the following (a "Transfer"), unless such Transfer otherwise
would qualify as a Permitted Transfer: (i) all or any part of the Property;
or (ii) any direct interest in an Owner.
(k) PERMITTED TRANSFERS. Each of the following Transfers is
referred to herein as a "Permitted Transfer":
(i) Any transfer of an interest in an Owner shall be a
Permitted Transfer if the following conditions are satisfied: (A) the
amount of interests in an Owner transferred in reliance on this exception
shall not exceed forty nine and ninety nine hundredths percent (49.99%) in
the aggregate; (B) no Event of Default has occurred and is continuing at
the time of any such proposed transfer; and (C) if as a result of a
transfer otherwise permitted under this paragraph, any one individual
either directly or indirectly owns in the aggregate greater than forty nine
and ninety nine hundredths percent (49.99%) of the interests in any Owner,
then Borrower must provide a substantive consolidation opinion of counsel
addressing such transfer which opinion must be acceptable to the Rating
Agencies.
(ii) Any Lease permitted under Section 5.1(u) of this
Agreement.
(iii)Any Transfer of a Parcel if in connection therewith a
partial release is issued by Lender with respect to such Parcel pursuant to
Section 2.4.3 above or such Parcel becomes a Replaced Parcel pursuant to
Section 2.4.4 above.
ARTICLE VII. CASUALTY; CONDEMNATION; ESCROWS
---------------------------------------------
Section 7.1 INSURANCE; CASUALTY AND CONDEMNATION.
7.1.1 INSURANCE.
(a) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall keep the Property insured and obtain and
maintain during the Term policies of insurance insuring against loss or
damage by standard, "all-risk" perils. Such insurance (i) shall be in an
amount equal to the greatest of (A) the then full replacement cost of the
Property without deduction for physical depreciation, (B) the outstanding
principal balance of the Loan, and (C) such amount that the insurer would
not deem Borrower a co-insurer under said policies, and (ii) and shall have
deductibles no greater than five percent (5%) of the full replacement cost
of the Property. The policies of insurance carried in accordance with this
paragraph shall be paid quarterly in advance and shall contain a
"Replacement Cost Endorsement" with a waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall also obtain and maintain during the Term the
following policies of insurance:
(i) Flood insurance if any part of the Property is located in
an area identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Program in an amount at least
equal to the Debt or the maximum limit of coverage available with respect
to the Property under said program, whichever is less.
(ii) Comprehensive public liability insurance, including broad
form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages and containing minimum limits per
occurrence of $1,000,000 and $2,000,000 in the aggregate for any policy
year. In addition, at least $10,000,000 excess and/or umbrella liability
insurance shall be obtained and maintained for any and all claims,
including all legal liability imposed upon Borrower and all court costs and
attorneys' fees incurred in connection with the ownership, operation and
maintenance of the Property.
(iii)Rental loss and/or business interruption insurance in an
amount equal to the greater of (A) the estimated gross revenues from the
operations of the Property for the next succeeding twelve (12) month period
or (B) the projected operating expenses (including debt service) for the
maintenance and operation of the Property for the next succeeding twelve
(12) month period. The amount of such insurance shall be increased from
time to time during the Term as and when the Rents increase or the estimate
of (or the actual) gross revenue, as may be applicable, increases.
(iv) 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 any of the Improvements
(without exclusion for explosions), in an amount at least equal to
$2,000,000 for the Property.
(v) Worker's compensation insurance with respect to any
employees of Borrower, as required by any governmental authority or legal
requirement.
(vi) During any period of repair or restoration, builder's
"all risk" insurance in an amount equal to not less than the full insurable
value of the Property against such risks (including fire and extended
coverage and collapse of the Improvements to agreed limits) as Lender may
request, in form and substance acceptable to Lender.
(vii)Coverage to compensate for the cost of demolition and the
increased cost of construction for the Property in an amount satisfactory
to Lender.
(viii) Such other insurance, including earthquake
insurance, as may from time to time be reasonably required by Lender in
order to protect its interests.
(c) All policies of insurance (the "Policies") required pursuant to
this Section 7.1.1 (i) shall be issued by companies approved by Lender and
licensed to do business in the State, with a minimum claims paying ability
rating of "Aq" by Standard & Poor's Ratings Group or "AX" by Best's, except
that for any earthquake insurance, a minimum claims paying ability rating
of "BBB" by Standard & Poor's Ratings Group is acceptable; (ii) shall name
Lender and its successors and/or assigns as their interest may appear as
the mortgagee; (iii) shall contain a Non-Contributory Standard Lender
Clause and a Lender's Loss Payable Endorsement, or their equivalents,
naming Lender as the person to which all payments made by such insurance
company shall be paid; (iv) shall contain a waiver of subrogation against
Lender; (v) shall be maintained throughout the Term without cost to Lender;
(vi) shall be assigned and the originals thereof delivered to Lender; (vii)
shall contain such provisions as Lender deems reasonably necessary or
desirable to protect its interest including endorsements providing that
neither Borrower, Lender nor any other party shall be a co-insurer under
said Policies and that Lender shall receive at least thirty (30) days prior
written notice of any modification, reduction or cancellation of any of the
Policies; and (viii) shall be satisfactory in form and substance to Lender
and shall be approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. Borrower shall pay the premiums for
such Policies (the "Insurance Premiums") as the same become due and payable
and shall furnish to Lender evidence of the renewal of each of the Policies
with receipts for the payment of the Insurance Premiums or other evidence
of such payment reasonably satisfactory to Lender (provided, however, that
Borrower is not required to furnish such evidence of payment to Lender if
such Insurance Premiums have been paid by Lender pursuant to Section 7.3
hereof). If Borrower does not furnish such evidence and receipts at least
thirty (30) days prior to the expiration of any expiring Policy, then
Lender may procure, but shall not be obligated to procure, such insurance
and pay the Insurance Premiums therefor, and Borrower agrees to reimburse
Lender for the cost of such Insurance Premiums promptly on demand. Within
thirty (30) days after request by Lender, Borrower shall obtain such
increases in the amounts of coverage required hereunder as may be
reasonably requested by Lender, taking into consideration changes in the
value of money over time, changes in liability laws, changes in prudent
customs and practices, and the like.
(d) If any portion of the Property is damaged or destroyed, in
whole or in part, by fire or other casualty (an "Insured Casualty"),
Borrower shall give prompt notice thereof to Lender. Following the
occurrence of an Insured Casualty, Borrower, regardless of whether
insurance proceeds are available, shall promptly proceed to restore,
repair, replace or rebuild the affected Parcel to be of at least equal
value and of substantially the same character as prior to such damage or
destruction, all to be effected in accordance with Legal Requirements. The
expenses incurred by Lender in the adjustment and collection of insurance
proceeds shall become part of the Debt and be secured hereby and shall be
reimbursed by Borrower to Lender upon demand.
7.1.2 CASUALTY AND APPLICATION OF PROCEEDS.
(a) In case of loss or damages covered by any of the Policies, the
following provisions shall apply:
(i) If an Insured Casualty does not exceed $100,000, Borrower
may settle and adjust any claim without the consent of Lender; provided
that such adjustment is carried out in a competent and timely manner. In
such case, Borrower is hereby authorized to collect and receipt for any
such insurance proceeds.
(ii) If an Insured Casualty shall exceed $100,000, Borrower
may settle and adjust such claim with Lender's consent, which shall not be
unreasonably withheld or delayed (provided that such settlement and
adjustment is carried out in a competent and timely manner), and Borrower
may agree (subject to such consent by Lender) with the insurance company or
companies on the amount to be paid on the loss; provided, however that if
at the time of the Insured Casualty an Event of Default then exists, Lender
may settle and adjust any claim without the consent of Borrower and agree
with the insurance company or companies on the amount to be paid on the
loss. In any event described in this subparagraph (ii), the proceeds of
any such policy shall be due and payable solely to Lender and held in
escrow by Lender in accordance with the terms hereof.
(b) In the event of an Insured Casualty where the loss is in an
aggregate amount less than $1,000,000, and if, in the reasonable judgment
of Lender, the Property can be restored within twelve (12) months and prior
to the maturity of the Note to an economic unit not less valuable and not
less useful than the same was prior to the Insured Casualty, and after such
restoration will adequately secure the Debt, then, if no Default or Event
of Default shall have occurred and be then continuing, the proceeds of
insurance (after reimbursement of any expenses incurred by Lender) shall be
applied to reimburse Borrower for the cost of restoring, repairing,
replacing or rebuilding the Parcel or part thereof subject to the Insured
Casualty (the "Restoration"), in the manner set forth herein. Borrower
hereby covenants and agrees to commence and diligently to prosecute such
Restoration; provided that (i) Borrower shall pay all costs (and if
required by Lender, Borrower shall deposit the total thereof with Lender in
advance) of such Restoration in excess of the net proceeds of insurance
made available pursuant to the terms hereof; (ii) the Restoration shall be
done in compliance with all Legal Requirements; and (iii) Lender shall have
received evidence reasonably satisfactory to it that, during the period of
the Restoration, the sum of (A) income derived from the Property, as
reasonably determined by Lender, plus (B) proceeds of rent loss insurance
or business interruption insurance, if any, to be paid will equal or exceed
the sum of (I) expenses in connection with the operation of the Property
and (II) the debt service on the Loan.
(c) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty ("Insurance Proceeds") shall, at the option of
Lender in its sole discretion, be applied to the payment of the Debt or
applied to reimburse Borrower for the cost of any Restoration, in the
manner set forth below. Any application of Insurance Proceeds to the Debt
shall include any applicable Casualty Return-of-Amount. Any such
application to the Debt shall be without any prepayment consideration,
other than payment of any applicable Return-of-Amount, except that if an
Event of Default has occurred and is continuing at the time the insurance
proceeds are received, then Borrower shall pay to Lender an additional
amount equal to the Yield Maintenance Premium, if any, that would be
required under Section 2.3.7 hereof if a Defeasance Deposit was to be made
by Borrower. Any such application to the Debt shall be applied to those
payments of principal and interest last due under the Note but shall not
postpone or reduce any payments otherwise required pursuant to the Note
other than such last due payments.
(d) If Borrower is entitled to reimbursement out of insurance
proceeds held by Lender, such proceeds shall be deposited by Lender into
the Casualty/Condemnation Subaccount and disbursed from time to time from
the Casualty/Condemnation Subaccount upon Lender being furnished with (1)
evidence satisfactory to it of the estimated cost of completion of the
Restoration, (2) funds or, at Lender's option, assurances satisfactory to
Lender that such funds are available, sufficient in addition to the
proceeds of insurance to complete the proposed Restoration, (3) such
architect's certificates, waivers of lien, contractor's sworn statements,
title insurance endorsements, bonds, plats of survey and such other
evidences of cost, payment and performance as Lender may reasonably require
and approve, and (4) all plans and specifications for such Restoration,
such plans and specifications to be approved by Lender prior to
commencement of any work. In addition, no payment made prior to the final
completion of the Restoration shall exceed ninety percent (90%) of the
value of the work performed from time to time; funds other than proceeds of
insurance shall be disbursed prior to disbursement of such proceeds; and at
all times, the undisbursed balance of such proceeds remaining in the hands
of Lender, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Lender by or on behalf of Borrower for
that purpose, shall be at least sufficient in the reasonable judgment of
Lender to pay for the cost of completion of the Restoration, free and clear
of all liens or claims for lien. Any surplus which may remain out of
insurance proceeds held by Lender after payment of such costs of
Restoration shall be paid to Borrower.
7.1.3 CONDEMNATION.
(a) Borrower shall promptly give Lender written notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding affecting the Property (a "Condemnation") and shall deliver to
Lender copies of any and all papers served in connection with such
Condemnation. Following the occurrence of a Condemnation, Borrower,
regardless of whether an Award is available, shall promptly proceed to
restore, repair, replace or rebuild the Property to the extent practicable
to be of at least equal value and of substantially the same character as
prior to such Condemnation, all to be effected in accordance with Legal
Requirements.
(b) Lender is hereby irrevocably appointed as Borrower's attorney-
in-fact, coupled with an interest, with exclusive power to collect, receive
and retain any award or payment in respect of a Condemnation (an "Award")
and to make any compromise or settlement in connection with such
Condemnation, subject to the provisions of this Section. Notwithstanding
the foregoing, (i) if an Award is reasonably expected not to exceed
$100,000, Borrower may compromise and settle any such Award without the
consent of Lender; provided that such compromise and settlement is carried
out in a competent and timely manner, and (ii) if an Award is reasonably
expected to exceed $100,000, Borrower may compromise and settle such Award
with Lender's consent, which shall not be unreasonably withheld or delayed
(provided that such compromise and settlement is carried out in a competent
and timely manner); provided, however, that if at the time of the
Condemnation an Event of Default then exists, Lender may settle and
compromise any Award without the consent of Borrower. Notwithstanding any
Condemnation by any public or quasi-public authority (including any
transfer made in lieu of or in anticipation of such a Condemnation),
Borrower shall continue to pay the Debt at the time and in the manner
provided for in the Note, in this Agreement and the other Loan Documents
and the Debt shall not be reduced unless and until any Award shall have
been actually received and applied by Lender to expenses of collecting the
Award and to discharge of the Debt. Lender shall not be limited to the
interest paid on the Award by the condemning authority but shall be
entitled to receive out of the Award interest at the rate or rates provided
in the Note. Borrower shall cause any Award that is payable to Borrower to
be paid directly to Lender.
(c) In the event of any Condemnation where the Award is in an
aggregate amount less than $1,000,000, and if, in the reasonable judgment
of Lender, the Property can be restored within twelve (12) months and prior
to maturity of the Note to an economic unit not less valuable and not less
useful than the same was prior to the Condemnation, and after such
restoration will adequately secure the Debt, then, if no Default or Event
of Default shall have occurred and be then continuing, the proceeds of the
Award (after reimbursement of any expenses incurred by Lender) shall be
applied to reimburse Borrower for the cost of restoring, repairing,
replacing or rebuilding the Property or part thereof subject to
Condemnation (the "Condemnation Restoration") in the manner set forth
below. Borrower hereby covenants and agrees to commence and diligently to
prosecute such Condemnation Restoration; provided that (i) Borrower shall
pay all costs (and if required by Lender, Borrower shall deposit the total
thereof with Lender in advance) of such Condemnation Restoration in excess
of the Award made available pursuant to the terms hereof; (ii) the
Condemnation Restoration shall be done in compliance with all Legal
Requirements; and (iii) Lender shall have received evidence reasonably
satisfactory to it that, during the period of the Condemnation Restoration,
the sum of (A) income derived from the Property, as reasonably determined
by Lender, plus (B) proceeds of rent loss insurance or business
interruption insurance, if any, to be paid will equal or exceed the sum of
(I) expenses in connection with the operation of the Property and (II) the
debt service on the Loan.
(d) Except as provided above, the Award collected upon any
Condemnation shall, at the option of Lender in its sole discretion, be
applied to the payment of the Debt or applied to reimburse Borrower for the
cost of the Condemnation Restoration in the manner set forth below. Any
application of an Award to the Debt shall be accompanied by the applicable
Condemnation Return-of-Amount. Any such application to the Debt shall be
without any prepayment consideration, other than any applicable Return-of-
Amount, except that if an Event of Default has occurred and is continuing
at the time the Award is received, then Borrower shall pay to Lender an
additional amount equal to the Yield Maintenance Premium, if any, that
would be required under Section 2.3.7 hereof if a Defeasance Deposit was to
be made by Borrower. Any such application to the Debt shall be applied to
those payments of principal and interest last due under the Note but shall
not postpone or reduce any payments otherwise required pursuant to the Note
other than such last due payments. If the Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of such Award,
Lender shall have the right, whether or not a deficiency judgment on the
Note shall be recoverable or shall have been sought, recovered or denied,
to receive all or a portion of said Award sufficient to pay the Debt.
(e) In the event Borrower is entitled to reimbursement out of the
Award received by Lender, such proceeds shall be disbursed from time to
time upon Lender being furnished with (1) evidence satisfactory to it of
the estimated cost of completion of the Condemnation Restoration, (2) funds
or, at Lender's option, assurances satisfactory to Lender that such funds
are available, sufficient in addition to the proceeds of the Award to
complete the Condemnation Restoration, (3) such architect's certificates,
waivers of lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of costs,
payment and performance as Lender may reasonably require and approve; and
(4) all plans and specifications for such Condemnation Restoration, such
plans and specifications to be approved by Lender prior to commencement of
work. In addition: (i) no payment made prior to the final completion of
the restoration, repair, replacement and rebuilding shall exceed ninety
percent (90%) of the value of the work performed from time to time; (ii)
funds other than proceeds of the Award shall be disbursed prior to
disbursement of such proceeds; and (iii) at all times, the undisbursed
balance of such proceeds remaining in the hands of Lender, together with
funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose, shall
be at least sufficient in the reasonable judgment of Lender to pay for the
costs of completion of the Condemnation Restoration free and clear of all
liens or claims for lien. Any surplus which may remain out of the Award
received by Lender after payment of such costs of restoration, repair,
replacement or rebuilding and after payment to the Borrower of any
remaining amounts which were deposited pursuant to clause (2) above shall,
in the sole and absolute discretion of Lender, be retained by Lender and
applied to payment of the Debt.
Section 7.2 REQUIRED REPAIR; REQUIRED REPAIR FUNDS.
7.2.1 REQUIRED REPAIRS: DEPOSITS. Borrower shall perform the
repairs at the Property set forth on SCHEDULE 2 annexed hereto (the
"Required Repairs"). Borrower shall complete each of the Required Repairs
on or before the deadline for same set forth on SCHEDULE 2. On the Closing
Date, Borrower shall deposit with Lender the amount set forth on SCHEDULE 2
hereto to perform the Required Repairs for the Property. Amounts so
deposited with Lender (the "Required Repair Fund") shall be held by Lender
in an account (the "Required Repair Account") in Lender's name at a
financial institution selected by Lender in its sole discretion and shall
be invested in Permitted Investments.
7.2.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges, assigns
and grants a security interest to Lender, as security for payment of all
sums due in respect of the Loan and the performance of all other terms,
conditions and covenants of the Loan Documents and this Agreement on
Borrower's part to be paid and performed, all of Borrower's right, title
and interest in and to the Required Repair Fund and the Required Repair
Account. Borrower shall not, without obtaining the prior written consent
of Lender, further pledge, assign or grant any security interest in the
Required Repair Fund or the Required Repair Account or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-l
Financing Statements, except those naming Lender as the secured party, to
be filed with respect thereto.
7.2.3 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse to
Borrower all Required Repair Funds in the Required Repair Account upon
satisfaction by Borrower of each of the following conditions: (a) Borrower
shall submit a written request for payment to Lender at least twenty (20)
days prior to the date on which Borrower requests such payment be made
(except in the case of an emergency repair which requires immediate
attention, in which event Borrower may submit such payment request within
ten (10) days), (b) on the date such request is received by Lender and on
the date such payment is to be made, no Default or Event of Default shall
exist and remain uncured, (c) Lender shall have received an Officer's
Certificate from Borrower certifying that all Required Repairs for that
Parcel have been completed (i) in a good and workmanlike manner, and (ii)
in accordance with all applicable Legal Requirements, such certificate to
be accompanied by a copy of each license, permit or other approval required
by any Governmental Authority for the use or occupancy of the Property, (d)
Lender shall have received an Officer's Certificate from Borrower (i)
identifying each Person that supplied materials or labor in connection with
the Required Repairs performed at that Parcel and (ii) stating that each
such Person has been paid in full, such certificate to be accompanied by a
copy of appropriate lien waivers or other evidence of payment satisfactory
to Lender, (e) at Lender's option, a title search for the Property
indicating that the Property is free from all liens, claims and other
encumbrances not previously approved by Lender, and (f) Lender shall have
received such other evidence as Lender shall reasonably request that the
Required Repairs at the Property have been completed and paid for. Lender
shall be required to make only one disbursement per month from the Required
Repair Account and such disbursement shall be made only upon satisfaction
of each condition contained in this Section 7.2.3. Upon completion of all
Required Repairs in accordance with the terms hereof, Lender shall disburse
to Borrower any amounts then remaining in the Required Repair Account.
7.2.4 FAILURE TO PERFORM REQUIRED REPAIRS. It shall be a default
under this Agreement if (a) Borrower does not complete the Required Repairs
at the Property by the required deadline for each repair as set forth on
SCHEDULE 2, or (b) Borrower does not satisfy each condition contained in
Section 7.2.3 hereof. Upon the occurrence of an Event of Default, Lender,
at its option, may withdraw all Required Repair Funds from the Required
Repair Account and Lender may apply such funds either to completion of the
Required Repairs at the Property or toward payment of the Debt in such
order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply Required Repair Funds
shall be in addition to all other rights and remedies provided to Lender
under this Agreement and the other Loan Documents.
Section 7.3 TAX AND INSURANCE ESCROW FUND.
7.3.1 TAX AND INSURANCE ESCROW FUND. Borrower shall pay to Lender
on each Payment Date (a) one-twelfth of the Taxes that Lender estimates
will be payable during the next ensuing twelve (12) months in order to
accumulate with Lender sufficient funds to pay all such Taxes at least
thirty (30) days prior to their respective due dates, less any amounts
which are to be paid by a tenant directly to the taxing authorities
pursuant to the terms of a Lease, and (b) one-twelfth of the Insurance
Premiums that Lender estimates will be payable for the renewal of the
coverage afforded by the Policies upon the expiration thereof in order to
accumulate with Lender sufficient funds to pay all such Insurance Premiums
at least thirty (30) days prior to the expiration of the Policies (the
amounts required to be paid on a monthly basis as provided in (a) and (b)
above hereinafter called the "Tax and Insurance Escrow Fund Payments," and
the aggregate amount of the Tax and Insurance Escrow Fund Payments which
are held by Lender at any time is defined as the "Tax and Insurance Escrow
Fund"). The Tax and Insurance Escrow Fund Payments, and the payments of
interest or principal or both, payable pursuant to the Note, shall be added
together and shall be paid as an aggregate sum by Borrower to Lender.
Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes
and Insurance Premiums required to be made by Borrower pursuant to Sec-
tion 5.1 hereof and under the Mortgage, or to reimburse Borrower for such
amounts upon presentation of evidence of payment and an Officer's
Certificate in form and substance satisfactory to Lender; subject, however,
to Borrower's right to contest Taxes in accordance with Section 5.1(b)
hereof. In making any payment relating to the Tax and Insurance Escrow
Fund, Lender may do so according to any ▇▇▇▇, statement or estimate
procured from the appropriate public office (with respect to Taxes) or
insurer or agent (with respect to Insurance Premiums), without inquiry into
the accuracy of such ▇▇▇▇, statement or estimate or into the validity of
any tax, assessment, sale, forfeiture, tax lien or title or claim thereof.
If the amount of the Tax and Insurance Escrow Fund shall exceed the amounts
required in Lender's judgment for the payment of Taxes and Insurance
Premiums pursuant to Section 5.1 hereof, Lender shall, in its sole
discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Tax and Insurance Escrow Fund. In
allocating such excess, Lender may deal with the Person shown on the
records of Lender to be the owner of the Property. If at any time Lender
determines that the amount of the Tax and Insurance Escrow Fund Payments
must be increased to pay the items set forth in (a) and (b) above, Lender
shall notify Borrower of such determination and Borrower shall increase its
monthly Tax and Insurance Escrow Fund Payments to Lender by the amount that
Lender estimates is sufficient to make up the deficiency at least thirty
(30) days prior to delinquency of the Taxes and/or expiration of the
Policies, as the case may be.
7.3.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges, assigns
and grants a security interest to Lender, as security for payment of all
sums due under the Loan and the performance of all other terms, conditions
and provisions of the Loan Documents and this Agreement on Borrower's part
to be paid and performed, of all Borrower's right, title and interest in
and to the Tax and Insurance Escrow Fund. Borrower shall not, without
obtaining the prior written consent of Lender, further pledge, assign or
grant any security interest in the Tax and Insurance Escrow Fund, or permit
any lien or encumbrance to attach thereto, or any levy to be made thereon,
or any UCC-1 Financing Statements, except those naming Lender as the
secured party, to be filed with respect thereto.
7.3.3 APPLICATION OF TAX AND INSURANCE ESCROW FUND. Upon the
occurrence of an Event of Default, Lender may apply any sums then present
in the Tax and Insurance Escrow Fund to the payment of the following items
in any order in its sole discretion: (a) Taxes and Other Charges;
(b) Insurance Premiums; (c) interest on the unpaid principal balance of the
Note; (d) amortization of the unpaid principal balance of the Note; or (e)
all other sums payable pursuant to this Agreement and the other Loan
Documents. The Tax and Insurance Escrow Fund shall not constitute a trust
fund and may be commingled with other monies held by Lender. Sums in the
Tax and Insurance Escrow Fund shall be held by Lender in an account in
Lender's name at a financial institution selected by Lender in its sole
discretion and shall be invested in Permitted Investments. Earnings or
interest, if any, thereon shall be retained as part of such funds and
applied in accordance with this Section 7.3. Lender shall not be liable
for any loss sustained on the investment of any funds constituting the Tax
and Insurance Escrow Fund.
Section 7.4 CAPITAL RESERVE FUND.
7.4.1 CAPITAL RESERVE FUND. Borrower shall pay to Lender on each
Payment Date an amount equal to one-twelfth (1/12th) of the product
obtained by multiplying $.30 by the aggregate amount of square feet of
rentable space in the Property (the monthly amounts to be paid are
hereinafter called the "Capital Reserve Fund Payments," and the aggregate
amount of the Capital Reserve Fund Payments held by Lender at any time are
defined as the "Capital Reserve Fund"). Lender will apply the Capital
Reserve Fund to payment of Capital Expenses, Approved Leasing Expenses and
any Operating Expenses consisting of maintenance and repair items pursuant
to the terms hereof; PROVIDED, HOWEVER, if the Loan shall have been
accelerated or if there is an Event of Default which is continuing, then
Lender may credit such Capital Reserve Fund against the Debt in such
priority and proportions as Lender in its sole and absolute discretion
shall deem proper. If the amount of the Capital Reserve Fund shall in
Lender's judgment exceed the amounts due for Approved Capital Expenses
pursuant to the terms hereof, Lender shall, in its discretion, return any
excess to Borrower or, if future Capital Reserve Fund payments are then
required, credit such excess against such future payments; PROVIDED,
HOWEVER, if the Loan shall have been accelerated or if there is an Event of
Default which is continuing, then Lender may credit such excess against the
Debt in such priority and proportions as Lender in its sole and absolute
discretion shall deem proper.
7.4.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges, assigns
and grants a security interest to Lender, as security for payment of all
sums due under the Loan and the performance of all other terms, conditions
and provisions of the Loan Documents and this Agreement on Borrower's part
to be paid and performed, of all Borrower's right, title and interest in
and to the Capital Reserve Fund. Borrower shall not, without obtaining the
prior written consent of Lender, further pledge, assign or grant any
security interest in the Capital Reserve Fund, or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to
be filed with respect thereto. This Agreement is, among other things,
intended by the parties to be a security agreement for purposes of the
Illinois Uniform Commercial Code.
7.4.3 APPLICATION OF CAPITAL RESERVE FUND. Upon the occurrence of
an Event of Default, Lender may apply any sums then present in the Capital
Reserve Fund to the payment of the following items in any order in its sole
discretion: (a) Capital Expenses; (b) interest on the unpaid principal
balance of the Note; (c) amortization of the unpaid principal balance of
the Note; or (d) all other sums payable pursuant to this Agreement and the
other Loan Documents. The Capital Reserve Fund shall not constitute a
trust fund and may be commingled with other monies held by Lender. Sums in
the Capital Reserve Fund shall be held by Lender in an account in Lender's
name at a financial institution selected by Lender in its sole discretion
and shall be invested in Permitted Investments. Earnings or interest, if
any, thereon shall be retained as part of such funds and applied in
accordance with this Section 7.4. Lender shall not be liable for any loss
sustained on the investment of any funds constituting the Capital Reserve
Fund.
7.4.4 PAYMENT OF CAPITAL EXPENSES. Funds held in the Capital
Reserve Fund may be used for Approved Capital Expenses. From time to time,
Borrower may send a request for disbursement of funds in the Capital
Reserve Fund, but not more than one (1) time per month and, to the extent
there are sufficient funds available in the Capital Reserve Fund, such dis-
bursements shall be made by Lender so long as (A) no Event of Default shall
have occurred and be continuing; (B) such expenditure is for an Approved
Capital Expense; and (C) the request for disbursement is accompanied by (1)
an Officer's Certificate certifying (v) the amount of funds to be
disbursed, (w) that such funds will be used to pay Approved Capital
Expenses and a description thereof, (x) that the same has not been the
subject of a previous disbursement, (y) that all outstanding trade payables
(other than those to be paid from the requested disbursement or those
otherwise which constitute Permitted Indebtedness) have been paid in full,
and (z) that all previous disbursements have been used to pay the
previously identified Approved Capital Expenses, and (2) reasonably
detailed documentation as to the amount, necessity and purpose therefor.
Section 7.5 ROLLOVER RESERVE FUND.
7.5.1 ROLLOVER RESERVE FUND. The amounts held under this Section 7.5
are defined as the "Rollover Reserve Fund". Concurrently with the
execution and delivery of this Agreement, Borrower shall pay the amount of
Three Hundred Fourteen Thousand Eight Hundred Dollars ($314,800) into the
Rollover Reserve Fund, which payment represents all termination fees
received by Borrower in connection with the Omnia Lease (the "Omnia
Payment"). Borrower shall pay to Lender on each Payment Date the amount of
$26234 (the monthly amounts to be paid are referred to as "Rollover Reserve
Fund Payments"), and all Rollover Reserve Fund Payments are to be paid into
the Rollover Reserve Fund. Lender will apply the Rollover Reserve Fund to
payment of Approved Leasing Expenses pursuant to the terms hereof;
PROVIDED, HOWEVER, if the Loan shall have been accelerated or if there is
an Event of Default which is continuing, then Lender may credit such
Rollover Reserve Fund against the Debt in such priority and proportions as
Lender in its sole and absolute discretion shall deem proper. If the
amount of the Rollover Reserve Fund shall exceed the amounts due for
Approved Leasing Expenses pursuant to the terms hereof, Lender shall, in
its discretion, return any excess to Borrower; PROVIDED, HOWEVER, if the
Loan shall have been accelerated or if there is an Event of Default which
is continuing, then Lender may credit such excess against the Debt in such
priority and proportions as Lender in its sole and absolute discretion
shall deem proper.
7.5.2 ROLLOVER RESERVE FUND-LEASE TERMINATION PAYMENTS. If at any
time during the Term, Borrower receives a payment from a Tenant in
connection with the termination or compromise of a Lease, Borrower shall
deposit such amount into the Deposit Account to be forwarded to the
Rollover Reserve Fund to be held by Lender and applied as provided herein.
If the Approved Leasing Expenses actually incurred by Borrower in re-
leasing the entire space covered by any terminated Lease are less than the
amount of any termination payment paid by the former tenant with respect to
such termination, so long as no Event of Default shall have occurred and be
continuing, upon request by Borrower, Lender shall refund to Borrower an
amount equal to such difference.
7.5.3 GRANT OF SECURITY INTEREST. Borrower hereby pledges, assigns
and grants a security interest to Lender, as security for payment of all
sums due under the Loan and the performance of all other terms, conditions
and provisions of the Loan Documents and this Agreement on Borrower's part
to be paid and performed, of all Borrower's right, title and interest in
and to the Rollover Reserve Fund. Borrower shall not, without obtaining
the prior written consent of Lender, further pledge, assign or grant any
security interest in the Rollover Reserve Fund, or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to
be filed with respect thereto. This Agreement is, among other things,
intended by the parties to be a security agreement for purposes of the
Illinois Uniform Commercial Code.
7.5.4 APPLICATION OF ROLLOVER RESERVE FUND. Upon the occurrence of
an Event of Default, Lender may apply any sums then present in the Rollover
Reserve Fund and/or to the payment of the following items in any order in
its sole discretion: (a) Approved Leasing Expenses; (b) interest on the
unpaid principal balance of the Note; (c) amortization of the unpaid
principal balance of the Note; or (d) all other sums payable pursuant to
this Agreement and the other Loan Documents. The Rollover Reserve Fund
shall not constitute a trust fund and may be commingled with other monies
held by Lender. Sums in the Rollover Reserve Fund shall be held by Lender
in the Deposit Account and shall be invested in Permitted Investments.
Earnings or interest, if any, thereon shall be retained as part of such
funds and applied in accordance with this Section 7.5.4 Lender shall not
be liable for any loss sustained on the investment of any funds
constituting the Rollover Reserve Fund.
7.5.5 PAYMENT OF APPROVED LEASING EXPENSES. Funds held in the
Rollover Reserve Fund may be used for Approved Leasing Expenses. From time
to time, Borrower may send a request for disbursement of funds in the
Rollover Reserve Fund, but not more than one (1) time per month and, to the
extent there are sufficient funds available in the Rollover Reserve Fund,
such disbursements shall be made by Lender so long as (A) no Event of
Default shall have occurred and be continuing; (B) such expenditure is for
an Approved Leasing Expense; and (C) the request for disbursement is
accompanied by (1) an Officer's Certificate certifying (v) the amount of
funds to be disbursed, (w) that such funds will be used to pay Approved
Leasing Expenses and a description thereof, (x) that all outstanding trade
payables (other than those to be paid from the requested disbursement or
those otherwise permitted to be outstanding under Section 6.1(i) hereof)
have been paid in full, (y) that the same has not been the subject of a
previous disbursement, and (z) that all previous disbursements have been
used to pay the previously identified Approved Leasing Expenses, and (2) if
requested by Lender, reasonably detailed supporting documentation as to the
amount, necessity and purpose therefor.
Section 7.6 SECURITY DEPOSITS.
7.6.1 SECURITY DEPOSIT FUND. Borrower is not required to
reserve deposits made with respect to Leases with the Clearing Bank unless
either the terms of the Lease under which the security deposit was made or
applicable law requires that the security deposit be segregated (such
deposits are referred to as "Security Deposits"). As provided in the
Clearing Account Agreement, Borrower shall establish a deposit account
referred to as the "Security Deposit Account."
7.6.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges,
assigns and grants a security interest to Lender, as security for payment
of all sums due under the Loan and the performance of all other terms,
conditions and provisions of the Loan Documents and this Agreement on
Borrower's part to be paid and performed, of all Borrower's right, title
and interest in and to the Security Deposit Account. Borrower shall not,
without obtaining the prior written consent of Lender, further pledge,
assign or grant any security interest in the Security Deposit Account, or
permit any lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements, except those naming Lender as
the secured party, to be filed with respect thereto. With respect to the
Security Deposit Account, this Agreement is, among other things, intended
by the parties to be a security agreement for purposes of the Illinois
Uniform Commercial Code.
7.6.3 APPLICATION OF SECURITY DEPOSIT ACCOUNT. Upon the
occurrence of an Event of Default, Lender may apply any sums then present
in the Security Deposit Account to the payment of amounts due from the
tenant under the Lease with respect to which the security deposit was
applied; provided, however, that Lender's application of such amounts to
that Lease must be in accordance with the terms of the Lease. To the
extent permitted by applicable law, any interest accruing on the Security
Deposit Account shall inure to the benefit of Borrower. Unless an Event of
Default shall have occurred and be continuing, such interest shall be
disbursed to Borrower monthly.
7.6.4 PAYMENT OF SECURITY DEPOSIT ACCOUNT AMOUNTS. Funds held
in the Security Deposit Account may be used for amounts to be paid with
respect to the Lease under which the security deposit was made. From time
to time, Borrower may send a request for disbursement of funds in the
Security Deposit Account, and, to the extent there are sufficient funds
available in the Security Deposit Account, such disbursements shall be made
by Lender so long as (A) the particular security deposit which the Borrower
seeks to apply has not been fully disbursed; and (B) the request for
disbursement is accompanied by an Officer's Certificate certifying the
amount of funds to be disbursed, that such funds will be used to pay
amounts due under the Lease and a description thereof, that the use of the
funds is in accordance with the terms of the Lease and with applicable law.
Any funds remaining in the Security Deposit Account after the debt has been
paid in full shall be remitted to the Borrower.
ARTICLE VIII. DEFAULTS
-----------------------
Section 8.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of
default hereunder (each, an "Event of Default"):
(i) if any sum payable under the Note for principal or interest is
not paid when due;
(ii) if any sum payable under this Agreement other than amounts
described in clause (i) above is not paid when due and within five (5) days
after written notice thereof from Lender to Borrower;
(iii)if any of the Taxes or Other Charges are not paid when the same
are due and payable, subject to Borrower's right to contest Taxes in
accordance with Section 5.1(b) hereof;
(iv) if the Policies are not kept in full force and effect, or if
the Policies are not delivered to Lender within five (5) days after request
therefor;
(v) if, without Lender's prior written consent, (A) any Owner
transfers or encumbers all or any portion of the Properties other than in
connection with a Permitted Transfer or (B) any direct interest in any
Owner is transferred or assigned except as expressly permitted under
Section 6.1(j) or Section 6.1(k) hereof;
(vi) if any representation or warranty made by Borrower or by any
Owner herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished by
Borrower or any Owner in connection with this Agreement or any other Loan
Document, shall be false or misleading in any material respect as of the
date the representation or warranty was made and the effect of such false
or misleading representation is not cured to Lender's satisfaction within
thirty (30) days after written notice thereof from Lender to Borrower;
(vii)if any Owner shall make an assignment for the benefit of
creditors;
(viii) if a receiver, liquidator or trustee shall be appointed
for any Owner or if any Owner shall be adjudicated a bankrupt or insolvent,
or if any petition for bankruptcy, reorganization or arrangement pursuant
to federal bankruptcy law, or any similar federal or state law, shall be
filed by or against, consented to, or acquiesced in by, any Owner or if any
proceeding for the dissolution or liquidation of any Owner shall be
instituted; provided, however, if such appointment, adjudication, petition
or proceeding was involuntary and not consented to by any Owner upon the
same not being discharged, stayed or dismissed within ninety (90) days;
(ix) if any Owner attempts to assign its respective rights under
this Agreement in contravention of the Loan Documents or any of the other
Loan Documents or any interest herein or therein;
(x) if any Owner breaches any of its respective negative covenants
contained in Section 6.1 or any covenant contained in Section 4.1(dd)
hereof;
(xi) if an Event of Default as defined or described in the Note, any
Mortgage, or any other Loan Document occurs, whether as to Borrower, any
Owner or the Property, or if any other such event shall occur or condition
shall exist, if the effect of such event or condition is to accelerate the
maturity of any portion of the Debt or to permit Lender to accelerate the
maturity of all or any portion of the Debt;
(xii)if Borrower shall be in default of its obligations to make
deposits into the Required Repair Fund or to make required Tax and
Insurance Escrow Fund Payments, Capital Reserve Fund Payments or Rollover
Reserve Fund Payments;
(xiii) if Borrower shall be in default under any term, covenant
or provision set forth herein which specifically contains a notice
requirement or grace period after the giving of such notice or the
expiration of such grace period; or
(xiv)if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xiii) above, for ten (10) days after notice to Borrower
from Lender, in the case of any Default which can be cured by the payment
of a sum of money, or for thirty (30) days after notice from Lender in the
case of any other Default; PROVIDED, HOWEVER, that if such non-monetary
Default is susceptible of cure but cannot reasonably be cured within such
30-day period and provided further that Borrower shall have commenced to
cure such Default within such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, such 30-day period shall be
extended for an additional period of time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such Default, such
additional period not to exceed sixty (60) days.
(b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (vii), (viii) or (ix) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or
at law or in equity, Lender may take such action, without notice or demand,
that Lender deems advisable to protect and enforce its rights against
Borrower and in and to the Property, including declaring the Debt to be
immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against Borrower
and the Property, including all rights or remedies available at law or in
equity; and upon any Event of Default described in clauses (vii), (viii) or
(ix) above, the Debt and all other obligations of Borrower hereunder and
under the other Loan Documents shall immediately and automatically become
due and payable, without notice or demand, and Borrower hereby expressly
waives any such notice or demand, anything contained herein or in any other
Loan Document to the contrary notwithstanding.
(c) Upon the occurrence of an Event of Default, Lender may apply
any amounts held in the Deposit Account and any amounts otherwise received
by Lender to such purposes under the Loan Documents as Lender may elect,
including payment of interest or principal on the Note. In the event
Lender accelerates the Maturity Date of the Note following the occurrence
of an Event of Default, Borrower shall be required to pay a yield
maintenance premium with respect to the Note equal to that Yield
Maintenance Premium which Borrower would have been required to pay as part
of Borrower's Defeasance Deposit if Borrower had elected to cause a
voluntary Defeasance of the Note under Section 2.3.7 of this Agreement as
of the date to which the Maturity Date is accelerated, and the amount of
such yield maintenance premium as determined by Lender shall be due under
this Agreement and shall be secured by the Mortgage.
Section 8.2 REMEDIES.
(a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to
Lender against Borrower under this Agreement or any of the other Loan
Documents executed and delivered by, or applicable to, Borrower or at law
or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding
or other action for the enforcement of its rights and remedies under any of
the Loan Documents with respect to the Property. Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order
as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights
and remedies of Lender permitted by law, equity or contract or as set forth
herein or in the other Loan Documents. Without limiting the generality of
the foregoing, Borrower agrees that if an Event of Default is continuing
(i) Lender is not subject to any "one action" or "election of remedies" law
or rule, and (ii) all liens and other rights, remedies or privileges
provided to Lender shall remain in full force and effect until Lender has
exhausted all of its remedies against the Property and the Mortgage have
been foreclosed, sold and/or otherwise realized upon in satisfaction of the
Debt or the Debt has been paid in full.
(b) Lender shall have the right from time to time to partially
foreclose the Mortgage in any manner and for any amounts secured by the
Mortgage then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i)
in the event Borrower defaults in the payment of one or more scheduled
payments of principal and interest, Lender may foreclose the applicable
Mortgage to recover such delinquent payments, or (ii) in the event Lender
elects to accelerate less than the entire outstanding principal balance of
the Loan, Lender may foreclose a Mortgage to recover so much of the
principal balance of the Loan as Lender may accelerate. Notwithstanding
one or more partial foreclosures, the Property shall remain subject to the
Mortgage to secure payment of sums secured by the Mortgage and not
previously recovered.
(c) Lender shall have the right from time to time to sever the Note
and the other Loan Documents into one or more separate notes, mortgages and
other security documents in such denominations as Lender shall determine in
its sole discretion for purposes of evidencing and enforcing its rights and
remedies provided hereunder. Borrower shall execute and deliver to Lender
from time to time, promptly after the request of Lender, a severance
agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely
and irrevocably appoints Lender as its true and lawful attorney, coupled
with an interest, in its name and stead to make and execute all documents
necessary or desirable to effect the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof.
(d) Any application of proceeds of the exercise of Lender's
remedies under this Article to repayment of the Debt shall be accompanied
by the applicable Event of Default Return-of-Amount.
Section 8.3 REMEDIES CUMULATIVE. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any
other right, power or remedy which Lender may have against Borrower
pursuant to this Agreement or the other Loan Documents, or existing at law
or in equity or otherwise. Lender's rights, powers and remedies may be
pursued singly, concurrently or otherwise, at such time and in such order
as Lender may determine in Lender's sole discretion. No delay or omission
to exercise any remedy, right or power accruing upon an Event of Default
shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from
time to time and as often as may be deemed expedient. A waiver of one
Default or Event of Default with respect to Borrower shall not be construed
to be a waiver of any subsequent Default or Event of Default by Borrower or
to impair any remedy, right or power consequent thereon.
ARTICLE _8K SPECIAL PROVISIONS
-------------------------------
Section 9.1 SALE OF NOTE AND SECURITIZATION. Lender shall have the
right to dispose of the Loan, the Note, and the Loan Documents, whether in
connection with a Secondary Market Transaction or otherwise, with no
requirement of consent from the Borrower. At the request of the holder of
the Note and, to the extent not already required to be provided by Borrower
under this Agreement, Borrower shall use reasonable efforts to satisfy the
market standards to which the holder of the Note customarily adheres or
which may be reasonably required in the marketplace or by the Rating
Agencies in connection with the sale of the Note or participation therein
or the first successful securitization (such sale and/or securitization,
the "Securitization") of rated single or multi-class securities (the
"Securities") secured by or evidencing ownership interests in the Note and
the Mortgage, including:
(a) (i) provide such financial and other information with
respect to the Property, Borrower and its affiliates, the Manager and any
tenants of the Property, (ii) provide business plans and budgets relating
to the Property and (iii) to perform or permit or cause to be performed or
permitted such site inspection, appraisals, market studies, environmental
reviews and reports (Phase I's and, if appropriate, Phase II's),
engineering reports and other due diligence investigations of the Property,
as may be reasonably requested by the holder of the Note or the Rating
Agencies or as may be necessary or appropriate in connection with the
Securitization (the "Provided Information"), together, if customary, with
appropriate verification and/or consents of the Provided Information
through letters of auditors or opinions of counsel of independent attorneys
acceptable to Lender and the Rating Agencies;
(b) at Lender's expense, cause counsel to render opinions in form
customary for securitization transactions as to non-consolidation,
fraudulent conveyance, and true sale or any other opinion customary in
securitization transactions with respect to the Property and Borrower and
its affiliates, which counsel and opinions shall be reasonably satisfactory
to the holder of the Note and the Rating Agencies;
(c) make such representations and warranties as of the closing date
of the Securitization with respect to the Property, Borrower, and the Loan
Documents as are customarily provided in securitization transactions and as
may be reasonably requested by the holder of the Note or the Rating
Agencies and consistent with the facts covered by such representations and
warranties as they exist on the date thereof, including the representations
and warranties made in the Loan Documents; and
(d) execute such amendments to the Loan Documents and Borrower's
organizational documents, enter into a lock-box or similar arrangement with
respect to the Rents and establish and fund such reserve funds (including
reserve funds for deferred maintenance and capital improvements) as may be
requested by the holder of the Note or the Rating Agencies or otherwise to
effect the Securitization, provided, that nothing contained in this
subsection (d) shall result in a material economic change in the
transaction.
Section 9.2 SECURITIZATION INDEMNIFICATION.
(a) Borrower understands that certain of the Provided Information
and the Required Records may be included in disclosure documents in
connection with the Securitization, including a prospectus or private
placement memorandum (each, a "Disclosure Document") and may also be
included in filings with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), or the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to
be revised prior to the sale of all Securities, upon request from the
holder of the Note, Borrower will cooperate with the holder of the Note in
updating the Provided Information or Required Reports for inclusion or
summary in the Disclosure Document by providing all current information
pertaining to Borrower and the Properties necessary to keep the Disclosure
Document accurate and complete in all material respects with respect to
such matters.
(b) In connection with each of (i) a preliminary and a private
placement memorandum or (ii) a preliminary and final prospectus, as
applicable, Borrower agrees to provide an indemnification certificate:
(A) certifying that Borrower has carefully examined those
portions of such memorandum or prospectus, as applicable, pertaining to
Borrower, the Property and the Loan including applicable portions of the
sections entitled "Special Considerations", "Description of the Mortgage",
"Description of the Mortgage Loan and Property", "The Manager", "The
Borrower" and "Certain Legal Aspects of the Mortgage Loan", and such
sections (and any other sections reasonably requested and pertaining to
Borrower, the Property or the Loan) do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements made, in the light of the circumstances under which they
were made, not misleading;
(B) indemnifying Lender and the affiliate of Nomura
Securities International, Inc. ("Nomura"), that has filed the registration
statement relating to the securitization (the "Registration Statement"),
each of its directors, each of its officers who have signed the
Registration Statement and each person or entity who controls Nomura within
the meaning of Section 15 of the Securities Act or Section 30 of the
Exchange Act of 1933, as amended (collectively, the "Nomura Group"), and
Nomura, each of its directors and each person who controls Nomura, within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act (collectively, the "Underwriter Group") for any losses,
claims, damages or liabilities (the "Liabilities") to which Lender, the
Nomura Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon any untrue statement of any
material fact based on information provided by Borrower and contained in
the applicable portions of such sections applicable to Borrower, the
Manager, the Property or the Loan, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated in the applicable portions of such sections or necessary in order
to make the statements in the applicable portions of such sections or in
light of the circumstances under which they were made, not misleading;
provided that such indemnification shall not extend to or include
Liabilities for the gross negligence or wilful misconduct of any of the
indemnified parties; and
(C) agreeing to reimburse Lender and Nomura for any legal or
other expenses reasonably incurred by Lender and Nomura in connection with
investigating or defending the Liabilities. Borrower's Liability under
clauses (A) or (B) above shall be limited to Liabilities arising out of or
based upon any such untrue statement or omission made therein in reliance
upon and in conformity with information furnished to Lender by or on behalf
of Borrower in connection with the preparation of those portions of the
memorandum or prospectus pertaining to Borrower, the Property or the Loan
or in connection with the underwriting of the debt, including financial
statements of Borrower, operating statements, rent rolls, environmental
site assessment reports and property condition reports with respect to the
Properties. This indemnity agreement will be in addition to any liability
which Borrower may otherwise have.
(c) In connection with filings under the Exchange Act, Borrower
agrees to (i) indemnify Lender, the Nomura Group and the Underwriter Group
for any Liabilities to which Lender, the Nomura Group or the Underwriter
Group may become subject insofar as the Liabilities arise out of or are
based upon the omission or alleged omission to state in the Provided
Information or Required Records a material fact required to be stated in
the Provided Information or Required Records in order to make the
statements in the Provided Information or Required Records, in light of the
circumstances under which they were made not misleading and (ii) reimburse
Lender or Nomura for any legal or other expenses reasonably incurred by
Lender and Nomura in connection with defending or investigating the
Liabilities.
(d) Promptly after receipt by an indemnified party under this Sec-
tion 9.2 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9.2, notify the indemnifying party in
writing of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any
liability which the indemnifying party may have to any indemnified party
hereunder except to the extent that failure to notify causes prejudice to
the indemnifying party. In the event that any action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent
that it (or they) may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel satisfactory to such
indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 9.2 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified
party and the indemnifying party shall have reasonably concluded that there
are any legal defenses available to it and/or other indemnified parties
that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. The indemnifying party shall not be liable for the
expenses of more than one separate counsel unless there are legal defenses
available to it that are different from or additional to those available to
another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Sec-
tion 9.2(b) or (c) is for any reason held to be unenforceable by an
indemnified party in respect of any losses, claims, damages or liabilities
(or action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 9.2(b) or 9.2(c), the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages or liabilities (or action in respect
thereof); provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, the following
factors shall be considered: (i) the Nomura Group's and Borrower's
relative knowledge and access to information concerning the matter with
respect to which claim was asserted; (ii) the opportunity to correct and
prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and Borrower
hereby agree that it may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
Section 9.3 RATING SURVEILLANCE. Lender will retain the Rating
Agencies to provide rating surveillance services on any certificates issued
in a Securitization. The pro rata share of such rating surveillance will
be at the expense of Lender.
Section 9.4 EXCULPATION. Subject to the qualifications below,
Lender shall not enforce the liability and obligation of Borrower to
perform and observe the obligations contained in the Note, this Agreement,
the Mortgage or the other Loan Documents by any action or proceeding
wherein a money judgment shall be sought against Borrower or any Owner,
except that Lender may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Lender
to enforce and realize upon its interest under the Note, this Agreement,
the Mortgage and the other Loan Documents, or in the Property, the Rents,
or any other collateral given to Lender pursuant to the Loan Documents;
PROVIDED, HOWEVER, that, except as specifically provided herein, any
judgment in any such action or proceeding shall be enforceable against
Borrower or an Owner only to the extent of Borrower's or such Owner's
interest in the Property, in the Rents and in any other collateral given to
Lender, and Lender, by accepting the Note, this Agreement, the Mortgage and
the other Loan Documents, agrees that it shall not ▇▇▇ for, seek or demand
any deficiency judgment against Borrower or any Owner in any such action or
proceeding under or by reason of or under or in connection with the Note,
this Agreement, the Mortgage or the other Loan Documents. The provisions
of this section shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan
Documents; (b) impair the right of Lender to name Borrower or the Owners as
a party defendant in any action or suit for foreclosure and sale under any
Mortgage; (c) affect the validity or enforceability of or any guaranty made
in connection with the Loan or any of the rights and remedies of Lender
thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Assignment of Leases;
(f) constitute a prohibition against Lender commencing any other
appropriate action or proceeding in order for Lender to fully realize the
security granted by the Mortgage or to exercise its remedies against the
Property; or (g) constitute a waiver of the right of Lender to enforce the
liability and obligation of Borrower or the Owners, by money judgment or
otherwise, to the extent of any loss, damage, cost, expense, liability,
claim or other obligation incurred by Lender (including attorneys' fees and
costs reasonably incurred) arising out of or in connection with the
following:
(i) fraud or material misrepresentation by Borrower, an Owner, or
any guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower or an
Owner;
(iii)the breach of any provision in that certain Environmental and
Hazardous Substance Indemnification Agreement of even date herewith given
by Borrower to Lender or in the Mortgage concerning environmental laws,
hazardous substances and asbestos and any indemnification of Lender with
respect thereto in either document;
(iv) the removal or disposal by Borrower or an Owner of any portion
of the Property after an Event of Default, other than in the ordinary
course of business;
(v) the misapplication or conversion by Borrower or an Owner of (A)
any insurance proceeds paid by reason of any loss, damage or destruction to
the Property, (B) any awards or other amounts received in connection with
the condemnation of all or a portion of the Property, or (C) any Rents
following an Event of Default;
(vi) failure to pay charges for labor or materials or other charges
that can create liens on any portion of the Property unless such charges
are the subject of a bona fide dispute in which Borrower or an Owner is
contesting the amount or validity thereof;
(vii)the collection of Rent more than thirty (30) days in advance,
and the failure to deliver to Lender any security deposits collected with
respect to the Property upon a foreclosure of the Property or action in
lieu thereof, except to the extent any such security deposits were applied
in accordance with the terms and conditions of any of the Leases prior to
the occurrence of the Event of Default that gave rise to such foreclosure
or action in lieu thereof;
(viii) the occurrence of any event described in clause (vii) of
Section 8.1 with respect to any Owner; and
(ix) Borrower's indemnification of Lender set forth in Section 9.2.
Notwithstanding anything to the contrary in this Agreement or any of the
Loan Documents, Lender shall not be deemed to have waived any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount
of the Debt secured by the Mortgage or to require that all collateral shall
continue to secure all of the Debt owing to Lender in accordance with the
Loan Documents. Notwithstanding anything to the contrary in this Agreement
or in any of the Loan Documents, the Debt shall be fully recourse to the
Borrower (but not to its members, its managers, or their principals) in the
event that: (i) Borrower fails to obtain Lender's prior written consent to
any subordinate financing or other voluntary lien encumbering the
Properties other than a Permitted Encumbrance; or (ii) Borrower fails to
obtain Lender's prior written consent to any assignment, transfer, or
conveyance of the Property or any interest therein as required by any
Mortgage. Notwithstanding anything to the contrary in this Agreement or in
any of the Loan Documents, in the event that: (y) the first full monthly
payment of principal and interest under the Note is not paid when due; or
(z) Borrower fails to permit on-site inspections of the Property, fails to
provide financial information, fails to maintain its status as a single
purpose entity or fails to appoint a new property manager upon the request
of Lender after an Event of Default, each as required by, and in accordance
with the terms and provisions of, this Loan Agreement and the Mortgage,
then Lender shall have the right to direct the Clearing Bank and the
Deposit Bank that, until such condition stated in clause (y) or (z) above
has been corrected to Lender's satisfaction, all amounts deposited into
Clearing Account A shall be forwarded to the Deposit Account without any
disbursement to Borrower's Subaccount or to Clearing Account B.
Section 9.5 TERMINATION OF MANAGER. If an Event of Default occurs
and is continuing, Borrower shall, at the request of Lender, terminate the
Management Agreement and replace the Manager with a manager approved by
Lender on terms and conditions satisfactory to Lender.
Section 9.6 RETENTION OF SERVICER. Lender reserves the right to
retain the Servicer to act as its agent hereunder with such powers as are
specifically delegated to the Servicer by Lender, whether pursuant to the
terms of this Agreement, the Pooling and Servicing Agreement or the Deposit
Account Agreement or otherwise, together with such other powers as are
reasonably incidental thereto. Borrower shall pay any reasonable fees and
expenses of the Servicer in connection with a Defeasance of the Note,
release of Property, assumption or modification of the Loan or enforcement
of the Loan Documents; provided, however, that Borrower shall not be
required to pay the Servicer's customary periodic fee for servicing the
Loan.
ARTICLE X. MISCELLANEOUS
-------------------------
Section 10.1 SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the Loan
and the execution and delivery to Lender of the Note, and shall continue in
full force and effect so long as all or any of the Debt is outstanding and
unpaid (but the accuracy thereof shall be determined as of the Closing
Date).
Section 10.2 SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to
include the legal representatives, successors and assigns of such party.
All covenants, promises and agreements in this Agreement contained, by or
on behalf of Borrower, shall inure to the benefit of the respective legal
representatives, successors and assigns of Lender.
Section 10.3 LENDER'S DISCRETION. Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove,
or any arrangement or term is to be satisfactory to Lender, the decision of
Lender to approve or disapprove or to decide whether arrangements or terms
are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall
be final and conclusive.
Section 10.4 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF ILLINOIS AND MADE
BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF ILLINOIS AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE
STATE OF ILLINOIS, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED
HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES
THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS
AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF
THE STATES IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO
THE FULLEST EXTENT PERMITTED BY THE LAWS OF SUCH STATES, THE LAW OF THE
STATE OF ILLINOIS SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL
LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER
OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF
ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT (BUT NOT INCLUDING ANY LEGAL
SUIT, ACTION OR PROCEEDING TO ENFORCE ANY LOAN DOCUMENT WITH RESPECT TO ANY
PART OF THE PROPERTY, INCLUDING ANY MORTGAGE FORECLOSURE ACTION) SHALL BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN CHICAGO, ILLINOIS, AND BORROWER
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ESQ., AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS
BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN CHICAGO, ILLINOIS,
AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER
IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
THE STATE OF ILLINOIS. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF
ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME
AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN CHICAGO, ILLINOIS, (WHICH OFFICE SHALL BE DESIGNATED AS THE
ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A
SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN CHICAGO,
ILLINOIS OR IS DECEASED.
Section 10.5 MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of
this Agreement, or of the Note, or of any other Loan Document, nor consent
to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on
Borrower, shall entitle Borrower to any other or future notice or demand in
the same, similar or other circumstances.
Section 10.6 DELAY NOT A WAIVER. Neither any failure nor any delay
on the part of Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Note or under any other Loan Document, or
any other instrument given as security therefor, shall operate as or
constitute a waiver thereof, nor shall a single or partial exercise thereof
preclude any other future exercise, or the exercise of any other right,
power, remedy or privilege. In particular, and not by way of limitation,
by accepting payment after the due date of any amount payable under this
Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all
other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
Section 10.7 NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be
given in writing and shall be effective for all purposes if hand delivered
or sent by (a) certified or registered United States mail, postage prepaid,
or (b) 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 Lender:
Nomura Asset Capital Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Nomura Asset Capital Corporation
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
If to Borrower:
c/o Banyan Strategic Realty Trust
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
c/o Banyan Strategic Realty Trust
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business
Day.
Section 10.8 TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM
OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.
Section 1Table 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 10.10 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
Section 10.11 PREFERENCES. Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by
Borrower to any portion of the obligations of Borrower hereunder. To the
extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
Section 10.12 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Lender to Borrower and except
with respect to matters for which Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice. Borrower hereby
expressly waives the right to receive any notice from Lender with respect to
any matter for which this Agreement or the other Loan Documents do not
specifically and expressly provide for the giving of notice by Lender to
Borrower.
Section 10.13 JOINT AND SEVERAL LIABILITY. Each Owner shall be jointly
and severally liable for the agreements, representations, warranties,
covenants, and undertakings of Borrower under this Agreement, under the Note,
and under any Loan Document to which the Owners are parties.
Section 10.14 EXPENSES; INDEMNITY.
(a) Borrower covenants and agrees to reimburse Lender (or the holder
of the Loan, as applicable) upon receipt of written notice from such holder
for all reasonable costs and expenses (including reasonable attorneys' fees
and disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including any opinions requested by Lender as to any legal matters arising
under this Agreement or the other Loan Documents with respect to the
Property); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after
the Closing Date, including confirming compliance with environmental and
insurance requirements; (iii) Lender's ongoing performance and compliance with
all agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iv) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by
Lender; (v) Borrower complying with any requests made pursuant to Section 9.1
hereof (subject to the limitations contained in such section); (vi) the filing
and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Liens in favor
of Lender pursuant to this Agreement and the other Loan Documents;
(vii) enforcing or preserving any rights, in response to third party claims or
the prosecuting or defending of any action or proceeding or other litigation,
in each case against, under or affecting Borrower, this Agreement, the other
Loan Documents, the Property, or any other security given for the Loan; and
(viii) enforcing any obligations of or collecting any payments due from
Borrower under this Agreement, the other Loan Documents or with respect to the
Property or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the
extent the same arise by reason of the gross negligence, illegal acts, fraud
or willful misconduct of Lender. Any costs and expenses due and payable to
Lender hereunder which are not paid by Borrower within ten (10) days after
demand may be paid from any amounts in the Deposit Account, with notice
thereof to Borrower.
(b) Borrower shall indemnify and hold harmless Lender 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 Lender in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not Lender shall be
designated a party thereto), that may be imposed on, incurred by, or asserted
against Lender in any manner relating to or arising out of (i) any breach by
Borrower of its obligations under, or any material misrepresentation by
Borrower contained in this Agreement or the other Loan Documents, (ii) the use
or intended use of the proceeds of the Loan, or (iii) any information provided
by or on behalf of Borrower, or contained in any documentation approved by
Borrower and in any way relating to the issuance, offering and sale of the
Securities (collectively, the "Indemnified Liabilities"); PROVIDED, HOWEVER,
that Borrower shall not have any obligation to Lender hereunder to the extent
that such Indemnified Liabilities arise from the gross negligence, illegal
acts, fraud or willful misconduct of Lender. To the extent that the
undertaking to indemnify and hold harmless set forth in the preceding sentence
may be unenforceable because it violates any law or public policy, Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.
Section 10.15 EXHIBITS INCORPORATED. The Exhibits annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 10.16 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of
Lender's interest in and to this Agreement, the Note and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrower may otherwise
have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by
Borrower.
Section 10.17 NO JOINT VENTURE OR PARTNERSHIP. Borrower and Lender
intend that the relationships created hereunder and under the other Loan
Documents be solely that of borrower and lender. Nothing herein or therein is
intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between Borrower and Lender nor to grant Lender any
interest in the Property other than that of mortgagee or lender.
Section 10.18 PUBLICITY. All news releases, publicity or advertising
by Borrower or their Affiliates through any media intended to reach the
general public which refers to the Loan Documents or the financing evidenced
by the Loan Documents, to Lender, Nomura, the Loan purchaser, the Servicer or
the trustee in a Securitization shall be subject to the prior written approval
of Lender; provided, however that to the extent Borrower or their Affiliates
are required to issue any such news releases pursuant to applicable securities
laws, Lender's prior written approval shall not be required, but Borrower
shall promptly provide Lender with a copy of each such news release.
Section 10.19 WAIVER OF MARSHALLING OF ASSETS. To the fullest extent
Borrower may legally do so, Borrower waives all rights to a marshalling of the
assets of Borrower, Borrower's partners, if any, and others with interests in
Borrower, and of Borrower's properties, 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 Lender under the Loan Documents to a
sale of the Property for the collection of the related indebtedness without
any prior or different resort for collection, of the right of Lender or any
deed of trust trustee to the payment of the related indebtedness out of the
net proceeds of the Property in preference to every other claimant whatsoever.
Section 10.20 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right
to assert a counterclaim, other than a compulsory counterclaim, in any action
or proceeding brought against it by Lender or its agents, including Servicer.
Section 10.21 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.
Section 10.22 BROKERS AND FINANCIAL ADVISORS. Borrower hereby
represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement and Borrower agrees to pay any
commissions, fees, expenses, or other charges owing to any broker arising out
of this transaction. Borrower and Lender hereby agree to indemnify and hold
the other harmless from and against any and all claims, liabilities, costs and
expenses of any kind in any way relating to or arising from a claim by any
Person that such Person acted on behalf of the indemnifying party in
connection with the transactions contemplated herein. The provisions of this
Section 10.22 shall survive the expiration and termination of this Agreement
and the repayment of the Debt.
Section 10.23 NO THIRD PARTY BENEFICIARIES. This Agreement and the
other Loan Documents are solely for the benefit of Lender and the Borrower and
nothing contained in this Agreement or the other Loan Documents shall be
deemed to confer upon anyone other than the Lender and the Borrower any right
to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled
to assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 10.24 PRIOR AGREEMENTS. This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Loan Documents.
(Signatures follow on attached pages)
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the
day and year first above written.
BORROWER
BSRT LEXINGTON B CORP., an Illinois
corporation
By:
------------------------------
Name:▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BSRT LEXINGTON TRUST, a Massachusetts
business trust
By: BSRT PORTFOLIO CORP., an Illinois
corporation, its sole trustee
By:
------------------------------
Name:▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
NOMURA ASSET CAPITAL CORPORATION, a
Delaware corporation
By:
------------------------------
Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SCHEDULE A
----------
MATTERS REGARDING REPRESENTATIONS
---------------------------------
NONE
SCHEDULE B
----------
THE RENT ROLL
-------------
SCHEDULE C
----------
REQUIRED REPAIRS
----------------
EXHIBIT A
---------
THE NOTE
--------
EXHIBIT B
----------
INTENTIONALLY OMITTED
---------------------
EXHIBIT C
---------
INTENTIONALLY OMITTED
---------------------
EXHIBIT D
----------
THE PROPERTY AND THE ALLOCATED LOAN AMOUNTS
-------------------------------------------
The Parcels Allocated Loan Amounts
Lexington $7,700,000
EXHIBIT E
---------
THE PERMITTED ENCUMBRANCES
--------------------------
EXHIBIT F
---------
THE ZONING LETTER
-----------------
(LETTERHEAD OF MUNICIPALITY)
Nomura Asset Capital Corporation
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: _____________________________; [insert name and address of
property and describe project amenities specifically] (the "Project")
Gentlemen:
In response to your request concerning the Project's compliance with
applicable codes, regulations and ordinances, please be advised as follows:
1. The [here insert applicable governmental authority] is responsible
for (a) enforcement of building codes, zoning ordinances and similar codes or
ordinances related to commercial development in [here insert applicable city,
county, or municipality] and (b) responsible for the issuance of certificates
of occupancy in [here insert applicable city, county, or municipality];
2. certificates of occupancy have been issued and are in effect for
the Project and we are not aware of any circumstances which would render the
certificates of occupancy invalid or cause them to be revoked. A copy of such
certificates of occupancy for the Project are attached hereto;
3. the Project is zoned __________________ under the laws or
ordinances of [here insert applicable governmental authority], which zoning is
proper for the [here insert brief description of Project] and related
amenities comprising the Project, and accordingly the Project is a conforming
use; and
4. as a condition to the issuance of the certificates of occupancy in
[here insert applicable city, county, or municipality] (the "Authority") a
[industrial][office] project must comply with all applicable codes and
ordinances including, but not limited to, building and occupancy codes, any
regulations pertaining to an entry sign board, fire department codes and
regulations, applicable zoning and use laws, landscaping and parking
requirements, obtaining appropriate curb cut permits and provisions for
applicable sanitary sewer, water, storm drainage and other utilities. The
issuance of the certificates of occupancy for the Project is evidence that the
conditions set forth have been satisfied at the Project. [Note: If the
issuance of a certificate of occupancy does not necessarily indicate
compliance with all these requirements, substitute the following: The Project
currently complies with all applicable laws, rules and regulations pertaining
to zoning, land use, parking, and is in compliance with applicable building
and fire codes]
5. a current search of the Authority's applicable records indicates
that there are no pending violations of any applicable laws, codes, rules,
regulations or ordinances described in paragraph (iv) above and there are no
pending rezoning applications, hearings, cases, appeals other proceedings
which could affect the zoning classification of the Project.
Sincerely,
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(Title)