EXHIBIT 10(b)
LOAN AGREEMENT
Dated as of December 6, 2002
Between
▇▇▇▇▇ POST OAK LIMITED PARTNERSHIP,
as Borrower
and
COLUMN FINANCIAL, INC.,
as Lender
TABLE OF CONTENTS Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1.Definitions 1
Section 1.2.Principles of Construction 23
II. GENERAL TERMS
Section ▇.▇.▇▇▇▇ Commitment; Disbursement to Borrower. 23
Section 2.2.Interest Rate. 23
Section ▇.▇.▇▇▇▇ Payment. 29
Section 2.4.Prepayments. 29
Section 2.5.Release of Property 30
Section ▇.▇.▇▇▇▇ Management. 31
Section 2.7.Extension of the Initial Maturity Date 32
III. CONDITIONS PRECEDENT
Section 3.1.Conditions Precedent to Closing 33
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1.Borrower Representations 36
Section 4.2.Survival of Representations 44
V. BORROWER COVENANTS
Section 5.1.Affirmative Covenants 44
Section 5.2.Negative Covenants 55
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
Section ▇.▇.▇▇▇▇▇▇▇▇▇ 60
Section 6.2.Casualty 64
Section 6.3.Condemnation 64
Section 6.4.Restoration 65
VII. RESERVE FUNDS
Section 7.1.Required Repair Funds. 69
Section ▇.▇.▇▇▇ and Insurance Escrow Fund 70
Section 7.3.Replacements and Replacement Reserve. 71
Section 7.4.Rollover Reserve. 72
Section 7.5.Reserve Funds, Generally. 73
Section ▇.▇.▇▇▇▇▇▇▇▇ of Letters of Credit 75
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VIII.DEFAULTS
Section 8.1.Event of Default 76
Section 8.2.Remedies 78
IX. SPECIAL PROVISIONS
Section ▇.▇.▇▇▇▇ of Notes and Securitization 80
Section 9.2.Securitization Indemnification 81
Section 9.3.[Intentionally Deleted] 85
Section 9.4.Exculpation 85
Section 9.5.Matters Concerning Manager 87
Section 9.6.Servicer 87
Section 9.7.Severance Documentation 87
X. MISCELLANEOUS
Section 10.1. Survival 87
Section 10.2. Lender's Discretion 88
Section 10.3. Governing Law. 88
Section 10.4. Modification, Waiver in Writing 89
Section 10.5. Delay Not a Waiver 89
Section 10.6. Notices 90
Section 10.7. Trial by Jury. 91
Section 10.8. Headings 91
Section 10.9. Severability 91
Section 10.10. Preferences 91
Section 10.11. Waiver of Notice 91
Section 10.12. Remedies of Borrower 92
Section 10.13. Expenses; Indemnity 92
Section 10.14. Schedules Incorporated 93
Section 10.15. Offsets, Counterclaims and Defenses 93
Section 10.16. No Joint Venture or Partnership;
No Third Party Beneficiaries 93
Section 10.17. Publicity 94
Section 10.18. Cross-default; Cross-collateralization;
Waiver of Marshalling of Assets 94
Section 10.19. Waiver of Counterclaim 94
Section 10.20. Conflict; Construction of
Documents; Reliance 94
Section 10.21. Brokers and Financial Advisors 95
Section 10.22. Prior Agreements 95
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SCHEDULES
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Schedule I - Property - Information
Schedule II - Rent Roll
Schedule III - Required Repairs - Deadlines for Completion
Schedule IV - Organization Chart
Schedule V - Intentionally Deleted
Schedule VI - Aesthetic Repairs - Deadlines for Completion
Schedule VII - Unfunded Obligations Reserve
Schedule 4.1.4 Litigation
Schedule 4.1.5 Agreements
Schedule 4.1.24 Physical Condition
Schedule 4.1.26 Leases
Exhibit A - Approved Management Agreement
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 6, 2002 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between COLUMN FINANCIAL, INC., having an address at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender"), and ▇▇▇▇▇ POST OAK LIMITED
PARTNERSHIP, a Delaware limited partnership, having its principal place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1. Definitions. For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly indicates a contrary
intent:
"3000 Property" shall mean the Individual Property known as ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
"3040 Property" shall mean the Individual Property known as ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
"3050 Property" shall mean the Individual Property known as ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
"Acceptable Counterparty" shall mean any counterparty to the Interest Rate
Cap Agreement that has and shall maintain, until the expiration of the
applicable Interest Rate Cap Agreement, a long-term unsecured debt rating of at
least "AA" from S&P and "Aa" from Moody's, respectively, which rating shall not
include a "t" or otherwise reflect a termination risk.
"Acceptable Rating" shall mean a long-term unsecured debt rating of at
least "AA" by S&P and "Aa2" from Moody's.
"Acquired Property" shall have the meaning set forth in Section
5.1.11(f)(i).
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"Acquired Property Statements" shall have the meaning set forth in Section
5.1.11(f)(i).
"Additional Insolvency Opinion" shall have the meaning set forth in Section
4.1.30c hereof.
"Additional Rollover Reserve Monthly Deposit" shall have the meaning set
forth in Section 7.4.1.
"Aesthetic Repair Account" shall have the meaning set forth in Section
7.6.1 hereof.
"Aesthetic Repair Fund" shall have the meaning set forth in Section 7.6.1
hereof.
"Aesthetic Repairs" shall have the meaning set forth in Section 7.6.1
hereof.
"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.
"Affiliated Loans" shall mean a loan made by Lender to an Affiliate of
Borrower or Guarantor.
"Affiliated Manager" shall mean any Manager in which Borrower, Principal or
Guarantor has, directly or indirectly, any legal, beneficial or economic
interest.
"Agent" shall mean any Eligible Institution acting as Agent under the Cash
Management Agreement or any successor designated by Lender.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Budget" shall mean the operating budget, including all planned
Capital Expenditures, for the Properties prepared by Borrower for the applicable
Fiscal Year or other period.
"Applicable Interest Rate" shall mean the rate or rates at which the
outstanding principal amount of the Loan bears interest from time to time in
accordance with the provisions of Section 2.2.3 hereof.
"Approved Annual Budget" shall have the meaning set forth in Section
5.1.11(d).
"Approved Bank" shall mean a bank or financial institution that has an
Acceptable Rating.
"Approved Blanket Policy" shall have the meaning set forth in Section
6.1(a)(x).
"Approved Management Agreement" shall mean a management agreement
substantially in the form and substance attached hereto as Exhibit A.
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"Approved Manager" shall mean (a) Transwestern Commercial Services and/or
(b) ▇▇▇▇▇▇▇▇ ▇▇▇▇ Company.
"Assignment of Leases" shall mean that certain first priority Assignment of
Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to
Lender, as assignee, assigning to Lender all of Borrower's interest in and to
the Leases and Rents of each Individual Property as security for the Loan, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Assignment of Management Agreement" shall mean, with respect to each the
3040 Property, individually and the 3000 Property and the 3050 Property,
collectively, that certain Assignment of Management Agreement and Subordination
of Management Fees dated as of the date hereof among Lender, Borrower and
Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Award" shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation with respect to all or any part of any Individual
Property.
"Bankruptcy Action" shall mean with respect to any Person (a) such Person
filing a voluntary petition under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law; (b) the filing of an involuntary petition
against such Person under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or soliciting or causing to be solicited
petitioning creditors for any involuntary petition against such Person; (c) such
Person filing an answer consenting to or otherwise acquiescing in or joining in
any involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law
(which is not discharged within ninety (90) days from the date of such filing),
or soliciting or causing to be solicited petitioning creditors for any
involuntary petition from any Person; (d) such Person consenting to or
acquiescing in or joining in an applicable for the appointment of a custodian,
receiver, trustee, or examiner for such Person or any portion of the Property;
or (e) such Person making an assignment for the benefit of creditors, or
admitting, in writing or in any legal proceeding, its insolvency or inability to
pay its debt as they become due.
"Basic Carrying Costs" shall mean, with respect to each Individual
Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii)
Insurance Premiums.
"Borrower" shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and assigns.
"Borrower Sections" shall have the meaning set forth in Section 9.2(b)
hereof.
"Breakage Costs" shall have the meaning set forth in Section 2.2.3(h)
hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, New York are not open for
business.
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"Capital Expenditures" shall mean, for any period, the amount expended for
items capitalized under GAAP (including expenditures for building improvements
or major repairs, leasing commissions and tenant improvements).
"Cash Expenses" shall mean, for any period, the Operating Expenses for the
operation of the Properties to the extent that such expenses are actually
incurred by Borrower minus any payments into the Tax and Insurance Escrow Fund.
"Cash Management Agreement" shall mean, collectively, the Lockbox Account
Agreement and the Deposit Account Agreement.
"Casualty" shall have the meaning specified in Section 6.2 hereof.
"Casualty Consultant" shall have the meaning set forth in Section
6.4(b)(iii) hereof.
"Casualty Retainage" shall have the meaning set forth in Section 6.4(b)(iv)
hereof.
"CFO Certificate" shall mean a certificate delivered to Lender by Borrower
which is signed by the Chief Financial Officer of Borrower.
"Closing Date" shall mean the date of the funding of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as it may
be further amended from time to time, and any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Collateral Assignment of Interest Rate Cap Agreement" shall mean that
certain Collateral Assignment of Interest Rate Cap Agreement, dated the date
hereof, executed by Borrower in connection with the Loan for the benefit of the
Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Condemnation" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies of the business and
affairs of the entity in question by reason of the ownership of beneficial
interests, by contract or otherwise.
"Counterparty" means, with respect to the Interest Rate Cap Agreement, CDC
Financial Products Inc. and with respect to any Replacement Interest Rate Cap
Agreement, any substitute Acceptable Counterparty.
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"Credit Suisse First Boston" shall have the meaning set forth in Section
9.2(b) hereof.
"Credit Suisse First Boston Group" shall have the meaning set forth in
Section 9.2(b) hereof.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note, together with all interest accrued
and unpaid thereon and all other sums (including the Prepayment Premium) due to
Lender in respect of the Loan under the Note, this Agreement, the Mortgage or
any other Loan Document.
"Debt Service Coverage Ratio" shall mean a ratio for the applicable period
in which:
(a) the numerator is the Net Operating Income (excluding interest on
credit accounts) for such period as set forth in the financial
statements required hereunder; and
(b) the denominator is the greater of (i) the actual aggregate amount of
principal and interest due and payable on the Loan for the same period
used in determining Net Operating Income above, less payments received
under the Interest Rate Cap Agreement, if any, and (ii) the assumed
aggregate amount of principal and interest due and payable on the Loan
for the same period in determining Net Operating Income above, using
an assumed interest rate for such period of eight and thirty-two one
hundredths percent (8.32%).
"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) four
percent (4%) above the Applicable Interest Rate.
"Deposit Account" shall have the meaning set forth in Section 2.6.1 hereof.
"Deposit Account Agreement" shall mean that certain Deposit Management
Agreement by and among Borrower, Agent and Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time,
relating to funds deposited in the Deposit Account.
"Determination Date" shall mean, with respect to any Interest Period, the
date that is two (2) London Business Days prior to the fifteenth (15th) day of
the calendar month in which such Interest Period commences.
"Disclosure Document" shall have the meaning set forth in Section 5.1.11(f)
hereof.
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"DSCR Event" shall mean any time when the Debt Service Coverage Ratio for
the Loan, as determined every calendar quarter, is less than the Threshold DSCR.
For purposes of determining whether a "DSCR Event" has occurred (a) from the
Closing Date until the first (1st) anniversary thereof, the Debt Service
Coverage Ratio shall be based on year to date Net Operating Income (with
appropriate adjustments to be made by Lender, in its reasonable discretion, to
recognize annual income and expense items on a projected basis) and (b) after
the first (1st) anniversary of the Closing Date, the Debt Service Coverage Ratio
shall be based on the trailing twelve (12) month period.
"Eligible Account" shall mean an account separate and identifiable from all
other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. 9.10(b),
having in either case a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal and state authority. An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.
"Eligible Institution" shall mean a depository institution or trust
company, the short-term unsecured debt obligations or commercial paper of which
are rated at least A-1+ by Standard & Poor's Ratings Group, P-1 by ▇▇▇▇▇'▇
Investors Service, Inc. and F-1+ by Fitch Inc. in the case of accounts in which
funds are held for thirty (30) days or less (or, in the case of accounts in
which funds are held for more than thirty (30) days, the long-term unsecured
debt obligations of which are rated at least "AA" by Fitch and S&P and "Aa2" by
Moody's).
"Embargoed Person" shall have the meaning set forth in Section 4.1.35
hereof.
"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, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning set forth in Section 8.1(a)
hereof.
"Exchange Act" shall have the meaning set forth in Section 9.2(a) hereof.
"Exchange Act Filing" shall have the meaning set forth in Section
5.1.11(i).
"Extended Maturity Date" shall have the meaning set forth in Section 2.7
hereof.
"Extension Option" shall have the meaning set forth in Section 2.7 hereof.
6
"Extension Interest Rate Cap Agreement" shall mean an interest rate cap
agreement from an Acceptable Counterparty with terms identical to the Interest
Rate Cap Agreement except that the same shall be effective in connection with
the Extension Option.
"Extraordinary Expense" shall have the meaning set forth in Section
5.1.11(e) hereof.
"Fiscal Year" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"Fitch" shall mean Fitch, Inc., Duff & ▇▇▇▇▇▇.
"Foreign Taxes" shall have the meaning set forth in Section 2.2.3(e)
hereof.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency, commission,
office or other authority of any nature whatsoever for any governmental ▇▇▇▇
(▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether now or
hereafter in existence.
"Gross Income from Operations" shall mean all income, computed in
accordance with GAAP, derived from the ownership and operation of the Properties
from whatever source, including, but not limited to, Rents, utility charges,
escalations, forfeited security deposits, interest on credit accounts, service
fees or charges, license fees, parking fees and other pass-through or
reimbursements paid by tenants under the Leases of any nature; but excluding
sales, use and occupancy or other taxes on receipts required to be accounted for
by Borrower to any government or Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Insurance
Proceeds and Condemnation Proceeds (other than business interruption or other
loss of income insurance), any disbursements to the Borrower from the Tax and
Insurance Escrow Fund, the Replacement Reserve Fund, the Rollover Reserve Fund,
or any other escrow fund established by the Loan Documents, proceeds from a
resale or refinancing of a Property and payments by the Counterparty under the
Interest Rate Cap Agreement.
"Guarantor" shall mean ▇▇▇▇▇ Equity, Inc., a Florida corporation.
"Guaranty" shall mean that certain Guaranty, dated as of the date hereof,
from Guarantor to Lender.
"Improvements" shall have the meaning set forth in the granting clause of
the related Mortgage with respect to each Individual Property.
"Indebtedness" of a Person, at a particular date, means the sum (without
duplication) at such date of (a) indebtedness or liability for borrowed money
and indebtedness in the form of mezzanine debt or preferred equity; (b)
obligations evidenced by bonds, debentures, notes, or other similar instruments;
(c) obligations for the deferred purchase price of property or services
(including trade obligations); (d) obligations under letters of credit; (e)
obligations under acceptance facilities; (f) all guaranties, endorsements (other
than for collection or deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment, to supply
funds, to invest in any Person or entity, or otherwise to assure a creditor
against loss; and (g) obligations secured by any Liens, whether or not the
obligations have been assumed.
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"Indemnified Person" shall have the meaning set forth in Section 9.2(h)
hereof.
"Independent Director" or "Independent Manager" shall mean a Person who is
not at the time of initial appointment, or at any time while serving as a
director or manager, as applicable, and has not been at any time during the
preceding five (5) years: (a) a stockholder, director (with the exception of
serving as the Independent Director or Independent Manager), officer, employee,
partner, member, attorney or counsel of the Principal, the Borrower or any
Affiliate of either of them; (b) a customer, supplier or other person who
derives any of its purchases or revenues from its activities with the Principal,
the Borrower or any Affiliate of either of them; (c) a Person controlling or
under common control with any such stockholder, director, officer, partner,
member, customer, supplier or other Person; or (d) a member of the immediate
family of any such stockholder, director, officer, employee, partner, customer,
supplier or other person. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise. A natural person who
satisfies the foregoing definition other than subparagraph (b) shall not be
disqualified from serving as an Independent Director if such individual is an
independent director provided by a nationally-recognized company that provides
professional independent directors and that also provides other corporate
services in the ordinary course of its business. A natural person who otherwise
satisfies the foregoing shall not be disqualified from serving as an Independent
Director if such individual is at the time of initial appointment, or at any
time while serving as an Independent Director, an Independent Director of a
"special purpose entity" affiliated with Borrower (other than any mezzanine
borrower) if such individual is an independent director provided by a
nationally-recognized company that provides professional independent directors.
For purposes of this paragraph, a "special purpose entity" is an entity, whose
organizational documents contain restrictions on its activities and impose
requirements intended to preserve such entity's separateness that are
substantially similar to those of Borrower, and provide, inter alia, that it:
(a) is organized for the limited purpose of owning and operating one or more
properties; (b) has restrictions on its ability to incur indebtedness, dissolve,
liquidate, consolidate, merge and/or sell assets; (c) may not file voluntarily a
bankruptcy petition on its own behalf without the consent of the Independent
Director and (d) shall conduct itself in accordance with certain "separateness
covenants", including, but not limited to, the maintenance of its books,
records, bank accounts and assets separate from those of any other person or
entity.
"Individual Property" shall mean each parcel of real property, the
Improvements thereon and all personal property owned by Borrower and encumbered
by a Mortgage, together with all rights pertaining to such property and
Improvements, as more particularly described in the Granting Clauses of the
Mortgage and referred to therein as the "Property".
"Initial Maturity Date" shall mean December 9, 2004.
8
"Insolvency Opinion" shall mean that certain non-consolidation opinion
letter dated the date hereof delivered by White & Case LLP in connection with
the Loan.
"Insurance Premiums" shall have the meaning set forth in Section 6.1(b)
hereof.
"Insurance Proceeds" shall have the meaning set forth in Section 6.4(b)
hereof.
"Interest Period" shall mean, with respect to any Payment Date, the period
commencing on the ninth (9th) day of the preceding calendar month and
terminating on the eighth (8th) day of the calendar month in which such Payment
Date occurs; provided, however, that no Interest Period shall end later than the
Maturity Date (other than for purposes of calculating interest at the Default
Rate), and the initial Interest Period shall begin on the Closing Date and shall
end on the immediately following eighth (8th) day of the calendar month.
"Interest Rate Cap Agreement" means an Interest Rate Cap Agreement
(together with the confirmation and schedules relating thereto) in form and
substance reasonably satisfactory to Lender between Borrower and an Acceptable
Counterparty.
"▇▇▇▇▇ Properties" shall have the meaning set forth in Section 6.1(a)(x)
hereof.
"Lease" shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in any
Individual Property of Borrower, and every modification, amendment or other
agreement relating to such lease, sublease, subsublease, or other agreement
entered into in connection with such lease, sublease, subsublease, or other
agreement and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto.
"Legal Requirements" shall mean, with respect to each Individual Property,
all federal, state, county, municipal and other governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting such Individual 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 Borrower, at any time in force affecting such Individual Property or
any part thereof, including, without limitation, any which may (a) require
repairs, modifications or alterations in or to such Individual Property or any
part thereof, or (b) in any way limit the use and enjoyment thereof.
"Lender" shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and assigns.
"Liabilities" shall have the meaning set forth in Section 9.2(b) hereof.
"LIBOR" shall mean, with respect to each Interest Period, the rate
(expressed as a percentage per annum and rounded upward, if necessary, to the
next nearest 1/1000 of 1%) for deposits in U.S. dollars, for a one-month period,
that appears on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m.,
9
London time, on the related Determination Date. If such rate does not appear on
Telerate Page 3750 as of 11:00 a.m., London time, on such Determination Date,
LIBOR shall be the arithmetic mean of the offered rates (expressed as a
percentage per annum) for deposits in U.S. dollars for a one-month period that
appear on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such
Determination Date, if at least two such offered rates so appear. If fewer than
two such offered rates appear on the Reuters Screen Libor Page as of 11:00 a.m.,
London time, on such Determination Date, Lender shall request the principal
London Office of any four major reference banks in the London interbank market
selected by Lender to provide such bank's offered quotation (expressed as a
percentage per annum) to prime banks in the London interbank market for deposits
in U.S. dollars for a one-month period as of 11:00 a.m., London time, on such
Determination Date for the amounts of not less than U.S. $1,000,000. If at least
two such offered quotations are so provided, LIBOR shall be the arithmetic mean
of such quotations. If fewer than two such quotations are so provided, Lender
shall request any three major banks in New York City selected by Lender to
provide such bank's rate (expressed as a percentage per annum) for loans in U.S.
dollars to leading European banks for a one- month period as of approximately
11:00 a.m., New York City time, on the applicable Determination Date for amounts
of not less than U.S. $1,000,000. If at least two such rates are so provided,
LIBOR shall be the arithmetic mean of such rates. LIBOR shall be determined
conclusively by Lender or its agent in accordance with this definition.
"LIBOR Loan" shall mean the Loan at such time as interest thereon accrues
at a rate of interest based upon LIBOR.
"Licenses" shall have the meaning set forth in Section 4.1.22 hereof.
"Lien" shall mean, with respect to each Individual Property, any mortgage,
deed of trust, lien, pledge, hypothecation, assignment, security interest, or
any other encumbrance, charge or transfer of, on or affecting Borrower, the
related Individual Property, any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"Loan" shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"Loan Documents" shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases, the Environmental Indemnity, the Assignment
of Management Agreement, the Guaranty, the Cash Management Agreement, the
Collateral Assignment of Interest Rate Cap Agreement and all other documents
executed and/or delivered in connection with the Loan.
"Lockbox Account" shall mean, collectively, the account or accounts, if
any, specified in the Lockbox Account Agreement for deposit of Rents and other
receipts from the Properties.
10
"Lockbox Account Agreement" shall mean that certain Lockbox Account
Agreement by and among Borrower, Manager, Lockbox Bank and Lender, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time, relating to funds deposited in the Lockbox Account.
"Lockbox Bank" shall mean Fleet National Bank, a national banking
association.
"Lockout Release Date" shall mean June 9, 2004.
"London Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which commercial banks in London, England are not open for
business.
"Management Agreement" shall mean, with respect to any Individual Property,
the management agreement entered into by and between Borrower and the Manager,
pursuant to which the Manager is to provide management and other services with
respect to such Individual Property, or, if the context requires, the
Replacement Management Agreement executed in accordance with the terms and
provisions of this Agreement.
"Manager" shall mean (a) with respect to the 3040 Property, ▇▇▇▇▇ Interests
Limited Partnership, a Delaware limited partnership and (b) with respect to the
3000 and 3050 Property, Cottonwood Partners Management, Ltd., a Utah limited
partnership, or, if the context requires, a Qualified Manager who is managing
the Properties in accordance with the terms and provisions of this Agreement.
"Maturity Date" shall mean the Initial Maturity Date, or, if applicable,
the Extended Maturity Date, or such other date on which the final payment of
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.
"Maximum Legal Rate" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage" shall mean, that certain first priority Deed of Trust and
Security Agreement, dated the date hereof, executed and delivered by Borrower as
security for the Loan and encumbering each Individual Property, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Net Cash Flow" for any period shall mean the amount obtained by
subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
"Net Cash Flow Schedule" shall have the meaning set forth in Section
5.1.11(b) hereof.
11
"Net Operating Income" means the amount obtained by subtracting Operating
Expenses from Gross Income from Operations.
"Net Proceeds" shall have the meaning set forth in Section 6.4(b) hereof.
"Net Proceeds Deficiency" shall have the meaning set forth in Section
6.4(b)(vi) hereof.
"Note" shall mean that certain promissory note of even date herewith in the
principal amount of Seventy-Seven Million and No/100 Dollars ($77,000,000.00),
made by Borrower in favor of Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Offering Document Date" shall have the meaning set forth in Section
5.1.11(f)(iv).
"Offering Materials" shall have the meaning set forth in Section 9.2(b)
hereof.
"Officers' Certificate" shall mean a certificate delivered to Lender by
Borrower which is signed by an authorized senior officer of the general partner
or managing member of Borrower.
"Operating Expenses" shall mean the total of all expenditures, computed in
accordance with generally accepted accounting principles, of whatever kind
relating to the operation, maintenance and management of the Properties that are
incurred on a monthly or other periodic basis, including without limitation,
utilities, ordinary repairs and maintenance, insurance, license fees, property
taxes and assessments, advertising expenses, management fees, payroll and
related taxes, computer processing charges, the Replacement Reserve Monthly
Deposit (as adjusted pursuant to the terms hereof), the Rollover Reserve Monthly
Deposit (as adjusted pursuant to the terms hereof), operational equipment or
other lease payments as approved by Lender, and other similar costs, but
excluding depreciation, debt service, Capital Expenditures, and distributions to
Borrower from the Replacement Reserve Fund, the Tax and Insurance Escrow Fund,
the Rollover Reserve Fund and any other reserves required under the Loan
Documents.
"Origination Fee" shall have the meaning set forth in Section 2.1.5 hereof.
"Other Charges" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Individual Property, now or hereafter levied or
assessed or imposed against such Individual Property or any part thereof.
"Payment Date" shall mean the ninth (9th) day of each calendar month during
the term of the Loan or, if such day is not a Business Day, the immediately
preceding Business Day.
"Permitted Encumbrances" shall mean, with respect to an Individual
Property, collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
12
Insurance Policies relating to such Individual Property or any part thereof, (c)
Liens, if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, and (d) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender's sole discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of such Individual Property or Borrower's ability to repay the Loan.
"Permitted Investments" shall have the meaning set forth in the Deposit
Account Agreement.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Personal Property" shall have the meaning set forth in the granting clause
of the Mortgage with respect to each Individual Property.
"Physical Conditions Report" shall mean, with respect to each Individual
Property, a report prepared by a company satisfactory to Lender regarding the
physical condition of such Individual Property, satisfactory in form and
substance to Lender in its sole discretion.
"Policies" shall have the meaning specified in Section 6.1(b) hereof.
"Prepayment Premium" shall mean an amount equal to the following: one
percent (1%) of the principal balance of the Loan being prepaid if the
prepayment occurs on or after the Lockout Release Date up to, but not including,
the Initial Maturity Date.
"Prime Rate" shall mean the annual rate of interest publicly announced by
Citibank, N.A. in New York, New York, as its base rate, as such rate shall
change from time to time. If Citibank, N.A. ceases to announce a base rate,
Prime Rate shall mean the rate of interest published in The Wall Street Journal
from time to time as the "Prime Rate". If more than one "Prime Rate" is
published in The Wall Street Journal for a day, the average of such "Prime
Rates" shall be used, and such average shall be rounded up to the nearest
one-eighth of one percent (0.125%). If The Wall Street Journal ceases to publish
the "Prime Rate", the Lender shall select an equivalent publication that
publishes such "Prime Rate", and if such "Prime Rates" are no longer generally
published or are limited, regulated or administered by a governmental or
quasigovernmental body, then Lender shall select a comparable interest rate
index.
"Prime Rate Loan" shall mean the Loan at such time as interest thereon
accrues at a rate of interest based upon the Prime Rate.
"Prime Rate Spread" shall mean the difference (expressed as the number of
basis points) obtained by subtracting (b) from (a) as follows: (a) LIBOR plus
the Spread on the date LIBOR was last applicable to the Loan and (b) the Prime
Rate on the date that LIBOR was last applicable to the Loan; provided, however,
in no event shall such difference be a negative number.
13
"Principal" shall mean ▇▇▇▇▇ Post Oak, Inc., a Delaware corporation.
"Properties" shall mean, collectively, each and every Individual Property
which is subject to the terms of this Agreement.
"Provided Information" shall have the meaning set forth in Section 9.1(a)
hereof.
"Qualified Manager" shall mean either (a) Manager; (b) an Approved Manager;
or (c) in the reasonable judgment of Lender, a reputable and experienced
management organization (which may be an Affiliate of Borrower) possessing
experience in managing properties similar in size, scope, use and value as the
Properties, provided, that Borrower shall have obtained prior written
confirmation from the applicable Rating Agencies that management of the
Properties by such Person will not cause a downgrade, withdrawal or
qualification of the then current ratings of the Securities or any class
thereof.
"Qualified Transferee" shall mean any one of the following Persons:
(i) a pension fund, pension trust or pension account that has total
real estate assets of at least $1 Billion; or
(ii) a pension fund advisor who (a) immediately prior to such
transfer, controls at least $1 Billion of real estate equity
assets and (b) is acting on behalf of one or more pension funds
that, in the aggregate, satisfy the requirements of clause (i) of
this definition; or
(iii) an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a
state or territory of the United States (including the District
of Columbia) (a) with a net worth, as of a date no more than six
(6) months prior to the date of the transfer of at least $500
Million and (b) who, immediately prior to such transfer, controls
real estate equity assets of at least $1 Billion; or
(iv) a corporation organized under the banking laws of the United
States or any state or territory of the United States (including
the District of Columbia) (a) with a combined capital and surplus
of at least $500 Million and (b) who, immediately prior to such
transfer, controls real estate equity assets of at least $1
Billion; or
(v) any Person (a) with a long-term unsecured debt rating from the
Rating Agencies of at least investment grade or (b) who (i) owns
or operates at least five million square feet of rentable area,
(ii) has a net worth, as of a date no more than six (6) months
prior to the date of such transfer, of at least $500 Million and
(iii) immediately prior to such transfer, controls real estate
equity assets of at least $1 Billion .
"Rating Agencies" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any other
nationally-recognized statistical rating agency which has been approved by
Lender.
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"Registration Statement" shall have the meaning set forth in Section 9.2(b)
hereof.
"Release Amount" shall mean for an Individual Property the amount set forth
on Schedule I hereto.
"REMIC Trust" shall mean a "real estate mortgage investment conduit",
within the meaning of Section 860D of the Code, that holds the Note.
"Rents" shall mean, with respect to each Individual Property, all rents,
rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits that are returned to or earned by Borrower (including, without
limitation, security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered, and other consideration of whatever form
or nature received by or paid to or for the account of or benefit of Borrower or
its agents or employees from any and all sources arising from or attributable to
the Individual Property, and proceeds, if any, from business interruption or
other loss of income insurance.
"Replacement Interest Rate Cap Agreement" means an interest rate cap
agreement from an Acceptable Counterparty with terms identical to the Interest
Rate Cap Agreement except that the same shall be effective in connection with
replacement of the Interest Rate Cap Agreement following a downgrade, withdrawal
or qualification of the long-term unsecured debt rating of the Counterparty;
provided that, to the extent any such interest rate cap agreement does not meet
the foregoing requirements, a "Replacement Interest Rate Cap Agreement" shall be
such interest rate cap agreement approved in writing by each of the Rating
Agencies with respect thereto.
"Replacement Management Agreement" shall mean,
collectively, (a) either (i) a management agreement with a
Qualified Manager substantially in the same form and substance as
the Management Agreement, (ii) a management agreement with a
Qualified Manager, which management agreement shall be reasonably
acceptable to Lender in form and substance, provided, with
respect to this subclause (ii), Lender, at its option, may
require that Borrower obtain confirmation from the applicable
Rating Agencies that such management agreement will not cause a
downgrading, withdrawal or qualification of the then current
rating of the Securities or any class thereof or (iii) an
Approved Management Agreement with a Qualified Manager; and
(b) an assignment of management agreement and subordination of
management fees substantially in the form then used by Lender (or
of such other form and substance reasonably acceptable to
Lender), executed and delivered to Lender by Borrower and such
Qualified Manager at Borrower's expense.
"Replacement Reserve Account" shall have the meaning set forth in Section
7.3.1 hereof.
"Replacement Reserve Additional Deposit" shall have the meaning set forth
in Section 2.7 hereof.
15
"Replacement Reserve Fund" shall have the meaning set forth in Section
7.3.1 hereof.
"Replacement Reserve Initial Deposit" shall have the meaning set forth in
Section 7.3.1 hereof.
"Replacement Reserve Monthly Deposit" shall have the meaning set forth in
Section 7.3.1 hereof.
"Replacements" shall have the meaning set forth in Section 7.3.1(a) hereof.
"Required Repair Account" shall have the meaning set forth in Section 7.1.1
hereof.
"Required Repair Fund" shall have the meaning set forth in Section 7.1.1
hereof.
"Required Repairs" shall have the meaning set forth in Section 7.1.1
hereof.
"Reserve Funds" shall mean the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Rollover Reserve Fund, the Required Repair Fund,
the Aesthetic Repair Fund any other escrow fund established by the Loan
Documents.
"Restoration" shall mean the repair and restoration of an Individual
Property after a casualty or Condemnation as nearly as possible to the condition
the Individual Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"Restricted Party" shall mean Borrower, Principal, any Guarantor, or any
Affiliated Manager or any shareholder, partner, member or non-member manager, or
any direct or indirect legal or beneficial owner of, Borrower, Principal, or any
Guarantor, any Affiliated Manager or any non-member manager.
"Rollover Reserve Account" shall have the meaning set forth in Section
7.4.1 hereof.
"Rollover Reserve Deposit" shall mean collectively, the Initial Rollover
Reserve Deposit and, if applicable, the Additional Rollover Reserve Deposit.
"Rollover Reserve Fund" shall have the meaning set forth in Section 7.4.1
hereof.
"Rollover Reserve Monthly Deposit" shall have the meaning set forth in
Section 7.4.1 hereof.
"S&P" shall mean Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies.
16
"Sale or Pledge" shall mean a voluntary or involuntary sale, conveyance,
transfer or pledge of a legal or beneficial interest.
"Securities" shall have the meaning set forth in Section 9.1 hereof.
"Securities Act" shall have the meaning set forth in Section 9.2(a) hereof.
"Securitization" shall have the meaning set forth in Section 9.1 hereof.
"Security Agreement" shall have the meaning set forth in Section
2.4.1(a)(vi) hereof.
"Servicer" shall have the meaning set forth in Section 9.6 hereof.
"Servicing Agreement" shall have the meaning set forth in Section 9.6
hereof.
"Severed Loan Documents" shall have the meaning set forth in Section 8.2c
hereof.
"SNDA" shall have the meaning set forth in Section 5.1.20.
"Special Purpose Entity" shall mean a corporation, limited partnership or
limited liability company which at all times on and after the date hereof:
(i) is organized solely for the purpose of (A) acquiring, developing,
owning, holding, selling, leasing, transferring, exchanging, managing
and operating the Properties, entering into this Agreement with the
Lender, refinancing the Properties in connection with a permitted
repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing; or
(B) acting as a general partner of the limited partnership that owns
the Properties or member of the limited liability company that owns
the Properties;
(ii) is not engaged and will not engage in any business unrelated to (A)
the acquisition, development, ownership, management or operation of
the Properties, (B) acting as general partner of the limited
partnership that owns the Properties or (C) acting as a member of the
limited liability company that owns the Properties, as applicable;
(iii) does not have and will not have any assets other than those related
to the Properties or its partnership interest in the limited
partnership or the member interest in the limited liability company
that owns the Properties or acts as the general partner or managing
member thereof, as applicable;
(iv) has not engaged, sought or consented to and will not engage in, seek
or consent to any dissolution, winding up, liquidation, consolidation,
merger, sale of all or substantially all of its assets, transfer of
partnership or membership interests (if such entity is a general
partner in a limited partnership or a member in a limited liability
company) or amendment of its limited partnership agreement, articles
of incorporation, articles of organization, certificate of formation
or operating agreement (as applicable) with respect to the matters set
forth in this definition;
17
(v) if such entity is a limited partnership, has, as its only general
partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability companies (with more than one
member);
(vi) if such entity is a corporation, has at least two (2) Independent
Directors, and has not caused or allowed and will not cause or allow
the board of directors of such entity to take any action requiring the
unanimous affirmative vote of one hundred percent (100%) of the
members of its board of directors unless two Independent Directors
shall have participated in such vote;
(vii) if such entity is a limited liability company with more than one
member (other than a special member), has at least one member that is
a Special Purpose Entity that is a corporation that has at least two
Independent Directors and that owns at least one percent (1.0%) of the
equity of the limited liability company or if such entity is a limited
liability company with one member has at least one (1) Independent
Director;
(viii) if such entity is a limited liability company with only one member,
is a limited liability company organized in the State of Delaware that
has (i) as its only member a non-managing member, (ii) at least two
Independent Managers and has not caused or allowed and will not cause
or allow the board of managers of such entity to take any action
requiring the unanimous affirmative vote of one hundred percent (100%)
of the managers unless two Independent Managers shall have
participated in such vote and (iii) at least one springing member that
will become the non-managing member of such entity upon the
dissolution of the existing non-managing member;
(ix) if such entity is (a) a limited liability company, has articles of
organization, a certificate of formation and/or an operating
agreement, as applicable, (b) a limited partnership, has a limited
partnership agreement, or (c) a corporation, has a certificate of
incorporation or articles that, in each case, provide that such entity
will not: (1) dissolve, merge, liquidate, consolidate; (2) sell all or
substantially all of its assets or the assets of the Borrower (as
applicable); (3) engage in any other business activity, or amend its
organizational documents with respect to the matters set forth in this
definition without the consent of the Lender; or (4) without the
affirmative vote of two (2) Independent Directors and of all other
directors of the corporation (that is such entity or the general
partner or managing or co-managing member of such entity) or with one
Independent Director in the case of a limited liability company with a
single member (other than a special member), file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with
respect to itself or to any other entity in which it has a direct or
indirect legal or beneficial ownership interest;
18
(x) if such entity is a limited partnership or a limited liability company
that is the general partner of a limited partnership or the member of
a limited liability company (with more than one member) that is the
Borrower, has a corporation that has at least two Independent
Directors and that owns at least 1.0% (one percent) of the equity of
such entity as its general partner or managing member, as applicable,
that is a Special Purpose Entity;
(xi) is and will remain solvent and pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses)
from its assets as the same shall become due, and is maintaining and
will maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of
its contemplated business operations;
(xii) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(xiii) has maintained and will maintain its accounts, books and records
separate from any other Person and will file its own tax returns,
except to the extent that it is required to file consolidated tax
returns by law;
(xiv) has maintained and will maintain its own records, books, resolutions
and agreements;
(xv) other than as provided in the Cash Management Agreement, (a) has not
commingled and will not commingle its funds or assets with those of
any other Person and (b) has not participated and will not participate
in any cash management system with any other Person;
(xvi) has held and will hold its assets in its own name;
(xvii) has conducted and will conduct its business in its name or in a name
franchised or licensed to it by an entity other than an Affiliate of
Borrower, except for services rendered under a business management
services agreement with an Affiliate that complies with the terms
contained in Subsection (xxx) below, so long as the manager, or
equivalent thereof, under such business management services agreement
holds itself out as an agent of the Borrower;
(xviii) has maintained and will maintain its financial statements,
accounting records and other entity documents separate from any other
Person and has not permitted and will not permit its assets to be
listed as assets on the financial statement of any other entity except
with respect to the consolidated financial statements of Guarantor;
provided, however, that any such consolidated financial statement
shall contain a note indicating that its separate assets and
liabilities are neither available to pay the debts of the consolidated
entity nor constitute obligations of the consolidated entity;
(xix) has paid and will pay its own liabilities and expenses, including the
salaries of its own employees, out of its own funds and assets, and
has maintained and will maintain a sufficient number of employees in
light of its contemplated business operations;
19
(xx) has observed and will observe all partnership, corporate or limited
liability company formalities, as applicable;
(xxi) has and will have no Indebtedness other than (i) the Loan, (ii)
liabilities incurred in the ordinary course of business relating to
the ownership and operation of the Property and the routine
administration of Borrower (other than real estate taxes, Rents paid
in advance and security deposits), in amounts not to exceed $3,000,000
which liabilities are not more than sixty (60) days past the date
incurred, are not evidenced by a note and are paid when due, and which
amounts are normal and reasonable under the circumstances, and (iii)
such other liabilities that are permitted pursuant to this Agreement;
(xxii) has not and will not assume or guarantee or become obligated for the
debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person except as permitted
pursuant to this Agreement;
(xxiii) has not and will not acquire obligations or securities of its
partners, members or shareholders or any other Affiliate;
(xxiv) has allocated and will allocate fairly and reasonably any overhead
expenses that are shared with any Affiliate, including, but not
limited to, paying for shared office space and services performed by
any employee of an Affiliate;
(xxv) maintains and uses and will maintain and use separate stationery,
invoices and checks bearing its name. The stationery, invoices, and
checks utilized by the Special Purpose Entity or utilized to collect
its funds or pay its expenses shall bear its own name and shall not
bear the name of any other entity unless such entity is clearly
designated as being the Special Purpose Entity's agent;
(xxvi) has not pledged and will not pledge its assets for the benefit of
any other Person;
(xxvii) has held itself out and identified itself and will hold itself out
and identify itself as a separate and distinct entity under its own
name and not as a division or part of any other Person, except for
services rendered under a business management services agreement with
an Affiliate that complies with the terms contained in Subsection
(xxx) below, so long as the manager, or equivalent thereof, under such
business management services agreement holds itself out as an agent of
the Borrower;
(xxviii) has maintained and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify
its individual assets from those of any other Person;
20
(xxix) has not made and will not make loans to any Person or hold evidence
of indebtedness issued by any other Person or entity (other than cash
and investment-grade securities issued by an entity that is not an
Affiliate of or subject to common ownership with such entity);
(xxx) has not identified and will not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part
of it, and has not identified itself and shall not identify itself as
a division of any other Person;
(xxxi) has not entered into or been a party to, and will not enter into or
be a party to, any transaction with its partners, members,
shareholders or Affiliates except (A) in the ordinary course of its
business and on terms which are intrinsically fair, commercially
reasonable and are no less favorable to it than would be obtained in a
comparable arm's-length transaction with an unrelated third party and
(B) in connection with this Agreement;
(xxxii) has not and will not have any obligation to, and will not,
indemnify its partners, officers, directors or members, as the case
may be, unless such an obligation is fully subordinated to the Debt
and will not constitute a claim against it in the event that cash flow
in excess of the amount required to pay the Debt is insufficient to
pay such obligation;
(xxxiii) if such entity is a corporation, it shall consider the interests
of its creditors in connection with all corporate actions;
(xxxiv) does not and will not have any of its obligations guaranteed by any
Affiliate, other than the Guaranty; and
(xxxv) has complied and will comply with all of the terms and provisions
contained in its organizational documents. The statement of facts
contained in its organizational documents are true and correct and
will remain true and correct.
"Spread" shall mean two and eighty-seven one hundredths percent (2.87%).
"Standard Statements" shall have the meaning set forth in Section
5.1.11(f)(i).
"State" shall mean, with respect to an Individual Property, the State or
Commonwealth in which such Individual Property or any part thereof is located.
"Survey" shall mean a survey of the Individual Property in question
prepared by a surveyor licensed in the State and satisfactory to Lender and the
company or companies issuing the Title Insurance Policies, and containing a
certification of such surveyor satisfactory to Lender.
"Tax and Insurance Escrow Fund" shall have the meaning set forth in Section
7.2.1 hereof.
21
"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 any Individual Property or part thereof.
"Threshold Amount" shall have the meaning set forth in Section 5.1.21
hereof.
"Threshold DSCR" shall mean a Debt Service Coverage Ratio, for the Loan,
with respect to the Properties, equal to 1.25 to 1.00.
"Title Insurance Policies" shall mean, with respect to each, the 3040
Property, individually and the 3000 Property and 3050 Property, collectively, an
ALTA mortgagee title insurance policy or "▇▇▇▇-up" of a title insurance
commitment in the form (acceptable to Lender) (or, if an Individual Property is
in a State which does not permit the issuance of such ALTA policy, such form as
shall be permitted in such State and acceptable to Lender) issued with respect
to such Individual Property and insuring the lien of the Mortgage encumbering
such Individual Property.
"Transfer" shall have the meaning set forth in Section 5.2.10 hereof.
"Trigger Period" shall mean the period occurring (i) after such time as a
DSCR Event occurs until the Debt Service Coverage Ratio, for the Loan, equals or
exceeds the Threshold DSCR, as determined during the succeeding calendar quarter
determination, or (ii) after the occurrence of an Event of Default until six (6)
months have elapsed after Lender's acceptance of a cure of such Event of
Default.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in the applicable State in which an Individual Property is located.
"Underwriter Group" shall have the meaning set forth in Section 9.2(b)
hereof.
"Unfunded Obligation" shall have the meaning set forth in Section 7.7.1
hereof.
"Unfunded Obligations Fund" shall have the meaning set forth in Section
7.7.1 hereof.
"Unfunded Obligations Reserve Account" shall have the meaning set forth in
Section 7.7.1 hereof.
"Unused Amount" shall mean with respect to an Individual Property and the
Replacement Reserve Fund and Rollover Reserve Fund the amount, if any, by which
(i) the product of (x) the percentage set forth on Schedule I with respect to
such Individual Property and (y) the aggregate amount deposited into the
Replacement Reserve Fund or Rollover Reserve Fund, as the case may be, exceeds
(ii) the amount withdrawn from the Replacement Reserve Fund or Rollover Reserve
Fund, as the case may be, with respect to such Individual Property.
"U.S. Obligations" shall mean non-redeemable securities evidencing an
obligation to timely pay principal and/or interest in a full and timely manner
that are (a) direct obligations of the United States of America for the payment
of which its full faith and credit is pledged, or (b) to the extent acceptable
to the Rating Agencies, other "government securities" within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as amended.
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Section 1.2. Principles of Construction. All references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified. All uses of the word "including" shall mean "including, without
limitation" unless the context shall indicate otherwise. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.
II. GENERAL TERMS
SECTION 2.1. Loan Commitment; Disbursement to Borrower.
2.1.1 Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender hereby agrees to make and Borrower hereby
agrees to accept the Loan on the Closing Date.
2.1.2 Single Disbursement to Borrower. Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 The Note, Mortgage and Loan Documents. The Loan shall be evidenced by
the Note and secured by the Mortgage, the Assignment of Leases and the other
Loan Documents.
2.1.4 Use of Proceeds. Borrower shall use the proceeds of the Loan to (a)
acquire the Properties and/or repay and discharge any existing loans relating to
the Properties, (b) pay all past-due Basic Carrying Costs, if any, with respect
to the Properties, (c) make deposits into the Reserve Funds on the Closing Date
in the amounts provided herein, (d) pay costs and expenses incurred in
connection with the closing of the Loan, as approved by Lender, (e) fund any
working capital requirements of the Properties and (f) distribute the balance,
if any, to Borrower or as Borrower shall otherwise direct.
2.1.5 Origination Fee. On the Closing Date, Borrower shall pay to Lender,
or have deducted from the proceeds of the Loan, a non-refundable origination fee
(the "Origination Fee") in an amount equal to one percent (1%) of the Loan (i.e.
$770,000).
Section 2.2. Interest Rate.
2.2.1 Interest Generally. Interest on the outstanding principal balance of
the Loan shall accrue from the Closing Date through and including the end of the
Interest Period during which the Maturity Date occurs at the Applicable Interest
Rate. Borrower shall pay to Lender on each Payment Date the interest accrued on
the Loan for the preceding Interest Period.
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2.2.2 Interest Calculation. Interest on the outstanding principal balance
of the Loan shall be calculated by multiplying (a) the actual number of days
elapsed in the period for which the calculation is being made by (b) a daily
rate based on a three hundred sixty (360) day year by (c) the outstanding
principal balance.
2.2.3 Determination of Interest Rate. (a) The Applicable Interest Rate with
respect to the Loan shall be: (i) LIBOR plus the Spread with respect to the
applicable Interest Period for a LIBOR Loan or (ii) the Prime Rate plus the
Prime Rate Spread for a Prime Rate Loan if the Loan is converted to a Prime Rate
Loan pursuant to the provisions of Section 2.2.3 c or (f).
(b) Subject to the terms and conditions of this Section 2.2.3, the Loan
shall be a LIBOR Loan and Borrower shall pay interest on the
outstanding principal amount of the Loan at LIBOR plus the Spread for
the applicable Interest Period. Any change in the rate of interest
hereunder due to a change in the Applicable Interest Rate shall become
effective as of the opening of business on the first day on which such
change in the Applicable Interest Rate shall become effective (within
a reasonable time after such change, Lender shall give Borrower notice
thereof). Each determination by Lender of the Applicable Interest Rate
shall be conclusive and binding for all purposes, absent manifest
error.
(c) In the event that Lender shall have determined (which determination
shall be conclusive and binding upon Borrower absent manifest error)
that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining
LIBOR, then Lender shall forthwith give notice by telephone of such
determination, confirmed in writing, to Borrower at least one (1) day
prior to the last day of the related Interest Period. If such notice
is given, the related outstanding LIBOR Loan shall be converted, on
the last day of the then current Interest Period, to a Prime Rate
Loan.
(d) If, pursuant to the terms of this Agreement, any portion of the Loan
has been converted to a Prime Rate Loan and Lender shall determine
(which determination shall be conclusive and binding upon Borrower
absent manifest error) that the event(s) or circumstance(s) which
resulted in such conversion shall no longer be applicable, Lender
shall give notice by telephone of such determination, confirmed in
writing, to Borrower at least one (1) day prior to the last day of the
related Interest Period. If such notice is given, the related
outstanding Prime Rate Loan shall be converted to a LIBOR Loan on the
last day of the then current Interest Period.
(e) With respect to a LIBOR Loan, all payments made by Borrower hereunder
shall be made free and clear of, and without reduction for or on
account of, income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions, reserves or withholdings imposed, levied,
collected, withheld or assessed by any Governmental Authority, which
are imposed, enacted or become effective after the date hereof (such
non-excluded taxes being referred to collectively as "Foreign Taxes"),
excluding income and franchise taxes of the United States of America
or any political subdivision or taxing authority thereof or therein
(including Puerto Rico). If any Foreign Taxes are required to be
withheld from any amounts payable to Lender hereunder, the amounts so
payable to Lender shall be increased to the extent necessary to yield
to Lender (after payment of all Foreign Taxes) interest or any such
other amounts payable hereunder at the rate or in the amounts
specified hereunder. Whenever any Foreign Tax is payable pursuant to
applicable law by Borrower, as promptly as possible thereafter,
Borrower shall send to Lender an original official receipt, if
available, or certified copy thereof showing payment of such Foreign
Tax. Borrower hereby indemnifies Lender for any incremental taxes,
interest or penalties that may become payable by Lender which may
result from any failure by Borrower to pay any such Foreign Tax when
due to the appropriate taxing authority or any failure by Borrower to
remit to Lender the required receipts or other required documentary
evidence.
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(f) If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it
unlawful for Lender to make or maintain a LIBOR Loan as contemplated
hereunder, (i) the obligation of Lender hereunder to make a LIBOR Loan
or to convert a Prime Rate Loan to a LIBOR Loan shall be canceled
forthwith and (ii) any outstanding LIBOR Loan shall be converted
automatically to a Prime Rate Loan on the next succeeding Payment Date
or within such earlier period as required by law. Borrower hereby
agrees promptly to pay Lender, upon demand, any reasonable amounts
necessary to compensate Lender for any costs incurred by Lender in
making any conversion in accordance with this Agreement, including,
without limitation, any interest or fees payable by Lender to lenders
of funds obtained by it in order to make or maintain the LIBOR Loan
hereunder. Lender's notice of such costs, as certified to Borrower,
shall be conclusive absent manifest error.
(g) In the event that any change in any requirement of law or in the
interpretation or application thereof, or compliance by Lender with
any request or directive (whether or not having the force of law)
hereafter issued from any central bank or other Governmental
Authority:
(i) shall hereafter impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of Lender which is
not otherwise included in the determination of LIBOR hereunder;
(ii) shall hereafter have the effect of reducing the rate of return on
Lender's capital as a consequence of its obligations hereunder to
a level below that which Lender could have achieved but for such
adoption, change or compliance (taking into consideration
Lender's customary and ordinary policies with respect to capital
adequacy) by any amount deemed by Lender to be material; or
(iii) shall hereafter impose on Lender any other condition and the
result of any of the foregoing is to increase the cost to Lender
of making, renewing or maintaining loans or extensions of credit
or to reduce any amount receivable hereunder;
then, in any such case, Borrower shall promptly pay Lender, upon
demand, any additional amounts necessary to compensate Lender for
such additional cost or reduced amount receivable which Lender
deems to be material as determined by Lender. If Lender becomes
entitled to claim any additional amounts pursuant to this Section
2.2.3(g), Lender shall provide Borrower with not less than
ninety (90) days written notice specifying in reasonable detail
the event by reason of which it has become so entitled and the
additional amount required to fully compensate Lender for such
additional cost or reduced amount. A certificate as to any
additional costs or amounts payable pursuant to the foregoing
sentence submitted by Lender to Borrower shall be conclusive in
the absence of manifest error. This provision shall survive
payment of the Note and the satisfaction of all other obligations
of Borrower under this Agreement and the Loan Documents.
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(h) Borrower agrees to indemnify Lender and to hold Lender harmless from
any loss or expense which Lender sustains or incurs as a consequence
of (i) any default by Borrower in payment of the principal of or
interest on a LIBOR Loan, including, without limitation, any such loss
or expense arising from interest or fees payable by Lender to lenders
of funds obtained by it in order to maintain a LIBOR Loan hereunder,
(ii) any prepayment (whether voluntary or mandatory) of the LIBOR Loan
on a day that (A) is not the Payment Date immediately following the
last day of an Interest Period with respect thereto or (B) is the
Payment Date immediately following the last day of an Interest Period
with respect thereto if Borrower did not give the prior written notice
of such prepayment required pursuant to the terms of this Agreement,
including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it
in order to maintain the LIBOR Loan hereunder and (iii) the conversion
(for any reason whatsoever, whether voluntary or involuntary) of the
Applicable Interest Rate from LIBOR plus the Spread to the Prime Rate
plus the Prime Rate Spread with respect to any portion of the
outstanding principal amount of the Loan then bearing interest at
LIBOR plus the Spread on a date other than the Payment Date
immediately following the last day of an Interest Period, including,
without limitation, such loss or expenses arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to
maintain a LIBOR Loan hereunder (the amounts referred to in clauses
(i), (ii) and (iii) are herein referred to collectively as the
"Breakage Costs"); provided, however, Borrower shall not indemnify
Lender from any loss or expense arising from Lender's willful
misconduct or gross negligence. This provision shall survive payment
of the Note in full and the satisfaction of all other obligations of
Borrower under this Agreement and the other Loan Documents.
(i) Lender shall not be entitled to claim compensation pursuant to this
Section 2.2.3 for any Foreign Taxes, increased cost or reduction in
amounts received or receivable hereunder, or any reduced rate of
return, which was incurred or which accrued more than the earlier of
(i) ninety (90) days before the date Lender notified Borrower of the
change in law or other circumstance on which such claim of
compensation is based and delivered to Borrower a written statement
setting forth in reasonable detail the basis for calculating the
additional amounts owed to Lender under this Section 2.2.3, which
statement shall be conclusive and binding upon all parties hereto
absent manifest error, or (ii) any earlier date provided that Lender
notified Borrower of such change in law or circumstance and delivered
the written statement referenced in clause (i) promptly after Lender
received written notice of such change in law or circumstance
(provided that Lender shall notify Borrower within thirty (30) days of
such change).
(j) Borrower shall enter into an Interest Rate Cap Agreement with a LIBOR
strike price not to exceed five and forty-five hundredths percent
(5.45%) at the Closing Date. The Interest Rate Cap Agreement (i) shall
be in a form reasonably acceptable to Lender, (ii) shall be with an
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Acceptable Counterparty, (iii) shall direct such Acceptable
Counterparty to deposit directly into the Deposit Account any amounts
due Borrower under such Interest Rate Cap Agreement so long as any
portion of the Debt exists, provided that the Debt shall be deemed to
exist if the Property is transferred to Lender or an Affiliate of
Lender by judicial or non-judicial foreclosure or deed-in-lieu
thereof, (iv) shall be for a period equal to the term of the Loan and
(v) shall have an initial notional amount equal to the principal
balance of the Loan. Borrower shall collaterally assign to Lender,
pursuant to the Collateral Assignment of Interest Rate Cap Agreement,
all of its right, title and interest to receive any and all payments
under the Interest Rate Cap Agreement, and shall deliver to Lender an
executed counterpart of such Interest Rate Cap Agreement (which shall,
by its terms, authorize the assignment to Lender and require that
payments be deposited directly into the Lockbox Account).
(k) Borrower shall comply with all of its obligations under the terms and
provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement to Borrower or
Lender shall be deposited immediately into the Lockbox Account or if
the Lockbox Account is not then required to be in effect, into such
account as specified by Lender. Borrower shall take all actions
reasonably requested by Lender to enforce Lender's rights under the
Interest Rate Cap Agreement in the event of a default by the
Counterparty and shall not waive, amend or otherwise modify any of its
rights thereunder.
(l) In the event of any downgrade, withdrawal or qualification of the
rating of the Counterparty by S&P or ▇▇▇▇▇' so that such Counterparty
no longer has a long-term unsecured debt rating of at least "AA-" from
S&P and "Aa-" from ▇▇▇▇▇'▇, respectively, Borrower shall replace the
Interest Rate Cap Agreement with a Replacement Interest Rate Cap
Agreement not later than ten (10) Business Days following receipt of
notice from Lender of such downgrade, withdrawal or qualification.
(m) In the event that Borrower fails to purchase and deliver to Lender the
Interest Rate Cap Agreement or any replacement Interest Rate Cap
Agreement as and when required hereunder, Lender may purchase such
Interest Rate Cap Agreement and the cost incurred by Lender in
purchasing such Interest Rate Cap Agreement shall be paid by Borrower
to Lender with interest thereon at the Default Rate from the date such
cost was incurred by Lender until such cost is paid by Borrower to
Lender.
(n) In connection with the Interest Rate Cap Agreement, Borrower shall
obtain and deliver to Lender an opinion of counsel from counsel (which
counsel may be in-house counsel for the Counterparty) for the
Counterparty (upon which Lender and its successors and assigns may
rely) which shall provide, in relevant part, that:
(1) the Counterparty is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and has
the organizational power and authority to execute and deliver, and to
perform its obligations under, the Interest Rate Cap Agreement;
(2) the execution and delivery of the Interest Rate Cap Agreement by the
Counterparty, and any other agreement which the Counterparty has
executed and delivered pursuant thereto, and the performance of its
obligations thereunder have been and remain duly authorized by all
necessary action and do not contravene any provision of its
certificate of incorporation or by-laws (or equivalent organizational
documents) or any law, regulation or contractual restriction binding
on or affecting it or its property;
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(3) all consents, authorizations and approvals required for the execution
and delivery by the Counterparty of the Interest Rate Cap Agreement,
and any other agreement which the Counterparty has executed and
delivered pursuant thereto, and the performance of its obligations
thereunder have been obtained and remain in full force and effect, all
conditions thereof have been duly complied with, and no other action
by, and no notice to or filing with any governmental authority or
regulatory body is required for such execution, delivery or
performance; and
(4) the Interest Rate Cap Agreement, and any other agreement which the
Counterparty has executed and delivered pursuant thereto, has been
duly executed and delivered by the Counterparty and constitutes the
legal, valid and binding obligation of the Counterparty, enforceable
against the Counterparty in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
2.2.4 Additional Costs. Lender will use reasonable efforts (consistent with
legal and regulatory restrictions) to maintain the availability of the LIBOR
Loan and to avoid or reduce any increased or additional costs payable by
Borrower under Section 2.2.3, including, if requested by Borrower, a transfer or
assignment of the Loan to a branch, office or Affiliate of Lender in another
jurisdiction, or a redesignation of its lending office with respect to the Loan,
in order to maintain the availability of the LIBOR Loan or to avoid or reduce
such increased or additional costs, provided that the transfer or assignment or
redesignation (a) would not result in any additional costs, expenses or risk to
Lender that are not reimbursed by Borrower and (b) would not be disadvantageous
in any other respect to Lender as determined by Lender in its reasonable
discretion.
2.2.5 Default Rate. In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, the outstanding principal balance
of the Loan and, to the extent permitted by law, overdue interest in respect of
the Loan, shall accrue interest at the Default Rate, calculated from the date
such payment was due without regard to any grace or cure periods contained
herein.
2.2.6 Usury Savings. This Agreement and the Note are subject to the express
condition that at no time shall Borrower be obligated or required to pay
interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the Applicable Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
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Section 2.3. Loan Payment.
2.3.1 Payments Generally. The first Interest Period hereunder shall
commence on and include the Closing Date and end on January 8, 2003. Each
Interest Period thereafter shall commence on the ninth (9th) day of each
calendar month during the term of the Loan and shall end on and include the
eighth (8th) day of the next occurring calendar month. For purposes of making
payments hereunder, but not for purposes of calculating Interest Periods, if the
day on which such payment is due is not a Business Day, then amounts due on such
date shall be due on the immediately preceding Business Day and with respect to
payments of principal due on the Maturity Date, interest shall be payable at the
Applicable Interest Rate or the Default Rate, as the case may be, through and
including the day immediately preceding such Maturity Date. All amounts due
pursuant to this Agreement and the other Loan Documents shall be payable without
setoff, counterclaim, defense or any other deduction whatsoever.
2.3.2 Payment on Maturity Date. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance, all accrued and unpaid interest
and all other amounts due hereunder and under the Note, the Mortgage and other
the Loan Documents.
2.3.3 Late Payment Charge. If any principal, interest or any other sums 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 three
percent (3%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgage and the
other Loan Documents to the extent permitted by applicable law.
2.3.4 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments and prepayments under this Agreement and the Note
shall be made to Lender not later than 2:00 p.m., New York City time, on the
date when due and shall be made in lawful money of the United States of America
in immediately available funds at Lender's office, and any funds received by
Lender after such time shall, for all purposes hereof, be deemed to have been
paid on the next preceding Business Day.
Section 2.4. Prepayments.
2.4.1 Voluntary Prepayments. Prior to the Lockout Release Date, the
outstanding principal amount of the Loan may not be prepaid in whole or in part.
On or after the Lockout Release Date, Borrower may, at its option and upon
thirty (30) days prior written notice to Lender, prepay the Debt in whole or in
part; provided that such prepayment is accompanied by the Prepayment Premium, if
any, and further provided that any prepayment shall be accompanied by the amount
of interest that would have accrued on the principal amount of such prepayment
through the end of the Interest Period during which such prepayment is made.
Lender shall not be obligated to accept any prepayment unless it is accompanied
by the Prepayment Premium due in connection therewith. Any partial prepayment
shall be applied to the last payments of principal due under the Loan.
Notwithstanding anything herein to the contrary, the Borrower may not
voluntarily prepay the Loan on the day after a Payment Date to the day before a
Determination Date during any month.
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2.4.2 Mandatory Lender Prepayments. On the next occurring Payment Date
following the date on which Borrower actually receives any Net Proceeds, if
Lender is not obligated to make such Net Proceeds available to Borrower for the
Restoration of any Individual Property, Borrower shall prepay the outstanding
principal balance of the Note in an amount equal to one hundred percent (100%)
of such Net Proceeds. Other than following an Event of Default, no Prepayment
Premium shall be due in connection with any prepayment made pursuant to this
Section 2.4.2. The Release Amount with respect to such Individual Property shall
be reduced in an amount equal to such prepayment. Any partial prepayment under
this Section shall be applied to the last payments of principal due under the
Loan.
2.4.3 Prepayments After Default. If, following an Event of Default, payment
of all or any part of the Debt is tendered by Borrower or otherwise recovered by
Lender, (a) such tender or recovery shall be applied by Lender to the Debt on
the next occurring Payment Date and deemed a voluntary payment by Borrower and
(b) Borrower shall pay, in addition to the Debt an amount equal to the
Prepayment Premium, if any.
Section 2.5. Release of Property. Except as set forth in this Section 2.5,
no repayment or prepayment of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the release of any Lien of
any Mortgage on any Individual Property.
2.5.1 Release of Individual Property. After the Lockout Release Date,
Borrower may obtain the release of an Individual Property from the Lien of the
Mortgage thereon (and related Loan Documents) and the release of Borrower's
obligations under the Loan Documents with respect to such Individual Property
(other than those expressly stated to survive), upon the satisfaction of each of
the following conditions:
(a) Borrower shall pay to Lender (x) the Release Amount for the applicable
Individual Property and (y) the Prepayment Premium, if any, due in
connection therewith;
(b) Borrower shall submit to Lender, not less than thirty (30) days prior
to the date of such release, a release of Lien (and related Loan
Documents) for such Individual Property for execution by Lender. Such
release shall be in a form appropriate in each jurisdiction in which
the Individual Property is located and reasonably acceptable to
Lender. In addition, Borrower shall provide all other documentation
Lender reasonably requires to be delivered by Borrower in connection
with such release, together with an Officer's Certificate certifying
that such documentation (i) is in compliance with all Legal
Requirements, (ii) will effect such release in accordance with the
terms of this Agreement, and (iii) will not impair or otherwise
adversely affect the Liens, security interests and other rights of
Lender under the Loan Documents not being released (or as to the
parties to the Loan Documents and Properties subject to the Loan
Documents not being released);
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(c) After giving effect to such release, the Debt Service Coverage Ratio
for the Properties shall not be less than the Debt Service Coverage
Ratio in existence at the time of closing the Loan;
(d) The Individual Property to be released shall be conveyed to a Person
other than a Borrower or any of its Affiliates; and
(e) No Event of Default shall have occurred and remain uncured.
2.5.2 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 due on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of the Note and this Loan
Agreement, release the Lien of the Mortgage on each Individual Property not
theretofore released.
Section 2.6. Cash Management.
2.6.1 (a) Borrower shall establish and maintain a Lockbox Account pursuant
to the Lockbox Account Agreement. Borrower shall, or shall cause Manager to,
deliver written instructions to all tenants under Leases to deliver all Rents
payable thereunder directly to the Lockbox Account. In the event that either
Borrower or Manager receives any amounts constituting Rents or other revenue of
any kind from the Property, Borrower shall, or shall cause Manager to, deposit
said amounts into the Lockbox Account in accordance with the Cash Management
Agreement.
(b) At all times other than during a Trigger Period, Borrower shall be
entitled to use and apply all funds deposited in the Lockbox Account.
(c) During a Trigger Period, Borrower shall no longer be entitled to use
and apply the funds deposited in the Lockbox Account and all funds in
the Lockbox Account shall be swept daily by the Lockbox Bank into an
account ("Deposit Account") with Agent and applied in accordance with
this Agreement and the Deposit Account Agreement. Except as set forth
in the Cash Management Agreement, Borrower shall have no rights to
make withdrawals from the Lockbox Account or Deposit Account or
receive the proceeds thereof.
(d) Borrower hereby grants to Lender a first priority security interest in
the Lockbox Account and Deposit Account and all deposits at any time
contained therein and the proceeds thereof and will take all actions
necessary to maintain in favor of Lender a perfected first priority
security interest in the Lockbox Account and Deposit Account,
including, without limitation, executing and filing UCC-1 Financing
Statements and continuations thereof. All costs and expenses for
establishing and maintaining the Lockbox Account and Deposit Account
shall be paid by Borrower. Borrower will not in any way alter or
modify the Cash Management Agreement without Lender's consent and will
notify Lender of the Lockbox Account number.
2.6.2 Payments Received Under the Cash Management Agreement.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the monthly payment of
principal and interest and amounts due for the Tax and Insurance Escrow Fund,
Required Repair Fund, Aesthetic Repair Fund, Replacement Escrow Fund, Rollover
Escrow Fund, Unfunded Obligations Reserve Fund and any other payment reserves
established pursuant to this Agreement or any other Loan Document shall be
deemed satisfied to the extent sufficient amounts are deposited in the Deposit
Account established pursuant to the Cash Management Agreement to satisfy such
obligations on the dates each such payment is required, regardless of whether
any of such amounts are so applied by Lender.
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Section 2.7. Extension of the Initial Maturity Date. Borrower shall have
the option to extend the term of the Loan beyond the Initial Maturity Date for
three successive terms (each, an "Extension Option") of one (1) year each (the
maturity date following the exercise of each such option is hereinafter the
"Extended Maturity Date") upon satisfaction of the following terms and
conditions:
(a) no Event of Default shall have occurred and be continuing at the time
the applicable Extension Option is exercised and on the date that the
applicable extension term is commenced;
(b) Borrower shall notify Lender of its irrevocable election to extend the
Maturity Date as aforesaid not earlier than six (6) months, and no
later than three (3) months, prior to (i) with respect to the first
Extension Option, the Initial Maturity Date, (ii) with respect to the
second Extension Option, the end of the first Extension Option and
(iii) with respect to the third Extension Option, the end of the
second Extension Option;
(c) if the Interest Rate Cap Agreement is scheduled to mature prior to the
applicable Extended Maturity Date, Borrower shall obtain and deliver
to Lender not later than ten (10) Business Days prior to the first day
of each Extension Option, one or more Replacement Interest Rate Cap
Agreements from an Acceptable Counterparty which Replacement Interest
Rate Cap Agreement shall be effective commencing on the first date of
such Extension Option and shall have a maturity date not earlier than
the applicable Extended Maturity Date;
(d) In connection with each Extension Option Borrower shall have delivered
to Lender together with its notice pursuant to subsection (b) of this
Section 2.7 and as of the commencement of the applicable Extension
Option, an Officer's Certificate in form acceptable to the Lender
certifying that each of the representations and warranties of Borrower
contained in the Loan Documents is true, complete and correct in all
material respects as of the date of such Officer's Certificate to the
extent such representation and warranties are not matters which by
their nature can no longer be true and correct as a result of the
passage of time; and
(e) In connection with the second Extension Option, Borrower shall (a)
deposit the amount of $2,000,000 (the "Additional Rollover Reserve
Deposit") in the form of cash and/or a Letter of Credit (or any
combination thereof) in accordance with the terms and conditions set
forth in Section 7.6 below, into the Rollover Reserve Fund and (b)
commence to make an additional deposit on each Payment Date in the
amount of $55,800 (the "Additional Rollover Reserve Monthly Deposit")
into the Rollover Reserve Fund; provided that Borrower shall not be
obligated to make such deposits in the event that the 3000 Property
has been released in accordance with the provisions set forth in
Section 2.5.1.
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(f) In connection with the second Extension Option and the third Extension
Option, Borrower shall pay to Lender on or before the first day of the
second Extension Option and the third Extension Option, as the case
may be, an extension fee equal to one-quarter of one percent (0.25%)
of the outstanding principal balance of the Loan.
III. CONDITIONS PRECEDENT
SECTION 3.1. Conditions Precedent to Closing. 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:
3.1.1 Representations and Warranties; Compliance with Conditions. The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Default or an Event of Default shall have occurred and be continuing; and
Borrower shall be in compliance in all material respects with all terms and
conditions set forth in this Agreement and in each other Loan Document on its
part to be observed or performed.
3.1.2 Loan Agreement and Note. Lender shall have received a copy of this
Agreement and the Note, in each case, duly executed and delivered on behalf of
Borrower.
3.1.3 Delivery of Loan Documents; Title Insurance; Reports; Leases.
(a) Mortgage, Assignment of Leases. Lender shall have received from
Borrower fully executed and acknowledged counterparts of the Mortgage
and the Assignment of Leases and evidence that counterparts of the
Mortgage and Assignment of Leases have been delivered to the title
company for recording, in the reasonable judgment of Lender, so as to
effectively create upon such recording valid and enforceable Liens
upon each Individual Property, of the requisite priority, in favor of
Lender (or such other trustee as may be required or desired under
local law), subject only to the Permitted Encumbrances and such other
Liens as are permitted pursuant to the Loan Documents. Lender shall
have also received from Borrower fully executed counterparts of the
Environmental Indemnity, Guaranty, Cash Management Agreement and
Assignment of Management Agreement.
(b) Title Insurance. Lender shall have received Title Insurance Policies
with respect to the 3000 Property and the 3050 Property, issued by
Commonwealth Title Insurance Company, and with respect to the 3040
Property, issued by First American Title Insurance Company and each
dated as of the Closing Date, with reinsurance and direct access
agreements acceptable to Lender. Such Title Insurance Policies shall
(i) provide coverage in amounts satisfactory to Lender in its
reasonable discretion, (ii) insure Lender that the relevant Mortgage
creates a valid lien on the Individual Property 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), (iii) contain such legally available endorsements and
affirmative coverages as Lender may reasonably request, and (iv) name
Lender as the insured. To the extent permitted by the terms and
provisions thereof, the Title Insurance Policies shall be assignable.
Lender also shall have received evidence that all premiums in respect
of such Title Insurance Policies have been paid.
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(c) Survey. Lender shall have received a current survey for each
Individual Property, certified to Lender and its successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to
Lender in accordance with the Accuracy Standards for ALTA/ACSM Land
Title Surveys as adopted by American Land Title Association, American
Congress on Surveying & Mapping and National Society of Professional
Surveyors in 1999. Each such survey shall reflect the same legal
description contained in the Title Insurance Policies relating to such
Individual Property referred to in clause (ii) above and shall
include, among other things, unless the Individual Property is
platted, a metes and bounds description of the real property
comprising part of such Individual Property reasonably satisfactory to
Lender. The surveyor's seal shall be affixed to each survey and the
surveyor shall provide a certification for each survey in form and
substance acceptable to Lender.
(d) 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.
(e) Environmental Reports. Lender shall have received a Phase I
environmental report (and, if recommended by the Phase I environmental
report, a Phase II environmental report) in respect of each Individual
Property, in each case satisfactory in form and substance to Lender.
(f) [INTENTIONALLY DELETED].
(g) Encumbrances. Borrower shall have taken or caused to be taken such
actions in such a manner so that Lender has a valid and perfected
first Lien as of the Closing Date with respect to each Mortgage on the
applicable Individual 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.
3.1.4 Related Documents. Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
be in form and substance reasonably satisfactory to Lender, and shall have been
duly authorized, executed and delivered by all parties thereto and Lender shall
have received and approved certified copies thereof.
3.1.5 Delivery of Organizational Documents. On or before the Closing Date,
Borrower shall deliver or cause to be delivered to Lender copies certified by
Borrower of all organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or qualification to do
business, as Lender may reasonably request, including, without limitation, good
standing certificates, qualifications to do business in the appropriate
jurisdictions, resolutions authorizing the entering into of the Loan and
incumbency certificates as may be reasonably requested by Lender.
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3.1.6 Opinions of Borrower's Counsel. Lender shall have received opinions
of Borrower's counsel (a) with respect to non-consolidation issues, and (b) with
respect to due execution, authority, enforceability of the Loan Documents and
such other matters as Lender may reasonably require, all such opinions in form,
scope and substance reasonably satisfactory to Lender and Lender's counsel.
3.1.7 [INTENTIONALLY DELETED].
3.1.8 Basic Carrying Costs. Borrower shall have paid all Basic Carrying
Costs relating to the Properties which are in arrears, including, without
limitation, (a) accrued but unpaid insurance premiums relating to the
Properties, (b) Taxes due for the year 2002 and for all previous years with
respect to the Properties, and (c) currently due and payable Other Charges
relating to the Properties, which amounts shall be funded with proceeds of the
Loan.
3.1.9 Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated by this
Agreement and 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.
3.1.10 Payments. All payments, deposits or escrows required to be made or
established by Borrower under this Agreement, the Note and the other Loan
Documents on or before the Closing Date shall have been paid or funded with
proceeds of the Loan.
3.1.11 Tenant Estoppels. Lender shall have received an executed tenant
estoppel letter, which shall be in the form reasonably acceptable to Lender (a)
with respect to the 3040 Property, from lessees of not less than seventy-five
percent (75%) of the gross leased area of the 3040 Property that was leased up
as of November 2, 2002 and (b) with respect to the 3000 Property and the 3050
Property, (i) from all tenants leasing more than 10,000 square feet and (ii)
other tenants who lease at least fifty percent (50%) of the remaining gross
leased area.
3.1.12 Transaction Costs. Borrower shall have paid or reimbursed Lender for
all title insurance premiums, recording and filing fees, costs of environmental
reports, Physical Conditions Reports, appraisals and other reports, the fees and
costs of Lender's counsel and all other third party out-of-pocket expenses
incurred in connection with the origination of the Loan.
3.1.13 Material Adverse Change. There shall have been no material adverse
change in the financial condition or business condition of Borrower, Guarantor
or the Properties since the date of the most recent financial statements
delivered to Lender. The income and expenses of the Properties, the occupancy
leases thereof, and all other features of the transaction shall be as
represented to Lender without material adverse change. Neither Borrower,
Guarantor nor any of its constituent Persons shall be the subject of any
bankruptcy, reorganization, or insolvency proceeding.
3.1.14 Leases and Rent Roll. Lender shall have received copies of all
tenant leases, certified copies of any tenant leases as requested by Lender.
Lender shall have received a current certified rent roll of the Properties,
reasonably satisfactory in form and substance to Lender.
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3.1.15 [INTENTIONALLY DELETED].
3.1.16 Tax Lot. Lender shall have received evidence that each Individual
Property constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
3.1.17 Physical Conditions Reports. Lender shall have received Physical
Conditions Reports with respect to each Individual Property, which reports shall
be reasonably satisfactory in form and substance to Lender.
3.1.18 Management Agreement. Lender shall have received a certified copy of
the Management Agreement with respect to the Properties which shall be
satisfactory in form and substance to Lender.
3.1.19 Appraisal. Lender shall have received an appraisal of each
Individual Property, which shall be satisfactory in form and substance to
Lender.
3.1.20 Financial Statements. Lender shall have received a balance sheet
with respect to each Individual Property for the two most recent Fiscal Years
and statements of income with respect to each Individual Property for the two
most recent Fiscal Years, each in form and substance reasonably satisfactory to
Lender.
3.1.21 Further Documents. Lender or its counsel shall have received such
other and further approvals, opinions, documents and information as Lender or
its counsel may have reasonably requested including the Loan Documents in form
and substance satisfactory to Lender and its counsel.
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Borrower Representations. Borrower represents and warrants as
of the date hereof and as of the Closing Date that:
4.1.1 Organization. Borrower is duly organized and 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. Borrower is duly qualified
to do business and is in good standing in each jurisdiction where it is required
to be so qualified in connection with its properties, businesses and operations.
Borrower possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary 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 Properties. The ownership interests
of Borrower are set forth in the Chart attached hereto as Schedule IV.
4.1.2 Proceedings. Borrower 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 Borrower and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, subject only 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).
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4.1.3 No Conflicts. 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 Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement, management agreement or other
agreement or instrument to which Borrower is a party or by which any of
Borrower'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 Borrower or
any of Borrower's properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory authority or other governmental agency or body required for the
execution, delivery and performance by Borrower of this Agreement or any other
Loan Documents has been obtained and is in full force and effect.
4.1.4 Litigation. Except as set forth on Schedule 4.1.4, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or threatened against or affecting
Borrower or any Individual Property, which actions, suits or proceedings, if
determined against Borrower or any Individual Property, might materially
adversely affect the condition (financial or otherwise) or business of Borrower
or the condition or ownership of any Individual Property.
4.1.5 Agreements. Except as set forth on Schedule 4.1.5, Borrower is not a
party to any agreement or instrument or subject to any restriction which might
materially and adversely affect Borrower or any Individual Property, or
Borrower's business, properties or assets, operations or condition, financial or
otherwise. Borrower is not in default in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party or by
which Borrower or any of the Properties are bound. Borrower has no material
financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Borrower is a party or by
which Borrower or the Properties is otherwise bound, other than (a) obligations
incurred in the ordinary course of the operation of the Properties as permitted
pursuant to clause (xx) of the definition of "Special Purpose Entity" set forth
in Section 1.1 hereof and (b) obligations under the Loan Documents.
4.1.6 Title. Borrower has good and insurable fee simple title to the real
property comprising part of each Individual Property and good title to the
balance of such Individual Property, free and clear of all Liens whatsoever
except the Permitted Encumbrances, such other Liens as are permitted pursuant to
the Loan Documents and the Liens created by the Loan Documents. The Permitted
Encumbrances in the aggregate do not materially and adversely affect the value,
operation or use of the applicable Individual Property (as currently used) or
Borrower's ability to repay the Loan. Each Mortgage, when properly recorded in
the appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (a) a
valid, perfected first priority lien on the applicable Individual Property,
subject only to Permitted Encumbrances and the Liens created by the Loan
Documents and (b) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. There are no claims for
payment for work, labor or materials affecting the Properties which are or may
become a lien prior to, or of equal priority with, the Liens created by the Loan
Documents.
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4.1.7 Solvency. Borrower (a) has not entered into the transaction or
executed the Note, this Agreement or any other Loan Documents with the actual
intent to hinder, delay or defraud any creditor and (b) received reasonably
equivalent value in exchange for its obligations under such Loan Documents.
Giving effect to the Loan, the fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the Loan, exceed Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of Borrower's assets is and
will, immediately following the making of the Loan, be greater than Borrower's
probable liabilities, including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured. Borrower's assets do not
and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower
and the amounts to be payable on or in respect of obligations of Borrower).
Except as expressly disclosed to Lender in writing, no petition in bankruptcy
has been filed against Borrower or any constituent Person, and neither Borrower
nor any constituent Person has ever made an assignment for the benefit of
creditors or taken advantage of any insolvency act for the benefit of debtors.
Neither Borrower nor any of its constituent Persons are contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of Borrower's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it or such constituent Persons.
4.1.8 Full and Accurate Disclosure. No statement of fact made by Borrower
in this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no material
fact presently known to Borrower which has not been disclosed to Lender which
materially and adversely affects, nor as far as Borrower can foresee, might
materially and adversely affect, any Individual Property or the business,
operations or condition (financial or otherwise) of Borrower.
4.1.9 No Plan Assets. Borrower is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a)
Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to state statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Loan Agreement.
38
4.1.10 Compliance. To the best of Borrower's knowledge, Borrower and the
Properties and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes. Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority. There
has not been committed by Borrower or, to Borrower's knowledge, any other Person
in occupancy of or involved with the operation or use of the Properties any act
or omission affording the federal government or any other Governmental Authority
the right of forfeiture as against any Individual Property or any part thereof
or any monies paid in performance of Borrower's obligations under any of the
Loan Documents.
4.1.11 Financial Information. To the best of Borrower's knowledge, all
financial data, including, without limitation, the statements of income and
operating expense, that have been delivered to Lender in respect of the
Properties (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of the Properties as of the date of
such reports, and (iii) to the extent prepared or audited by an independent
certified public accounting firm, have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. Except for
Permitted Encumbrances, Borrower does not have any 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 any Individual
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.
4.1.12 Condemnation. No Condemnation or other proceeding has been commenced
or, to Borrower's best knowledge, is threatened or contemplated with respect to
all or any portion of any Individual Property or for the relocation of roadways
providing access to any Individual Property.
4.1.13 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.
4.1.14 Utilities and Public Access. Each Individual Property has rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service such Individual Property for its respective
intended uses. All public utilities necessary or convenient to the full use and
enjoyment of each Individual Property are located either in the public
right-of-way abutting such Individual Property (which are connected so as to
serve such Individual Property without passing over other property) or in
recorded easements serving such Individual Property and such easements are set
forth in and insured by the Title Insurance Policies. All roads necessary for
the use of each Individual Property for their current respective purposes have
been completed and dedicated to public use and accepted by all Governmental
Authorities.
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4.1.15 Not a Foreign Person. Borrower is not a "foreign person" within the
meaning of 1445(f)(3) of the Code.
4.1.16 Separate Lots. Each Individual Property is comprised of one (1) or
more parcels which constitute a separate tax lot or lots and does not constitute
a portion of any other tax lot not a part of such Individual Property.
4.1.17 Assessments. There are no pending or, to Borrower's knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any Individual Property, nor to Borrower's knowledge are there any
contemplated improvements to any Individual Property that may result in such
special or other assessments.
4.1.18 Enforceability. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable
(subject to principles of equity and bankruptcy, insolvency and other laws
generally affecting creditors' rights and the enforcement of debtors'
obligations), and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
4.1.19 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.
4.1.20 Insurance. Borrower has obtained and has delivered to Lender
certified copies of all insurance policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement, provided that the
requirement of a certification shall be upon request by Lender. There are no
outstanding claims under any such policy, and no Person, including Borrower, has
done, by act or omission, anything which would impair the coverage of any such
policy.
4.1.21 Use of Property. Each Individual Property is used exclusively for
office purposes and other appurtenant and related uses.
4.1.22 Certificate of Occupancy; Licenses. All certifications, permits,
licenses and approvals, including, without limitation, certificates of
completion and occupancy permits required for the legal use, occupancy and
operation of each Individual Property as an office building (collectively, the
"Licenses"), have been obtained and are in full force and effect. Borrower shall
keep and maintain all licenses necessary for the operation of each Individual
Property as an office building. The use being made of each Individual Property
is in conformity with the certificate of occupancy issued for such Individual
Property.
4.1.23 Flood Zone. None of the Improvements on any Individual Property are
located in an area as identified by the Federal Emergency Management Agency as
an area having special flood hazards or, if so located, the flood insurance
required pursuant to Section 6.1(a)(i) is in full force and effect with respect
to each such Individual Property.
40
4.1.24 Physical Condition. Except as set forth on Schedule 4.1.24, each
Individual Property, including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects
(provided that the obligation to maintain such items in good condition shall be
relative to the age of such item); there exists no structural or other material
defects or damages in any Individual Property, whether latent or otherwise, and
Borrower has not received notice from any insurance company or bonding company
of any defects or inadequacies in any Individual Property, or any part thereof,
which would materially and 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.
4.1.25 Boundaries. All of the improvements which were included in
determining the appraised value of each Individual Property lie wholly within
the boundaries and building restriction lines of such Individual Property, and
no improvements on adjoining properties encroach upon such Individual Property,
and no easements or other encumbrances upon the applicable Individual Property
encroach upon any of the improvements, so as to affect the value or
marketability of the applicable Individual Property except those which are
insured against by title insurance.
4.1.26 Leases. The Properties are not subject to any Leases other than the
Leases described in Schedule II attached hereto and made a part hereof. Borrower
is the owner and lessor of landlord's interest in the Leases. No Person has any
possessory interest in any Individual Property or right to occupy the same
except under and pursuant to the provisions of the Leases. Except as set forth
on Schedule 4.1.26, the current Leases are in full force and effect and there
are no defaults thereunder by either party and, to Borrower's knowledge, there
are no conditions that, with the passage of time or the giving of notice, or
both, would constitute defaults thereunder. No Rent (excluding security
deposits) has been paid more than one (1) month in advance of its due date.
Except as set forth on Schedule 4.1.26, all work to be performed by Borrower
under each Lease has been performed as required and has been accepted by the
applicable tenant, and any payments, free rent, partial rent, rebate of rent or
other payments, credits, allowances or abatements required to be given by
Borrower to any tenant has already been received by such tenant. There has been
no prior sale, transfer or assignment, hypothecation or pledge of any Lease or
of the Rents received therein which is outstanding as of the date hereof. No
tenant under any Lease has a right or option pursuant to such Lease or otherwise
to purchase all or any part of the leased premises or the building of which the
leased premises are a part. No tenant under any Lease has any right or option
for additional space in the Improvements. To Borrower's knowledge, no hazardous
wastes or toxic substances, as defined by applicable federal, state or local
statutes, rules and regulations, have been disposed, stored or treated by any
tenant under any Lease on or about the leased premises nor does Borrower have
any knowledge of any tenant's intention to use its leased premises for any
activity which, directly or indirectly, involves the use, generation, treatment,
storage, disposal or transportation of any petroleum product or any toxic or
hazardous chemical, material, substance or waste except in compliance with the
Legal Requirements.
41
4.1.27 Survey. The Survey for each Individual Property delivered to Lender
in connection with this Agreement has been prepared in accordance with the
provisions of Section 3.1.3c hereof, and, to Borrower's knowledge, does not fail
to reflect any material matter affecting such Individual Property or the title
thereto.
4.1.28 Principal Place of Business; State of Organization. Borrower's
principal place of business as of the date hereof is the address set forth in
the introductory paragraph of this Agreement. The Borrower is organized under
the laws of the State of Delaware.
4.1.29 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 Properties to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Mortgage has been paid, and, under current Legal Requirements,
the Mortgage is enforceable in accordance with its respective terms by Lender
(or any subsequent holder thereof), subject to principles of equity and
bankruptcy, insolvency and other laws generally applicable to creditors' rights
and the enforcement of debtors' obligations.
4.1.30 Special Purpose Entity/Separateness. (a) Until the Debt has been
paid in full, Borrower hereby represents, warrants and covenants that (i)
Borrower is, shall be and shall continue to be a Special Purpose Entity, and
(ii) Principal is, shall be and shall continue to be a Special Purpose Entity.
(b) The representations, warranties and covenants set forth in Section
4.1.30(a) shall survive for so long as any amount remains payable to
Lender under this Agreement or any other Loan Document.
(c) All of the assumptions made in the Insolvency Opinion, including, but
not limited to, any exhibits attached thereto, are true and correct in
all respects and any assumptions made in any subsequent
non-consolidation opinion required to be delivered in connection with
the Loan Documents (an "Additional Insolvency Opinion"), including,
but not limited to, any exhibits attached thereto, will have been and
shall be true and correct in all respects. Borrower has complied and
will comply with, and Principal has complied and Borrower will cause
Principal to comply with, all of the assumptions made with respect to
Borrower or Principal in the Insolvency Opinion. Borrower will have
complied and will comply with all of the assumptions made with respect
to Borrower or Principal in any Additional Insolvency Opinion. Each
entity other than Borrower or Principal with respect to which an
assumption shall be made in any Additional Insolvency Opinion will
have complied and will comply with all of the assumptions made with
respect to it in any Additional Insolvency Opinion.
4.1.31 Management Agreement. The Management Agreement is in full force and
effect and there is no default thereunder by any party thereto and, to
Borrower's knowledge, no event has occurred that, with the passage of time
and/or the giving of notice, would constitute a default thereunder.
42
4.1.32 Illegal Activity. No portion of any Individual Property has been or
will be purchased with proceeds of any illegal activity.
4.1.33 No Change in Facts or Circumstances; Disclosure. All information
submitted by Borrower to Lender and in all financial statements, rent rolls,
reports, certificates and other documents submitted in connection with the Loan
or in satisfaction of the terms thereof and all statements of fact made by
Borrower in this Agreement or in any other Loan Document, are accurate, complete
and correct in all material respects. There has been no material adverse change
in any condition, fact, circumstance or event that would make any such
information inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects or might materially
and adversely affect the use, operation or value of the Properties or the
business operations or the financial condition of Borrower. Borrower has
disclosed to Lender all material facts and has not failed to disclose any
material fact that could cause any Provided Information or representation or
warranty made herein to be materially misleading.
4.1.34 Investment Company Act. Borrower is not (a) an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (b) 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 (c) subject to any other
federal or State law or regulation which purports to restrict or regulate its
ability to borrow money.
4.1.35 Embargoed Person. At all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower, Principal and
Guarantor constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions
under U.S. law, including, but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. 1701 et seq., The Trading with the Enemy Act, 50
U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder with the result that the investment in Borrower, Principal or
Guarantor, as applicable (whether directly or indirectly), is prohibited by law
or the Loan made by the Lender is in violation of law ("Embargoed Person"); (b)
no Embargoed Person has any interest of any nature whatsoever in Borrower,
Principal or Guarantor, as applicable, with the result that the investment in
Borrower, Principal or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of Borrower, Principal or Guarantor, as applicable, have been
derived from any unlawful activity with the result that the investment in
Borrower, Principal or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law.
4.1.36 Cash Management Account. (a) This Agreement, together with the other
Loan Documents, creates a valid and continuing security interest in the Lockbox
Account and Deposit Account in favor of Lender, which security interest is prior
to all other Liens, other than Permitted Encumbrances, and is enforceable as
such against creditors of and purchasers from Borrower. Other than in connection
with the Loan Documents and except for Permitted Encumbrances, Borrower has not
sold or otherwise conveyed the Lockbox Account and Deposit Account;
43
(b) Each of the Lockbox Account and Deposit Account constitute "deposit
accounts" within the meaning of the Uniform Commercial Code;
(c) Pursuant and subject to the terms hereof, the Lockbox Bank has agreed
to comply with all instructions originated by Lender, without further
consent by Borrower, directing disposition of the Lockbox Account and
all sums at any time held, deposited or invested therein, together
with any interest or other earnings thereon, and all proceeds thereof
(including proceeds of sales and other dispositions), whether
accounts, general intangibles, chattel paper, deposit accounts,
instruments, documents or securities; and
(d) The Lockbox Account and Deposit Account are not in the name of any
Person other than Borrower, as pledgor, or Lender, as pledgee.
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.
V. BORROWER COVENANTS
SECTION 5.1. Affirmative Covenants. From the date hereof and until payment
and performance in full of all obligations of Borrower under the Loan Documents
or the earlier release of the Liens of the Mortgage encumbering the Properties
(and all related obligations) in accordance with the terms of this Agreement and
the other Loan Documents, Borrower hereby covenants and agrees with Lender that:
5.1.1 Existence; Compliance with Legal Requirements. Borrower shall do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its existence, rights, licenses, permits and franchises and comply,
in all material respects, with all Legal Requirements applicable to it and the
Properties. There shall never be committed by Borrower any act or omission
affording the federal government or any state or local government the right of
forfeiture against any Individual Property or any part thereof or any monies
paid in performance of Borrower's obligations under any of the Loan Documents.
44
Borrower hereby covenants and agrees not to commit, permit or suffer to exist
any act or omission affording such right of forfeiture. Borrower 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 Properties in good working order and repair in all material
respects 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 Properties
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. 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
validity of any Legal Requirement, the applicability of any Legal Requirement to
Borrower or any Individual Property or any alleged violation of any Legal
Requirement, provided that (i) no Default or Event of Default has occurred and
remains uncured; (ii) Borrower is permitted to do so under the provisions of any
mortgage or deed of trust superior in lien to the applicable Mortgage; (iii)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iv) no Individual
Property nor any part thereof or interest therein will be in imminent danger of
being sold, forfeited, terminated, cancelled or lost; (v) Borrower shall
promptly upon final determination thereof comply with any such Legal Requirement
determined to be valid or applicable or cure any violation of any Legal
Requirement; (vi) such proceeding shall suspend the enforcement of the contested
Legal Requirement against Borrower or any Individual Property; and (vii)
Borrower shall furnish such security as may be required in the proceeding, or as
may be reasonably requested by Lender, to insure compliance with such Legal
Requirement, together with all interest and penalties payable in connection
therewith. Lender may apply any such security, as necessary to cause compliance
with such Legal Requirement at any time when, in the reasonable judgment of
Lender, the validity, applicability or violation of such Legal Requirement is
finally established or any Individual Property (or any part thereof or interest
therein) shall be in danger of being sold, forfeited, terminated, cancelled or
lost.
5.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Properties or
any part thereof as the same become due and payable; provided, however,
Borrower's obligation to directly pay Taxes shall be suspended for so long as
Borrower complies with the terms and provisions of Section 7.2 hereof. Borrower
will deliver to Lender receipts for payment or other evidence reasonably
satisfactory to Lender that the Taxes and Other Charges have been so paid or are
not then delinquent prior to the date on which the Taxes and/or Other Charges
would otherwise be delinquent if not paid. Borrower shall furnish to Lender
receipts for the payment of the Taxes and the Other Charges prior to the date
the same shall become delinquent (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 7.2 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 Properties, and
shall promptly pay for all utility services provided to the Properties. 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) Borrower is permitted to do so under the
provisions of any mortgage or deed of trust superior in lien to the applicable
Mortgage; (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 and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
45
(iv) no Individual Property nor any part thereof or interest therein will be in
imminent danger of being sold, forfeited, terminated, cancelled or lost; (v)
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; (vi) such proceeding shall suspend
the collection of such contested Taxes or Other Charges from the applicable
Individual Property; and (vii) Borrower shall furnish such security as may be
required in the proceeding, or as may be reasonably requested by Lender, to
insure the payment of any such Taxes or Other Charges, together with all
interest and penalties thereon. 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 or
any Individual Property (or part thereof or interest therein) shall be in
imminent danger of being sold, forfeited, terminated, cancelled or lost or there
shall be any danger of the Lien of any Mortgage being primed by any related
Lien.
5.1.3 Litigation. Borrower shall give prompt written notice to Lender of
any litigation or governmental proceedings pending or threatened against
Borrower which might materially adversely affect Borrower's condition (financial
or otherwise) or business or any Individual Property.
5.1.4 Access to Properties. Borrower shall permit agents, representatives
and employees of Lender to inspect the Properties or any part thereof at
reasonable hours upon reasonable advance notice.
5.1.5 Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower's condition, financial or otherwise, or of
the occurrence of any Default or Event of Default of which Borrower has
knowledge.
5.1.6 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.
5.1.7 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.
5.1.8 Award and Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in connection with any Individual Property, and Lender
shall be reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements, and the payment by Borrower of the
expense of an appraisal on behalf of Lender in case of Casualty or Condemnation
affecting any Individual Property or any part thereof) out of such Insurance
Proceeds.
5.1.9 Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
46
(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 Borrower 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
reasonably necessary, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the obligations
of Borrower 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 purpose of carrying out of the
intents and purposes of this Agreement and the other Loan Documents,
as Lender shall reasonably require from time to time.
5.1.10 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 any one or more of the
Properties as a direct or indirect result of applicable taxes not having been
paid with respect to any Individual Property, Borrower agrees that Borrower will
execute, acknowledge and deliver to Lender, immediately upon Lender's request,
supplemental affidavits increasing the amount of the Debt attributable to any
such Individual Property (as set forth as the Release Amount on Schedule I
annexed hereto) for which all applicable taxes have been paid to an amount
determined by Lender to be equal to the lesser of (a) the greater of the fair
market value of the applicable Individual Property (i) as of the date hereof and
(ii) as of the date such supplemental affidavits are to be delivered to Lender,
and (b) the amount of the Debt attributable to any such Individual Property (as
set forth as the Release Amount on Schedule I annexed hereto), and Borrower
shall, on demand, pay any additional taxes.
5.1.11 Financial Reporting. (a) Borrower will keep and maintain or will
cause to be kept and maintained on a Fiscal Year basis, in accordance with GAAP
(or such other accounting basis acceptable to Lender), proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation on an
individual basis of the Properties. Lender shall have the right from time to
time at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of Borrower 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 and during the continuance
of an Event of Default, Borrower shall pay any reasonable costs and expenses
incurred by Lender to examine Borrower's accounting records with respect to the
Properties, as Lender shall determine to be reasonably necessary or appropriate
in the protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within ninety (90) days
following the end of each Fiscal Year of Borrower, a complete copy of
Borrower's and Guarantor's annual consolidated financial statements
audited by Deloitte & Touche or another "Big Five" accounting firm or
other independent certified public accountant acceptable to Lender in
47
accordance with GAAP (or such other accounting basis acceptable to
Lender) covering the Properties on a combined basis for such Fiscal
Year and containing statements of profit and loss for Borrower,
Guarantor and the Properties and a balance sheet for Borrower and
Guarantor. Such statements shall utilize the accrual method of
accounting and shall set forth the financial condition and the results
of operations for the Properties for such Fiscal Year, and shall
include, but not be limited to, amounts representing annual Net Cash
Flow, Net Operating Income, Gross Income from Operations and Operating
Expenses; provided that notwithstanding anything contained herein to
the contrary, Guarantor shall only be required to deliver to Lender
financial statements in the form required to be delivered by Guarantor
to the Securities and Exchange Commission as part of Guarantor's "Form
10-K" annual filing and "Form 10-Q" quarterly filing. Borrower's and
Guarantor's annual financial statements shall be accompanied by (i) a
CFO Certificate stating that each such annual financial statement
presents fairly the financial condition and the results of operations
of Borrower, Guarantor and the Properties being reported upon and has
been prepared in accordance with GAAP, (ii) an unqualified opinion of
Deloitte & Touche or another "Big Five" accounting firm or other
independent certified public accountant reasonably acceptable to
Lender, (iii) a list of tenants, if any, occupying more than twenty
(20%) percent of the total floor area of the Improvements, (iv) a
breakdown showing the year in which each Lease then in effect expires
and the percentage of total floor area of the Improvements and the
percentage of base rent with respect to which Leases shall expire in
each such year, each such percentage to be expressed on both a per
year and cumulative basis, and (v) a Schedule audited by such
independent certified public accountant reconciling Net Operating
Income to Net Cash Flow (the "Net Cash Flow Schedule"), which shall
itemize all adjustments made to Net Operating Income to arrive at Net
Cash Flow deemed material by such independent certified public
accountant. Together with Borrower's and Guarantor's annual financial
statements, Borrower shall furnish to Lender an Officers' Certificate
certifying as of the date thereof 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.
(c) Borrower will furnish, or cause to be furnished, to Lender on or
before thirty (30) days after the end of each calendar month and forty
five (45) days at the end of each quarter, the following items,
accompanied by a CFO Certificate stating that such items are true,
correct, accurate, and complete and fairly present the financial
condition and results of the operations of Borrower and the Properties
on a combined basis as well as each Individual Property (subject to
normal year-end adjustments) as applicable: (i) a rent roll for the
subject month accompanied by a CFO Certificate with respect thereto;
(ii) monthly and year-to-date operating statements (including Capital
Expenditures) prepared for each calendar month, noting Net Operating
Income, Gross Income from Operations, and Operating Expenses (not
including any contributions to the Replacement Reserve Fund and the
Rollover Reserve Fund), and other information necessary and sufficient
to fairly represent the financial position and results of operation of
the Properties during such calendar month, and containing a comparison
of budgeted income and expenses and the actual income and expenses,
all in form reasonably satisfactory to Lender; (iii) a calculation
reflecting the annual Debt Service Coverage Ratio for the immediately
preceding quarter as of the last day of such quarter accompanied by a
CFO Certificate with respect thereto; and (iv) a Net Cash Flow
Schedule. In addition, such CFO Certificate shall also state that the
representations and warranties of Borrower set forth in Section
4.1.30(a) are true and correct as of the date of such certificate and
that there are no trade payables outstanding for more than sixty (60)
days.
48
(d) For the partial Fiscal Year commencing on the date hereof, and for
each Fiscal Year thereafter, Borrower shall submit to Lender an Annual
Budget not later than thirty (30) days prior to the commencement of
such period or Fiscal Year in form reasonably satisfactory to Lender.
The Annual Budget shall be subject to Lender's written approval, which
approval shall not be unreasonably withheld or delayed (each such
Annual Budget, an "Approved Annual Budget"). In the event that Lender
objects to a proposed Annual Budget submitted by Borrower which
requires the approval of Lender hereunder, Lender shall advise
Borrower of such objections within fifteen (15) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of
such objections) and Borrower shall promptly revise such Annual Budget
and resubmit the same to Lender. Lender shall advise Borrower of any
objections to such revised Annual Budget within ten (10) days after
receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall promptly revise the
same in accordance with the process described in this subsection until
Lender approves the Annual Budget. Until such time that Lender
approves a proposed Annual Budget which requires the approval of
Lender hereunder, the most recently Approved Annual Budget shall
apply; provided that, such Approved Annual Budget shall be adjusted to
reflect actual increases in real estate taxes, insurance premiums and
utilities expenses.
(e) In the event that, Borrower must incur an extraordinary operating
expense or capital expense not set forth in the Approved Annual Budget
(each, an "Extraordinary Expense"), then Borrower shall promptly
deliver to Lender a reasonably detailed explanation of such proposed
Extraordinary Expense for Lender's approval, which approval shall not
be unreasonably withheld or delayed.
(f) If requested by Lender, Borrower shall provide Lender, promptly upon
request, with the following financial statements if, at the time a
preliminary or final prospectus, prospectus supplement, private
placement memorandum, offering circular or other offering document
(the "Disclosure Document") is being prepared for a Securitization, it
is expected that the principal amount of the Loan together with any
Affiliated Loans at the time of Securitization may, or if the
principal amount of the Loan together with any Affiliated Loans at any
time during which the Loan and any Affiliated Loans are included in a
Securitization does, equal or exceed 20% of the aggregate principal
amount of all mortgage loans included or expected to be included, as
applicable, in the Securitization:
(i) A balance sheet with respect to each Individual Property for the
two most recent fiscal years, meeting the requirements of Section
210.3-01 of Regulation S-X of the Securities Act and statements
of income and statements of cash flows with respect to each
Individual Property for the three most recent fiscal years,
meeting the requirements of Section 210.3-02 of Regulation S-X,
and, to the extent that such balance sheet is more than 135 days
old as of the date of the document in which such financial
statements are included, interim financial statements of each
49
Individual Property meeting the requirements of Section 210.3-01
and 210.3-02 of Regulation S-X (all of such financial statements,
collectively, the "Standard Statements"); provided, however, that
with respect to each Individual Property (other than properties
that are hotels, nursing homes, or other properties that would be
deemed to constitute a business and not real estate under
Regulation S-X or other legal requirements) that has been
acquired by Borrower from an unaffiliated third party (such
Property, "Acquired Property"), as to which the other conditions
set forth in Section 210.3-14 of Regulation S-X for provision of
financial statements in accordance with such Section have been
met, in lieu of the Standard Statements otherwise required by
this Section, Borrower shall instead provide the financial
statements required by such Section 210.3-14 of Regulation S-X
("Acquired Property Statements").
(ii) Not later than thirty (30) days after the end of each fiscal
quarter following the date hereof, a balance sheet of each
Individual Property as of the end of such fiscal quarter, meeting
the requirements of Section 210.3-01 of Regulation S-X, and
statements of income and statements of cash flows of each
Individual Property for the period commencing following the last
day of the most recent fiscal year and ending on the date of such
balance sheet and for the corresponding period of the most recent
fiscal year, meeting the requirements of Section 210.3-02 of
Regulation S-X (provided, that if for such corresponding period
of the most recent fiscal year Acquired Property Statements were
permitted to be provided hereunder pursuant to subsection (i)
above, Borrower shall instead provide Acquired Property
Statements for such corresponding period).
(iii) Not later than seventy-five (75) days after the end of each
fiscal year following the date hereof, a balance sheet of each
Individual Property as of the end of such fiscal year, meeting
the requirements of Section 210.3-01 of Regulation S-X, and
statements of income and statements of cash flows of the each
Individual Property for such fiscal year, meeting the
requirements of Section 210.3-02 of Regulation S-X.
(iv) Within ten (10) Business Days after notice from the Lender in
connection with the Securitization of this Loan, such additional
financial statements, such that, as of the date (each, an
"Offering Document Date") of each Disclosure Document, Borrower
shall have provided Lender with all financial statements as
described in subsection (f)(i) above; provided that the fiscal
year and interim periods for which such financial statements
shall be provided shall be determined as of such Offering
Document Date.
(g) If requested by Lender, Borrower shall provide Lender, promptly upon
request, with summaries of the financial statements referred to in Section
5.1.11(f) hereof if, at the time a Disclosure Document is being prepared for a
Securitization, it is expected that the principal amount of the Loan and any
Affiliated Loans at the time of Securitization may, or if the principal amount
of the Loan and any Affiliated Loans at any time during which the Loan and any
Affiliated Loans are included in a Securitization does, equal or exceed 10% (but
is less than 20%) of the aggregate principal amount of all mortgage loans
included or expected to be included, as applicable, in a Securitization. Such
summaries shall meet the requirements for "summarized financial information," as
defined in Section 210.1-02(bb) of Regulation S-X, or such other requirements as
may be determined to be necessary or appropriate by Lender.
50
(h) All financial statements provided by Borrower hereunder pursuant to
Section 5.1.11(f) and (g) hereof shall be prepared in accordance with GAAP, and
shall meet the requirements of Regulation S-X and other applicable legal
requirements. All financial statements referred to in Subsections 5.1.11(f)(i)
and 5.1.11(f)(iii) above shall be audited by independent accountants of Borrower
acceptable to Lender in accordance with Regulation S-X and all other applicable
legal requirements, shall be accompanied by the manually executed report of the
independent accountants thereon, which report shall meet the requirements of
Regulation S-X and all other applicable legal requirements, and shall be further
accompanied by a manually executed written consent of the independent
accountants, in form and substance acceptable to Lender, to the inclusion of
such financial statements in any Disclosure Document and any Exchange Act Filing
and to the use of the name of such independent accountants and the reference to
such independent accountants as "experts" in any Disclosure Document and
Exchange Act Filing (as defined below), all of which shall be provided at the
same time as the related financial statements are required to be provided. All
financial statements (audited or unaudited) provided by Borrower under Section
5.1.11(f) and (g) shall be certified by the chief financial officer or
administrative member of Borrower, which certification shall state that such
financial statements meet the requirements set forth in the first sentence of
this Section 5.1.11(h).
(i) If requested by Lender, Borrower shall provide Lender, promptly upon
request, with any other or additional financial statements, or financial,
statistical or operating information, as Lender shall determine to be required
pursuant to Regulation S-X or any amendment, modification or replacement thereto
or other legal requirements in connection with any Disclosure Document or any
filing under or pursuant to the Exchange Act in connection with or relating to a
Securitization (hereinafter, an "Exchange Act Filing") or as shall otherwise be
reasonably requested by the Lender.
(j) In the event Lender determines, in connection with a Securitization,
that the financial statements required in order to comply with Regulation S-X or
other legal requirements are other than as provided herein, then notwithstanding
the provisions of Section 5.1.11(f), (g) and (h) hereof, Lender may request, and
Borrower shall promptly provide, such combination of Acquired Property Statement
and/or Standard Statements or such other financial statements as Lender
determines to be necessary or appropriate for such compliance.
(k) Any reports, statements or other information required to be delivered
under this Agreement shall be delivered (i) in paper form, (ii) on a diskette,
and (iii) if requested by Lender and within the capabilities of Borrower's data
systems without change or modification thereto, in electronic form and prepared
using a Microsoft Word for Windows or WordPerfect for Windows files (which files
may be prepared using a spreadsheet program and saved as word processing files).
Borrower agrees that Lender may disclose information regarding the Properties
and Borrower that is provided to Lender pursuant to this Section in connection
with the Securitization to such parties requesting such information in
connection with such Securitization.
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5.1.12 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 Properties.
Borrower 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 Properties.
5.1.13 Title to the Properties. Borrower will warrant and defend (a) the
title to each Individual Property and every part thereof, subject only to Liens
permitted or created hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Mortgage and the Assignment of Leases
on the Properties, subject only to Liens permitted or created hereunder
(including Permitted Encumbrances), in each case against the claims of all
Persons whomsoever. Borrower shall reimburse Lender for any losses, costs,
damages or expenses (including reasonable attorneys' fees and court costs)
incurred by Lender if an interest in any Individual Property, other than as
permitted hereunder, is claimed by another Person.
5.1.14 Costs of Enforcement. In the event (a) that the Mortgage encumbering
each Individual Property is foreclosed in whole or in part or that the Mortgage
is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to
the Mortgage encumbering each Individual Property in which proceeding Lender is
made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other
similar proceeding in respect of Borrower or any of its constituent Persons or
an assignment by Borrower or any of its constituent Persons for the benefit of
its creditors, Borrower, its successors or assigns, shall be chargeable with and
agrees to pay all costs of collection and defense, including reasonable
attorneys' fees and costs, incurred by Lender or Borrower in connection
therewith and in connection with any appellate proceeding or post-judgment
action involved therein, together with all required service or use taxes.
5.1.15 Estoppel Statement. (a) After request by Lender, Borrower shall
within ten (10) days furnish Lender with a statement, duly acknowledged and
certified, setting forth, to Borrower's knowledge (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the Applicable Interest Rate of the Note, (iv) the date installments of
interest and/or principal were last paid, (v) any offsets or defenses to the
payment of the Debt, if any, and (vi) that 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.
(b) Borrower shall use commercially reasonable efforts to deliver to
Lender upon request, tenant estoppel certificates from each commercial
tenant leasing space at the Properties in form and substance
reasonably satisfactory to Lender provided that Borrower shall not be
required to deliver such certificates more frequently than once in any
calendar year.
5.1.16 Loan Proceeds. Borrower shall use the proceeds of the Loan received
by it on the Closing Date only for the purposes set forth in Section 2.1.4.
5.1.17 Performance by Borrower. Borrower shall in a timely manner observe,
perform and fulfill in all material respects each and every covenant, term and
provision of each Loan Document executed and delivered by, or applicable to,
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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.
5.1.18 Confirmation of Representations. Borrower shall deliver, in
connection with any Securitization, (a) one or more Officer's Certificates
certifying as to the accuracy of all representations made by Borrower in the
Loan Documents as of the date of the closing of such Securitization in all
relevant jurisdictions, and (b) certificates of the relevant Governmental
Authorities in all relevant jurisdictions indicating the good standing and
qualification of Borrower and its sole member as of the date of the
Securitization.
5.1.19 No Joint Assessment. Borrower shall not suffer, permit or initiate
the joint assessment of any Individual Property (a) with any other real property
constituting a tax lot separate from such Individual Property, and (b) which
constitutes real property with any portion of such Individual Property which may
be deemed to constitute personal property, or any other procedure whereby the
lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of the Individual
Property.
5.1.20 Leasing Matters. Any Leases with respect to an Individual Property
written after the date hereof, for more than 20,000 square feet shall be
approved by Lender, which approval shall not be unreasonably withheld. Upon
request, Borrower shall furnish Lender with executed copies of all Leases. All
renewals of Leases and all proposed Leases shall provide for rental rates
comparable to existing local market rates. All proposed Leases shall be on
commercially reasonable terms and shall not contain any terms which would
materially 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 Individual Property and that the lessee agrees to
attorn to Lender or any purchaser at a sale by foreclosure or power of sale.
Borrower (i) shall observe and perform the obligations imposed upon the lessor
under the Leases in a commercially reasonable manner; (ii) shall enforce and may
amend or terminate the terms, covenants and conditions contained in the Leases
upon the part of the lessee thereunder to be observed or performed in a
commercially reasonable manner and in a manner not to impair the value of the
Individual Property involved except that no termination by Borrower or
acceptance of surrender by a tenant of any Leases shall be permitted unless by
reason of a tenant default and then only in a commercially reasonable manner to
preserve and protect the Individual Property; provided, however, that no such
termination or surrender of any Lease covering more than 20,000 square feet will
be permitted without the written consent of Lender, which consent shall no be
unreasonably withheld; (iii) 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. Notwithstanding anything
to the contrary contained herein, Borrower shall not enter into a individual
lease of all or substantially all of any Individual Property without Lender's
prior written consent, which consent shall no be unreasonably withheld. At the
request of Borrower, Lender will, at Borrower's cost and expense, enter into a
Subordination, Non-Disturbance and Attornment Agreement ("SNDA") with any tenant
leasing more than 5,000 square feet on Lender's standard form, provided, that
with respect to any tenant leasing less than 5,000 square feet, Lender will, at
Borrower's cost and expense, enter into such SNDA in its reasonable discretion.
53
5.1.21 Alterations. Borrower shall obtain Lender's prior written consent to
any alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a material
adverse effect on Borrower's financial condition, the value of the applicable
Individual Property or the Net Operating Income. Notwithstanding the foregoing,
Lender's consent shall not be required in connection with any alterations that
will not have a material adverse effect on Borrower's financial condition, the
value of the applicable Individual Property or the Net Operating Income,
provided such alterations are made in connection with (a) tenant improvement
work performed pursuant to the terms of any Lease executed on or before the date
hereof, (b) tenant improvement work performed pursuant to the terms and
provisions of a Lease and not materially adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any
Improvements or the exterior of any building constituting a part of any
Improvements, (c) alterations performed in connection with the restoration of an
Individual Property after the occurrence of a casualty in accordance with the
terms and provisions of this Agreement, or (d) alterations costing less than
$750,000 and not effecting any structural component of any Improvements, any
utility or HVAC system contained in any Improvements or the exterior of any
building constituting a part of any Improvements. If the total unpaid amounts
due and payable (for which there are insufficient funds in the appropriate
reserves) with respect to alterations to the Improvements at any Individual
Property (other than such amounts to be paid or reimbursed by tenants under the
Leases) shall at any time exceed $750,000 (the "Threshold Amount"), Borrower
shall promptly deliver to Lender as security for the payment of such amounts and
as additional security for Borrower's obligations under the Loan Documents any
of the following: (A) cash, (B) U.S. Obligations, (C) other securities having a
rating acceptable to Lender and that the applicable Rating Agencies have
confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned in connection with any Securitization, or (D) a completion and
performance bond or an irrevocable letter of credit (payable on sight draft
only) issued by a financial institution having a rating by Standard & Poor's
Ratings Group of not less than A-1+ if the term of such bond or letter of credit
is no longer than three (3) months or, if such term is in excess of three (3)
months, issued by a financial institution having a rating that is reasonably
acceptable to Lender and that the applicable Rating Agencies have confirmed in
writing will not, in and of itself, result in a downgrade, withdrawal or
qualification of the initial, or, if higher, then current ratings assigned in
connection with any Securitization. Such security shall be in an amount equal to
the excess of the total unpaid amounts with respect to alterations to the
Improvements on the applicable Individual Property (other than such amounts to
be paid or reimbursed by tenants under the Leases) over the Threshold Amount and
Lender may apply such security from time to time at the option of Lender to pay
for such alterations.
5.1.22 Operation of Property. (a) Borrower shall cause the Properties to be
operated, in all material respects, in accordance with the Management Agreement
(or Replacement Management Agreement) as applicable; provided, however, that in
no event shall Manager be entitled to a management fee in excess of four percent
(4%) of Gross Income from Operations. In the event that the Management Agreement
expires or is terminated (without limiting any obligation of Borrower to obtain
54
Lender's consent to any termination or modification of the Management Agreement
in accordance with the terms and provisions of this Agreement), Borrower shall
promptly enter into a Replacement Management Agreement with Manager or another
Qualified Manager, as applicable.
(b) 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 the Management Agreement and do all things
necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any material default under
the Management Agreement of which it is aware; (iii) if requested from
Lender, promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, received by it under the
Management Agreement; and (iv) enforce the performance and observance
of all of the covenants and agreements required to be performed and/or
observed by Manager under the Management Agreement, in a commercially
reasonable manner.
5.1.23 O&M Plan. From the date hereof, Borrower shall implement and
maintain an operation and maintenance plan, with respect to the 3040 Property
and the 3050 Property, reasonably acceptable to Lender in all material respects.
5.1.24 Lead and Drinking Water. Borrower agrees that within fourteen (14)
days from the Closing Date, it shall show evidence reasonably satisfactory to
Lender that there is no lead in the drinking water above the drinking water
standards under applicable environmental laws. In the event that lead is
detected above such drinking water standards, Borrower hereby agrees that it
will take all necessary steps and actions to remediate the lead in the drinking
water to levels in compliance with applicable environmental laws.
Section 5.2. 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 encumbering the Properties 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:
5.2.1 Operation of Property. (a) Borrower shall not, without Lender's prior
written consent (which consent shall not be unreasonably withheld): (i)
surrender, terminate or cancel the Management Agreement; provided, that Borrower
may, without Lender's consent, replace the Manager so long as the replacement
manager is a Qualified Manager pursuant to a Replacement Management Agreement;
(ii) reduce or consent to the reduction of the term of the Management Agreement;
(iii) increase or consent to the increase of the amount of any charges under the
Management Agreement; 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.
(b) Following the occurrence and during the continuance of an Event of
Default, Borrower shall not exercise any rights, make any decisions,
grant any approvals or otherwise take any action under the Management
Agreement without the prior written consent of Lender, which consent
may be granted, conditioned or withheld in Lender's sole discretion.
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5.2.2 Liens. Borrower shall not create, incur, assume or suffer to exist
for more than thirty (30) days after Borrower receives notice thereof any Lien
on any portion of any Individual 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.
5.2.3 Dissolution. Borrower shall not (a) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(b) engage in any business activity not related to the ownership and operation
of the Properties, (c) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
Properties except to the extent permitted by the Loan Documents, (d) modify,
amend, waive or terminate its organizational documents or its qualification and
good standing in any jurisdiction or (e) cause the Principal to (i) dissolve,
wind up or liquidate or take any action, or omit to take an action, as a result
of which the Principal would be dissolved, wound up or liquidated in whole or in
part, or (ii) amend, modify, waive or terminate the certificate of incorporation
or bylaws of the Principal, in each case, without obtaining the prior written
consent of Lender.
5.2.4 Change In Business. Borrower shall not enter into any line of
business other than the ownership and operation of the Properties, 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.
5.2.5 Debt Cancellation. Borrower shall not cancel or otherwise forgive or
release any claim or debt (other than termination of Leases in accordance
herewith) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower's business.
5.2.6 Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
any Individual 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.
5.2.7 No Joint Assessment. Borrower shall not suffer, permit or initiate
the joint assessment of any Individual Property with (a) any other real property
constituting a tax lot separate from such Individual Property, or (b) any
portion of such Individual Property which may be deemed to constitute personal
property, or any other procedure whereby the Lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
such Individual Property.
5.2.8 Principal Place of Business and Organization. Borrower shall not
change its principal place of business set forth in the introductory paragraph
of this Agreement without first giving Lender thirty (30) days prior written
notice. Borrower shall not change the place of its organization as set forth in
Section 4.1.28 without the consent of Lender, which consent shall not be
unreasonably withheld. Upon Lender's request, Borrower shall execute and deliver
additional financing statements, security agreements and other instruments which
may be necessary to effectively evidence or perfect Lender's security interest
in the Property as a result of such change of principal place of business or
place of organization.
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5.2.9 ERISA. (a) Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term
of the Loan, as requested by Lender in its sole discretion, that (A)
Borrower is not and does not maintain an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, or a "governmental plan" within the meaning of Section 3(3) of
ERISA; (B) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. 2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. 2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. 2510.3-101c or
(e).
5.2.10 Transfers. (a) Borrower acknowledges that Lender has examined and
relied on the experience of Borrower and its general partners, members,
principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the Loan, and will
continue to rely on Borrower's ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Debt and
the performance of the Other Obligations. Borrower acknowledges that Lender has
a valid interest in maintaining the value of the Property so as to ensure that,
should Borrower default in the repayment of the Debt or the performance of the
Other Obligations, Lender can recover the Debt by a sale of the Property.
(b) Without the prior written consent of Lender and except to the extent
otherwise set forth in this Section 5.2.10, Borrower shall not, and
shall not permit any Restricted Party to, (i) sell, convey, mortgage,
grant, bargain, encumber, pledge, assign, grant options with respect
to, or otherwise transfer or dispose of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) the Property or any
part thereof or any legal or beneficial interest therein or (ii)
permit a Sale or Pledge of an interest in any Restricted Party
(collectively, a "Transfer"), other than pursuant to Leases of space
in the Improvements to tenants in accordance with the provisions of
Section 5.1.20 (provided, however, that Lender acknowledges Borrower's
right to request approval of a Transfer).
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(c) A Transfer shall include, but not be limited to, (i) an installment
sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (ii) an agreement
by Borrower leasing all or a substantial part of the Property for
other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest
in, Borrower's right, title and interest in and to any Leases or any
Rents; (iii) if a Restricted Party is a corporation, any merger,
consolidation or Sale or Pledge of such corporation's stock or the
creation or issuance of new stock; (iv) if a Restricted Party is a
limited or general partnership or joint venture, any merger or
consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of
any general partner or any profits or proceeds relating to such
partnership interest, or the Sale or Pledge of limited partnership
interests or any profits or proceeds relating to such limited
partnership interest or the creation or issuance of new limited
partnership interests; (v) if a Restricted Party is a limited
liability company, any merger or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or
if no managing member, any member) or the Sale or Pledge of the
membership interest of a managing member (or if no managing member,
any member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of non-managing membership interests
or the creation or issuance of new non-managing membership interests;
(vi) if a Restricted Party is a trust or nominee trust, any merger,
consolidation or the Sale or Pledge of the legal or beneficial
interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests; or (vii) the removal or the resignation
of the managing agent (including, without limitation, an Affiliated
Manager) other than in accordance with Section 5.1.22 hereof.
(d) Notwithstanding the provisions of this Section 5.1.20, the following
transfers shall not be deemed to be a Transfer: (i) the Sale or
Pledge, in one or a series of transactions, of not more than
forty-nine percent (49%) of the stock in a Restricted Party; provided,
however, no such transfers shall result in the change of voting
control in the Restricted Party, and as a condition to each such
transfer, Lender shall receive not less than thirty (30) days prior
written notice of such proposed transfer, and (ii) the Sale or Pledge,
in one or a series of transactions, of not more than forty-nine
percent (49%) of the limited partnership interests or non-managing
membership interests (as the case may be) in a Restricted Party;
provided, however, as a condition to each such transfer, Lender shall
receive not less than thirty (30) days prior written notice of such
proposed transfer.
(e) Notwithstanding the provisions of this Section 5.2.10, Borrower shall
have a one-time right to transfer, not more than eighty percent (80%)
of the stock, limited partnership interests or non-managing membership
interests (as the case may be) in a Restricted Party provided that:
(a) the proposed transferee shall be a Qualified Transferee; (b) if
the Manager shall not be the manager of the Property following such
transfer, then the Manager must be a Qualifying Manager; (c) no Event
of Default shall have occurred and be continuing under the Loan
Documents; (d) payment by Borrower to Lender of all of fees and
expenses incurred in connection with such transfer including, without
limitation, the cost of any third party reports, legal fees and
expenses, rating agency fees (including rating agency counsel) and
expenses or required legal opinions; (e) the delivery of a
nonconsolidation opinion reflecting the proposed transfer satisfactory
in form and substance to Lender and the Rating Agencies; and (f) the
delivery of evidence satisfactory to Lender that the single purpose
nature and bankruptcy remoteness of Borrower, its shareholders,
partners or members, as the case may be, following such transfers are
in accordance with the then current standards of Lender and the Rating
Agencies.
58
(f) Notwithstanding the provisions of this Section 5.2.10, Borrower shall
have the right to transfer the Properties and/or any Restricted Party
may transfer the stock, partnership interests or membership interests
(as the case may be) in a Restricted Party to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or
Guarantor or an entity in which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or Guarantor owns
directly or indirectly all of the beneficial interests; provided that:
(a) if the Manager shall not be the manager of the Property following
such transfer, then the Manager must be a Qualifying Manager; (b) no
Event of Default shall have occurred and be continuing under the Loan
Documents; (c) prior to a Securitization, Borrower shall have received
the prior approval of Lender, which approval Lender shall not
unreasonably withhold and after a Securitization, Borrower shall have
obtained prior written confirmation from the applicable Rating
Agencies that such transfer will not result in a downgrade, withdrawal
or qualification of the then current ratings of the Securities or any
class thereof; (d) payment by Borrower to Lender of all of fees and
expenses incurred in connection with such transfer including, without
limitation, the cost of any third party reports, legal fees and
expenses, rating agency fees (including rating agency counsel) and
expenses or required legal opinions; (e) the delivery of a
nonconsolidation opinion reflecting the proposed transfer satisfactory
in form and substance to Lender and the Rating Agencies; and (f) the
delivery of evidence satisfactory to Lender that the single purpose
nature and bankruptcy remoteness of Borrower, its shareholders,
partners or members, as the case may be, following such transfers are
in accordance with the then current standards of Lender and the Rating
Agencies.
(g) Notwithstanding the provisions of this Section 5.2.10, Lender shall
not unreasonably withhold its prior written consent to a one-time
sale, assignment or other transfer of all the Properties, provided
that (i) Lender receives sixty (60) days' prior written notice of such
transfer and (ii) Lender reserves the right to condition the consent
required hereunder upon (a) a modification of the terms hereof and of
the Mortgage, the Note or the other Loan Documents; (b) an assumption
of this Agreement, the Note, the Mortgage and the other Loan Documents
as so modified by the proposed transferee, subject to the provisions
of Section 9.4 of this Agreement; (c) payment of all of fees and
expenses incurred in connection with such transfer including, without
limitation, the cost of any third party reports, legal fees and
expenses, rating agency fees (including rating agency counsel) and
expenses or required legal opinions; (d) the payment of a
non-refundable $5,000 application fee and, in the event that the
proposed transferee is not an Affiliate of Borrower, an assumption fee
equal to one percent (1%) of the outstanding principal balance of the
Loan; (e) the delivery of a nonconsolidation opinion reflecting the
proposed transfer satisfactory in form and substance to Lender; (f)
the proposed transferee's continued compliance with the
representations and covenants set forth in Section 4.1.30 of this
Agreement; (g) the delivery of evidence satisfactory to Lender that
the single purpose nature and bankruptcy remoteness of Borrower, its
shareholders, partners or members, as the case may be, following such
transfers are in accordance with the then current standards of Lender
and the Rating Agencies; (h) prior to any release of the Guarantor, a
59
substitute guarantor reasonably acceptable to Lender shall have
assumed the Guaranty executed by Guarantor or executed a replacement
guaranty reasonably satisfactory to Lender; (i) if required by Lender,
confirmation in writing from the Rating Agencies to the effect that
such transfer will not result in a re-qualification, reduction or
withdrawal of the then current rating assigned to the Securities in
any applicable Securitization; (j) no Event of Default shall have
occurred and be continuing under the Loan Documents; or (k) such other
conditions as Lender shall determine in its reasonable discretion to
be in the interest of Lender, including, without limitation, the
creditworthiness, reputation and qualifications of the transferee with
respect to the Loan and the Property. Lender shall not be required to
demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due
and payable upon Borrower's sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property
without Lender's consent. This provision shall apply to every sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment,
or transfer of the Property regardless of whether voluntary or not, or
whether or not Lender has consented to any previous sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer
of the Property.
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
SECTION 6.1. Insurance. (a) Borrower shall obtain and maintain, or cause to
be maintained, insurance for Borrower and the Properties providing at least the
following coverages:
(i) comprehensive all risk insurance on the Improvements and the Personal
Property, including contingent liability from Operation of Building
Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred
percent (100%) of the "Full Replacement Cost," which for purposes of
this Agreement shall mean actual replacement value (exclusive of costs
of excavations, foundations, underground utilities and footings) with
a waiver of depreciation, but the amount shall in no event be less
than the outstanding principal balance of the Loan; (B) containing an
agreed amount endorsement with respect to the Improvements and
Personal Property waiving all co-insurance provisions; (C) providing
for no deductible in excess of the lesser of (x) Twenty-Five Thousand
and No/100 Dollars ($25,000), (y) five percent (5%) of the Replacement
Cost and (z) five percent (5%) of Net Operating Income for all such
insurance coverage; and (D) containing an "Ordinance or Law Coverage"
or "Enforcement" endorsement if any of the Improvements or the use of
the Individual Property shall at any time constitute legal
non-conforming structures or uses. In addition, Borrower shall obtain:
(x) if any portion of the Improvements is currently or at any time in
the future located in an area designated as Flood Zone A or Zone V,
flood hazard insurance in an amount equal to the lesser of (1) the
outstanding principal balance of the Note or (2) the maximum amount of
such insurance available under the National Flood Insurance Act of
1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended or such greater
amount as Lender shall require; (y) earthquake insurance in amounts
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and in form and substance satisfactory to Lender in the event the
Individual Property is located in an area with a high degree of
seismic activity and (z) coastal windstorm insurance in amounts and in
form and substance satisfactory to Lender in the event the Individual
Property is located in any coastal region, provided that the insurance
pursuant to clauses (x), (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required
under this subsection (i);
(ii) commercial general liability insurance against claims for personal
injury, bodily injury, death or property damage occurring upon the
Individual Property, such insurance (A) to be on the so-called
"occurrence" form with a combined limit of not less than Two Million
and No/100 Dollars ($2,000,000) in the aggregate and One Million and
No/100 Dollars ($1,000,000) per occurrence (and, if on a blanket
policy, containing an "Aggregate Per Location" endorsement); (B) to
continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economic conditions
making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and
completed operations on an "if any" basis; (3) independent
contractors; (4) blanket contractual liability for all legal
contracts; and (5) contractual liability covering the indemnities
contained in Article 9 of the Mortgage to the extent the same is
available;
(iii) business income insurance (A) with loss payable to Lender; (B)
covering all risks required to be covered by the insurance provided
for in subsection (i) above; (C) containing an extended period of
indemnity endorsement which provides that after the physical loss to
the Improvements and Personal Property has been repaired, the
continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the
expiration of twelve (12) months from the date that the applicable
Individual Property is repaired or replaced and operations are
resumed, whichever first occurs, and notwithstanding that the policy
may expire prior to the end of such period; and (D) in an amount equal
to one hundred percent (100%) of the projected gross income from each
Individual Property for a period of twelve (12) months from the date
that such Individual Property is repaired or replaced and operations
are resumed. The amount of such business income insurance shall be
determined prior to the date hereof and at least once each year
thereafter based on Borrower's reasonable estimate of the gross income
from each Individual Property for the succeeding twelve (12) month
period. All proceeds payable to Lender pursuant to this subsection
shall be held by Lender and shall be applied to the obligations
secured by the Loan Documents from time to time due and payable
hereunder and under the Note; provided, however, that nothing herein
contained shall be deemed to relieve Borrower of its obligations to
pay the obligations secured by the Loan Documents on the respective
dates of payment provided for in the Note and the other Loan Documents
except to the extent such amounts are actually paid out of the
proceeds of such business income insurance;
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(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only
if the Individual Property coverage form does not otherwise apply, (A)
owner's contingent or protective liability insurance covering claims
not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance
provided for in subsection (i) above written in a so-called builder's
risk completed value form (1) on a non-reporting basis, (2) against
all risks insured against pursuant to subsection (i) above, (3)
including permission to occupy the Individual Property, and (4) with
an agreed amount endorsement waiving co-insurance provisions;
(v) if an Individual Property includes commercial property, worker's
compensation insurance with respect to any employees of Borrower, as
required by any governmental authority or legal requirement;
(vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent
with the commercial property insurance policy required under
subsection (i) above;
(vii) umbrella liability insurance in an amount not less than Twenty-Five
Million and No/100 Dollars ($25,000,000) per occurrence on terms
consistent with the commercial general liability insurance policy
required under subsection (ii) above;
(viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including umbrella coverage, of One Million and
No/100 Dollars ($1,000,000);
(ix) if an Individual Property is or becomes a legal "non-conforming" use,
ordinance or law coverage and insurance coverage to compensate for the
cost of demolition or rebuilding of the undamaged portion of the
Individual Property along with any reduced value and the increased
cost of construction in amounts as requested by Lender; and
(x) the commercial property and business income insurance required under
Sections 6.1(a)(i) and (iii) above shall cover perils of terrorism and
acts of terrorism and Borrower shall maintain commercial property and
business income insurance for loss resulting from perils and acts of
terrorism on terms (including amounts) consistent with those required
under Sections 6.1(a)(i) and (iii) above at all times during the term
of the Loan so long as Lender reasonably determines that either (i)
prudent owners of real estate comparable to the Properties are
maintaining same or (ii) prudent institutional lenders (including,
without limitation, investment banks) to such owners are requiring
that such owners maintain such insurance; provided, that Lender hereby
agrees that a blanket policy covering the Property and all of the
properties owned directly or indirectly by ▇▇▇▇▇ Equity, Inc. (the
"▇▇▇▇▇ Properties") with an aggregate annual limit of $77,000,000 (the
"Approved Blanket Policy") shall be acceptable for this clause (x);
provided, further that Borrower hereby acknowledges that if an event
occurs at the ▇▇▇▇▇ Properties that reduces the coverage in the
Approved Blanket Policy, Borrower agrees to obtain within ten (10)
business days of such occurrence a stand-alone policy with respect to
the Properties in the amount of the outstanding principal balance of
the Loan so long as Lender reasonably determines that such insurance
is available at commercially reasonable rates; and
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(xi) upon sixty (60) days' written notice, such other reasonable insurance
and in such reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the
time are commonly insured against for property similar to the
Individual Property located in or around the region in which the
Individual Property is located.
(b) All insurance provided for in Section 6.1(a) shall be obtained under
valid and enforceable policies (collectively, the "Policies" or, in the
singular, the "Policy"), and shall be subject to the reasonable approval of
Lender as to insurance companies, amounts, deductibles, loss payees and
insureds. The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State and having a claims
paying ability rating of "AA" or better (and the equivalent thereof) by at least
two (2) of the Rating Agencies rating the Securities (one of which shall be
Standard & Poor's Ratings Group if they are rating the Securities and one of
which will be ▇▇▇▇▇'▇ Investors Service, Inc. if they are rating the
Securities), or if only one Rating Agency is rating the Securities, then only by
such Rating Agency. The Policies described in Section 6.1(a) (other than those
strictly limited to liability protection) shall designate Lender as loss payee.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums due thereunder (the "Insurance Premiums"), shall be delivered by
Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate to the
Individual Property the amount of coverage from time to time required hereunder
and shall otherwise provide the same protection as would a separate Policy
insuring only the Properties in compliance with the provisions of Section
6.1(a).
(d) All Policies provided for or contemplated by Section 6.1(a), except for
the Policy referenced in Section 6.1(a)(v), shall name Borrower as the insured
and Lender as the additional insured, as its interests may appear, and in the
case of property damage, boiler and machinery, flood and earthquake insurance,
shall contain a so-called New York standard non-contributing mortgagee clause in
favor of Lender providing that the loss thereunder shall be payable to Lender.
(e) All Policies provided for in Section 6.1(a) shall contain clauses or
endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for Borrower,
or of any Tenant or other occupant, or failure to comply with the
provisions of any Policy, which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way
affect the validity or enforceability of the insurance insofar as
Lender is concerned;
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(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at
least thirty (30) days' written notice to Lender and any other
party named therein as an additional insured;
(iii) the issuers thereof shall give written notice to Lender if the
Policy has not been renewed fifteen (15) days prior to its
expiration; and
(iv) Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems
reasonably necessary to protect its interest in the Properties, including,
without limitation, the obtaining of such insurance coverage as Lender in its
sole discretion deems appropriate. All premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon demand and, until paid, shall be secured by
the Mortgage and shall bear interest at the Default Rate.
Section 6.2. Casualty. If the Individual Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a "Casualty"),
Borrower shall give prompt notice of such damage to Lender and shall promptly
commence and diligently prosecute the completion of the Restoration of the
Individual Property as nearly as possible to the condition the Individual
Property was in immediately prior to such fire or other casualty, with such
alterations as may be reasonably approved by Lender and otherwise in accordance
with Section 6.4; provided, however, that in the event that the Net Proceeds are
not made available to Borrower for Restoration pursuant to Section 6.4 and
Borrower satisfies the condition of Section 2.5.1 (a)-(e) for the release of an
Individual Property, Lender agrees upon request by Borrower to apply the Net
Proceeds to pay the Release Amount. Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance. Lender may, but
shall not be obligated to make proof of loss if not made promptly by Borrower.
In addition, Lender may participate in any settlement discussions with any
insurance companies with respect to any Casualty in which the Net Proceeds or
the costs of completing the Restoration are equal to or greater than Five
Hundred Thousand and No/100 Dollars ($500,000) and Borrower shall deliver to
Lender all instruments required by Lender to permit such participation. Section
6.3. Condemnation. Borrower shall promptly give Lender notice of the actual
or, if Borrower has knowledge of any, threatened commencement of any proceeding
for the Condemnation of any Individual Property and shall deliver to Lender
copies of any and all papers served in connection with such proceedings. Lender
may participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
64
by any public or quasi-public authority through Condemnation or otherwise
(including, but not limited to, any transfer made in lieu of or in anticipation
of the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement and the Debt shall not be reduced until any Award shall have been
actually received and applied by Lender, after the deduction of reasonable
expenses of collection, to the reduction or discharge of the Debt. Lender shall
not be limited to the interest paid on the Award by the condemning authority but
shall be entitled to receive out of the Award interest at the rate or rates
provided herein or in the Note. If any Individual Property or any portion
thereof is taken by a condemning authority, Borrower shall promptly commence and
diligently prosecute the Restoration of the applicable Individual Property and
otherwise comply with the provisions of Section 6.4. If any Individual Property
is sold, through foreclosure or otherwise, prior to the receipt by Lender of the
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall have been sought, recovered or denied, to receive the Award, or a
portion thereof sufficient to pay the Debt.
Section 6.4. Restoration. The following provisions shall apply in
connection with the Restoration of any Individual Property:
(a) If the Net Proceeds shall be less than Five Hundred Thousand and
No/100 Dollars ($500,000) and the costs of completing the Restoration
shall be less than Five Hundred Thousand and No/100 Dollars
($500,000), the Net Proceeds will be disbursed by Lender to Borrower
upon receipt, provided that all of the conditions set forth in Section
6.4(b)(i) are met and Borrower delivers to Lender a written
undertaking to expeditiously commence and to satisfactorily complete
with due diligence the Restoration in accordance with the terms of
this Agreement.
(b) If the Net Proceeds are equal to or greater than Five Hundred Thousand
and No/100 Dollars ($500,000) or the costs of completing the
Restoration is equal to or greater than Five Hundred Thousand and
No/100 Dollars ($500,000) Lender shall make the Net Proceeds available
for the Restoration in accordance with the provisions of this Section
6.4. The term "Net Proceeds" shall mean: (i) the net amount of all
insurance proceeds received by Lender pursuant to Sections 6.1 (a)(i),
(iv), (vi), (ix) and (x) as a result of such damage or destruction,
after deduction of its reasonable costs and expenses (including, but
not limited to, reasonable counsel fees), if any, in collecting same
("Insurance Proceeds"), or (ii) the net amount of the Award, after
deduction of its reasonable costs and expenses (including, but not
limited to, reasonable counsel fees), if any, in collecting same
("Condemnation Proceeds"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration, provided that each of the following conditions are
met:
(A) no Event of Default shall have occurred and be continuing;
(B) (1) in the event the Net Proceeds are Insurance Proceeds,
less than thirty-five percent (35%) of the total floor area
of the Improvements on the Individual Property has been
damaged, destroyed or rendered unusable as a result of such
fire or other casualty or (2) in the event the Net Proceeds
are Condemnation Proceeds, less than ten percent (10%) of
the land constituting the Individual Property is taken, and
such land is located along the perimeter or periphery of the
Individual Property, and no portion of the Improvements is
located on such land;
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(C) Leases demising in the aggregate a percentage amount equal
to or greater than the Rentable Space Percentage of the
total rentable space in the Individual Property which has
been demised under executed and delivered Leases in effect
as of the date of the occurrence of such fire or other
casualty or taking, whichever the case may be, shall remain
in full force and effect during and after the completion of
the Restoration, notwithstanding the occurrence of any such
fire or other casualty or taking, whichever the case may be,
and will make all necessary repairs and restorations thereto
at their sole cost and expense. The term "Rentable Space
Percentage" shall mean (1) in the event the Net Proceeds are
Insurance Proceeds, a percentage amount equal to
seventy-five percent (75%) and (2) in the event the Net
Proceeds are Condemnation Proceeds, a percentage amount
equal to seventy-five percent (75%);
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than sixty
(60) days after such Casualty or Condemnation, whichever the
case may be, occurs) and shall diligently pursue the same to
satisfactory completion;
(E) Lender shall be reasonably satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note, which will be incurred with respect
to the Individual Property as a result of the occurrence of
any such Casualty or Condemnation, whichever the case may
be, will be covered out of (1) the Net Proceeds, (2) the
insurance coverage referred to in Section 6.1(a)(iii), if
applicable, or (3) by other funds of Borrower;
(F) Lender shall be reasonably satisfied that the Restoration
will be completed on or before the earliest to occur of (1)
the Maturity Date, (2) the earliest date required for such
completion under the terms of Leases making up the Rentable
Space Percentage, (3) such time as may be required under
applicable zoning law, ordinance, rule or regulation in
order to repair and restore the applicable Individual
Property to the condition it was in immediately prior to
such Casualty or to as nearly as possible the condition it
was in immediately prior to such Condemnation, as applicable
or (4) the expiration of the insurance coverage referred to
in Section 6.1(a)(iii);
(G) the Individual Property and the use thereof after the
Restoration will be in compliance with and permitted under
all applicable zoning laws, ordinances, rules and
regulations;
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(H) the Restoration shall be done and completed by Borrower in
an expeditious and diligent fashion and in compliance with
all applicable governmental laws, rules and regulations
(including, without limitation, all applicable environmental
laws);
(I) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the Individual Property or
the related Improvements;
(J) the Net Operating Income for the affected Individual
Property, after giving effect to the Restoration, shall be
equal to or greater than the Net Operating Income for such
Individual Property immediately prior to the Restoration;
(K) Borrower shall deliver, or cause to be delivered, to Lender
a signed detailed budget approved in writing by Borrower's
architect or engineer stating the entire cost of completing
the Restoration, which budget shall be reasonably acceptable
to Lender; and
(L) the Net Proceeds together with any cash or cash equivalent
deposited by Borrower with Lender are sufficient in Lender's
reasonable discretion to cover the cost of the Restoration.
(ii) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance with
the provisions of this Section 6.4(b), shall constitute
additional security for the Debt and other obligations under the
Loan Documents. The Net Proceeds shall be disbursed by Lender
to, or as directed by, Borrower from time to time during the
course of the Restoration, upon receipt of evidence reasonably
satisfactory to Lender that (A) all materials installed and work
and labor performed (except to the extent that they are to be
paid for out of the requested disbursement) in connection with
the Restoration have been paid for in full, and (B) there exist
no notices of pendency, stop orders, mechanic's or materialman's
liens or notices of intention to file same, or any other liens or
encumbrances of any nature whatsoever on the Individual Property
which have not either been fully bonded to the satisfaction of
Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance in
all respects by Lender and by an independent consulting engineer
selected by Lender (the "Casualty Consultant"), which review and
acceptance shall not be unreasonably withheld. If an Event of
Default occurs and is continuing, Lender shall have the use of
the plans and specifications and all permits, licenses and
approvals required or obtained in connection with the
Restoration. The identity of the contractors, subcontractors and
materialmen engaged in the Restoration, as well as the contracts
under which they have been engaged, shall be subject to prior
review and acceptance by Lender and the Casualty Consultant,
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which review and acceptance shall not be unreasonably withheld.
All costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration including,
without limitation, reasonable counsel fees and disbursements and
the Casualty Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs
actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, minus
the Casualty Retainage. The term "Casualty Retainage" shall mean
an amount equal to ten percent (10%) of the costs actually
incurred for work in place as part of the Restoration, as
certified by the Casualty Consultant, until the Restoration has
been completed. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this
Section 6.4(b), be less than the amount actually held back by
Borrower from contractors, subcontractors and materialmen engaged
in the Restoration. The Casualty Retainage shall not be released
until the Casualty Consultant certifies to Lender that the
Restoration has been completed substantially in accordance with
the provisions of this Section 6.4(b) and that all approvals
necessary for the re-occupancy and use of the Individual Property
have been obtained from all appropriate governmental and
quasi-governmental authorities, and Lender receives evidence
reasonably satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of
the Casualty Retainage; provided, however, that Lender will
release the portion of the Casualty Retainage being held with
respect to any contractor, subcontractor or materialman engaged
in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor
or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, the
contractor, subcontractor or materialman delivers the lien
waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the Title
Insurance Policy, and Lender receives an endorsement to the Title
Insurance Policy insuring the continued priority of the lien of
the related Mortgage and evidence of payment of any premium
payable for such endorsement. If required by Lender, the release
of any such portion of the Casualty Retainage shall be approved
by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or
materialman.
(v) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in
consultation with the Casualty Consultant, be sufficient to pay
in full the balance of the costs which are estimated by the
Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the
deficiency with Lender or provide evidence reasonably
satisfactory to Lender of the availability of funds sufficient to
cover the deficiency (the "Net Proceeds Deficiency") before any
further disbursement of the Net Proceeds shall be made. The Net
Proceeds Deficiency deposited with Lender shall be held by Lender
and shall be disbursed for costs actually incurred in connection
with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant
to this Section 6.4(b) shall constitute additional security for
the Debt and other obligations under the Loan Documents.
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(vii) The excess, if any, of the Net Proceeds and interest thereon and
the remaining balance, if any, of the Net Proceeds Deficiency
deposited with Lender after the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with
the provisions of this Section 6.4(b), and the receipt by Lender
of evidence reasonably satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in
full, shall be remitted by Lender to Borrower, provided no Event
of Default shall have occurred and shall be continuing under the
Note, this Agreement or any of the other Loan Documents.
(c) All Net Proceeds and interest thereon not required (i) to be made
available for the Restoration or (ii) to be returned to Borrower as
excess Net Proceeds pursuant to Section 6.4(b)(vii) may be retained
and applied by Lender toward the payment of the Debt whether or not
then due and payable in such order, priority and proportions as Lender
in its sole discretion shall deem proper, or, at the discretion of
Lender, the same may be paid, either in whole or in part, to Borrower
for such purposes as Lender shall approve, in its discretion.
(d) In the event of foreclosure of the Mortgage with respect to the
Individual Property, or other transfer of title to the Individual
Property in extinguishment in whole or in part of the Debt all right,
title and interest of Borrower in and to the Policies that are not
blanket Policies then in force concerning the Individual Property and
all proceeds payable thereunder shall thereupon vest in the purchaser
at such foreclosure or Lender or other transferee in the event of such
other transfer of title.
VII. RESERVE FUNDS
SECTION 7.1. Required Repair Funds.
7.1.1 Deposits. Borrower shall perform the repairs at the Properties, as
more particularly set forth on Schedule III hereto (such repairs hereinafter
referred to as "Required Repairs"). Except as a result of a force majeure,
Borrower shall complete the Required Repairs on or before the required deadline
for each repair as set forth on Schedule III. It shall be an Event of Default
under this Agreement if (a) Borrower does not substantially complete the
Required Repairs at each Individual Property by the required deadline for each
repair as set forth on Schedule III, or (b) Borrower does not satisfy each
condition contained in Section 7.1.2 hereof. Upon the occurrence of such an
69
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 one or more of the Properties 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. On the Closing Date,
Borrower shall deposit with Lender the amount for each Individual Property set
forth on such Schedule III hereto to perform the Required Repairs for such
Individual Property. Amounts so deposited with Lender shall be held by Lender in
accordance with Section 7.7 hereof. Amounts so deposited shall hereinafter be
referred to as Borrower's "Required Repair Fund" and the account in which such
amounts are held shall hereinafter be referred to as Borrower's "Required Repair
Account".
7.1.2 Release of Required Repair Funds. Lender shall disburse to Borrower
the Required Repair Funds from the Required Repair Account from time to time
upon satisfaction by Borrower of each of the following conditions: (a) Borrower
shall submit a written request for payment to Lender at least thirty (30) days
prior to the date on which Borrower requests such payment be made and specifies
the Required Repairs to be paid, (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
Officers' Certificate (i) stating that all Required Repairs at the applicable
Individual Property to be funded by the requested disbursement have been
completed in good and workmanlike manner and in accordance with all applicable
federal, state and local laws, rules and regulations, such certificate to be
accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the Required
Repairs, (ii) identifying each Person that supplied materials or labor in
connection with the Required Repairs performed at such Individual Property to be
funded by the requested disbursement, and (iii) stating that each such Person
has been paid in full or will be paid in full upon such disbursement, such
Officers' Certificate to be accompanied by lien waivers or other evidence of
payment reasonably satisfactory to Lender, (d) at Lender's option, a title
search for such Individual Property indicating that such Individual Property is
free from all liens, claims and other encumbrances not previously approved by
Lender, and (e) Lender shall have received such other evidence as Lender shall
reasonably request that the Required Repairs at such Individual Property to be
funded by the requested disbursement have been substantially completed and are
paid for or will be paid upon such disbursement to Borrower. Lender shall not be
required to make disbursements from the Required Repair Account unless such
requested disbursement is in an amount greater than $25,000 (or a lesser amount
if the total amount in the Required Repair Account is less than $25,000, in
which case only one disbursement of the amount remaining in the account shall be
made) and such disbursement shall be made only upon satisfaction of each
condition contained in this Section 7.1.2.
Section 7.2. 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, 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 (said amounts in (a) and (b) above
hereinafter called the "Tax and Insurance Escrow Fund"). Notwithstanding the
70
foregoing, Borrower shall not be required to make monthly deposits for Insurance
Premiums as set forth in (b) above for so long as (a) Borrower maintains blanket
insurance Policies for the Properties and (b) a Trigger Period is not in
existence. The Tax and Insurance Escrow Fund 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 Section 5.1.2 hereof and under the
Mortgage. 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 due for Taxes and Insurance
Premiums pursuant to Section 5.1.2 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. Any amount remaining in the Tax
and Insurance Escrow Fund after the Debt has been paid in full shall be promptly
returned to Borrower. In allocating such excess, Lender may deal with the Person
shown on the records of Lender to be the owner of the Properties. If at any time
Lender reasonably determines that the Tax and Insurance Escrow Fund is not or
will not be sufficient to pay Taxes and Insurance Premiums by the dates set
forth in (a) and (b) above, Lender shall notify Borrower of such determination
and Borrower shall increase its monthly payments to Lender by the amount that
Lender estimates is sufficient to make up the deficiency at least thirty (30)
days prior to delinquency of the Taxes and/or thirty (30) days prior to
expiration of the Policies, as the case may be.
Section 7.3. Replacements and Replacement Reserve.
7.3.1 Replacement Reserve Fund. Borrower shall pay to Lender on each
Payment Date the amount equal to $17,764 (as such amount may be adjusted from
time to time as herein provided) (the "Replacement Reserve Monthly Deposit"),
which amount shall be deposited with and held by Lender to be used for
replacements and repairs required to be made to the Properties during the
calendar year pursuant to the Approved Budget (collectively, the
"Replacements"). From and after the time that any Individual Property is
released hereunder, the then amount of the Rollover Reserve Monthly Deposit
shall be reduced by the amount set forth in the Replacement Reserve column on
Schedule I. Amounts so deposited shall hereinafter be referred to as Borrower's
"Replacement Reserve Fund" and the account in which such amounts are held shall
hereinafter be referred to as Borrower's "Replacement Reserve Account". Any
amount held in the Replacement Reserve Account and allocated for an Individual
Property shall be retained by Lender and credited toward the future Replacement
Reserves Monthly Deposits required by Lender hereunder in the event such
Individual Property is released from the Lien of its related Mortgage in
accordance with Section 2.5 hereof.
7.3.2 Disbursements from Replacement Reserve Account. Lender shall make
disbursements from the Replacement Reserve Fund as requested by Borrower, and
approved by Lender in its reasonable discretion, no more frequently than once in
any thirty (30) day period of no less than $5,000.00 upon delivery by Borrower
of Lender's standard form of draw request accompanied by copies of paid invoices
for the amounts requested and, if required by Lender for requests in excess of
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$10,000.00 for a single item, lien waivers and releases or other evidence of
payment reasonably satisfactory to Lender from all parties furnishing materials
and/or services in connection with the requested payment. Lender may require an
inspection of the Property at Borrower's expense prior to making a monthly
disbursement in order to verify completion of replacements and repairs of items
in excess of $25,000.00 for which reimbursement is sought.
7.3.3 Balance in the Replacement Reserve Account. The insufficiency of any
balance in the Replacement Reserve Account shall not relieve Borrower from its
obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.
Section 7.4. Rollover Reserve.
7.4.1 Deposits to Rollover Reserve Fund. Borrower shall deposit with Lender
(a) on the Closing Date, the amount of $6,476,000 (the "Initial Rollover Reserve
Deposit") in the form of cash and/or a Letter of Credit (or any combination
thereof) in accordance with Section 7.6 hereof and (b) on each Payment Date
commencing on January 10, 2003, up to the Payment Date immediately preceding the
Maturity Date the sum of $64,749 (as such amount may be adjusted from time to
time as herein provided, including but not limited to additional deposits
required for, if applicable, the Additional Rollover Reserve Monthly Deposit as
set forth in Section 2.7(a) hereof) (the "Rollover Reserve Monthly Deposit"),
such funds shall be deposited with and held by Lender for tenant improvement and
leasing commission obligations incurred following the date hereof. From and
after the time that any Individual Property is released hereunder, the then
amount of the Rollover Reserve Monthly Deposit shall be reduced by the amount
set forth in the Rollover Reserve column on Schedule I. In addition, Borrower
shall pay to Lender for deposit with Lender all funds received by Borrower in
connection with any cancellation, termination or surrender of any Lease,
including, but not limited to, any surrender or cancellation fees, buy-out fees,
or reimbursements for tenant improvements and leasing commissions (provided that
the funds received by Lender shall be held for tenant improvement and leasing
commission obligations for the space in which such funds were received). In the
event that Borrower shows Lender evidence that the space for which such fees or
reimbursements (set forth in the preceding sentence) were received by Borrower
is rented (i) without payment by Borrower of any tenant improvement allowance or
leasing commission in connection with such space or (ii) by Borrower for less
costs for tenant improvement and leasing obligations than the amount of the fees
or reimbursements received by Lender, Lender shall (x) remit all funds to
Borrower in the event of (i) above or (y) such excess funds to Borrower in the
event of (ii) above. All such amounts so deposited shall hereinafter be referred
to as the "Rollover Reserve Fund" and the account to which such amounts are held
shall hereinafter be referred to as the "Rollover Reserve Account".
Section 7.5. Withdrawal of Rollover Reserve Funds. Lender shall make
disbursements from the Rollover Escrow Fund for tenant improvement and leasing
commission obligations incurred by Borrower. All such expenses shall be approved
by Lender in its reasonable discretion, based on commercially reasonable
standards. Lender shall make disbursements as requested by Borrower on a monthly
basis in increments of no less than $5,000.00 upon delivery by Borrower of
Lender's standard form of draw request accompanied by copies of paid invoices
for the amounts requested and, if required by Lender, lien waivers and releases
or other evidence of payment reasonably satisfactory to Lender from all parties
furnishing materials and/or services in connection with the requested payment.
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Lender may require an inspection of the Properties at Borrower's expense prior
to making a monthly disbursement in excess of $50,000 in order to verify
completion of improvements for which reimbursement is sought. All earnings or
interest on the Rollover Escrow Fund shall be and become part of such Rollover
Escrow Fund and shall be disbursed as provided in this Section 7.5. Section 7.6.
Aesthetic Repair Funds.
7.6.1 Deposits. Borrower shall perform the repairs at the Properties, as
more particularly set forth on Schedule VI hereto (such repairs hereinafter
referred to as "Aesthetic Repairs"). Except as a result of a force majeure,
Borrower shall complete the Aesthetic Repairs on or before the required deadline
for each repair as set forth on Schedule VI. Upon the occurrence of such an
Event of Default, Lender, at its option, may withdraw all Aesthetic Repair Funds
from the Aesthetic Repair Account and Lender may apply such funds either to
completion of the Aesthetic Repairs at one or more of the Properties 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 Aesthetic
Repair Funds shall be in addition to all other rights and remedies provided to
Lender under this Agreement and the other Loan Documents. On the Closing Date,
Borrower shall deposit with Lender the amount for each Individual Property set
forth on such Schedule VI hereto to perform the Aesthetic Repairs for such
Individual Property. Amounts so deposited with Lender shall be held by Lender in
accordance with Section 7.7 hereof. Amounts so deposited shall hereinafter be
referred to as Borrower's "Aesthetic Repair Fund" and the account in which such
amounts are held shall hereinafter be referred to as Borrower's "Aesthetic
Repair Account".
7.6.2 Release of Aesthetic Repair Funds. Lender shall disburse to Borrower
the Aesthetic Repair Funds from the Aesthetic Repair Account from time to time
upon satisfaction by Borrower of each of the following conditions: (a) Borrower
shall submit a written request for payment to Lender at least thirty (30) days
prior to the date on which Borrower requests such payment be made and specifies
the Aesthetic Repairs to be paid, (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, and (c) Lender shall have received an
Officers' Certificate stating that each such Person has been paid in full or
will be paid in full upon such disbursement, such Officers' Certificate to be
accompanied by evidence of payment reasonably satisfactory to Lender, provided
that a ▇▇▇▇ marked "paid" shall in all events be considered evidence of payment.
Lender shall not be required to make disbursements from the Aesthetic Repair
Account unless such requested disbursement is in an amount greater than $25,000
(or a lesser amount if the total amount in the Aesthetic Repair Account is less
than $25,000, in which case only one disbursement of the amount remaining in the
account shall be made) and such disbursement shall be made only upon
satisfaction of each condition contained in this Section 7.6.2.
Section 7.7. Unfunded Obligations Reserve. On the Closing Date Borrower
shall deposit with Lender an aggregate amount of $2,547,644.09 to be held by
Lender for the future obligations of Borrower under those Leases more
particularly described in Schedule VII hereto. The amount so deposited shall
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hereinafter be referred to as the "Unfunded Obligation Reserve Fund" and the
account in which such amount is held shall hereinafter be referred to as the
"Unfunded Obligations Reserve Account". Upon Borrower's written request, Lender
shall make disbursements from the Unfunded Obligations Reserve up to the amount
set forth on Schedule VII hereto for the respective Lease to reimburse Borrower,
or to pay the tenant, for any amounts due by Borrower to such tenant under such
Lease (the "Unfunded Obligation"), provided that Borrower delivers such written
request with an Officer's Certificate stating that such amounts are due pursuant
to such Lease; it being agreed that Borrower shall have no obligation to deliver
to Lender any additional evidence that such Unfunded Obligation is due. Upon
delivery to Lender of an Officer's Certificate stating that an Unfunded
Obligation has been paid in full, provided no Event of Default shall have
occurred and be continuing, Lender shall, within three (3) Business Days after
receipt of such Officer's Certificate, remit to Borrower any excess funds in
respect of such Unfunded Obligation.
Section 7.8. Reserve Funds, Generally.
7.8.1 Borrower grants to Lender a first-priority perfected security
interest in each of the Reserve Funds and any and all monies now or hereafter
deposited in each Reserve Fund as additional security for payment of the Debt.
Until expended or applied in accordance herewith, the Reserve Funds shall
constitute additional security for the Debt.
7.8.2 Upon the occurrence of an Event of Default, Lender may, in addition
to any and all other rights and remedies available to Lender, apply any sums
then present in any or all of the Reserve Funds to the payment of the Debt in
any order in its sole discretion.
7.8.3 The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.
7.8.4 The Reserve Funds shall be held in an Eligible Account and shall bear
interest at a money market rate selected by Lender. All interest on a Reserve
Fund shall be added to and become a part of such Reserve Fund and shall be
disbursed in the same manner as other monies deposited in such Reserve Fund,
except that interest on the Tax and Insurance Escrow Fund shall not be added to
or become a part thereof and shall be the sole property of and shall be paid to
Lender. Borrower shall be responsible for payment of any federal, state or local
income or other tax applicable to the interest earned by Borrower on the Reserve
Funds.
7.8.5 Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any Reserve
Fund or the monies deposited therein or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto.
7.8.6 Lender shall not be liable for any loss sustained on the investment
of any funds constituting the Reserve Funds.
7.8.7 Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with the Reserve Funds or the performance of the obligations for which the
Reserve Funds were established, except for such losses, damages, costs and
expenses resulting from the gross negligence or willful misconduct of Lender,
its agents, employees and contractors. Borrower shall assign to Lender all
rights and claims Borrower may have against all persons or entities supplying
labor, materials or other services which are to be paid from or secured by the
Reserve Funds; provided, however, that Lender may not pursue any such right or
claim unless an Event of Default has occurred and remains uncured.
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7.8.8 If any Individual Property is released hereunder, any amounts held in
the Required Repair Fund, Aesthetic Repair Fund, Unfunded Obligations Reserve
Fund, Tax and Insurance Escrow Fund or any other Reserve Fund, other than the
Rollover Reserve Fund and Replacement Reserve Fund, with respect to such
Individual Property shall be disbursed to Borrower upon Borrower's request. If
an Individual Property is released hereunder and there is an Unused Amount in
either the Replacement Reserve Fund and Rollover Reserve Fund with respect to
such Individual Property, the Unused Amount with respect to such Individual
Property in such fund(s) shall be disbursed to Borrower upon Borrower's request.
Section 7.9. Delivery of Letters of Credit. (a) In lieu of making all or
any portion of the Rollover Reserve Deposit to the Rollover Reserve Fund,
Borrower may deliver to Lender one (1) or more Letters of Credit in accordance
with the provisions of this Section 7.9. Additionally, Borrower may deliver to
Lender one (1) or more Letters of Credit in accordance with the provisions of
this Section 7.9 in lieu of deposits previously made to the Rollover Reserve
Fund with respect to a Rollover Reserve Deposit. The aggregate amount of any
Letter of Credit and cash on deposit with respect to the Rollover Reserve
Deposit in the Rollover Reserve Fund shall at all times be at least equal to the
aggregate amount which Borrower is required to have on deposit in the Rollover
Reserve Fund with respect to the Rollover Reserve Deposit pursuant to this
Agreement. Lender shall have the right to draw down the Letter of Credit in full
or in part in accordance with the applicable provisions hereof in the same
manner as if Borrower has deposited cash hereunder. Borrower hereby agrees to
pay any transfer fee in connection with a Letter of Credit required by the
issuer of such Letter of Credit within five (5) days after demand by Lender.
(b) Borrower shall give Lender no less than five (5) days notice of
Borrower's election to deliver a Letter of Credit and Borrower shall
pay to Lender all of Lender's reasonable out-of-pocket costs and
expenses in connection therewith. Borrower shall not be entitled to
draw from any such Letter of Credit. Upon thirty (30) days notice to
Lender, Borrower may from time to time replace all or any portion of a
Letter of Credit with a cash deposit to the Rollover Reserve Fund.
Prior to the return of a Letter of Credit, Borrower shall deposit cash
in an amount equal in the aggregate to the amount that would have been
required to have been deposited in the Rollover Reserve Fund and not
been disbursed in accordance with this Agreement if such Letter of
Credit had not been delivered (provided that Borrower shall not be
required to deposit the amount of interest that would have accrued in
the Rollover Reserve Fund had a cash deposit been made in lieu of a
Letter of Credit).
(c) Each Letter of Credit delivered under this Agreement shall be
additional security for the payment of the Debt. Upon the occurrence
and during the continuance of an Event of Default, Lender shall have
the right, at its option, to draw on any Letter of Credit and to apply
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all or any part thereof to the payment of the items for which such
Letter of Credit was established or to apply each such Letter of
Credit to payment of the Debt in such order, proportion or priority as
Lender may determine. On the Maturity Date, any such Letter of Credit
may be applied to reduce the Debt.
(d) In addition to any other right Lender may have to draw upon a Letter
of Credit pursuant to the terms and conditions of this Agreement,
Lender shall have the additional rights to draw in full any Letter of
Credit: (a) with respect to any evergreen Letter of Credit, if Lender
has received a notice from the issuing bank that the Letter of Credit
will not be renewed and a substitute Letter of Credit is not provided
at least thirty (30) days prior to the date on which the outstanding
Letter of Credit is scheduled to expire; (b) with respect to any
Letter of Credit with a stated expiration date, if Lender has not
received a notice from the issuing bank that it has renewed the Letter
of Credit at least thirty (30) days prior to the date on which such
Letter of Credit is scheduled to expire and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on
which the outstanding Letter of Credit is scheduled to expire; (c)
upon receipt of notice from the issuing bank that the Letter of Credit
will be terminated (except if the termination of such Letter of Credit
is permitted pursuant to the terms and conditions of this Agreement or
a substitute Letter of Credit is provided); or (d) if Lender has
received notice that the bank issuing the Letter of Credit shall cease
to be an Approved Bank and Borrower shall not have replaced such bank
with an Approved Bank within ten (10) Business Days after notice
thereof. In the event that Lender draws down on any Letter of Credit
in accordance with the terms of Section 7.9(d), the proceeds of such
draw down shall be held by Lender as if Borrower has deposited cash
hereunder. Notwithstanding anything to the contrary contained in the
above, Lender is not obligated to draw any Letter of Credit upon the
happening of an event specified in (a), (b), (c) or (d) above and
shall not be liable for any losses sustained by Borrower due to the
insolvency of the bank issuing the Letter of Credit if Lender has not
drawn the Letter of Credit.
VIII. DEFAULTS
SECTION 8.1. Event of Default. (a) Each of the following events shall
constitute an event of default hereunder (an "Event of Default"):
(i) if any portion of the Debt is not paid when due;
(ii) if any of the Taxes or Other Charges are not paid by Borrower
when the same are due and payable, if Borrower is obligated
pursuant to the terms herein to make such payments directly;
(iii) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender upon
request, if Borrower is obligated pursuant to the terms hereof to
pay the Insurance Premiums directly to the insurance company;
(iv) if Borrower transfers or encumbers any portion of the Properties
without Lender's prior written consent in violation of the
provisions of this Agreement and Article 6 of any Mortgage;
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(v) if any representation or warranty made by Borrower herein or in
any other Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished to
Lender shall have been false or misleading in any material
respect as of the date the representation or warranty was made;
(vi) if Borrower, Principal or any guarantor under any guaranty issued
in connection with the Loan shall make an assignment for the
benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower, Principal or any guarantor under any guarantee issued
in connection with the Loan or if Borrower, Principal or such
guarantor shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant
to federal bankruptcy law, or any similar federal or state law,
shall be filed by or against, consented to, or acquiesced in by,
Borrower, Principal or such guarantor, or if any proceeding for
the dissolution or liquidation of Borrower, Principal or such
guarantor shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary
and not consented to by Borrower, Principal or such guarantor,
upon the same not being discharged, stayed or dismissed within
ninety 90 days;
(viii) if Borrower attempts to assign its rights under this Agreement
or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if Borrower breaches any of its respective negative covenants
contained in Section 5.2 or any covenant contained in Section
4.1.30 or Section 5.1.11 hereof;
(x) with respect to any term, covenant or provision set forth herein
which specifically contains a notice requirement or grace period,
if Borrower shall be in default under such term, covenant or
condition after the giving of such notice or the expiration of
such grace period;
(xi) if any of the assumptions contained in the Insolvency Opinion
delivered to Lender in connection with the Loan, or in the
Additional Insolvency Opinion delivered subsequent to the closing
of the Loan, is or shall become untrue in any material respect;
(xii) if a material default has occurred and continues beyond any
applicable notice and/or cure period under the Management
Agreement (or any Replacement Management Agreement) which default
permits the Manager thereunder to terminate or cancel the
Management Agreement (or any Replacement Management Agreement);
(xiii) 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 (xii) above, for ten (10) days
after notice to Borrower from Lender, in the case of any Default
which can only 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 such time
as is reasonably necessary for Borrower in the exercise of due
diligence to cure such Default, such additional period not to
exceed one hundred twenty (120) days; or
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(xiv) if there shall be default under any of the other Loan Documents
beyond any applicable notice and/or cure periods contained in
such documents, whether as to Borrower or any Individual
Property, which has the effect of permitting Lender 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.
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clause (vi), (vii) or (viii) above) and at any
time thereafter, 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 reasonably advisable to protect and enforce
its rights against Borrower and in and to all or any Individual
Property, including, without limitation, 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 any or all of the Properties, including, without
limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in clause (vi), (vii) or (viii)
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.
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 all or any Individual Property. Any such actions taken
by Lender shall be cumulative and concurrent and may be pursued independently,
singularly, 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
Properties and each Mortgage has been foreclosed, sold and/or otherwise realized
upon in satisfaction of the Debt or the Debt has been paid in full.
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(b) With respect to Borrower and the Properties, nothing contained herein
or in any other Loan Document shall be construed as requiring Lender
to resort to any Individual Property for the satisfaction of any of
the Debt in preference or priority to any other Individual Property,
and Lender may seek satisfaction out of all of the Properties or any
part thereof, in its absolute discretion in respect of the Debt. In
addition, 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 beyond any applicable grace period
in the payment of one or more scheduled payments of principal and
interest, Lender may foreclose the Mortgage to recover such delinquent
payments, or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may
foreclose the Mortgage to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by the
Mortgage as Lender may elect. Notwithstanding one or more partial
foreclosures, the Properties 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 (the "Severed Loan Documents") in such
denominations as Lender shall determine in its sole discretion for
purposes of evidencing and enforcing its rights and remedies provided
hereunder. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and
such other documents as Lender shall request in order to effect the
severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. 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; provided, however, Lender shall not make or execute
any such documents under such power until three (3) days after notice
has been given to Borrower by Lender of Lender's intent to exercise
its rights under such power. Except as may be required in connection
with a securitization pursuant to Section 9.1 hereof, (i) Borrower
shall not be obligated to pay any costs or expenses incurred in
connection with the preparation, execution, recording or filing of the
Severed Loan Documents, and (ii) the Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in
the Loan Documents and any such representations and warranties
contained in the Severed Loan Documents will be given by Borrower only
as of the Closing Date.
(d) Remedies Cumulative; Waivers. 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 singularly, 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.
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IX. SPECIAL PROVISIONS
SECTION 9.1. Sale of Notes and Securitization. Borrower acknowledges and
agrees that the Lender may sell all or any portion of the Loan and the Loan
Documents, or issue one or more participations therein, or consummate one or
more private or public securitizations of rated single- or multi-class
securities (the "Securities") secured by or evidencing ownership interests in
all or any portion of the Loan and the Loan Documents or a pool of assets that
include the Loan and the Loan Documents (such sales, participations and/or
securitizations, collectively, a "Securitization"). At the request of Lender,
and to the extent not already required to be provided by Borrower under this
Agreement, Borrower shall use reasonable efforts to provide information not in
the possession of Lender or which may be reasonably required by Lender in order
to satisfy the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in
connection with any such Securitization including, without limitation, to:
(a) (i) provide reasonable additional financial and other information with
respect to the Property, Borrower, the Principal and the Manager, and
(ii) provide budgets relating to the Property (the "Provided
Information"), together with appropriate verification and/or consents
of the Provided Information through letters of auditors or opinions of
counsel of independent attorneys reasonably acceptable to Lender and
the Rating Agencies;
(b) assist in preparing descriptive materials for presentations to any or
all of the Rating Agencies, and work with, and if requested,
supervise, third-party service providers engaged by Borrower, the
Principal and their respective affiliates to obtain, collect, and
deliver information reasonably requested or required by Lender or the
Rating Agencies;
(c) deliver (i) revised opinions of counsel as to non-consolidation, due
execution and enforceability with respect to the Property, Borrower,
the Principal and their respective affiliates and the Loan Documents,
and (ii) revised organizational documents for Borrower, which counsel
opinions and organizational documents shall be reasonably satisfactory
to Lender, Borrower and the Rating Agencies;
(d) if required by any Rating Agency, use commercially reasonable efforts
to deliver such additional tenant estoppel letters, subordination
agreements or other agreements from parties to agreements that affect
the Property, which estoppel letters, subordination agreements or
other agreements shall be reasonably satisfactory to Lender and the
Rating Agencies;
(e) make the representations and warranties made in the Loan Documents as
of the closing date of the Securitization with respect to the
Property, Borrower, the Principal and the Loan Documents as may be
reasonably requested by Lender or the Rating Agencies and consistent
with the facts covered by such representations and warranties as they
exist on the date thereof;
80
(f) execute such amendments to the Loan Documents as may be reasonably
requested by Lender or the Rating Agencies to effect the
Securitization and/or deliver one or more new component notes to
replace the original note or modify the original note to reflect
multiple components of the Loan (and such new notes or modified note
shall have the same initial weighted average coupon of the original
note, but such new notes or modified note may change the interest rate
of the Loan), and modify the cash management agreement with respect to
the newly created components such that the pricing and marketability
of the Securities and the size of each class of Securities and the
rating assigned to each such class by the Rating Agencies shall
provide the most favorable rating levels and achieve the optimum
rating levels for the Loan provided, however, that Borrower shall not
be required to modify any document evidencing or securing the Loan
which would (A) modify (i) the interest rate payable under the Note,
(ii) the stated maturity of the Note, (iii) any other material
economic terms of the Loan or (iv) decrease the time period during
which Borrower is permitted to perform its obligations under this
Agreement or any of the other Loan Documents or (B) increase its
obligations or decrease its rights, in each case in any material
respect;
(g) if requested by Lender, review any information regarding the Property,
Borrower, Principal, the Manager and the Loan which is contained in a
private placement memorandum, prospectus, prospectus supplement
(including any amendment or supplement to either thereof), or other
disclosure document to be used by Lender or any affiliate thereof; and
(h) to the extent within the Borrower's or Guarantor's power to do so,
supply to Lender such reasonable documentation, financial statements
and reports in form and substance required in order to comply with any
applicable securities laws.
All reasonable third party costs and expenses incurred by Borrower or
Lender in connection with Borrower's compliance with requests made under this
Section 9.1 (including, without limitation, the fees and expenses of counsel,
service providers and the Rating Agencies) shall be paid by Lender.
Section 9.2. Securitization Indemnification. (a) Borrower understands that
certain of the Provided Information may be included in Disclosure Documents in
connection with the Securitization 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, Borrower
will cooperate with the holder of the Note, in all reasonable respects and at
the holder of the Note's expense, in updating the Disclosure Document by
providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects.
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(b) Borrower, Principal and Guarantor agree to provide in connection with
each of (i) a preliminary and a final private placement memorandum,
(ii) a preliminary and final prospectus or prospectus supplement,
(iii) such other offering materials as may be used for the
securitization of the Loan (such materials described in clause (i),
(ii) or (iii), as applicable, being hereinafter referred to
collectively as the "Offering Materials"), an indemnification
certificate (A) certifying that Borrower, Principal and Guarantor, as
applicable, has carefully examined the portions of, and only the
portions of, the Offering Materials relating to Borrower, Manager, the
Properties, Guarantor and Principal specifically, including, without
limitation, the sections entitled "Description of the Mortgage Loans
and Mortgaged Property," "The Manager" and "The Borrower"
(collectively, the "Borrower Sections"), and such Borrower Sections as
they relate to or include any Provided Information, and as they relate
to the Properties, 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 for purposes
of this Section 9.2, Lender hereunder shall include its officers and
directors), the Affiliate of Lender ("Credit Suisse First Boston")
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 the Affiliate within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Credit Suisse First Boston Group"), and Credit
Suisse First Boston, each of its directors and each Person who
controls Credit Suisse First Boston 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 (collectively, the "Liabilities") to which
Credit Suisse First Boston, the Credit Suisse First Boston Group or
the Underwriter Group may become subject insofar as the Liabilities
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such Borrower Sections or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated in such sections
or necessary in order to make the statements in such Borrower Sections
or in light of the circumstances under which they were made, not
misleading and (C) agreeing to reimburse Lender, the Credit Suisse
First Boston Group and the Underwriter Group for any legal or other
expenses reasonably incurred by Lender and Credit Suisse First Boston
in connection with investigating or defending the Liabilities;
provided, however, that Borrower will be liable in any such case under
clause (B) or (C) above only to the extent that any such loss claim,
damage or liability arises out of or is based upon any such untrue
statement or omission 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 the memorandum or prospectus or in
connection with the underwriting of the debt, including, without
limitation, 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. Moreover, the indemnification provided for in clauses
(B) and (C) above shall be effective whether or not an indemnification
certificate described in (A) above is provided and shall be applicable
based on information previously provided by Borrower or its Affiliates
if Borrower does not provide the indemnification certificate.
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(c) In connection with filings under the Exchange Act, Borrower and
Guarantor agree to indemnify (i) Lender, the Credit Suisse First
Boston Group and the Underwriter Group for Liabilities to which
Lender, the Credit Suisse First Boston Group or the Underwriter Group
may become subject insofar as the Liabilities arise out of or are
based upon any untrue statement or misstatement of any material
factor, the omission or alleged omission to state in the Provided
Information a material fact required to be stated in the Provided
Information in order to make the statements in the Provided
Information, in light of the circumstances under which they were made
not misleading and (ii) reimburse Lender, the Credit Suisse First
Boston Group or the Underwriter Group for any legal or other expenses
reasonably incurred by Lender, the Credit Suisse First Boston Group or
the Underwriter Group in connection with defending or investigating
the Liabilities.
(d) Borrower agrees that no Indemnified Person shall have any liability to
Borrower for or in connection with the Loan unless and to the extent
that it is finally judicially determined that liability for losses,
claims, damages, liabilities or expenses incurred by Borrower resulted
directly from the fraud, illegal acts, gross negligence or willful
misconduct of such Indemnified Person.
(e) Promptly after receipt by an Indemnified Person of notice of any claim
or the commencement of any action, the Indemnified Person shall, if a
claim in respect thereof is to be made against Borrower, notify
Borrower in writing of the claim or the commencement of that action;
provided, however, that the failure to notify Borrower shall not
relieve it from any liability which it may have under the
indemnification provisions of this Section 9.2, except to the extent
that it has been materially prejudiced by such failure and, provided
further that the failure to notify Borrower shall not relieve it from
any liability which it may have to an Indemnified Person otherwise
than under the provisions of this Section 9.2. If any such claim or
action shall be brought against an Indemnified Person, and it shall
notify Borrower thereof, Borrower shall be entitled to participate
therein and, to the extent that it wishes, assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Person. After
notice from Borrower to the Indemnified Person of its or their
election to assume the defense of such claim or action, such entity
shall not be liable to the Indemnified Person for any legal or other
expenses subsequently incurred by the Indemnified Person in connection
with the defense thereof except as provided in the following sentence;
provided, however, if the defendants in any such action include both
Borrower, on the one hand, and one or more Indemnified Persons on the
other hand, and independent counsel to an Indemnified Person shall
have reasonably concluded that there are any legal defenses available
to such Indemnified Person and/or other Indemnified Persons that are
different or in addition to those available to Borrower, the
Indemnified Person or Persons 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 Person or
Persons. The Indemnified Person shall instruct its counsel to maintain
reasonably detailed billing records for fees and disbursements for
which such Indemnified Person is seeking reimbursement hereunder and
shall submit copies of such detailed billing records to substantiate
that such counsel's fees and disbursements are solely related to the
defense of a claim for which Borrower is required hereunder to
indemnify such Indemnified Person. Borrower shall not be liable for
the expenses of more than one (1) such separate counsel.
83
(f) Without the prior written consent of Lender (which consent shall not
be unreasonably withheld or delayed), Borrower will not settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim,
action, suit or proceeding) unless (A) Borrower shall have given
Lender reasonable prior written notice thereof and shall have obtained
an unconditional release of Lender and each other Indemnified Person
hereunder from all liability arising out of such claim, action, suit
or proceedings, or (B) Borrower reaffirms in writing its indemnity and
contribution obligations hereunder regardless of any common, federal,
state or commonwealth statutory law to the contrary. As long as
Borrower has complied with its obligations to defend and indemnify
hereunder, Borrower shall not be liable for any settlement made by
Lender or any other Indemnified Person without the consent of Borrower
(which consent shall not be unreasonably withheld or delayed).
(g) Borrower agrees that if any indemnification or reimbursement sought
pursuant to this Section 9.2 is finally judicially determined to be
unavailable for a reason other than the fraud, illegal acts, gross
negligence or willful misconduct of an Indemnified Person or is
insufficient to hold an Indemnified Person harmless (with respect only
to the losses, claims, damages, liabilities or expenses that are the
subject of this Section 9.2), then Borrower and such Indemnified
Person shall contribute to the losses, claims, damages, liabilities
and expenses for which such indemnification or reimbursement is held
unavailable or is insufficient: (x) in such proportion as is
appropriate to reflect the relative benefits to Borrower on the one
hand, and such Indemnified Person on the other hand, from the
transactions to which such indemnification or reimbursement relates;
or (y) if the allocation provided by clause (x) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (x) but also the
relative faults of Borrower on the one hand, and all Indemnified
Persons on the other hand, as well as any other equitable
considerations. Notwithstanding the provisions of this Section 9.2,
(A) no party found liable for a fraudulent misrepresentation shall be
entitled to contribution from any other party who is not also found
liable for such fraudulent misrepresentation, and (B) Borrower and
Lender agree that in no event shall the amount to be contributed by
the Indemnified Persons collectively pursuant to this paragraph exceed
the amount of the fees and interest (by underwriting discount or
otherwise) actually received by the Credit Suisse First Boston Group
and the Underwriter Group in connection with the closing of the Loan
or the Securitization.
(h) Borrower agrees that the indemnification, contribution and
reimbursement obligations set forth in this Section 9.2 shall apply
whether or not Lender, any other Indemnified Person, the Credit Suisse
First Boston Group or the Underwriter Group is a formal party to any
such lawsuits, claims or other proceedings, and that such obligations
shall extend upon the terms set forth in this Section 9.2 to any
controlling person, director, partner, officer, employee,
representative or agent of Lender, the Credit Suisse First Boston
Group and the Underwriter Group (each, an "Indemnified Person").
Borrower further agrees that their indemnification, contribution and
reimbursement obligations shall be in addition to any liability which
they may otherwise have and shall extend, upon the same terms and
conditions, to each Person, if any, who controls any Indemnified
Persons within the meaning of the Securities Act.
(i) The liabilities and obligations of both Borrower and Lender under this
Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.
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(j) Notwithstanding anything to the contrary contained herein, Borrower
shall have no obligation to act as depositor with respect to the Loan
or an issuer or registrant with respect to the Securities issued in
any Securitization.
Section 9.3. [INTENTIONALLY DELETED]
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, 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 Properties, the
Rents, or any other collateral given to Lender pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Properties, 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 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 as a party defendant in any action or suit for
foreclosure and sale under the 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 the
Assignment of Leases; (f) constitute a prohibition against Lender to seek a
deficiency judgment against Borrower in order to fully realize the security
granted by the Mortgage or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against all of the
Properties; or (g) constitute a waiver of the right of Lender to enforce the
liability and obligation of Borrower, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs reasonably incurred)
arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by Borrower or any
guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower;
(iii) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity
Agreement 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 of any portion of the Properties after an
Event of Default or the causing of physical waste on any portion
of the Properties;
85
(v) the misapplication or conversion by Borrower of (A) any Insurance
Proceeds paid by reason of any loss, damage or destruction to the
Properties, (B) any Awards received in connection with a
condemnation of all or a portion of the Properties, (C) any Rents
following an Event of Default, (D) any Rents paid more than one
month in advance;
(vi) failure by Borrower to pay charges for labor or materials or
other charges that can create Liens on any portion of the
Properties unless due to Lender's failure to disburse funds held
therefor in escrow pursuant to the terms and provisions of this
Agreement;
(vii) any security deposits, advance deposits or any other deposits
collected with respect to the Properties which are not delivered
to Lender upon a foreclosure of the Properties or action in lieu
thereof, except to the extent any such security deposits were
applied in accordance with the terms and conditions of any of the
Leases prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof; and
(viii) Personal Property taken from the Property and not replaced with
Personal Property of the same utility and of the same or greater
value.
Notwithstanding anything to the contrary in this Agreement, the Note or any
of the Loan Documents, (A) Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt 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, and (B) the Debt shall be fully recourse to Borrower (i) in the event
of: (a) Borrower filing a voluntary petition under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law; (b) the filing of an
involuntary petition against Borrower under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or soliciting or causing to be
solicited petitioning creditors for any involuntary petition against Borrower
from any Person; (c) Borrower filing an answer consenting to or otherwise
acquiescing in or joining in any involuntary petition filed against it, by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or soliciting or causing to be solicited petitioning
creditors for any involuntary petition from any Person; (d) Borrower consenting
to or acquiescing in or joining in an application for the appointment of a
custodian, receiver, trustee, or examiner for Borrower or any portion of the
Property; and (e) Borrower making an assignment for the benefit of creditors, or
admitting, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due; (ii) if the first full monthly payment of
interest on the Note is not paid when due; (iii) if Borrower fails to permit
on-site inspections of the Properties, 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 as permitted under the Loan
Agreement, each as required by, and in accordance with, the terms and provisions
of the Loan Agreement or the Mortgage; (iv) if Borrower fails to obtain Lender's
prior written consent to any subordinate financing or other voluntary lien
encumbering the Properties; or (v) if Borrower fails to obtain Lender's prior
written consent to any assignment, transfer, or conveyance of the Properties or
any interest therein as required by the Loan Agreement or the Mortgage.
86
Section 9.5. Matters Concerning Manager. (a) If (i) an Event of Default is
continuing beyond any applicable notice and cure period, (ii) the Debt has been
accelerated pursuant to Section 8.1(b) hereof, (iii) the Manager is in default
under any of its obligations under the Management Agreement beyond any
applicable notice and cure period, or (iv) the Manager shall become bankrupt or
insolvent, 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, it being understood and agreed that the
management fee for such replacement manager shall not exceed the greater of (i)
exceed then prevailing market rates or (ii) four percent (4%).
Section 9.6. Servicer. At the option of Lender, the Loan may be serviced by
a servicer/trustee (the "Servicer") selected by Lender and Lender may delegate
all or any portion of its responsibilities under this Agreement and the other
Loan Documents to the Servicer pursuant to a servicing agreement (the "Servicing
Agreement") between Lender and Servicer. Borrower shall be responsible for any
reasonable set-up fees or any other initial costs relating to or arising under
the Servicing Agreement; provided, however, that Borrower shall not be
responsible for payment of the monthly servicing fee due to the Servicer under
the Servicing Agreement.
Section 9.7. Severance Documentation. Lender shall have the right, at any
time (whether prior to or after any sale, participation or Securitization of all
or any portion of the Loan), to modify the Loan in order to create one or more
senior and subordinate notes (i.e., an A/B or A/B/C structure) and/or one or
more components of the Note or notes, reduce the number of components of the
Note or notes, revise the interest rate for each component, reallocate the
principal balances of the notes and/or the components created pursuant to this
Section 9.7, increase or decrease the monthly debt service payments for each
such component or eliminate any component structure and/or the multiple note
structure of the Loan (including the elimination of the related allocations of
principal and interest payments), provided that (a) the principal balance of all
notes and/or components immediately after the effective date of such
modification equals the principal balance of the Loan immediately prior to such
modification and the weighted average of the interest rates for all notes and/or
components immediately after the effective date of such modification equals the
interest rate of the original Note immediately prior to such modification and
(b) such modification does not otherwise increase the economic obligations of
Borrower under the Loan Documents. At Lender's election, each note evidencing
the Loan may be subject to one or more Securitizations. Lender shall have the
right to modify the Note and/or notes and any components in accordance with this
Section 9.7 and, provided that such modification shall comply with the terms of
this Section 9.7, it shall become immediately effective. If requested by Lender,
Borrower shall promptly execute an amendment to the Loan Documents to evidence
any such modification.
X. MISCELLANEOUS
SECTION 10.1. Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
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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 unless a longer
period is expressly set forth herein or in the other Loan Documents. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the legal representatives, successors and assigns of such
party. All covenants, promises and agreements in this Agreement, by or on behalf
of Borrower, shall inure to the benefit of the legal representatives, successors
and assigns of Lender.
Section 10.2. Lender's Discretion. Whenever pursuant to this Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 10.3. Governing Law.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND
THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM
THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED
HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF
THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT
TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK
SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.
TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE
LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND
THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
88
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CORPORATION SERVICE COMPANY
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID
AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED
OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT
ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE
AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH
A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN
NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 10.4. Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
or of the Note, or of any other Loan Document, 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 10.5. Delay Not a Waiver. Neither any failure nor any delay on the
part of Lender or Borrower 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.
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Section 10.6. Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section):
If to Lender: Column Financial, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Column Financial, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Legal and Compliance Department
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: ▇▇▇▇▇ Post Oak Limited Partnership
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: White & Case LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
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A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or
certified mail, when delivered or the first attempted delivery on
a Business Day; or in the case of expedited prepaid delivery and
telecopy, upon the first attempted delivery on a Business Day; or
in the case of telecopy, upon sender's receipt of a
machine-generated confirmation of successful transmission after
advice by telephone to recipient that a telecopy notice is
forthcoming.
Section 10.7. 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, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER OR
BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
Section 10.8. Headings. The Article and/or Section headings and the Table
of Contents in this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.
Section 10.9. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.10. Preferences. Lender shall have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower to any
portion of the obligations of Borrower hereunder. To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 10.11. Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.
91
Section 10.12. Remedies of Borrower. In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
Section 10.13. Expenses; Indemnity. (a) Except as otherwise specifically
provided herein, Borrower covenants and agrees to pay or, if Borrower fails to
pay, to reimburse, Lender upon receipt of written notice from Lender 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 without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Properties); (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, without limitation, 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
required in the Loan Documents (unless the applicable provision in such Loan
Documents provides Borrower shall have no such obligation); (v) securing
Borrower's compliance with any requests made pursuant to the provisions of this
Agreement; (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 Properties, 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 Properties 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 cost and expenses due and payable to Lender may be
paid from any amounts in the Lockbox Account.
92
(b) Borrower shall indemnify, defend 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, without
limitation, 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, or (ii) the use or intended use of the
proceeds of the Loan (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, defend and
hold harmless set forth in the preceding sentence may be unenforceable
because it violates any law or public policy, Borrower shall pay the
maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.
Section 10.14. Schedules Incorporated. The Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 10.15. 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 10.16. No Joint Venture or Partnership; No Third Party
Beneficiaries. (a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Properties other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than
Lender and Borrower any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein
or therein. All conditions to the obligations of Lender to make the
Loan hereunder are imposed solely and exclusively for the benefit of
Lender and no other Person shall have standing to require satisfaction
of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall
under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in
part by Lender if, in Lender's sole discretion, Lender deems it
advisable or desirable to do so.
93
Section 10.17. 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, Credit Suisse First Boston, or any of their Affiliates
shall be subject to the prior written approval of Lender.
Section 10.18. Cross-Default; Cross-Collateralization; Waiver of
Marshalling of Assets. (a) Borrower acknowledges that Lender has made the Loan
to Borrower upon the security of its collective interest in the Properties and
in reliance upon the aggregate of the Properties taken together being of greater
value as collateral security than the sum of each Individual Property taken
separately.
(b) To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the
assets of Borrower, Borrower's partners and others with interests in
Borrower, and of the Properties, or to a sale in inverse order of
alienation in the event of foreclosure of the Mortgage, and agrees not
to assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption,
the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the
Loan Documents to a sale of the Properties for the collection of the
Debt without any prior or different resort for collection or of the
right of Lender to the payment of the Debt out of the net proceeds of
the Properties in preference to every other claimant whatsoever. In
addition, Borrower, for itself and its successors and assigns, waives
in the event of foreclosure of the Mortgage, any equitable right
otherwise available to Borrower which would require the separate sale
of the Properties or require Lender to exhaust its remedies against
any Individual Property or any combination of the Properties before
proceeding against any other Individual Property or combination of
Properties; and further in the event of such foreclosure Borrower does
hereby expressly consents to and authorizes, at the option of Lender,
the foreclosure and sale either separately or together of any
combination of the Properties.
Section 10.19. 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.
Section 10.20. Conflict; Construction of Documents; Reliance. In the event
of any conflict between the provisions of this Loan Agreement and any of the
other Loan Documents, the provisions of this Loan Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
94
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
Section 10.21. 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. Borrower hereby agrees to indemnify, defend and hold Lender
harmless from and against any and all claims, liabilities, costs and expenses of
any kind (including Lender's attorneys' fees and expenses) in any way relating
to or arising from a claim by any Person that such Person acted on behalf of
Borrower or Lender in connection with the transactions contemplated herein. The
provisions of this Section 10.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt. Lender 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.
Section 10.22. 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.
95
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
▇▇▇▇▇ POST OAK LIMITED PARTNERSHIP,
a Delaware corporation
By: ▇▇▇▇▇ POST OAK, INC., a Delaware corporation
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
LENDER:
COLUMN FINANCIAL, INC.
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
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SCHEDULE I
(Property - Information)
SCH. 1 - 1
SCHEDULE II
(Rent Roll)
SCH. 2 - 1
SCHEDULE III
(Required Repairs Deadlines For Completion)
SCH. 3 - 1
SCHEDULE IV
(Organization Chart)
SCH. 4 - 1
SCHEDULE V
(Intentionally Deleted)
SCH. 5 - 1
SCHEDULE VI
(Aesthetic Repairs)
2
SCHEDULE VII
(Unfunded Obligations)
3
SCHEDULE 4.1.4
(Litigation)
SCH. 5 - 1
SCHEDULE 4.1.5
(Agreements)
SCH. 5 - 1
SCHEDULE 4.1.24
(Physical Condition)
SCH. 5 - 1
SCHEDULE 4.1.26
(Leases)
SCH. 5 - 1
EXHIBIT A
(Approved Management Agreement)
