Exhibit 10.4
REVOLVING CREDIT AGREEMENT
DATED AS OF APRIL 29, 1998
among
AMERICAN REAL ESTATE INVESTMENT, L.P.,
AMERICAN REAL ESTATE INVESTMENT CORPORATION
and
BANKBOSTON, N.A.,
DLJ CAPITAL FUNDING, INC.
and
OTHER LENDERS THAT MAY BECOME
PARTIES TO THIS AGREEMENT
and
BANKBOSTON, N.A.,
AS AGENT
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is made as of the
29th day of April, 1998, by and among AMERICAN REAL ESTATE INVESTMENT, L.P. , a
Delaware limited partnership ("Borrower"), AMERICAN REAL ESTATE INVESTMENT
CORPORATION, a Maryland corporation ("REA"), each having its principal place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
BANKBOSTON, N.A. ("BankBoston"), DLJ CAPITAL FUNDING, INC. ("DLJ") and the other
lending institutions that may become parties hereto pursuant to Section 18
(together with BankBoston and DLJ, the "Lenders"), and BANKBOSTON, N.A., as
Agent for the Lenders (the "Agent").
R E C I T A L S
WHEREAS, subject to and upon the terms and conditions set forth herein,
the Lenders are willing to make available to the Borrower the credit facilities
provided for herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
Section 1 DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1 Definitions. The following terms shall have the meanings
set forth in this Section l or elsewhere in the provisions of this Agreement
referred to below:
Affiliate. As applied to any Person, (i) any other Person directly or
indirectly Controlling, Controlled by, or under common Control with such Person;
(ii) any officer, director, member, partner or shareholder of such Person; or
(iii) if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual, any trust
whose principle beneficiary is such individual or one or more members of the
immediate family of such individual and any Person who Controls, is Controlled
by or is under common Control with any such trust.
Agent. BankBoston, N.A., acting as administrative agent for the
Lenders, and its successors and assigns.
Agent's Head Office. The Agent's head office located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as the Agent may
designate from time to time by notice to the Borrower and the Lenders.
Agreement. This Revolving Credit Agreement, including the Schedules and
Exhibits hereto.
Appraisal. An MAI appraisal of the value of a parcel of Real Estate,
determined on a fair value basis, performed by an independent appraiser selected
by the Agent who is not an employee of the Borrower, REA, the Guarantors, the
Agent or a Lender or any Affiliate of any thereof, the form and substance of
such appraisal and the identity of the appraiser to be in
accordance with regulatory laws and policies (both regulatory and internal)
applicable to the Lenders and otherwise reasonably acceptable to the Agent.
Appraised Value. The fair value of a Mortgaged Property determined by
the most recent Appraisal or update obtained pursuant to Section 5.2, subject,
however, to such changes or adjustments to the value determined thereby as
provided in Section 5.2(d).
Assignment of Leases and Rents. Each of the assignments of leases and
rents from the Borrower, REA or a Guarantor to the Agent, pursuant to which
there shall be assigned to the Agent for the benefit of the Lenders a security
interest in the interest of the Borrower, REA or such Guarantor as lessor with
respect to all Leases of all or any part of each Mortgaged Property, each such
assignment to be substantially in the form of Exhibit A annexed hereto.
Balance Sheet Date. December 31, 1997.
BankBoston. As defined in the preamble.
Base Rate. The greater of (a) the fluctuating annual rate of interest
announced from time to time by the Agent at the Agent's Head Office as its "base
rate" or (b) one-half of one percent (0.5%) above the Federal Funds Effective
Rate (rounded upwards, if necessary, to the next one-eighth of one percent). Any
change in the rate of interest payable hereunder resulting from a change in the
Base Rate shall become effective as of the opening of business on the day on
which such change in the Base Rate becomes effective.
Base Rate Loans. Those Loans bearing interest calculated by reference
to the Base Rate.
Borrower. As defined in the preamble hereto.
Borrowing Base. At any time the Borrowing Base shall be the aggregate
for all Mortgaged Properties of the lesser of the following amounts as most
recently determined or calculated by the Agent for each Mortgaged Property: (a)
sixty-five percent (65%) of the Appraised Value of such Mortgaged Property, and
(b) sixty-five percent (65%) of the purchase price and ordinarily related
reasonable purchase transaction costs of such Mortgaged Property paid or to be
paid at or prior to the inclusion of such Mortgaged Property in the Collateral
by the Borrower, REA or a Guarantor, without deduction for depreciation, or if
developed by Borrower, REA or a Guarantor sixty-five percent (65%) of the
purchase price of the undeveloped land plus the completed construction costs
paid or to be paid at or prior to the inclusion of such Mortgaged Property in
the Collateral by the Borrower, REA or a Guarantor, determined in accordance
with GAAP, without deduction for depreciation, but at no time shall the
Borrowing Base for the Mortgaged Properties exceed the Debt Service Coverage
Amount for the Mortgaged Properties.
Building. With respect to each Mortgaged Property or parcel of Real
Estate, all of the buildings, structures and improvements now or hereafter
located thereon.
Business Day. Any day on which banking institutions located in the same
city and State as the Agent's Head Office are located are open for the
transaction of banking business and, in the case of Eurodollar Rate Loans, which
also is a Eurodollar Business Day.
2
Capital Event Proceeds. (i) Any proceeds resulting from the sale,
exchange, transfer, financing or refinancing of all or any portion of any
Mortgaged Property and (ii) any other extraordinary, non-recurring income
generated by any Mortgaged Property (other than rental loss or business
interruption proceeds with respect to any Mortgaged Property), in each case net
of reasonable transaction costs and/or reasonable amounts actually expended to
collect the same.
Capital Improvement Project. With respect to any Real Estate now or
hereafter owned or leased by the Borrower, REA, a Guarantor or any of their
respective Subsidiaries, capital improvements consisting of rehabilitation,
refurbishment, replacement and improvements to the existing Buildings on such
Real Estate which may be properly capitalized under GAAP.
Capital Improvement Reserve. With respect to any Real Estate now or
hereafter owned or leased by the Borrower, REA, any Guarantor or any of their
respective Subsidiaries, a reserve for Capital Improvement Projects, leasing
commissions and tenant improvements in an amount equal to (i) fifteen cents
($.15) multiplied by the Net Rentable Area contained therein for industrial
properties, (ii) seventy-five cents ($.75) multiplied by the Net Rentable Area
contained therein for office properties, (iii) twenty-five cents ($.25)
multiplied by the Net Rentable Area contained therein for any strip mall retail
shopping center that the Borrower may be permitted to acquire under Section 8.3
hereof and (iv) the amount reasonably determined by the Agent in its good faith
business judgment with respect to any other type of Real Estate that the
Majority Lenders may elect in their sole discretion to approve as Eligible Real
Estate in accordance with this Agreement.
Capitalized Lease. A lease under which the discounted future rental
payment obligations of the lessee or the obligor are required to be capitalized
on the balance sheet of such Person in accordance with GAAP.
CERCLA. See Section 6.20.
Closing Date. April 29, 1998.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Borrower,
REA and each Guarantor which are or are intended to be subject to the security
interests, security title, liens and mortgages created by the Security
Documents, including, without limitation, the Mortgaged Properties.
Commitment. With respect to each Lender, the amount set forth on
Schedule 1 hereto as the amount of such Lender's commitment to make or maintain
Loans to the Borrower, as the same may be changed from time to time in
accordance with the terms of this Agreement.
Commitment Percentage. With respect to each Lender, the percentage set
forth on Schedule 1 hereto as such Lender's percentage of the Total Commitment,
as the same may be changed from time to time in accordance with the terms of
this Agreement.
Compliance Certificate. See Section 7.4(c).
3
Condemnation Proceeds. All compensation, awards, damages, rights of
action and proceeds awarded to the Borrower, REA or a Guarantor by reason of any
Taking, net of all reasonable amounts actually expended to collect the same.
Consolidated. With reference to any term defined herein, that term as
applied to the accounts of a Person and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
Consolidated Operating Cash Flow. With respect to any Determination
Period of a Person, an amount equal to the Operating Cash Flow of such Person
and its Subsidiaries for such Determination Period determined on a consolidated
basis in accordance with GAAP.
Consolidated Tangible Net Worth. With respect to any Person, the
Tangible Net Worth of such Person and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Total Assets. With respect to any Person, the Total Assets
of such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
Consolidated Total Liabilities. With respect to any Person, the Total
Liabilities of such Person and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
Construction Inspector. EMG, or another firm of professional engineers
or architects selected by the Agent and, so long as no Default or Event of
Default exists hereunder, reasonably acceptable to the Borrower.
Control (including, with correlative meanings, the terms "Controlling",
"Controlled by" and "under common Control with"). As applied to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, ownership interests, by contract or otherwise.
Conversion/Continuation Request. A notice given by the Borrower to the
Agent of its election to convert or continue a Loan in accordance with Section
4.1.
Debt Service. For any Person and any Determination Period, the sum of
all interest (including capitalized interest) and mandatory principal payments
due and payable during such period in respect of any Indebtedness of such Person
excluding any balloon payments due upon maturity of any such Indebtedness.
Debt Service Coverage Amount. For the Mortgaged Properties, an amount
equal to the maximum principal loan amount which, when payable based on a 25
year mortgage style amortization schedule (expressed as a mortgage constant
percentage) and bearing interest at a rate per annum equal to the greater of (a)
the then current annual yield on ten (10) year obligations issued by the United
States Treasury most recently prior to the date of determination plus one and
three quarters percent (1.75%), and (b) the then applicable interest rate
payable on the Loans, could be paid by the monthly principal and interest
payment amount resulting from
4
dividing (x) the quotient obtained by dividing an amount equal to (i) the Net
Operating Income from the Mortgaged Properties for the preceding four fiscal
quarters minus (without duplication of any reserves included in Operating
Expenses for the Mortgaged Properties) the Capital Improvement Reserve for the
Mortgaged Properties by (ii) 1.30 by (y) 12. An example of the calculation of
the Debt Service Coverage Amount is set forth in Schedule 2 attached hereto. The
Debt Service Coverage Amount shall be determined by the Agent and such
determination may involve adjustments made by the Agent in the exercise of its
good faith business judgment to address either negative or positive factors
affecting the occupancy of a Mortgaged Property (such as Lease terminations and
new Leases) and any such determination, so long as the same shall be made by the
Agent in the exercise of its good faith business judgment, shall be conclusive
and binding absent manifest error.
Default. See Section 12.1.
Determination Period. Any period of time for which Debt Service, Gross
Cash Receipts, Interest Expense, Net Income (or Deficit), Net Operating Income,
Operating Cash Flow and/or Operating Expenses are being determined in accordance
with the terms of this Agreement.
Distribution. With respect to any Person, the declaration or payment of
any cash, dividend or distribution on or in respect of any shares of any class
of capital stock or other beneficial interest of such Person; the purchase,
redemption, exchange or other retirement by such Person of any shares of any
class of capital stock or other beneficial interest of such Person, directly or
indirectly through a Subsidiary of such Person or otherwise; the return of
capital by such Person to its shareholders or partners as such; or any other
distribution on or in respect of any shares of any class of capital stock or
other beneficial interest of such Person; provided, however, that the dividend
or distribution of common stock of a Person shall not constitute a Distribution
with respect to such Person.
DLJ. As defined in the preamble.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Lender
designated as such on Schedule 1 hereto; thereafter, such other office of such
Lender, if any, located within the United States that will be making or
maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and
the date on which any Loan which is made prior to the Maturity Date is converted
in accordance with Section 4.1.
Eligible Ground Lease. Any lease (a) which is a ground lease granted by
the fee owner of Real Estate (whether directly or by assignment) to the
Borrower, REA or a Guarantor, (b) which may be encumbered, transferred and/or
assigned without the consent of the lessor, (c) which has a remaining term
(including any renewal terms exercisable at the sole option of the lessee) of at
least 40 years or if less than 40 years, includes a provision acceptable to the
Agent pursuant to which the lessee has the right to obtain title to the fee
interest in the Real Estate from the lessor upon the payment of a nominal
purchase price, (d) under which no default has occurred and is
5
continuing, and (e) which contains terms and conditions satisfactory to the
Agent including, without limitation, mortgagee protection provisions to the
effect that (i) the lessor shall notify any holder of a security interest in
such lease of the occurrence of any default by the lessee under such lease and
shall afford such holder a reasonable period of time to cure such default, (ii)
the lessor shall not terminate the lease because of a default by the lessee
thereunder during any period in which any holder of a security interest in such
lease is in the process of prosecuting remedies to obtain possession of the
leasehold estate in the Real Estate, and (iii) in the event that such lease is
terminated, any holder of a security interest in such lease shall have the
option to enter into a new lease with the lessor for the remainder of the term
thereof and having terms substantially identical to those contained in the
terminated lease.
Eligible Real Estate. Real Estate:
(a) which is owned in fee or leased pursuant to an Eligible
Ground Lease (or other ground lease acceptable to the Majority Lenders
in their sole discretion) by the Borrower, REA or a Guarantor;
(b) which is located within the contiguous ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, excluding those States which prescribe a
"single-action" or similar rule limiting the rights of creditors
secured by real property, which exclusion shall apply, without
limitation, to the States of California and Washington except to the
extent such exclusion is waived in writing by the Majority Lenders with
respect to a specific parcel of Real Estate;
(c) which is improved by an office and/or industrial Building
or other income-producing Real Estate satisfactory to the Majority
Lenders (it being agreed that the property known as Urban Farms located
in Franklin Lakes, New Jersey is other income-producing Real Estate
which is satisfactory to the Majority Lenders under this clause (c));
(d) which is approved by the Majority Lenders in their sole
judgment;
(e) as to which all of the representations set forth in
Section 6 of this Agreement concerning Mortgaged Property are true and
correct;
(f) as to which the Agent has received all Eligible Real
Estate Qualification Documents;
(g) whose Borrowing Base does not exceed twenty percent (20%)
of the aggregate Borrowing Base of such Real Estate and all Mortgaged
Properties; and
(h) which, if added to the Collateral after January 1, 1999,
does not cause the aggregate Borrowing Base of the Mortgaged Properties
which are located in any one Metropolitan Statistical Area to equal or
exceed forty percent (40%) of the aggregate Borrowing Base of all of
the Mortgaged Properties.
6
Eligible Real Estate Qualification Documents. See Schedule 3 attached
hereto.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by either of the Borrower or
any ERISA Affiliate, other than a Guaranteed Pension Plan or Multiemployer Plan.
Environmental Engineer. EMG or another firm of independent professional
engineers or other scientists generally recognized as expert in the detection,
analysis and remediation of Hazardous Substances and related environmental
matters and acceptable to the Agent and, so long as no Default or Event of
Default exists hereunder, reasonably acceptable to the Borrower
Environmental Laws. See Section 6.20(a).
Equity Offering. The issuance and sale after the Closing Date by the
Borrower, REA or any Guarantor of any equity securities of such Person.
ERISA. The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower, REA, the Guarantors or their respective Subsidiaries under Section
414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any Lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D or any successor or similar
regulation), if such liabilities were outstanding. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other interbank eurodollar market as may be selected by the Reference Bank in
its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Lender
designated as such on Schedule 1 hereto; thereafter, such other office of such
Lender, if any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the quotient (rounded upwards to the
nearest 1/16 of one percent) of (a) the rate at which the Reference Bank's
Eurodollar Lending Office is offered Dollar deposits three (3) Eurodollar
Business Days prior to the beginning of such Interest Period in whatever
interbank eurodollar market may be selected by the Reference Bank in its sole
discretion, acting in good
7
faith, for delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the amount of the
Eurodollar Rate Loan to which such Interest Period applies, divided by (b) a
number equal to 1.00 minus the Eurocurrency Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by reference
to a Eurodollar Rate.
Event of Default. See Section 12.1.
Federal Funds Effective Rate. For any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published the average of the quotations for such day on such
transactions received by the Agent from three (3) Federal funds brokers of
recognized standing selected by the Agent.
Funds from Operations. With respect to any Person for any fiscal
period, an amount equal to the Net Income (or Deficit) of such Person for such
period, computed in accordance with GAAP, excluding financing costs and gains
(or losses) from debt restructuring and sales of property, but including
depreciation and amortization and other non-cash items.
GAAP. Principles that are (a) consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time and (b) consistently applied with
past financial statements of the Person adopting the same principles; provided
that a certified public accountant would, insofar as the use of such accounting
principles is pertinent, be in a position to deliver an unqualified opinion
(other than a qualification regarding changes in generally accepted accounting
principles) as to financial statements in which such principles have been
properly applied.
Gross Cash Receipts. Gross Cash Receipts shall mean with respect to a
Mortgaged Property the sum of cash received during any Determination Period by
or for the account of the Borrower, REA or the Guarantor which owns or leases
such Mortgaged Property in payment of the following items:
(a) rentals, including minimum or base rent, percentage rent,
and rent attributable to recovery of tenant improvements costs received
from tenants occupying space in such Mortgaged Property.
(b) all amounts paid by tenants under Leases with respect to
taxes and assessments imposed on such Mortgaged Property or in
reimbursement of Operating Expenses of such Mortgaged Property;
(c) parking revenues received in connection with the operation
of parking facilities at such Mortgaged Property; and
8
(d) receipts from vending machines, recreational facilities
and any and all other operating revenues received from such Mortgaged
Property.
In the event that the Borrower, REA or a Guarantor receives a payment
of Gross Cash Receipts other than on a monthly basis, then for the purpose of
determining the Gross Cash Receipts for any Determination Period, only the
amount of such payment which relates to such Determination Period (as opposed to
a period either before or after such Determination Period) shall be included in
the calculation of Gross Cash Receipts for such Determination Period.
Any payment of Gross Cash Receipts received from a tenant of a
Mortgaged Property which is delinquent shall be applied to the oldest
outstanding delinquencies relating to such tenant.
If the Borrower, REA or a Guarantor shall receive cash by reason of
Insurance Proceeds, proceeds of rental loss or business interruption insurance
(except to the extent that such proceeds replace the rental payments which
otherwise would have been due to the Borrower or a Guarantor from tenants of a
Mortgaged Property), title insurance, the forfeiting by tenants of security or
other deposits (except the forfeiting by tenants of security or other deposits
to pay rent), Condemnation Proceeds, Capital Event Proceeds, or any other items
of income which are extraordinary or of a non-recurring nature, such amounts
shall not be included in Gross Cash Receipts. Gross Cash Receipts for any
Determination Period shall include that portion of any payments made by tenants
prior to or during such Determination Period to cancel their Leases which is
equal to the rent that would have otherwise been payable during such
Determination Period under such Leases, provided that if the space vacated by
any such tenant is subsequently re-let for all or any portion of a Determination
Period, any rent paid by the new tenant during such period shall be deemed
included in Gross Cash Receipts for such Determination Period and a
corresponding portion of any lease cancellation payment attributable to such
period shall not be included in Gross Cash Receipts for such period. Gross Cash
Receipts shall not include any amounts payable by tenants holding over pursuant
to expired or terminated Leases. With respect to tenants which are occupying a
Mortgaged Property pursuant to a month-to-month Lease, Gross Cash Receipts from
such Leases shall not exceed five percent (5%) of the aggregate Gross Cash
Receipts in any Determination Period. In addition, Gross Cash Receipts for any
Determination Period shall be reduced by such amount as may be required by the
Agent as a result of negative factors affecting the occupancy of a Mortgaged
Property during such Determination Period and/or the fiscal quarter immediately
following such period as determined by the Agent in its good faith business
judgment, such as defaults by tenants under Leases, potential set-off against
rent, landlord concessions which become effective following a Determination
Period or anticipated or actual lease terminations or expirations. For example
(but without limiting the generality of the foregoing), in the event that a
Lease is scheduled to terminate in the fiscal quarter immediately following a
Determination Period, the Agent may exclude all Gross Cash Receipts received
pursuant to such Lease for such Determination Period. Any such reduction in
Gross Cash Receipts as a result of terminated or expired Leases, or Leases which
are due to terminate or expire, shall be offset by such amount as may be
approved by the Agent in its good faith business judgment as a result of
executed Leases for the premises covered by the terminated or expired Lease.
9
Gross Cash Receipts shall be determined on the basis of sound cash
basis accounting practices applied on a consistent basis.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower,
REA or a Guarantor or any ERISA Affiliate the benefits of which are guaranteed
on termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan.
Guarantors. Each wholly-owned Subsidiary of the Borrower owning a
Mortgaged Property which becomes a Guarantor in accordance herewith.
Guaranty. Each Unconditional Guaranty of Payment and Performance which
is required to be executed and delivered to the Agent by a Guarantor pursuant to
Section 5.3 hereof; and pursuant to which such Guarantor guarantees the
Obligations to the extent provided therein, each such guaranty to be
substantially in the form of Exhibit B annexed hereto.
Hazardous Substances. See Section 6.20(b).
Indebtedness. All obligations, contingent and otherwise, that in
accordance with GAAP should be classified upon a Person's balance sheet as
liabilities, or to which reference should be made by footnotes thereto,
including in any event and whether or not so classified: (a) all debt and
similar monetary obligations, whether direct or indirect (including, without
limitation, any obligations evidenced by bonds, debentures, notes or similar
debt instruments and all subordinated debt); (b) all liabilities secured by any
mortgage, pledge, security interest, lien, charge or other encumbrance existing
on property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; (c) all guarantees, endorsements and
other contingent obligations whether direct or indirect in respect of
indebtedness of others, including any obligation to supply funds to or in any
manner to invest directly or indirectly in a Person, to purchase indebtedness,
or to assure the owner of indebtedness against loss through an agreement to
purchase goods, supplies or services for the purpose of enabling the debtor to
make payment of the indebtedness held by such owner or otherwise, and the
obligation to reimburse the issuer in respect of any letter of credit; (d) any
obligation as a lessee or obligor under a Capitalized Lease; and (e) a Person's
pro rata share of any of the above-described obligations of its unconsolidated
Affiliates.
Indemnity Agreements. Each of the Indemnity Agreements Regarding
Hazardous Materials now or hereafter made by the Borrower, REA or a Guarantor in
favor of the Agent and the Lenders, pursuant to which the Borrower, REA and each
Guarantor agree to indemnify the Agent and the Lenders with respect to Hazardous
Substances and Environmental Laws, each such agreement to be substantially in
the form of Exhibit C annexed hereto.
Insurance Proceeds. All insurance proceeds, damages, claims and rights
of action and the right thereto under any insurance policies relating to any
portion of any Collateral, net of all reasonable amounts actually expended to
collect the same.
10
Interest Expense. For any Determination Period, the sum of all interest
(including capitalized interest) due and payable during such Determination
Period by the Borrower, REA, each Guarantor and their respective Subsidiaries on
a consolidated basis during such Determination Period.
Interest Payment Date. (a) As to each Loan, the first (1st) day of each
calendar month during the term of such Loan, and (b) also as to each Eurodollar
Rate Loan, the last day of each Interest Period relating thereto.
Interest Period. With respect to each Eurodollar Rate Loan (a)
initially, the period commencing on the Drawdown Date of such Eurodollar Rate
Loan and ending one, two or three months thereafter, and (b) thereafter, each
period commencing on the day following the last day of the next preceding
Interest Period applicable to such Loan and ending on the last day of one of the
periods set forth above, as selected by the Borrower in a Loan Request or
Conversion/Continuation Request; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate
Loan would otherwise end on a day that is not a Eurodollar Business
Day, such Interest Period shall end on the next succeeding Eurodollar
Business Day, unless such next succeeding Eurodollar Business Day
occurs in the next calendar month, in which case such Interest Period
shall end on the next preceding Eurodollar Business Day, as determined
conclusively by the Reference Bank in accordance with the then current
bank practice in the applicable Eurodollar interbank market; and (B) if
the Borrower shall fail to give notice as provided in Section 4.1, the
Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a Base Rate Loan on the last day of the then
current Interest Period with respect thereto; and
(B) no Interest Period relating to any Eurodollar Rate Loan
shall extend beyond the Maturity Date.
Investments. With respect to any Person, all shares of capital stock,
evidences of Indebtedness and other securities issued by any other Person and
owned by such Person, all loans, advances, or extensions of credit to, or
contributions to the capital of, any other Person, all purchases of the
securities or business or integral part of the business of any other Person and
commitments and options to make such purchases, all interests in real property,
and all other investments; provided, however, that the term "Investment" shall
not include (i) equipment, inventory and other tangible personal property
acquired in the ordinary course of business, or (ii) current trade and customer
accounts receivable for services rendered in the ordinary course of business and
payable in accordance with customary trade terms. In determining the aggregate
amount of Investments outstanding at any particular time: (a) there shall be
included as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid; (b) there
shall be deducted in respect of each Investment any amount received as a return
of capital; (c) there shall not be deducted in respect of any Investment any
amounts received as earnings on such Investment, whether as dividends, interest
11
or otherwise, except that accrued interest included as provided in the foregoing
clause (a) may be deducted when paid; and (d) there shall not be deducted in
respect of any Investment any decrease in the value thereof.
Lease Summaries. Summaries of the material terms of the Leases. Such
Lease Summaries shall be in form and substance reasonably satisfactory to the
Agent.
Leases. Leases, licenses and agreements, whether written or oral,
relating to the use or occupation of space in any Building or of any Real
Estate.
Lenders. BankBoston, DLJ and any other Person which becomes an assignee
of any rights of a Lender pursuant to Section 18 (but not including any
participant as described in Section 18).
Loan Documents. This Agreement, the Notes, the Security Documents and
all other documents, instruments or agreements now or hereafter executed or
delivered by or on behalf of the Borrower, REA or any Guarantor in connection
with the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans to be made by the Lenders hereunder.
Majority Lenders. As of any date, the Lender or Lenders whose aggregate
Commitment Percentage is equal to or greater than 66 2/3%.
Management Agreements. Agreements, whether written or oral, providing
for the management of the Mortgaged Properties or any of them.
Maturity Date. April 29, 2001 or such earlier date on which the Loans
shall become due and payable pursuant to the terms hereof.
Metropolitan Statistical Area. A geographic area designated as a
"Metropolitan Statistical Area" by the United States Office of Management and
Budget and included in published standards that are applied to data promulgated
by the United States Census Bureau.
Minority Interest. As to any Person, an ownership or other equity
investment in any other Person, which investment is not consolidated with the
accounts of such Person in accordance with GAAP.
Minimum Tangible Net Worth. At any time, the sum of (a) the greater of
$100,000,000 and the Consolidated Tangible Net Worth of the Borrower as of the
Closing Date plus (b) eighty percent (80%) of the aggregate net proceeds
received by the Borrower, REA or any other Guarantor after the Closing Date in
connection with any Equity Offering to any other Person.
Mortgaged Property or Mortgaged Properties. The Eligible Real Estate
owned by the Borrower, REA or a Guarantor which is security for the Obligations
pursuant to the Mortgages.
12
Mortgages. The Mortgages, Deeds to Secure Debt and/or Deeds of Trust
from the Borrower, REA or a Guarantor to the Agent for the benefit of the
Lenders (or to trustees named therein acting on behalf of the Agent for the
benefit of the Lenders), pursuant to which the Borrower, REA or a Guarantor has
conveyed or granted a mortgage lien upon or a conveyance in fee simple of a
Mortgaged Property as security for the Obligations, each such mortgage to be
substantially in the form of Exhibit D annexed hereto.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower, REA or any
ERISA Affiliate.
Net Income (or Deficit). With respect to any Person (or any asset of
any Person) for any Determination Period, the Net Income (or Deficit) of such
Person (or attributable to such asset), after deduction of all expenses, taxes
and other proper charges, determined in accordance with GAAP. The Net Income (or
Deficit) of a Person shall include, without duplication, the allocable share of
the Net Income (or Deficit) of any other Person in which a Minority Interest is
owned by such Person based on the ownership of such Person in such other Person.
Net Operating Income. For any Determination Period for a Mortgaged
Property, the sum of Gross Cash Receipts from such Mortgaged Property for such
Determination Period less Operating Expenses of such Mortgaged Property for such
Determination Period.
Net Rentable Area. With respect to any Real Estate, the floor area of
any buildings, structures or improvements available for leasing to tenants
determined in accordance with the Rent Roll for such Real Estate, the manner of
such determination to be reasonably consistent for all Real Estate of the same
type unless otherwise approved by the Agent.
Nomura Indebtedness. The obligations of FLIP/BRE, INC., a New Jersey
corporation ("FLIP"), OIP/BRE, L.L.C., a New Jersey limited liability company
("OIP"), MBP/BRE, L.L.C., a New Jersey limited liability company ("MBP"), and
NJA/BRE, L.L.C., a New Jersey limited liability company ("NJA" and, together
with FLIP, OIP and MBP, the "Nomura Borrowers") to Nomura Asset Capital
Corporation ("Nomura") pursuant to the Loan Agreement dated as of September 22,
1997 among Nomura and the Nomura Borrowers.
Non-recourse Indebtedness. Indebtedness of a Person which is secured by
Real Estate (other than the Mortgaged Properties) and related personal property
or interests therein and is not a general obligation of such Person, the holder
of such Indebtedness having recourse solely to the Real Estate and related
personal property or interests therein securing such Indebtedness, the Building
and Leases thereon and the rents and profits thereof. The loan documents
relating to such Non-recourse Indebtedness may contain customary exceptions to
the limitation on recourse to such Person and its partners or other principals
and still be considered as Non-recourse Indebtedness for the purposes hereof.
Notes. See Section 2.4.
Notice. See Section 19.
13
Obligations. All indebtedness, obligations and liabilities of the
Borrower, REA or any Guarantor to any of the Lenders or the Agent, individually
or collectively, under this Agreement or any of the other Loan Documents or in
respect of any of the Loans or the Notes, or other instruments at any time
evidencing any of the foregoing, whether existing on the date of this Agreement
or arising or incurred hereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
Operating Cash Flow. With respect to any Person (or any asset of any
Person), for any Determination Period, an amount equal to the sum of (a) the Net
Income of such Person (or attributable to such asset) for such Determination
Period plus (b) depreciation and amortization, Interest Expense and any
extraordinary or non-recurring losses deducted in calculating such Net Income
minus (c) any extraordinary or non-recurring gains included in calculating such
Net Income minus (d) any Capital Improvement Reserve attributable to such asset
for such Determination Period, all as determined in accordance with GAAP. In the
event that a Person has a Minority Interest in any other Person, then the
Operating Cash Flow of such Person shall include, without duplication, the
allocable share of the Operating Cash Flow of such other Person, based on the
ownership interest of such Person in such other Person.
Operating Expenses. Operating Expenses shall mean with respect to a
Mortgaged Property during any Determination Period, the sum of the following:
(a) all taxes and assessments imposed upon such Mortgaged
Property actually paid by or on behalf of the Borrower, REA or a
Guarantor during such Determination Period;
(b) the amounts paid by or on behalf of the Borrower, REA or a
Guarantor during such Determination Period on account of insurance
premiums for insurance carried in connection with such Mortgaged
Property or the ownership and operation thereof, and deductible amounts
expended during such Determination Period by the Borrower, REA or a
Guarantor and not reimbursed under any such insurance;
(c) expenses paid by or on behalf of the Borrower, REA or a
Guarantor during such Determination Period for the operation, cleaning,
marketing, leasing, maintenance, repair and replacement of such
Mortgaged Property properly chargeable against income according to
GAAP; and
(d) an amount approved by the Agent and actually funded as a
reasonable reserve for expenses relating to such Mortgaged Property by
the Borrower, REA or a Guarantor, which are not payable on a regular
basis during such Determination Period (including, but not limited to,
taxes and insurance), but excluding any amounts paid from funded
reserves.
For the purposes of this Agreement, Operating Expenses shall not
include any of the following:
14
(i) foreign, U.S., state, and local income taxes, franchise
taxes or other taxes based on income imposed on the Borrower, REA or
any Guarantor generally and not as owner of a Mortgaged Property;
(ii) depreciation and any other non-cash expenditures of the
Borrower, REA or any Guarantor for income tax purposes;
(iii) the cost of any improvements to a Mortgaged Property of
a capital nature (as determined in accordance with GAAP);
(iv) any expense paid in connection with the sale of all or
any part of a Mortgaged Property or any interest therein;
(v) any costs, expenses, fees, commissions or other
compensation paid by or on behalf of the Borrower, REA or any Guarantor
in connection with the renovation, improvement or development of a
Mortgaged Property except as provided in clause (c) of this definition;
and
(vi) any payment of principal or interest under the Notes or
other fees or charges payable under this Agreement or the other Loan
Documents.
Operating Expenses shall be determined on the basis of sound cash basis
accounting practices applied on a consistent basis, modified as described above.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 8.2.
Person. Any individual, corporation, limited liability company,
partnership, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision thereof.
Personal Property. All fixtures, machinery, equipment, furniture,
furnishings, inventory, building supplies, appliances and other articles of
personal property, including, but not limited to, all vehicles, books, gas and
electric fixtures, radiators, heaters, furnaces, engines and machinery, boilers,
ranges, ovens, elevators and motors, bathtubs, sinks, commodes, basins, pipes,
faucets and other plumbing, heating and air conditioning equipment, mirrors,
refrigerating plant, refrigerators, iceboxes, dishwashers, carpeting, floor
coverings, furniture, light fixtures, signs, lawn equipment, water heaters, and
cooking apparatus and appurtenances, and all other fixtures and equipment now or
hereafter owned by the Borrower, REA or any Guarantor and located in, on or
about, and used or intended to be used primarily with or in connection with the
use, operation, or enjoyment of, any Mortgaged Property, whether installed in
such a way as to become a part thereof or not, including all extensions,
additions, improvements, betterments, renewals and replace-
15
ments of any of the foregoing and all the right, title and interest of the
Borrower, REA or any Guarantor in and to any of the foregoing now owned or
hereafter acquired by the Borrower, REA or any Guarantor.
Potential Collateral. Any property of the Borrower, REA or a Guarantor
which is not at the time included in the Collateral and which consists of (i)
Eligible Real Estate, or (ii) Real Estate which is capable of becoming Eligible
Real Estate through the approval of the Majority Lenders and the completion and
delivery of Eligible Real Estate Qualification Documents.
Project Approvals. See Section 6.24(f).
REA. As defined in the preamble hereto.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower, REA, any Guarantor or any of their respective
Subsidiaries, including, without limitation, the Mortgaged Properties.
Record. The grid attached to any Note, or the continuation of such
grid, or any other similar record, including computer records, maintained by any
Lender with respect to any Loan referred to in such Note.
Reference Bank. The Agent.
Register. See Section 18.2.
REIT Status. With respect to REA, its status as a real estate
investment trust as defined in Section 856(a) of the Code.
Release. See Section 6.20(c)(iii).
Rent Roll. A report prepared by the Borrower, REA or a Guarantor
showing for each Mortgaged Property owned or leased by it, its occupancy, lease
expiration dates, lease rent and other information in substantially the form
presented to the Lenders prior to the date hereof or in such other form as may
have been approved by the Agent.
Requirements. See Section 6.24(e).
Security Documents. The Mortgages, the Assignments of Leases and Rents,
the Indemnity Agreements, UCC-1 financing statements and any further collateral
assignments to the Agent for the benefit of the Lenders.
Short-term Investments. Investments described in subsections (a)
through (g), inclusive, of Section 8.3. For all purposes of this Agreement and
the other Loan Documents, the value of Short-term Investments at any time shall
be the current market value thereof determined in a manner reasonably
satisfactory to the Agent.
State. A state of the United States of America.
16
Subordination, Attornment and Non-Disturbance Agreement. An agreement
among the Agent, the Borrower, REA or a Guarantor and a tenant under a Lease
pursuant to which such tenant agrees to subordinate its rights under the Lease
to the lien or security title of the applicable Mortgage and agrees to recognize
the Agent or its successor in interest as landlord under the Lease in the event
of a foreclosure under such Mortgage, and the Agent agrees to not disturb the
possession of such tenant, such agreement to be substantially in the form of
Exhibit E annexed hereto.
Subsidiary. Any corporation, association, partnership, trust, or other
business entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries greater than fifty percent (50%)
(by number of votes or controlling interests) of the outstanding voting
interests or other economic interest, or any other entity the accounts of which
are consolidated with the parent.
Survey. An instrument survey of each parcel of Mortgaged Property
prepared by a registered land surveyor which shall show the location of all
buildings, structures, easements and utility lines on such property, shall be
sufficient to remove the standard survey exception from the Title Policy, shall
show that all buildings and structures are within the lot lines of the Mortgaged
Property and shall not show any encroachments by others (or to the extent any
encroachments are shown, such encroachments shall be acceptable to the Agent in
its sole discretion), shall show rights of way, adjoining sites, establish
building lines and street lines, the distance to and names of the nearest
intersecting streets and such other details as the Agent may reasonably require;
and shall show whether or not the Mortgaged Property is located in a flood
hazard district as established by the Federal Emergency Management Agency or any
successor agency or is located in any flood plain, flood hazard or wetland
protection district established under federal, state or local law and shall
otherwise be in form and substance reasonably satisfactory to the Agent.
Surveyor Certification. With respect to each parcel of Mortgaged
Property, a certificate executed by the surveyor who prepared the Survey with
respect thereto, dated as of a recent date and containing such information
relating to such parcel as the Agent or the Title Insurance Company may
reasonably require, such certificate to be reasonably satisfactory to the Agent
in form and substance.
Taking. The taking or appropriation (including by deed in lieu of
condemnation) of any Mortgaged Property, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain, by
reason of any public improvement or condemnation proceeding, or in any other
manner or any damage or injury or diminution in value through condemnation,
inverse condemnation or other exercise of the power of eminent domain.
Tangible Net Worth. With respect to any Person, the amount by which the
Total Assets of such Person exceeds the Total Liabilities of such Person, less
the sum of:
(a) the total book value of all assets of such Person properly
classified as intangible assets under GAAP, including such items as
good will, the purchase price of acquired assets in excess of the fair
market value thereof, trademarks,
17
trade names, service marks, brand names, copyrights, patents and
licenses, and rights with respect to the foregoing; plus
(b) all amounts representing any write-up in the book value of
any assets of such Person resulting from a revaluation thereof
subsequent to the Balance Sheet Date.
Title Insurance Company. First American Title Insurance Company,
▇▇▇▇▇▇▇ Title Insurance Company and/or any other title insurance company or
companies approved by the Agent and the Borrower.
Title Policy. With respect to each parcel of Mortgaged Property, an
ALTA standard form title insurance policy (or, if such form is not available, an
equivalent, legally promulgated form of mortgagee title insurance policy
reasonably acceptable to the Agent) issued by a Title Insurance Company (with
such reinsurance as the Agent may reasonably require, any such reinsurance to be
with direct access endorsements to the extent available under applicable law) in
an amount as the Agent may reasonably require (but in no event exceeding the
Appraised Value of such Mortgaged Property) insuring the priority of the
Mortgage thereon and that the Borrower, REA or a Guarantor holds marketable fee
simple title to or a valid and subsisting leasehold interest in such parcel,
subject only to the encumbrances permitted by the Mortgage and which shall not
contain standard exceptions for mechanics liens, persons in occupancy (other
than tenants as tenants only under Leases) or matters which would be shown by a
survey, shall not insure over any matter except to the extent that any such
affirmative insurance is acceptable to the Agent in its sole discretion, and
shall contain (a) a revolving credit endorsement and (b) such other endorsements
and affirmative insurance as the Agent may reasonably require and is available
in the State in which the Real Estate is located, including but not limited to
(i) a comprehensive endorsement, (ii) a variable rate of interest endorsement,
(iii) a usury endorsement (if the Lenders have not received a satisfactory
opinion regarding usury from counsel satisfactory to the Lenders), (iv) a doing
business endorsement, (v) an ALTA form 3.1 zoning endorsement (in States where
same is available from the Title Insurance Company without an opinion of counsel
concerning such matters and where other evidence of zoning compliance has not
been delivered to the Agent in the Agent's good faith business judgment), (vi) a
"tie-in" endorsement relating to all Title Policies issued by such Title
Insurance Company in respect of other Mortgaged Property and (vii) a "first
loss" endorsement.
Total Assets. With respect to any Person, all assets of such Person
determined in accordance with GAAP. All real estate assets shall be valued on an
undepreciated cost basis. In the event that a Person has a Minority Interest in
any other Person, then the Total Assets of such Person shall include, without
duplication, the allocable share of the Total Assets of such other Person, based
on the ownership interest of such Person in such other Person.
Total Commitment. The sum of the Commitments of the Lenders, as in
effect from time to time. On the Closing Date, the Total Commitment shall be
$150,000,000.
Total Liabilities. With respect to any Person, all liabilities of such
Person determined in accordance with GAAP and, without duplication, all
Indebtedness of such Person, whether or not
18
so classified. In the event that a Person has a Minority Interest in any other
Person, then the Total Liabilities of such Person shall include, without
duplication, the allocable share of the Total Liabilities of such other Person,
based on the ownership interest of such Person in such other Person.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
Under Development. Any Real Estate shall be considered Under
Development until such time as (a) a certificate of occupancy (or, to the extent
a certificate of occupancy is not available in the jurisdiction in which such
Real Estate is located, an equivalent certificate or other evidence satisfactory
to the Agent) has been obtained, and (b) the Gross Cash Receipts from the
operation of such Real Estate shall have been not less than the Operating
Expenses of such Real Estate for three (3) consecutive months (including a
reserve (in an amount reasonably satisfactory to the Agent) for any expenses not
payable during such period, such as taxes and insurance).
Section 1.2 Rules of Interpretation. (a) A reference to any document or
agreement shall include such document or agreement as amended, modified or
supplemented from time to time in accordance with its terms and the terms of
this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification of
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the accounting entity
to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) The words "approval" and "approved", as the context requires, means
an approval in writing given to the party seeking approval after full and fair
disclosure to the party giving approval of all material facts necessary in order
to determine whether approval should be granted.
(h) All terms not specifically defined herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in the State of New
York, have the meanings assigned to them therein.
(i) Reference to a particular "Section ", refers to that section of
this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
Section 2 THE REVOLVING CREDIT FACILITY.
19
Section 2.1 Commitment to Lend. Subject to the terms and conditions set
forth in this Agreement, each of the Lenders severally agrees to lend to the
Borrower, and the Borrower may borrow (and repay and reborrow) from time to time
between the Closing Date and the Maturity Date upon notice by the Borrower to
the Agent given in accordance with Section 2.6, such sums as are requested by
the Borrower for the purposes set forth in Section 2.8 up to a maximum aggregate
principal amount outstanding (after giving effect to all amounts requested) at
any one time equal to the lesser of (a) such Lender's Commitment and (b) such
Lender's Commitment Percentage of the Borrowing Base; provided, that, in all
events no Default or Event of Default shall have occurred and be continuing; and
provided, further, that the outstanding principal amount of the Loans (after
giving effect to all amounts requested) shall not at any time exceed the Total
Commitment or cause a violation of the covenant set forth in Section 9.1. The
Loans shall be made pro rata in accordance with each Lender's Commitment
Percentage. Each request for a Loan hereunder shall constitute a representation
and warranty by the Borrower that all of the conditions set forth in Section 10
and Section 11 have been satisfied on the date of such request.
Section 2.2 Facility Fee. The Borrower agrees to pay to the Agent for
the account of the Lenders in accordance with their respective Commitment
Percentages a facility fee calculated at the rate per annum of one quarter of
one percent (0.25%) on the average daily amount by which the Total Commitment
exceeds the outstanding principal amount of Loans during each calendar quarter
or portion thereof commencing on the date hereof and ending on the Maturity
Date. The facility fee shall be payable quarterly in arrears on the first day of
each calendar quarter for the immediately preceding calendar quarter or portion
thereof, on any earlier date on which the applicable Commitments shall be
reduced and on the Maturity Date.
Section 2.3 Reduction and Termination of Commitments. The Borrower
shall have the right at any time and from time to time upon five (5) Business
Days' prior written notice to the Agent to reduce by $5,000,000 or an integral
multiple of $1,000,000 in excess thereof (provided that in no event shall the
Total Commitment be reduced in such manner to an amount less than $75,000,000)
or to terminate entirely the unborrowed portion of the Commitments, whereupon
the Commitments of the Banks shall be reduced pro rata in accordance with their
respective Commitment Percentages of the amount specified in such notice or, as
the case may be, terminated, any such termination or reduction to be without
penalty except as otherwise set forth in Section 4.8; provided, however, that no
such termination or reduction shall be permitted if, after giving effect
thereto, the Outstanding Loans would exceed the Commitments of the Lenders as so
terminated or reduced. Promptly after receiving any notice from the Borrower
delivered pursuant to this Section 2.3, the Agent will notify the Lenders of the
substance thereof. Upon the effective date of any such reduction or termination,
the Borrower shall pay to the Agent for the respective accounts of the Lenders
the full amount of any facility fee under Section 2.2 then accrued on the amount
of the reduction. No reduction or termination of the Commitment may be
reinstated.
Section 2.4 Notes. The Loans shall be evidenced by separate promissory
notes of the Borrower in substantially the form of Exhibit F hereto
(collectively, the "Notes"), dated the Closing Date (except as otherwise
provided in Section 18.3) and completed with appropriate insertions. One Note
shall be payable to the order of each Lender in the principal amount equal to
such Lender's Commitment or, if less, the outstanding amount of all Loans made
by such Lender, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Lender to
20
make or cause to be made, at or about the time of the Drawdown Date of any Loan
or the time of receipt of any payment of principal thereof, an appropriate
notation on such Lender's Record reflecting the making of such Loan or (as the
case may be) the receipt of such payment. The outstanding amount of the Loans
set forth on such Lender's Record shall be prima facie evidence of the principal
amount thereof owing and unpaid to such Lender, but the failure to record, or
any error in so recording, any such amount on such Lender's Record shall not
limit or otherwise affect the obligations of the Borrower hereunder or under any
Note to make payments of principal of or interest on any Note when due.
Section 2.5 Interest on Loans. (a) Each Base Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof and ending on
the date on which such Base Rate Loan is repaid or converted to a Eurodollar
Rate Loan at the rate per annum equal to the Base Rate.
(b) Each Eurodollar Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of each Interest
Period with respect thereto at the rate per annum equal to the sum of the
Eurodollar Rate determined for such Interest Period plus one and six hundred
twenty five thousandths percent (1.625%).
(c) The Borrower promises to pay interest on each Loan in arrears (i)
on each Interest Payment Date with respect thereto, (ii) upon any prepayment of
the Loans (to the extent accrued on the amount being prepaid to the date of
prepayment) and (iii) at maturity of the Loans.
(d) Base Rate Loans and Eurodollar Loans may be converted to Loans of
the other Type as provided in Section 4.1.
Section 2.6 Requests for Loans. The Borrower shall give to the Agent
written notice in the form of Exhibit G hereto (or telephonic notice confirmed
in writing in the form of Exhibit G hereto) of each Loan requested hereunder (a
"Loan Request") no less than one (1) Business Day prior to the proposed Drawdown
Date with respect to Base Rate Loans and three (3) Business Days prior to the
proposed Drawdown Date with respect to Eurodollar Rate Loans. Each such notice
shall specify with respect to the requested Loan the proposed principal amount
of such Loan, the Type of Loan, the initial Interest Period (if applicable) for
such Loan and the Drawdown Date. Each such notice shall also contain (i) a
general statement as to the purpose for which such advance shall be used (which
purpose shall be in accordance with the terms of Section 2.8), (ii) a
certification by the chief financial officer or chief accounting officer of the
Borrower that the Borrower, REA and the Guarantors are and will be in compliance
with all covenants under the Loan Documents after giving effect to the making of
such Loan, and (iii) a Compliance Certificate prepared using the financial
statements of REA most recently provided or required to be provided to the Agent
under Section 6.4 or Section 7.4 adjusted in the best good faith estimate of the
Borrower to give effect to the proposed advance. Promptly upon receipt of any
such notice, the Agent shall notify each of the Lenders thereof. Except as
provided in this Section 2.6, each such Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the Borrower to accept the Loan
requested from the Lenders on the proposed Drawdown Date; provided that, in
addition to the Borrower's other remedies against any Lender which fails to
advance its proportionate share of a requested Loan, such Loan Request may be
revoked by the Borrower by
21
notice received by the Agent no later than the Drawdown Date if any Lender fails
to advance its proportionate share of the requested Loan in accordance with the
terms of this Agreement; and provided further that the Borrower shall be liable
in accordance with the terms of this Agreement to any Lender which is prepared
to advance its proportionate share of the requested Loan for any costs, expenses
or damages actually incurred by such Lender as a result of the Borrower's
election to revoke such Loan Request. Nothing herein shall prevent the Borrower
from seeking recourse against any Lender that fails to advance its proportionate
share of a requested Loan as required by this Agreement. Each Loan Request shall
be (a) for a Base Rate Loan in a minimum aggregate amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof; or (b) for a Eurodollar Rate
Loan in a minimum aggregate amount of $2,000,000 or an integral multiple of
$100,000 in excess thereof; provided, however, that there shall be no more than
eight (8) Eurodollar Rate Loans outstanding at any one time.
Section 2.7 Funds for Loans. (a) Not later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Loans, each of the Lenders will make
available to the Agent, at the Agent's Head Office, in immediately available
funds, the amount of such Lender's Commitment Percentage of the amount of the
requested Loans which may be disbursed pursuant to Section 2.1. Upon receipt
from each Lender of such amount, and upon receipt of the documents required by
Section 10 and Section 11 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the Borrower
the aggregate amount of such Loans made available to the Agent by the Lenders by
crediting such amount to the account of the Borrower maintained at the Agent's
Head Office. The failure or refusal of any Lender to make available to the Agent
at the aforesaid time and place on any Drawdown Date the amount of its
Commitment Percentage of the requested Loans shall not relieve any other Lender
from its several obligation hereunder to make available to the Agent the amount
of such other Lender's Commitment Percentage of any requested Loans, including
any additional Loans that may be requested subject to the terms and conditions
hereof to provide funds to replace those not advanced by the Lender so failing
or refusing. In the event of any such failure or refusal, the Lenders not so
failing or refusing shall be entitled to a priority secured position as against
the Lender or Lenders so failing or refusing to make available to the Borrower
the amount of its or their Commitment Percentage for such Loans as provided in
Section 12.4.
(b) Unless the Agent shall have been notified by any Lender prior to
the applicable Drawdown Date that such Lender will not make available to Agent
such Lender's pro rata share of a proposed Loan, the Agent may in its discretion
assume that such Lender has made such Loan available to Agent in accordance with
the provisions of this Agreement and the Agent may, if it chooses, in reliance
upon such assumption make such Loan available to the Borrower, and such Lender
shall be liable to the Agent for the amount of such advance.
Section 2.8 Use of Proceeds. The Borrower will use the proceeds of the
Loans solely to provide financing (a) for the acquisition by the Borrower
pursuant to the terms thereof fee interests or leasehold interests in Real
Estate which (except as otherwise agreed by the Majority Lenders as referred to
in clause (c) of the definition of Eligible Real Estate) is utilized for office
and/or industrial purposes, (b) for Capital Improvement Projects for Real
Estate; (c) for working capital purposes (provided that the aggregate amount of
Loans outstanding for working capital
22
purposes shall not at any one time exceed $25,000,000), and (d) for such other
purposes as the Majority Lenders in their sole discretion from time to time may
agree in writing.
Section 3 REPAYMENT OF THE LOANS.
Section 3.1 Stated Maturity. The Borrower promises to pay on the
Maturity Date and there shall become absolutely due and payable on the Maturity
Date all of the Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.
Section 3.2 Mandatory Prepayments. If at any time the aggregate
outstanding principal amount of the Loans exceeds the aggregate Commitments or
the Borrowing Base for the Loans, then the Borrower shall immediately pay the
amount of such excess to the Agent for the respective accounts of the Lenders
for application to such Loans. In the event there shall have occurred a casualty
with respect to any Mortgaged Property and the Borrower is required to repay the
Loans pursuant to Section 7.7 or a Taking and the Borrower is required to repay
the Loans pursuant to a Mortgage, the Borrower shall prepay the Loans
concurrently with the date of receipt by the Borrower or the Agent of any
Insurance Proceeds or Condemnation Proceeds in respect of such casualty or
Taking, as applicable, or as soon thereafter as is reasonably practicable, in
the amount required pursuant to the relevant provisions of Section 7.7 or such
Mortgage.
Section 3.3 Optional Prepayments. The Borrower shall have the right, at
its election, to prepay the outstanding amount of the Loans, as a whole or in
part, at any time without penalty or premium; provided, that the full or partial
prepayment of the outstanding amount of any Eurodollar Rate Loans pursuant to
this Section 3.3 may be made only on the last day of the Interest Period
relating thereto except as otherwise required pursuant to Section 4.7. The
Borrower shall give the Agent, no later than 10:00 a.m., Boston time, at least
five (5) days prior written notice of any prepayment pursuant to this Section
3.3, in each case specifying the proposed date of prepayment of Loans and the
principal amount to be prepaid.
Section 3.4 Partial Prepayments. Each partial prepayment of the Loans
under Section 3.3 shall be in a minimum amount of $1,000,000.00 or an integral
multiple of $100,000 in excess thereof, shall be accompanied by the payment of
accrued interest on the principal prepaid to the date of payment and shall be
applied, in the absence of instruction by the Borrower, first to the principal
of Base Rate Loans and then to the principal of Eurodollar Rate Loans.
Section 3.5 Effect of Prepayments. Amounts of the Loans prepaid under
Section 3.2 and Section 3.3 prior to the Maturity Date may be reborrowed as
provided in Section 2.
Section 3.6 Additional Payments. Each voluntary or mandatory prepayment
of the Loans pursuant to this Article shall be accompanied by the payment of (i)
accrued interest on the principal amount so prepaid to the date of prepayment,
and (ii) the amount, if any, required to be paid to the Lenders pursuant to
Section 4.8.
Section 4 CERTAIN GENERAL PROVISIONS.
Section 4.1 Conversion Options. (a) The Borrower may elect from time to
time to convert any of its outstanding Loans to a Loan of another Type and such
Loan shall thereafter bear
23
interest as a Base Rate Loan or a Eurodollar Rate Loan, as applicable; provided
that (i) with respect to any such conversion of a Eurodollar Rate Loan to a Base
Rate Loan, the Borrower shall give the Agent at least one (1) Business Day's
prior written notice of such election, and such conversion shall only be made on
the last day of the Interest Period with respect to such Eurodollar Rate Loan;
(ii) with respect to any such conversion of a Base Rate Loan to a Eurodollar
Rate Loan, the Borrower shall give the Agent at least three (3) Eurodollar
Business Days' prior written notice of such election and the Interest Period
requested for such Loan, the principal amount of the Loan so converted shall be
in a minimum aggregate amount of $2,000,000 or an integral multiple of $100,000
in excess thereof and, after giving effect to the making of such Loan, there
shall be no more than eight (8) Eurodollar Rate Loans outstanding at any one
time; and (iii) no Loan may be converted into a Eurodollar Rate Loan when any
Default or Event of Default has occurred and is continuing. All or any part of
the outstanding Loans of any Type may be converted as provided herein, provided
that no partial conversion shall result in a Base Rate Loan in a principal
amount of less than $1,000,000 or a Eurodollar Rate Loan in a principal amount
of less than $2,000,000 and that the principal amount of each Loan shall be in
an integral multiple of $100,000. On the date on which such conversion is being
made, each Lender shall take such action as is necessary to transfer its
Commitment Percentage of such Loans to its Domestic Lending Office or its
Eurodollar Lending Office, as the case may be. Each Conversion/Continuation
Request relating to the conversion of a Base Rate Loan to a Eurodollar Rate Loan
shall be irrevocable by the Borrower.
(b) Any Eurodollar Rate Loan may be continued as such Type upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the terms of Section 4.1; provided that no Eurodollar Rate Loan
may be continued as such when any Default or Event of Default has occurred and
is continuing, but shall be automatically converted to a Base Rate Loan on the
last day of the Interest Period relating thereto ending during the continuance
of any Default or Event of Default.
(c) In the event that the Borrower does not notify the Agent of its
election hereunder with respect to any Eurodollar Rate Loan, such Loan shall be
automatically converted to a Base Rate Loan at the end of the applicable
Interest Period.
Section 4.2 Commitment Fee. The Borrower agrees to pay to BankBoston,
BancBoston Securities, Inc. and DLJ a commitment fee for services rendered or to
be rendered in connection with the Loans as provided pursuant to an Agreement
Regarding Fees dated as of even date herewith among the Borrower, REA,
BankBoston, BancBoston Securities, Inc. and DLJ. Such commitment fee shall be
solely for the account of BankBoston, BancBoston Securities, Inc. and DLJ as
provided in such Agreement Regarding Fees.
Section 4.3 Agent's Fee. The Borrower shall pay to the Agent, for the
Agent's own account, an annual Agent's fee as provided in the Agreement
Regarding Fees. The Agent's fee shall be payable quarterly in arrears on the
first day of each calendar quarter for the immediately preceding calendar
quarter or portion thereof. The Agent's fee shall also be paid upon the Maturity
Date or earlier termination of the Commitments. The Agent's fee for any partial
quarter shall be prorated.
24
Section 4.4 Funds for Payments. (a) All payments of principal,
interest, facility fees, closing fees and any other amounts due hereunder or
under any of the other Loan Documents shall be made to the Agent, for the
respective accounts of the Lenders and the Agent, as the case may be, at the
Agent's Head Office, not later than 1:00 p.m. (Boston time) on the day when due,
in each case in immediately available funds. The Agent is hereby authorized to
charge the accounts of the Borrower with BankBoston, on the dates when the
amount thereof shall become due and payable, with the amounts of the principal
of and interest on the Loans and all fees, charges, expenses and other amounts
owing to the Agent and/or the Lenders under the Loan Documents.
(b) All payments by the Borrower hereunder and under any of the other
Loan Documents shall be made without setoff or counterclaim and free and clear
of and without deduction for any taxes (other than income or franchise taxes
imposed on any Lender), levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Borrower is compelled by
law to make such deduction or withholding; provided that no such payment shall
constitute a waiver of any rights that the Borrower may have hereunder. If any
such obligation is imposed upon the Borrower with respect to any amount payable
by it hereunder or under any of the other Loan Documents, the Borrower will pay
to the Agent, for the account of the Lenders or (as the case may be) the Agent,
on the date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars as shall be necessary to
enable the Lenders or the Agent to receive the same net amount which the Lenders
or the Agent would have received on such due date had no such obligation been
imposed upon the Borrower. The Borrower will deliver promptly to the Agent
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Borrower hereunder or under
any other Loan Document.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States, if requested in writing by the Borrower (but only so long as such
Lender remains lawfully able to do so), shall provide the Borrower with such
duly executed form(s) or statement(s) which may, from time to time, be
prescribed by law and, which, pursuant to applicable provisions of (i) an income
tax treaty between the United States and the country of residence of such
Lender, (ii) the Code, or (iii) any applicable rules or regulations in effect
under (i) or (ii) above, indicates the withholding status of such Lender;
provided that nothing herein (including without limitation the failure or
inability to provide such form or statement) shall relieve the Borrower of its
obligations under Section 4.4(b). In the event that the Borrower shall have
delivered the certificates or vouchers described above for any payments made by
the Borrower and such Lender receives a refund of any taxes paid by the Borrower
pursuant to Section 4.4(b), such Lender will pay to the Borrower the amount of
such refund promptly upon receipt thereof; provided that if at any time
thereafter such Lender is required to return such refund, the Borrower shall
promptly repay to such Lender the amount of such refund.
Section 4.5 Computations. All computations of interest on the Loans and
of other fees to the extent applicable shall be based on a 360-day year and paid
for the actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to Eurodollar Rate Loans,
whenever a payment hereunder or under any of the other Loan
25
Documents becomes due on a day that is not a Business Day, the due date for such
payment shall be extended to the next succeeding Business Day, and interest
shall accrue during such extension.
Section 4.6 Inability to Determine Eurodollar Rate. In the event that,
prior to the commencement of any Interest Period relating to any Eurodollar Rate
Loan, the Agent shall determine that adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate for such Interest Period, the Agent
shall forthwith give notice of such determination (which shall be conclusive and
binding on the Borrower and the Lenders absent manifest error) to the Borrower
and the Lenders. In such event (a) any Loan Request with respect to a Eurodollar
Rate Loan shall be automatically withdrawn and shall be deemed a request for a
Base Rate Loan and (b) each Eurodollar Rate Loan will automatically, on the last
day of the then current Interest Period applicable thereto, become a Base Rate
Loan, and the obligations of the Lenders to make Eurodollar Rate Loans shall be
suspended until the Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so notify the Borrower and
the Lenders.
Section 4.7 Illegality. Notwithstanding any other provisions herein, if
any present or future law, regulation, treaty or directive or the interpretation
or application thereof shall make it unlawful, or any central bank or other
governmental authority having jurisdiction over a Lender or its Eurodollar
Lending Office shall assert that it is unlawful, for any Lender to make or
maintain Eurodollar Rate Loans, such Lender shall forthwith give notice of such
circumstances to the Agent and the Borrower and thereupon (a) the commitment of
the Lenders to make Eurodollar Rate Loans shall forthwith be suspended and (b)
the Eurodollar Rate Loans then outstanding shall be converted automatically to
Base Rate Loans on the last day of each Interest Period applicable to such
Eurodollar Rate Loans or within such earlier period as may be required by law.
Notwithstanding the foregoing, before giving such notice, the applicable Lender
shall designate a different lending office if such designation will void the
need for giving such notice and will not, in the judgment of such Lender, be
otherwise materially disadvantageous to such Lender.
Section 4.8 Compensation. The Borrower shall compensate the Lenders,
upon the Agent's written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expenses and liabilities
(incurred by reason of the liquidation or reemployment of deposits or other
funds required by the Lenders to fund Loans but excluding any loss of
anticipated profit with respect to such Loans) which the Lenders may sustain:
(i) if for any reason (other than a default by the Lenders) a borrowing of a
Loan does not occur on a date specified therefor in a notice of such borrowing
received from the Borrower (whether or not withdrawn by the Borrower or deemed
withdrawn pursuant to Section 4.6); (ii) if any repayment or prepayment of a
Eurodollar Rate Loan occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any Loan is not made on
any date specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other Default by the Borrower to repay Loans when
required by the terms of this Agreement or (y) an election made pursuant to
Section 4.1.
26
Section 4.9 Additional Costs, Etc. Notwithstanding anything herein to
the contrary, if any present or future applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and interpretations
thereof by any competent court or by any governmental or other regulatory body
or official charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Lender or the Agent by any
central bank or other fiscal, monetary or other authority (whether or not having
the force of law), shall:
(a) subject any Lender or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect
to this Agreement, the other Loan Documents, such Lender's Commitment
or the Loans (other than taxes based upon or measured by the income or
profits of such Lender or the Agent or its franchise tax), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Lender of the
principal of or the interest on any Loans or any other amounts payable
to any Lender under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable any special
deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law and which
are not already reflected in any amounts payable by Borrower hereunder)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of an office of any Lender, or
(d) impose on any Lender or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents,
the Loans, such Lender's Commitment, or any class of loans or
commitments of which any of the Loans or such Lender's Commitment forms
a part;
and the result of any of the foregoing is:
(i) to increase the cost to any Lender of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Lender's Commitment, or
(ii) to reduce the amount of principal, interest or other
amount payable to any Lender or the Agent hereunder on account of such
Lender's Commitment or any of the Loans, or
(iii) to require any Lender or the Agent to make any payment
or to forego any interest or other sum payable hereunder, the amount of
which payment or foregone interest or other sum is calculated by
reference to the gross amount of any sum receivable or deemed received
by such Lender or the Agent from the Borrower hereunder,
27
then, and in each such case, the Borrower will, within fifteen (15) days of
demand made by such Lender or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise, pay to such
Lender or the Agent such additional amounts as such Lender or the Agent shall
determine in good faith to be sufficient to compensate such Lender or the Agent
for such additional cost, reduction, payment or foregone interest or other sum.
Each Lender and the Agent in determining such amounts may use any reasonable
averaging and attribution methods generally applied by such Lender or the Agent.
Section 4.10 Capital Adequacy. If after the date hereof any Lender
determines that (a) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies or
any change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (b) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's commitment to
make Loans hereunder to a level below that which such Lender or holding company
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify the Borrower thereof. The Borrower agrees to pay to such
Lender the amount of such reduction in the return on capital as and when such
reduction is determined, upon presentation by such Lender of a statement of the
amount setting forth the Lender's calculation thereof. In determining such
amount, such Lender may use any reasonable averaging and attribution methods
generally applied by such Lender.
Section 4.11 Intentionally omitted.
Section 4.12 Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law) overdue interest on
the Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest payable on demand at a rate per annum
equal to four percent (4.0%) above the Base Rate until such amount shall be paid
in full (after as well as before judgment). In addition, the Borrower shall pay
a late charge equal to three percent (3%) of any amount of interest and/or
principal payable on the Loans or any other amounts payable hereunder or under
the Loan Documents, which is not paid by the Borrower within ten (10) days of
the date when due.
Section 4.13 Intentionally Omitted.
Section 4.14 Certificate. A certificate setting forth any amounts
payable pursuant to Section 4.8, Section 4.9, Section 4.10, or Section 4.12 and
a reasonably detailed explanation of such amounts which are due, submitted by
any Lender or the Agent to the Borrower, shall be conclusive in the absence of
manifest error.
Section 4.15 Limitation on Interest. Notwithstanding anything in this
Agreement or the other Loan Documents to the contrary, all agreements between or
among the Borrower, REA, the Guarantors, the Lenders and the Agent, whether now
existing or hereafter arising and whether
28
written or oral, are hereby limited so that in no contingency, whether by reason
of acceleration of the maturity of any of the Obligations or otherwise, shall
the interest contracted for, charged or received by the Lenders exceed the
maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the Lenders in excess of the
maximum lawful amount, the interest payable to the Lenders shall be reduced to
the maximum amount permitted under applicable law; and if from any circumstance
the Lenders shall ever receive anything of value deemed interest by applicable
law in excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess shall be
refunded to the Borrower. All interest paid or agreed to be paid to the Lenders
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in full of the
principal of the Obligations (including the period of any renewal or extension
thereof) so that the interest thereon for such full period shall not exceed the
maximum amount permitted by applicable law. This section shall control all
agreements between or among the Borrower, REA, the Guarantors, the Lenders and
the Agent.
Section 5 COLLATERAL SECURITY.
Section 5.1 Collateral. The Obligations shall be secured by (i) a
perfected first priority lien to be held by the Agent for the benefit of the
Lenders on the Mortgaged Properties, pursuant to the terms of the Mortgages,
(ii) a perfected first priority security interest to be held by the Agent for
the benefit of the Lenders in the Leases pursuant to the terms of the
Assignments of Leases and Rents and (iii) the Indemnity Agreements and the other
Security Documents.
Section 5.2 Appraisals. (a) The Agent on behalf of the Lenders shall
require Appraisals of each of the Mortgaged Properties, which will be ordered by
the Agent and reviewed and approved by the appraisal department of the Agent
from time to time, in order to determine the current Appraised Value and
Borrowing Base of each Mortgaged Property, and the Borrower shall pay to the
Agent on demand all reasonable out-of-pocket costs of all such Appraisals
relating to the Mortgaged Properties (which costs shall include any reasonable
internal appraisal review fees of the Agent); provided, however, that so long as
no Default or Event of Default shall have occurred and be continuing and
regulatory requirements of any Lender generally applicable to real estate loans
of the category made under this Agreement as reasonably interpreted by such
Lender shall not require more frequent Appraisals, and except as otherwise
provided in Section 5.2(b) or Section 5.2(e), the Borrower shall not be required
to pay for an Appraisal for a particular Mortgaged Property more often than once
in any twenty-four (24) month period, with the result that, except as otherwise
provided in Section 5.2(b) or Section 5.2(e), the first Appraisal of a Mortgaged
Property for which the Borrower shall be financially responsible shall not be
required prior to the date which is twenty-four (24) months from the date of
initial Appraisal for such Mortgaged Property delivered to the Agent pursuant to
this Agreement.
(b) Notwithstanding the provisions of Section 5.2(a), the Agent on
behalf of the Lenders may, for the purpose of determining the current Appraised
Value and Borrowing Base of a Mortgaged Property, obtain (and the Borrower shall
pay to the Agent on demand all reasonable out-of-pocket costs (which costs shall
include any reasonable internal appraisal review fees of the
29
Agent) of an Appraisal (or an update of the existing Appraisal) of such
Mortgaged Property (i) at any time that the regulatory requirements of a Lender
generally applicable to real estate loans of the category made under this
Agreement as reasonably interpreted by such Lender shall require an Appraisal,
or (ii) at any time following: (x) a condemnation of or a casualty affecting
more than twenty five percent 25% of the Net Rentable Area of such Mortgaged
Property, (y) the termination or expiration of Leases affecting more than twenty
five percent (25%) of the Net Rentable Area of such Mortgaged Property or (z)
the occurrence of a material adverse change with respect to such Mortgaged
Property as determined by the Majority Lenders in the exercise of their good
faith business judgment. If an Appraisal (or an update of the existing
Appraisal) is being done in respect of a Mortgaged Property that has been
affected by a condemnation or casualty which is being restored in accordance
with the relevant provisions of Section 7.7 hereof or the Mortgage encumbering
such Mortgaged Property, such Appraisal (or an update of the existing Appraisal)
shall, at the election of the Agent on behalf of the Lenders, either (A) be
undertaken only following the completion of such restoration or (B) take into
account the fact that such restoration has not been completed and be prepared on
an "as-built" basis, based on the plans and specifications for such restoration;
and in either such case any such Appraisal (or an update of the existing
Appraisal) shall take into account any termination of any Leases that have
occurred as a result of such condemnation or casualty.
(c) In the event that the Agent shall advise the Borrower, on the basis
of any Appraisal (or update of an existing Appraisal), that the Borrowing Base
is insufficient to comply with the requirements of Section 9.1, then until the
Borrowing Base is increased or the outstanding principal amount of the Loans is
reduced such that the Borrowing Base is in compliance with Section 9.1, the
Lenders shall not be required to make advances under Section 2.1.
(d) The Borrower, REA and each Guarantor acknowledge that the Agent may
make changes or adjustments to the value set forth in any Appraisal (or update
of an existing Appraisal) at the time such Appraisal (or update of an existing
Appraisal) is received as may be required by the appraisal department of the
Agent in its good faith business judgment, and that the Lenders are not bound by
the value set forth in any Appraisal performed pursuant to this Agreement and do
not make any representations or warranties with respect to any such Appraisal.
The Borrower, REA and each Guarantor further agree that the Lenders shall have
no liability as a result of or in connection with any Appraisal (or update of an
existing Appraisal) for statements contained in such Appraisal (or update of an
existing Appraisal), including without limitation, the accuracy and completeness
of information, estimates, conclusions and opinions contained in such Appraisal
(or update of an existing Appraisal), or variance of such Appraisal (or update
of an existing Appraisal) from the fair value of the Mortgaged Property that is
the subject of such Appraisal (or update of an existing Appraisal) given by the
local tax assessor's office, or the Borrower's, REA's or each Guarantor's idea
of the value of the Mortgaged Property.
(e) If requested to do so by the Borrower following the completion of a
Capital Improvement Project at a Mortgaged Property, the Agent shall obtain, at
the sole cost and expense of the Borrower, an Appraisal (or an update of the
existing Appraisal) of such Mortgaged Property, and the Appraised Value as
determined based on such new or updated Appraisal shall be used in order to
determine the Borrowing Base of such Mortgaged Property.
30
Section 5.3 Replacement or Addition of Mortgaged Properties. After the
Closing Date, the Borrower shall have the right, subject to the consent of the
Majority Lenders and the satisfaction by the Borrower of the conditions set
forth in this Section 5.3, to add Potential Collateral to the Collateral or to
replace any Mortgaged Property which is Collateral with Potential Collateral.
Subject to Section 7.17, the Borrower from time to time after the Closing Date
may also request that certain Real Estate of one or more of its wholly-owned
Subsidiaries (collectively, the "Subsidiary Collateral") be included as a
Mortgaged Property for the purpose of increasing the Borrowing Base or replacing
existing Collateral. In the event the Borrower desires to replace Collateral or
add additional Potential Collateral or Subsidiary Collateral as aforesaid, the
Borrower shall provide written notice to the Agent of such request (which the
Agent shall promptly furnish to the Lenders), together with all documentation
and other information required to permit the Agent to determine whether such
Real Estate is Eligible Real Estate. Thereafter, the Agent shall have fifteen
(15) days from the date of the receipt of such documentation and other
information to advise the Borrower whether the Majority Lenders consent to the
acceptance of such Subsidiary Collateral or Potential Collateral.
Notwithstanding the foregoing, no Subsidiary Collateral or Potential Collateral
shall be included as Collateral unless and until the following conditions
precedent shall have been satisfied:
(i) such Subsidiary Collateral or Potential Collateral shall
be Eligible Real Estate;
(ii) the owner or lessee of any Subsidiary Collateral shall
have executed a Guaranty of the Obligations in form and substance
satisfactory to the Agent, or, in the Agent's sole discretion, shall
have been added as an additional Borrower hereunder pursuant to an
amendment to this Agreement in form and substance satisfactory to the
Agent and Agent's counsel;
(iii) the Borrower or the owner or lessee of the Subsidiary
Collateral or Potential Collateral, as applicable, shall have executed
and delivered to the Agent all Eligible Real Estate Qualification
Documents, all of which instruments, documents or agreements shall be
in form and substance satisfactory to the Agent in its sole discretion;
and
(iv) after giving effect to the inclusion of such Subsidiary
Collateral or Potential Collateral, each of the representations and
warranties made by or on behalf of the Borrower, REA or the Guarantors
or any of their respective Subsidiaries contained in this Agreement,
the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Agreement shall be true in all
material respects both as of the date as of which it was made and shall
also be true as of the time of the replacement or addition of Mortgaged
Properties, with the same effect as if made at and as of that time (it
being understood and agreed that any representation or warranty which
by its terms is made as of a specified date shall be required to be
true and correct only as of such specified date), and no Default or
Event of Default shall have occurred and be continuing, and each of the
Lenders shall have received a certificate of the Borrower and REA
signed by an authorized representative of the Borrower and REA to such
effect.
31
The Borrower acknowledges that the decision of the Majority Lenders to
grant or withhold their consent to the acceptance of Subsidiary Collateral or
Potential Collateral under this Section 5.3 shall be based entirely on such
factors as the Lenders deem relevant in their sole discretion, including,
without limitation, those enumerated in clauses (i) through (iv) hereinabove,
and such consent may be granted or withheld solely at the discretion of the
Majority Lenders.
In connection with each such addition or substitution, the Borrower,
within fifteen (15) days of the Borrower's request to add such assets to the
Collateral, shall pay to the Agent for the account of the Lenders a review fee
of $7,500 for each asset to be added or replaced, which review fee shall be
split equally among the Lenders, without regard to their respective Commitment
Percentages.
Section 5.4 Release of Mortgaged Property. Provided no Default or Event
of Default shall have occurred hereunder and be continuing (or would exist
immediately after giving effect to the transactions contemplated by this Section
5.4), the Agent shall release a Mortgaged Property from the lien or security
title of the Security Documents encumbering the same upon the request of the
Borrower subject to and upon the following terms and conditions:
(a) the Agent shall determine that the Mortgaged Properties
remaining following such release (i) have a Borrowing Base of not less
than $25,000,000 and (ii) are otherwise satisfactory to the Majority
Lenders in their good faith business judgment;
(b) the Borrower shall deliver to the Agent written notice of
its desire to obtain such release no later than fifteen (15) days prior
to the date on which such release is to be effected;
(c) the Borrower shall submit to the Agent with such request a
Compliance Certificate prepared using the financial statements of REA
most recently provided or required to be provided to the Agent under
Section 6.4 or Section 7.4 adjusted in the best good faith estimate of
the Borrower to give effect to the proposed release and demonstrating
that no Default or Event of Default with respect to the covenants
referred to therein shall exist after giving effect to such release;
(d) all release documents to be executed by the Agent shall be
in form and substance reasonably satisfactory to the Agent;
(e) the Borrower shall pay all reasonable costs and expenses
of the Agent in connection with such release, including without
limitation, reasonable attorney's fees;
(f) the Borrower shall pay to the Agent for the account of the
Lenders a release price, which payment shall be applied to reduce the
outstanding principal balance of the Loans in an amount equal to the
amount which is necessary to
32
reduce the outstanding principal balance of the Loans so that no
Default or Event of Default shall exist under Section 9 following such
release;
(g) at no time during the term of this Agreement shall there
be less than five (5) Mortgaged Properties securing the Obligations;
and
(h) any release of a Mortgaged Property after January 1, 1999
will not cause the aggregate Borrowing Base of the remaining Mortgaged
Properties which are located in any one Metropolitan Statistical Area
to equal or exceed forty percent (40%) of the aggregate Borrowing Base
of all of the Mortgaged Properties.
Section 6 REPRESENTATIONS AND WARRANTIES.
Each of the Borrower and REA represents and warrants to the
Agent and the Lenders as follows.
Section 6.1 Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower is a Delaware limited
partnership duly organized pursuant to a certificate of limited partnership
dated as of November 3, 1993 and is in good standing under the laws of Delaware.
REA is a Maryland corporation duly organized pursuant to amended and restated
articles of incorporation dated as of December 12, 1997, and is in good standing
under the laws of Maryland. REA is a real estate investment trust in full
compliance with and entitled to the benefits of Section 856 of the Code. Each of
the Borrower and REA (i) has all requisite power to own its respective property
and conduct its respective business as now conducted and as presently
contemplated, and (ii) is in good standing and is duly authorized to do business
in the jurisdictions where the Mortgaged Properties owned or leased by it are
located and in each other jurisdiction where a failure to be so qualified in
such other jurisdiction could have a materially adverse effect on the business,
assets or financial condition of such Person.
(b) Subsidiaries. Each of the Guarantors and each of the Subsidiaries
of the Borrower, REA and each Guarantor (i) is a corporation, limited
partnership, general partnership, limited liability company or trust duly
organized under the laws of its State of organization and is validly existing
and in good standing under the laws thereof, (ii) has all requisite power to own
its property and conduct its business as now conducted and as presently
contemplated and (iii) is in good standing and is duly authorized to do business
in each jurisdiction where a failure to be so qualified could have a materially
adverse effect on the business, assets or financial condition of the Borrower,
REA, the Guarantors or such Subsidiary.
(c) Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents to which any of the Borrower, REA or any
Guarantor is a party and the transactions contemplated hereby and thereby (i)
are within the authority of such Person, (ii) have been duly authorized by all
necessary proceedings on the part of such Person, (iii) do not and will not
conflict with or result in any breach or contravention of any provision of law,
statute,
33
rule or regulation to which such Person is subject or any judgment, order, writ,
injunction, license or permit applicable to such Person, (iv) do not and will
not conflict with or constitute a default (whether with the passage of time or
the giving of notice, or both) under any provision of the partnership agreement,
articles of incorporation or other charter documents or bylaws of, or any
agreement or other instrument binding upon, such Person or any of its
properties, and (v) do not and will not result in or require the imposition of
any lien or other encumbrance on any of the properties, assets or rights of such
Person.
(d) Enforceability. The execution and delivery of this Agreement and
the other Loan Documents to which any of the Borrower, REA or any Guarantor is a
party are valid and legally binding obligations of such Person enforceable in
accordance with the respective terms and provisions hereof and thereof, except
as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights and general principles of equity.
Section 6.2 Governmental Approvals. The execution, delivery and
performance of this Agreement and the other Loan Documents to which the
Borrower, REA or any Guarantor is a party and the transactions contemplated
hereby and thereby do not require the approval or consent of, or filing with,
any governmental agency or authority other than those already obtained and the
filing of the Security Documents in the appropriate records office with respect
thereto.
Section 6.3 Title to Properties:. Except as indicated on Schedule 6.3
hereto, REA, the Borrower, the Guarantors and their respective Subsidiaries own
or lease all of the assets reflected in the consolidated balance sheet of REA as
at the Balance Sheet Date or acquired or leased since that date (except property
and assets sold or otherwise disposed of in the ordinary course of business
since that date), subject to no rights of others, including any mortgages,
leases, conditional sales agreements, title retention agreements, liens or other
encumbrances except Permitted Liens.
Section 6.4 Financial Statements. REA has furnished to the Agent the
financial information described on Schedule 6.4 hereof relating to REA, the
Borrower, the Guarantors, their respective Subsidiaries and the Real Estate.
Such balance sheet and information fairly present the financial condition of
REA, Borrower, the Guarantors and their respective Subsidiaries as of such dates
and the results of the operations of the Borrower, REA, the Guarantors, their
respective Subsidiaries and the Real Estate for such periods. There are no
liabilities, contingent or otherwise, of the Borrower, REA, the Guarantors or
any of their respective Subsidiaries involving material amounts not disclosed in
said balance sheet and the related notes thereto other than the Obligations.
Section 6.5 No Material Changes. Since the Balance Sheet Date, there
has occurred no materially adverse change in the financial condition or business
of the Borrower, REA, any Guarantor and their respective Subsidiaries taken as a
whole as shown on or reflected in the consolidated balance sheet of the REA as
of the Balance Sheet Date, or its consolidated statement of income or cash flows
for the fiscal year then ended, other than changes in the ordinary course of
business that have not had any materially adverse effect either individually or
in the aggregate on the business or financial condition of such Person.
34
Section 6.6 Franchises, Patents, Copyrights, Etc. The Borrower, REA,
the Guarantors and their respective Subsidiaries possess all franchises,
patents, copyrights, trademarks, trade names, service marks, licenses and
permits, and rights in respect of the foregoing, adequate for the conduct of
their business substantially as now conducted without known conflict with any
rights of others. None of the Mortgaged Properties is owned or operated under or
by reference to any registered or protected trademark, trade name, service ▇▇▇▇
or logo.
Section 6.7 Litigation. Except as stated on Schedule 6.7, there are no
actions, suits, proceedings or investigations of any kind pending or to the
knowledge of the Borrower or REA threatened against the Borrower, REA, any
Guarantor or any of their respective Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, could reasonably
be expected to, either in any case or in the aggregate, materially adversely
affect the properties, assets, financial condition or business of such Person or
materially impair the right of such Person to carry on business substantially as
now conducted by it, or result in any liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the balance
sheet of such Person, or which question the validity of this Agreement or any of
the other Loan Documents, any action taken or to be taken pursuant hereto or
thereto or any lien, security title or security interest created or intended to
be created pursuant hereto or thereto, or which could reasonably be expected to
have a material, adverse affect on the ability of the Borrower, REA, any
Guarantor or any of their respective Subsidiaries to pay and perform the
Obligations in the manner contemplated by this Agreement and the other Loan
Documents.
Section 6.8 No Materially Adverse Contracts, Etc. None of the Borrower,
REA, any Guarantor or any of their respective Subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation that has or is expected in the future to have a materially
adverse effect on the business, assets or financial condition of such Person.
None of the Borrower, REA, any Guarantor or any of their respective Subsidiaries
is a party to any contract or agreement that has or could reasonably be expected
to have a material adverse effect on the business of any of them.
Section 6.9 Compliance with Other Instruments, Laws, Etc. None of the
Borrower, REA, the Guarantors or any of their respective Subsidiaries is in
violation of any provision of its charter or other organizational documents,
bylaws, or any agreement or instrument to which it is subject or by which it or
any of its properties is bound or any decree, order, judgment, statute, license,
rule or regulation, in any of the foregoing cases in a manner that could
reasonably be expected to result in the imposition of substantial penalties or
materially and adversely affect the financial condition, properties or business
of such Person.
Section 6.10 Tax Status. Each of the Borrower, REA, the Guarantors and
their respective Subsidiaries (a) has made or filed all federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject, as the filing periods may have been extended, (b) has
paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings and (c) has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. Except as provided in the foregoing sentence, there
35
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of such Person know of no basis
for any such claim.
Section 6.11 No Event of Default. No Default or Event of Default has
occurred and is continuing.
Section 6.12 Holding Company and Investment Company Acts. None of the
Borrower, REA, the Guarantors or any of their respective Subsidiaries is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is any of them an "investment company",
or an "affiliated company" or a "principal underwriter" of an "investment
company", as such terms are defined in the Investment Company Act of 1940.
Section 6.13 Absence of UCC Financing Statements, Etc. Except with
respect to Permitted Liens and in connection with any secured Indebtedness
permitted under Section 8.1, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any applicable filing records, registry, or other public office,
that purports to cover, affect or give notice of any present or possible future
lien on, or security interest or security title in, any property of the
Borrower, REA, any Guarantor or their respective Subsidiaries or rights
thereunder.
Section 6.14 Setoff, Etc. The Collateral and the rights of the Agent
and the Lenders with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Borrower, REA and each Guarantor are
the owners of their respective Collateral free from any lien, security interest,
encumbrance or other claim or demand, except those encumbrances permitted in the
Mortgages.
Section 6.15 Certain Transactions. Except as disclosed on Schedule 6.15
hereto, none of the partners, officers, trustees, directors, or employees of the
Borrower, REA, any Guarantor or any of their respective Subsidiaries is a party
to any material agreement with the Borrower, REA or any Guarantor (other than
for services as partners, employees, officers and directors), including any such
agreement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any partner, officer, trustee, director or such employee or, to the
knowledge of the Borrower or REA, any corporation, partnership, trust or other
entity in which any partner, officer, trustee, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner.
Section 6.16 Employee Benefit Plans. The Borrower, REA, each Guarantor
and each ERISA Affiliate has fulfilled its obligation, if any, under the minimum
funding standards of ERISA and the Code with respect to each Employee Benefit
Plan, Multiemployer Plan or Guaranteed Pension Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the Code
with respect to each Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan. Neither the Borrower, any Guarantor nor any ERISA Affiliate has
(a) sought a waiver of the minimum funding standard under Section 412 of the
Code in respect of any Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan, (b) failed to make any contribution or payment to any Employee
Benefit Plan, Multiemployer
36
Plan or Guaranteed Pension Plan, or made any amendment to any Employee Benefit
Plan, Multiemployer Plan or Guaranteed Pension Plan, which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security
under ERISA or the Code, or (c) incurred any liability under Title IV of ERISA
other than a liability to the PBGC for premiums under Section 4007 of ERISA.
None of the Mortgaged Properties constitutes a "plan asset" of any Employee
Plan, Multiemployer Plan or Guaranteed Pension Plan.
Section 6.17 Disclosure. No representation or warranty of the Borrower,
REA or any Guarantor contained in this Agreement or the other Loan Documents or
in any other document, certificate or written statement furnished to the Agent
or the Lenders by or on behalf of the Borrower, REA or any Guarantor for use in
connection with the transactions contemplated by the Loan Documents contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein, taken as a whole,
not misleading in light of the circumstances in which the same were made or will
be made.
Section 6.18 Trade Name; Place of Business. Neither the Borrower, REA
nor any Guarantor uses any trade name and conducts business under any name other
than its actual name set forth in the Loan Documents. The principal place of
business of each of the Borrower, REA and each Guarantor is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Pike Suite 200, Plymouth ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Section 6.19 Regulations U and X. No portion of any Loan is to be used
for the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
Section 6.20 Environmental Compliance. To the best of the knowledge and
belief of the Borrower and REA, except as specifically set forth in the written
environmental site assessment reports of the Environmental Engineer provided to
the Agent on or before the date hereof, or in the case of Real Estate acquired
after the date hereof, the environmental site assessment reports with respect
thereto provided to the Agent:
(a) Neither the Borrower, REA, any Guarantor, their respective
Subsidiaries nor any operator of the Real Estate, nor any operations
thereon, is in violation, or alleged violation, of any judgment,
decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising
under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("▇▇▇▇"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any state
or local statute, regulation, ordinance, order or decree relating to
the environment (hereinafter "Environmental Laws"), which violation
involves Real Estate and would have a material adverse effect on the
environment or the business, assets or financial condition of the
Borrower, REA, the Guarantors or any of their respective Subsidiaries.
37
(b) Neither the Borrower, REA, any Guarantor nor any of their
respective Subsidiaries has received notice from any third party
including, without limitation, any federal, state or local governmental
authority, (i) that it has been identified by the United States
Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇ (1986); (ii) that any
hazardous waste, as defined by 42 U.S.C. Section 9601(5), any hazardous
substances as defined by 42 U.S.C. Section 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. Section 9601(33) or any toxic
substances, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("Hazardous Substances") which it
has generated, transported or disposed of have been found at any site
at which a federal, state or local agency or other third party has
conducted or has ordered that the Borrower, REA, any Guarantor or any
of their respective Subsidiaries conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law; or
(iii) that it is or shall be a named party to any claim, action, cause
of action, complaint, or legal or administrative proceeding (in each
case, contingent or otherwise) arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind whatsoever
in connection with the release of Hazardous Substances.
(c) (i) No portion of the Real Estate has been used for the
handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws, and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (ii) in the
course of any activities conducted by the Borrower, REA, any Guarantor,
their respective Subsidiaries or the operators of their properties, no
Hazardous Substances have been generated or are being used on the Real
Estate except in the ordinary course of business and in accordance with
applicable Environmental Laws; (iii) there has been no past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping (other than the
storing of materials in reasonable quantities to the extent necessary
for the operation of an office building in the ordinary course of
business, and in any event in compliance with all Environmental Laws)
(a "Release") or threatened Release of Hazardous Substances on, upon,
into or from the Real Estate, or on, upon, into or from the other
properties of the Borrower, REA, any Guarantor or their respective
Subsidiaries, which Release would have a material adverse effect on the
value of any of the Real Estate or adjacent properties or the
environment; (iv) there have been no Releases on, upon, from or into
any real property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on the value of, the
Real Estate; and (v) any Hazardous Substances that have been generated
on any of the Real Estate have been transported off-site in accordance
with all applicable Environmental Laws.
38
(d) Neither the Borrower, REA, any Guarantor, their respective
Subsidiaries nor the Real Estate is subject to any applicable
Environmental Law requiring the performance of Hazardous Substances
site assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any governmental agency or the
recording or delivery to other Persons of an environmental disclosure
document or statement by virtue of the transactions set forth herein
and contemplated hereby, or as a condition to the recording of the
Mortgages or to the effectiveness of any other transactions
contemplated hereby.
(e) None of the following are or will be located in, on, under
or constitute a part of the Real Estate: asbestos or
asbestos-containing material in any form or condition; urea
formaldehyde insulation; or transformers or other equipment which
contain dielectric fluid containing polychlorinated biphenyls.
(f) There are no existing or closed sanitary landfills, solid
waste disposal sites, or hazardous waste treatment, storage or disposal
facilities on or affecting the Real Estate.
(g) There has been no claim by any party that any use,
operation, or condition of the Real Estate has caused any nuisance or
any other liability or adverse condition on any other property nor is
there any knowledge of any basis for such a claim.
Section 6.21 Intentionally omitted.
Section 6.22 Leases. The Borrower has delivered to the Agent true
copies of the Leases relating to each Mortgaged Property required to be
delivered as a part of the Eligible Real Estate Qualification Documents as of
the date hereof.
Section 6.23 Intentionally omitted.
Section 6.24 Mortgaged Property. The Borrower and REA make the
following representations and warranties concerning each of the Mortgaged
Properties:
(a) Off-Site Utilities. All water, sewer, electric, gas,
telephone and other utilities necessary for the use and operation of
the Mortgaged Property are installed to the property lines of the
Mortgaged Property through dedicated public rights-of-way or through
perpetual private easements approved by the Agent with respect to which
the applicable Mortgage creates a valid and enforceable first lien or
security title and, except in the case of drainage facilities, are
connected to the Building located thereon with valid permits and are
adequate to service the Building in compliance with applicable law.
(b) Access, Etc. The streets abutting the Mortgaged Property
are dedicated and accepted public roads, to which the Mortgaged
Property has direct access by trucks and other motor vehicles and by
foot, or are perpetual private ways or easements (with direct access by
trucks and other motor vehicles and by
39
foot to public roads) to which the Mortgaged Property has direct access
approved by the Agent and with respect to which the applicable Mortgage
creates a valid and enforceable first lien or security title. All
private ways or easements providing access to the Mortgaged Property
are zoned in a manner which will permit access to the Building over
such ways or easements by trucks and other commercial and industrial
vehicles.
(c) Independent Building. The Building is fully independent in
all respects including, without limitation, in respect of structural
integrity, heating, ventilating and air conditioning, plumbing,
mechanical and other operating and mechanical systems, and electrical,
sanitation and water systems, all of which are connected directly to
off-site utilities located in public streets or ways or through insured
perpetual private easements approved by the Agent. The Building is
located on a lot which is separately assessed for purposes of real
estate tax assessment and payment. The Building, all Personal Property
and all paved or landscaped areas related to or used in connection with
the Building are located wholly within the perimeter lines of the lot
or lots on which the Mortgaged Property is located, except as may be
specifically shown on the Survey for such Mortgaged Property.
(d) Condition of Building. To the best of the knowledge and
belief of the Borrower and REA, the Building is structurally sound, in
good repair and free of defects in materials and workmanship. To the
best of the knowledge and belief of the Borrower and REA, all major
building systems located within the Building, including without
limitation heating, ventilating and air conditioning, electrical,
sprinkler, plumbing or other mechanical systems (but excluding any
systems which are required to be maintained by tenants), are in good
working order and condition. To the best of the knowledge and belief of
the Borrower and REA, since the date of the property condition reports
delivered to the Agent prior to the date hereof, there has been no
materially adverse change to the physical condition of any of the
Mortgaged Property, including as a result of any fire, explosion,
accident, flood or other casualty.
(e) Building Compliance with Law. Neither the Borrower, REA
nor any Guarantor has received any notice of, and has no knowledge of,
any violation by the Building as presently constructed, used, occupied
and operated any applicable federal or state law or governmental
regulation, or any local ordinance, order or regulation, including but
not limited to laws, regulations, or ordinances relating to zoning,
building use and occupancy, subdivision control, fire protection,
health, sanitation, safety, handicapped access, tidelands, wetlands and
flood control (hereinafter referred to as the "Requirements"). The
Building complies with applicable zoning laws and regulations and is
not a so-called non-conforming use. The zoning laws permit use of the
Building for its current use. There is such number of parking spaces on
the lot or lots on which the Mortgaged Property is located as is
adequate under the zoning laws and regulations to permit use of the
Building for its current use. Each Mortgaged
40
Property constitutes a separate parcel which has been properly
subdivided in accordance with all applicable state and local laws,
regulations and ordinances to the extent required thereby, and neither
the execution and delivery of the Mortgages nor the exercise of any
remedies thereunder by Agent shall violate any such law or regulation
relating to the subdivision of real property.
(f) No Required Mortgaged Property Consents, Permits, Etc.
Neither the Borrower, REA nor any Guarantor has received any notice of,
and has no knowledge of, any approvals, consents, licenses, permits
issued by any governmental or quasi-governmental authority, utility
installations and connections (including, without limitation, drainage
facilities), curb cuts and street openings, required by applicable
laws, rules, ordinances or regulations or any agreement affecting the
Mortgaged Property for the maintenance, operation, servicing and use of
the Mortgaged Property or the Building for its current use (hereinafter
referred to as the "Project Approvals") which have not been granted,
effected, or performed and completed (as the case may be), or any fees
or charges therefor which have not been fully paid, or which are no
longer in full force and effect. No Project Approvals (including,
without limitation, any railway siding agreements) will terminate, or
become void or voidable or terminable on any foreclosure sale of the
Mortgaged Property pursuant to the Mortgage. To the best knowledge of
the Borrower and REA, there are no outstanding notices, suits, orders,
decrees or judgments relating to zoning, building use and occupancy,
fire, health, sanitation or other violations affecting, against, or
with respect to, the Mortgaged Property or any part thereof.
(g) No Violations. Neither the Borrower, REA nor any Guarantor
has received written notice of, nor has any knowledge of, any violation
of any applicable Requirements, Project Approvals or any other
restrictions or agreements by which the Borrower, Guarantor or the
Mortgaged Property is bound.
(h) Insurance. Neither the Borrower, REA nor any Guarantor has
received any written notice from any insurer or its agent requiring
performance of any work with respect to the Mortgaged Property or
canceling or threatening to cancel any policy of insurance, and the
Mortgaged Property complies with the requirements of all of the
relevant insurance carriers of the Borrower, REA and the Guarantors.
(i) Real Property and other Taxes; Special Assessments. There
are no unpaid or outstanding real estate or other taxes or assessments
on or against the Mortgaged Property or any part thereof which are
payable by the Borrower, REA or any Guarantor (except real estate or
other taxes or assessments that are not yet delinquent or subject to
any penalties, interest or other late charges or which are being
contested in good faith by appropriate proceedings and for which the
Borrowers, REA or such Guarantor has set aside reserves adequate to pay
same). There are no unpaid or outstanding gross receipts, rent or sales
taxes payable by the Borrower, REA or any Guarantor with respect to the
use and operation of the
41
Mortgaged Property which are due and payable. The Borrower has
delivered to the Agent true and correct copies of real estate tax bills
for the Mortgaged Property for the past three fiscal tax years. No
abatement proceedings are pending with reference to any real estate
taxes assessed against the Mortgaged Property. To the best of the
knowledge and belief of the Borrower and REA, there are no betterment
assessments or other special assessments presently pending with respect
to any portion of the Mortgaged Property, and neither the Borrower, REA
nor any Guarantor has received any written notice of any such special
assessment being contemplated.
(j) Historic Status. The Building is not a historic structure
or landmark and neither the Building nor the Mortgaged Property is
located within any historic district pursuant to any federal, state or
local law or governmental regulation.
(k) Eminent Domain; Casualty. Except as set forth on Schedule
6.24(k) hereto, there are no pending eminent domain proceedings against
the Mortgaged Property or any part thereof, and, to the best of the
knowledge and belief of the Borrower and REA no such proceedings are
presently threatened or contemplated by any taking authority. Neither
the Mortgaged Property, the Building nor any part thereof is now
materially damaged or injured as a result of any fire, explosion,
accident, flood or other casualty.
(l) Leases. An accurate and complete Rent Roll and Lease
Summary as of the date of inclusion of each Mortgaged Property in the
Collateral (or such other recent date as may be required by the Agent)
with respect to all Leases of any portion of the Mortgaged Property has
been provided to the Agent. The Leases reflected on such Rent Roll
constitute as of the date thereof the sole agreements relating to
leasing or licensing of space at such Mortgaged Property and in the
Building relating thereto. None of the Leases has been modified,
changed, altered, assigned, supplemented or amended in any respect,
except as reflected on the Rent Roll, and no tenant is entitled to any
free rent, partial rent, rebate of rent payments, credit, offset or
deduction in rent, including, without limitation, lease support
payments or lease buy-outs, except as reflected in the Rent Roll. There
are no occupancies, rights, privileges or licenses in or to any
Mortgaged Property or portion thereof other than pursuant to the Leases
reflected in Rent Rolls previously furnished to the Agent for such
Mortgaged Property. Except as set forth in each Rent Roll, the Leases
reflected therein are in full force and effect in accordance with their
respective terms, without any payment default or any other material
default thereunder, nor are there any defenses, counterclaims, offsets,
concessions or rebates available to any tenant thereunder, and neither
the Borrower, REA nor any Guarantor has given or made, any notice of
any payment or other material default, or any claim, which remains
uncured or unsatisfied, with respect to any of the Leases, and to the
best of the knowledge and belief of the Borrower and REA, there is no
basis for any such claim or notice of default by any tenant. No
property other than the Mortgaged Property which is
42
the subject of the applicable Lease is necessary to comply with the
requirements (including, without limitation, parking requirements)
contained in such Lease. The Rent Rolls furnished to the Agent
accurately and completely set forth all rents payable by and security,
if any, deposited by tenants, no tenant having paid more than one
month's rent in advance. Except as described in Schedule 6.24(l)
attached hereto, all tenant improvements or work to be done, furnished
or paid for by the Borrower, REA or any Guarantor, or credited or
allowed to a tenant, for, or in connection with, the Building pursuant
to any Lease has been completed and paid for or provided for in a
manner satisfactory to the Agent, and, except as set forth on Schedule
6.24(l), no material leasing, brokerage or like commissions, fees or
payments are due from the Borrower in respect of the Leases.
(m) Management Agreement. On and as of the Closing Date, the
Mortgaged Properties are self managed by the Borrower and no Management
Agreements with any third party or Affiliate exist.
(n) Other Material Real Property Agreements; No Options. There
are no material agreements pertaining to the Mortgaged Property, any
Building thereon or the operation or maintenance of either thereof
other than as described in this Agreement (including the Schedules
hereto) or otherwise disclosed in writing to the Agent and the Lenders
by the Borrower, REA or any Guarantor; and no person or entity has any
right or option to acquire the Mortgaged Property or any Building
thereon or any portion thereof or interest therein.
Section 6.25 Brokers. Neither the Borrower, REA, any Guarantor nor any
of their respective Subsidiaries has engaged or otherwise dealt with any broker,
finder or similar entity in connection with this Agreement or the Loans
contemplated hereunder.
Section 6.26 Ownership. REA is the sole general partner of the Borrower
and as of the date hereof owns a 50.7% partnership interest in the Borrower. All
of the limited partners of the Borrower as of the date hereof are set forth on
Schedule 6.26 hereto. All of the Subsidiaries of the Borrower, REA and the
Guarantors as of the date hereof are set forth on Schedule 6.26. The form and
jurisdiction of organization of, and the ownership interests of the Borrower,
REA and each Guarantor in, each of their respective Subsidiaries as of the date
hereof are set forth in said Schedule 6.26. As of the date hereof, neither the
Borrower, REA or any Guarantor owns any interest in any joint ventures or other
entities which are not Subsidiaries.
Section 6.27 Other Debt. Neither the Borrower, REA, any Guarantor nor
any of their respective Subsidiaries is in default of the payment of any
Indebtedness or any other agreement, mortgage, deed of trust, security
agreement, financing agreement, indenture or lease to which any of them is a
party. Neither the Borrower, REA nor any Guarantor is a party to or bound by any
agreement, instrument or indenture that may require the subordination in right
or time or payment of any of the Obligations to any other indebtedness or
obligation of the Borrower, REA or any Guarantor. Schedule 6.27 hereto sets
forth all agreements, mortgages, deeds of trust, financing agreements or other
material agreements binding upon the Borrower, REA and each Guarantor or their
respective properties and entered into by the Borrower, REA and or such
43
Guarantor as of the date of this Agreement with respect to any Indebtedness of
the Borrower, REA or any Guarantor, and the Borrower has provided the Agent with
true, correct and complete copies thereof.
Section 6.28 Solvency. As of the Closing Date and after giving effect
to the transactions contemplated by this Agreement and the other Loan Documents,
including all Loans made or to be made hereunder, neither the Borrower, REA nor
any Guarantor is insolvent on a balance sheet basis such that the sum of such
Person's assets exceeds the sum of such Person's liabilities, each of the
Borrower, REA and each Guarantor is able to pay its debts as they become due,
and each of the Borrower, REA and each Guarantor has sufficient capital to carry
on its business.
Section 6.29 No Bankruptcy Filing. None of the Borrower, REA or any
Guarantor is contemplating either the filing of a petition by it under any state
or federal bankruptcy or insolvency laws or the liquidation of its assets or
property, and neither the Borrower nor REA has knowledge of any Person
contemplating the filing of any such petition against it or any Guarantor.
Section 6.30 No Fraudulent Intent. Neither the execution and delivery
of this Agreement or any of the other Loan Documents nor the performance of any
actions required hereunder or thereunder is being undertaken by the Borrower,
REA or any Guarantor with or as a result of any actual intent by any of such
Persons to hinder, delay or defraud any entity to which any of such Persons is
now or will hereafter become indebted.
Section 6.31 Transaction in Best Interests of Borrower; Consideration.
The transaction evidenced by this Agreement and the other Loan Documents is in
the best interests of the Borrower, REA and each Guarantor and the creditors of
such Persons. The direct and indirect benefits to inure to the Borrower, REA and
each Guarantor pursuant to this Agreement and the other Loan Documents
constitute substantially more than "reasonably equivalent value" (as such term
is used in Section 548 of the Bankruptcy Code) and "valuable consideration,"
"fair value," and "fair consideration," (as such terms are used in any
applicable state fraudulent conveyance law), in exchange for the benefits to be
provided by the Borrower, REA and each Guarantor pursuant to this Agreement and
the other Loan Documents, and but for the willingness of REA and each Guarantor
to guaranty the Loan, the Borrower would be unable to obtain the financing
contemplated hereunder which financing will enable the Borrower, REA, each
Guarantor and their respective Subsidiaries to have available financing to
conduct and expand their business.
Section 7 AFFIRMATIVE COVENANTS.
Each of the Borrower and REA covenants and agrees that, so long as any
Loan or Note is outstanding or any Lender has any obligation to make any Loans:
Section 7.1 Punctual Payment. The Borrower will duly and punctually pay
or cause to be paid the principal and interest on the Loans and all interest and
fees provided for in this Agreement, all in accordance with the terms of this
Agreement and the Notes, as well as all other sums owing pursuant to the Loan
Documents.
44
Section 7.2 Maintenance of Office. The Borrower, REA and each Guarantor
will maintain its respective chief executive office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place in the United
States of America as the Borrower, REA or any Guarantor shall designate upon
thirty (30) days prior written notice to the Agent and the Lenders, where
notices, presentations and demands to or upon the Borrower, REA or such
Guarantor in respect of the Loan Documents may be given or made.
Section 7.3 Records and Accounts. The Borrower, REA and each Guarantor
will (a) keep, and cause each of their respective Subsidiaries to keep, true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP and (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation and amortization
of its properties and the properties of their respective Subsidiaries,
contingencies and other reserves. Neither the Borrower, REA, any Guarantor nor
any of their respective Subsidiaries shall, without the prior written consent of
the Majority Lenders, (x) make any material change to the accounting procedures
used by such Person in preparing the financial statements and other information
described in Section 6.4 or Section 7.4, or (y) change its fiscal year.
Section 7.4 Financial Statements, Certificates and Information. REA
will deliver or cause to be delivered to each of the Lenders:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of REA, the audited
balance sheet of REA at the end of such year (both on a consolidated
basis with the Borrower and their respective Subsidiaries and on an
unconsolidated basis), and, if requested, the related audited
statements of income, changes in capital and cash flows for such year
(both on a consolidated basis with the Borrower and their respective
Subsidiaries and if requested by the Agent, on an unconsolidated
basis), each setting forth in comparative form the figures for the
previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with GAAP, and accompanied by an
auditor's report prepared without qualification as to the scope of the
audit by a "Big Six" accounting firm, and any other information the
Lenders may need to complete a financial analysis of REA, the Borrower
and their respective Subsidiaries, in any event together with a written
statement from such accountants to the effect that they have read this
Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event
of Default, or, if such accountants shall have obtained knowledge of
any Default or Event of Default they shall disclose in such statement
any such Default or Event of Default;
(b) as soon as practicable, but in any event not later than
forty five (45) days after the end of each of the first three fiscal
quarters of REA, copies of the unaudited balance sheet of REA as at the
end of such quarter (both on a consolidated basis with the Borrower and
their respective Subsidiaries and if requested by the Agent, on an
unconsolidated basis), and the related unaudited statements of income,
changes in capital and cash flows for the portion of REA's fiscal year
then elapsed (both on a consolidated basis with the Borrower and their
45
respective Subsidiaries and if requested by the Agent, on an
unconsolidated basis), and a statement showing the aging of the
receivables for the Mortgaged Properties, all in reasonable detail and
prepared in accordance with GAAP, together with a certification by the
chief financial officer or accounting officer of REA that the
information contained in such financial statements fairly presents the
financial position of REA the Borrower and their respective
Subsidiaries on the date thereof (subject to year-end adjustments);
(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement (a
"Compliance Certificate") certified by the chief financial officer or
chief accounting officer of REA in the form of Exhibit H hereto (or in
such other form as the Agent may approve from time to time) setting
forth in reasonable detail computations evidencing compliance with the
covenants contained in Section 9 and the other covenants described in
such certificate and (if applicable) setting forth reconciliations to
reflect changes in GAAP since the Balance Sheet Date. The Compliance
Certificate shall be accompanied by copies of the statements of
Consolidated Operating Cash Flow for each such fiscal quarter and the
preceding fiscal quarters for REA and a statement of Gross Cash
Receipts, Operating Expenses and Net Operating Income for each such
fiscal quarter and the preceding fiscal quarter for each of the
Mortgaged Properties, prepared on a basis consistent with the
statements furnished to the Lenders prior to the date hereof and
otherwise in form and substance satisfactory to the Agent, together
with a certification by the chief financial officer or chief accounting
officer of REA that the information contained in such statement fairly
presents the Consolidated Operating Cash Flow, Net Operating Income,
Gross Cash Receipts and Operating Expenses of REA and the Mortgaged
Properties, as applicable, for such periods;
(d) as soon as practicable but in any event not later than
forty five (45) days after the end of each fiscal quarter of REA
(including the fourth fiscal quarter in each year), an updated Rent
Roll with respect to each Mortgaged Property, a summary of each such
Rent Roll, and a leasing activity report with respect to each Mortgaged
Property setting forth the efforts to market and lease the then
unleased space in each Mortgaged Property and the results of such
efforts;
(e) simultaneously with the delivery of the financial
statement referred to in subsection (a) above, the business plan of REA
for the current fiscal year and a statement (i) listing the Real Estate
owned or leased by REA, the Borrower, the Guarantors and their
respective Subsidiaries and stating the location thereof, the date
acquired and the acquisition cost thereof, (ii) listing the
Indebtedness of REA, the Borrower, the Guarantors and their respective
Subsidiaries (excluding Indebtedness of the type described in Section
8.1(b)-(e)), which statement shall include, without limitation, a
statement of the original principal amount of such Indebtedness and the
current amount outstanding, the holder thereof, the maturity date and
any extension options, the interest rate, the collateral provided for
such Indebtedness and whether such Indebtedness is recourse or
non-recourse,
46
(iii) listing the Real Estate, if any, owned or leased by REA, the
Borrower, the Guarantors and their respective Subsidiaries which is
Under Development and providing a brief summary of the status of such
development and (iv) listing any new Subsidiaries of the Borrower, REA
or any Guarantor and the ownership thereof, and any change of ownership
of any existing Subsidiaries;
(f) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature sent to the partners of
the Borrower or the partners or shareholders of REA or any Guarantor;
(g) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and amendments
thereto of the Borrower, REA and each Guarantor; and
(h) from time to time such other financial data and
information in the possession of the Borrower, REA, each Guarantor or
their respective Subsidiaries (including without limitation auditors'
management letters, property inspection and environmental reports and
information as to zoning and other legal and regulatory changes
affecting the Borrower, REA or any Guarantor) as the Agent may
reasonably request.
Notwithstanding anything to the contrary set forth in this Agreement, during any
period of time that the percentage partnership interest of REA in the Borrower
falls below the ownership threshold which, in accordance with GAAP, would permit
the consolidation of the accounts of the Borrower with the accounts of REA:
(i) pursuant to Section 7.4(a), REA shall cause to be prepared
and delivered the audited balance sheet and financial statements of REA
and the Borrower which are described therein on an unconsolidated
basis, together with an agreed upon procedures report from the
accountants who are preparing such balance sheets and financial
statements showing the consolidation of such balance sheets and
financial statements as if such consolidation were permitted by GAAP
and otherwise in form acceptable to the Agent and, if requested by the
Agent, an audited balance sheet and financial statement of the Borrower
consolidated in accordance with GAAP;
(ii) pursuant to Section 7.4(b), REA shall prepare and deliver
the unaudited balance sheets and financial statements of REA and the
Borrower which are described therein on a consolidated basis (whether
or not such consolidation is permitted by GAAP) based on consolidation
methods and procedures in accordance with GAAP;
(iii)pursuant to Section 7.4(c), REA shall prepare and deliver
the Compliance Certificates described therein and calculate compliance
with the covenants set forth in Section 9 and the other covenants
described in such Compliance Certificates on the basis of the
consolidated balance sheets and financial statements of REA and the
Borrower which are described in subclauses (i) and (ii) hereof; and
47
(iv) all other terms and provisions of this Agreement
(including defined terms) which depend upon or make reference to the
consolidated financial results, balance sheets or financial statements
of REA shall be construed to mean such consolidated results, balance
sheets or financial statements of REA and the Borrower which are
prepared and determined in accordance with subclauses (i), (ii) and
(iii) hereof.
Section 7.5 Notices.
(a) Defaults. The Borrower and REA will immediately upon becoming aware
of same notify the Agent in writing of the occurrence of any Default or Event of
Default. If any Person shall give any notice or take any other action in respect
of a claimed default (whether or not constituting an Event of Default) under
this Agreement or under any note, evidence of indebtedness, indenture or other
obligation to which or with respect to which the Borrower, REA, any Guarantor or
any of their respective Subsidiaries is a party or obligor, whether as principal
or surety, and such default would permit the holder of such note or obligation
or other evidence of indebtedness to accelerate the maturity thereof, which
acceleration would have a material adverse effect on the Borrower, REA or any
Guarantor, the Borrower and REA shall forthwith give written notice thereof to
the Agent and each of the Lenders, describing the notice or action and the
nature of the claimed default.
(b) Environmental Events. The Borrower and REA will give notice to the
Agent within five (5) Business Days of becoming aware of (i) any potential or
known Release, or threat of Release, of any Hazardous Substances at or from any
Real Estate; (ii) any violation of any Environmental Law that the Borrower, REA,
any Guarantor or any of their respective Subsidiaries reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency or (iii) any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental liability,
of any federal, state or local environmental agency or board, that in either
case involves any Real Estate and could reasonably be expected to materially
affect the assets, liabilities, financial condition or operations of the
Borrower, REA, any Guarantor or any of their respective Subsidiaries or the
Agent's liens or security title on the Collateral pursuant to the Security
Documents.
(c) Notification of Claims Against Collateral. The Borrower and REA
will give notice to the Agent in writing within five (5) Business Days of
becoming aware of any setoff, claims (including, with respect to the Real
Estate, environmental claims), withholdings or other defenses to which any of
the Collateral, or the rights of the Agent or the Lenders with respect to the
Collateral, are subject.
(d) Notice of Litigation and Judgments. The Borrower and REA will give
notice to the Agent in writing within five (5) Business Days of becoming aware
of any litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting the Borrower, REA any Guarantor or any of their
respective Subsidiaries or to which the Borrower, REA, any Guarantor or any of
their respective Subsidiaries is or is to become a party involving an uninsured
claim against any of the Borrower, REA, any Guarantor or any of their respective
48
Subsidiaries that could reasonably be expected to have a materially adverse
effect on the Borrower, REA or any Guarantor stating the nature and status of
such litigation or proceedings. The Borrower, REA and each Guarantor will give
notice to the Agent, in writing, in form and detail reasonably satisfactory to
the Agent and each of the Lenders, within ten days of any judgment not covered
by insurance, whether final or otherwise, against any of the Borrower, REA, any
Guarantor or any of their respective Subsidiaries in an amount in excess of
$1,000,000.
(e) Notice of Proposed Sales, Encumbrances, Refinance or Transfer of
Non-Mortgaged Property. The Borrower and REA will give notice to the Agent of
any proposed or completed sale, encumbrance, refinance or transfer of any Real
Estate (other than the Mortgaged Properties) of the Borrower, REA, any Guarantor
or their respective Subsidiaries within any fiscal quarter of REA, such notice
to be submitted together with the Compliance Certificate provided or required to
be provided to the Lenders under Section 7.4 with respect to such fiscal
quarter. The Compliance Certificate shall with respect to any proposed or
completed sale, encumbrance, refinance or transfer be adjusted in the best good
faith estimate of REA to give effect to such sale, encumbrance, refinance or
transfer and demonstrate that no Default or Event of Default with respect to the
covenants referred to therein shall exist after giving effect to such sale,
encumbrance, refinance or transfer.
(f) Notification of Lenders. Within five(5) Business Days after
receiving any notice under this Section 7.5, the Agent will forward a copy
thereof to each of the Lenders, together with copies of any certificates or
other written information that accompanied such notice.
(g) Notice of Occupancy or Termination by Tenant. The Borrower and REA
will give written notice to the Agent in writing within five (5) Business Days
of becoming aware of the termination of a Lease within a Mortgaged Property
covering either 10,000 square feet or more or five percent (5%) or more of the
aggregate Net Rentable Area of such Mortgaged Property, and such notice shall
state the name of the tenant and the Mortgaged Property affected and the amount
of the base rent and additional rent that such tenant was obligated to pay. The
Borrower and REA shall deliver to the Agent within thirty (30) days after the
end of each fiscal quarter a true and correct copy of each Lease within a
Mortgaged Property entered into by or on behalf of the Borrower, REA, any
Guarantor or their respective Subsidiaries during the preceding quarter and not
previously delivered to the Agent.
Section 7.6 Existence; Compliance with Environmental Recommendations.
(a) The Borrower will do or cause to be done all things necessary to preserve
and keep in full force and effect its existence as a Delaware limited
partnership. REA will do or cause to be done all things necessary to preserve
and keep in full force and effect its existence as a Maryland corporation. Each
Guarantor will do or cause to be done all things necessary to preserve and keep
in full force and effect its legal existence in the jurisdiction of its
incorporation or formation. The Borrower and REA will cause each of their
respective Subsidiaries to do or cause to be done all things necessary to
preserve and keep in full force and effect their legal existence in the
jurisdiction of its incorporation or formation. The Borrower and REA will do or
cause to be done all things necessary to preserve and keep in full force all of
their respective rights and franchises and those of their respective
Subsidiaries, the preservation of which is necessary to the conduct of their
49
business. The Borrower and REA will, and will cause each of their respective
Subsidiaries to, continue to engage primarily in the businesses now conducted by
them and in related businesses.
(b) Without limitation of the obligations of the Borrower or REA under
this Agreement with respect to the maintenance of the Mortgaged Properties, the
Borrower and REA shall promptly and diligently comply with the recommendations
of the Environmental Engineer concerning the Mortgaged Properties contained in
the building inspection and environmental reports delivered to the Agent.
Section 7.7 Insurance. The Borrower, REA or the applicable Guarantor
will, at its expense, procure and maintain for the benefit of the Borrower, REA
or such Guarantor and the Agent, insurance policies issued by such insurance
companies, in such amounts, in such form and substance, and with such coverages,
endorsements, deductibles and expiration dates (which shall not be less than 12
months from the date of issuance of such coverage) as are reasonably acceptable
to the Agent, providing the following types of insurance covering each Mortgaged
Property:
(i) "all Risks" property insurance (including broad form
flood, broad form earthquake and comprehensive boiler and machinery
coverages) on each Building and the contents therein of the Borrower,
REA or such Guarantor and their respective Subsidiaries in an amount
not less than one hundred percent (100%) of the full replacement cost
of each such Building and the contents therein determined no less
frequently than every 24 months by an insurer, or, if not so determined
by the insurer, by a qualified appraiser selected and paid for by the
Borrower, REA or such Guarantor and acceptable to the Agent, or such
other limit as the Agent may approve, with deductibles not to exceed
$100,000 for any one occurrence, with a replacement cost coverage
endorsement, an agreed amount endorsement, and, if requested by the
Agent, a contingent liability from operation of building laws
endorsement, a demolition cost endorsement and an increased cost of
construction endorsement in such amounts as the Agent may require. Full
replacement cost as used in this Section 7.7 means the cost of
replacing a Building (exclusive of the cost of excavations, foundations
and footings below the lowest basement floor) and the contents therein
without deduction for physical depreciation thereof;
(ii) during the course of construction or repair of any
Building, the insurance required by clause (i) above shall be written
on a builders risk, completed value, non-reporting form, meeting all of
the terms required by clause (i) above, covering the total value of
work performed, materials, equipment, machinery and supplies furnished,
existing structures, and temporary structures being erected on or near
the Mortgaged Property, including coverage against collapse and damage
during transit or while being stored off-site, and containing a soft
costs (including loss of rents) coverage endorsement and a permission
to occupy endorsement;
50
(iii) flood insurance if at any time any Building is located
in any federally designated "special hazard area" (including any area
having special flood, mudslide and/or flood-related erosion hazards,
and shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map
published by the Federal Emergency Management Agency as Zone A, AO,
Al-30, AE, A99, AH, ▇▇, ▇▇-30, VE, V, M or E) and the broad form flood
coverage required by clause (i) above is not available, in an amount
equal to the full replacement cost or the maximum amount then available
under the National Flood Insurance Program;
(iv) rent loss insurance in an amount sufficient to recover at
least the total estimated gross receipts from all sources of income,
including without limitation, rental income, for the Mortgaged Property
for a twelve month period;
(v) commercial general liability insurance against claims for
personal injury (to include, without limitation, bodily injury and
personal and advertising injury) and property damage liability, all on
an occurrence basis, if commercially available, with such coverages as
the Agent may reasonably request (including, without limitation,
contractual liability coverage, completed operations coverage for a
period of two years following completion of construction of any
improvements on the Mortgaged Property, and coverages equivalent to an
ISO broad form endorsement), with a general aggregate limit of not less
than $2,000,000, a completed operations aggregate limit of not less
than $2,000,000 and a combined single "per occurrence" limit of not
less than $1,000,000 for bodily injury, property damage and medical
payments;
(vi) during the course of construction or repair of any
improvements on the Mortgaged Property, owner's contingent or
protective liability insurance covering claims not covered by or under
the terms or provisions of the insurance required by clause (v) above;
(vii) employers liability insurance;
(viii) umbrella liability insurance with limits of not less
than $25,000,000 to be in excess of the limits of the insurance
required by clauses (v), (vi) and (vii) above, with coverage at least
as broad as the primary coverages of the insurance required by clauses
(v), (vi) and (vii) above, with any excess liability insurance to be at
least as broad as the coverages of the lead umbrella policy. All such
policies shall be endorsed to provide defense coverage obligations;
(ix) workers' compensation insurance for all employees of the
Borrower, REA or such Guarantor or their respective Subsidiaries
engaged on or with respect to the Mortgaged Property; and
(x) such other insurance in such form and in such amounts as
may from time to time be reasonably required by the Agent against other
insurable
51
hazards and casualties which at the time are commonly insured against
in the case of properties of similar character and location to the Real
Estate.
The Borrower, REA or the applicable Guarantor shall pay all premiums on
insurance policies. The insurance policies with respect to all Mortgaged
Property provided for in clauses (v), (vi) and (viii) above shall name the Agent
and each Lender as an additional insured and shall contain a cross liability/
severability endorsement. The insurance policies provided for in clauses (i),
(ii), (iii) and (iv) above shall name the Agent as mortgagee and loss payee,
shall be first payable in case of loss to the Agent, and shall contain mortgage
clauses and lender's loss payable endorsements in form and substance reasonably
acceptable to the Agent. The Borrower shall deliver duplicate originals or
certified copies of all such policies to the Agent, and the Borrower shall
promptly furnish to the Agent all renewal notices and evidence that all premiums
or portions thereof then due and payable have been paid. At least 30 days prior
to the expiration date of the policies, the Borrower shall deliver to the Agent
evidence of continued coverage, in the form of a certificate of insurance
satisfactory to the Agent.
(a) All policies of insurance required by this Agreement shall contain
clauses or endorsements to the effect that (i) no act or omission of the
Borrower, REA or any Guarantor or any or their respective Subsidiaries or anyone
acting for the Borrower, REA, any Guarantor or any such Subsidiary (including,
without limitation, any representations made in the procurement of such
insurance), which might otherwise result in a forfeiture of such insurance or
any part thereof, no occupancy or use of the Mortgaged Property for purposes
more hazardous then permitted by the terms of the policy, and no foreclosure or
any other change in title to the Mortgaged Property or any part thereof, shall
affect the validity or enforceability of such insurance insofar as the Agent is
concerned, (ii) the insurer waives any right of setoff, counterclaim,
subrogation, or any deduction in respect of any liability of the Borrower, REA,
any Guarantor, any such Subsidiary, the Agent and the Lenders, (iii) such
insurance is primary and without right of contribution from any other insurance
which may be available, (iv) such policies shall not be modified, canceled or
terminated prior to the scheduled expiration date thereof without the insurer
thereunder giving at least thirty (30) days prior written notice to the Agent,
and (v) the Agent or the Lenders shall not be liable for any premiums thereon or
subject to any assessments thereunder, and such insurance shall in all events be
in amounts sufficient to avoid any coinsurance liability.
(b) The insurance required by this Agreement may be effected through a
blanket policy or policies covering all Real Estate of the Borrower, REA, any
Guarantor or any of their respective Subsidiaries not included in the Collateral
and shall be in amount equal to the replacement cost of all Buildings located on
such Real Estate, provided that such blanket policy or policies comply with all
of the terms and provisions of this Section 7.7 and contain endorsements or
clauses assuring that any claim recovery will not be less than that which a
separate policy would provide, including, without limitation, an aggregate
limits of insurance endorsement in the case of liability insurance.
(c) All policies of insurance required by this Agreement shall be
issued by companies licensed to do business in the State where the policy is
issued and also in the states where the
52
Real Estate is located and having a rating in Best's Key Rating Guide of at
least "A" and a financial size category of at least "VIII".
(d) Neither the Borrower, REA, any Guarantor nor any of their
respective Subsidiaries shall carry separate insurance, concurrent in kind or
form or contributing in the event of loss, with any insurance required under
this Agreement unless such insurance complies with the terms and provisions of
this Section 7.7.
(e) In the event of any loss or damage to the Mortgaged Property, the
Borrower, REA or the applicable Guarantor shall give prompt written notice to
the insurance carrier and the Agent, and the Agent shall furnish a copy of such
notice promptly to each of the Lenders. Each of the Borrower, REA and the
Guarantors hereby irrevocably authorizes and empowers the Agent, at the Agent's
option and in the Agent's sole discretion or at the request of the Majority
Lenders in their sole discretion, as its attorney in fact, to make proof of such
loss, to adjust and compromise any claim under insurance policies, to appear in
and prosecute any action arising from such insurance policies, to collect and
receive Insurance Proceeds, and to deduct therefrom the Agent's expenses
incurred in the collection of such Insurance Proceeds; provided, however, that
so long as no Default or Event of Default has occurred and is continuing and so
long as the Borrower, REA or any Guarantor shall in good faith diligently pursue
such claim, the Borrower, REA or such Guarantor may make proof of loss and
appear in any proceedings or negotiations with respect to the adjustment of such
claim, except that the Borrower, REA or such Guarantor may not settle, adjust or
compromise any such claim without the prior written consent of the Agent, which
consent shall not be unreasonably withheld or delayed; provided, further, that
the Borrower, REA or such Guarantor may make proof of loss and adjust and
compromise any claim under casualty insurance policies which is in an amount
less than $500,000 so long as no Default or Event of Default has occurred and is
continuing and so long as the Borrower, REA or such Guarantor shall in good
faith diligently pursue such claim. The Borrower, REA and each Guarantor further
authorize the Agent, at the Agent's option, to (i) apply the balance of such
Insurance Proceeds to the payment of the Obligations whether or not then due, or
(ii) if the Agent shall require the reconstruction or repair of the Mortgaged
Property, to hold the balance of such proceeds as trustee to be used to pay
taxes, charges, sewer use fees, water rates and assessments which may be imposed
on the Mortgaged Property and the Obligations as they become due during the
course of reconstruction or repair of the Mortgaged Property and to reimburse
the Borrower, REA or such Guarantor, in accordance with such terms and
conditions as the Agent may prescribe, for the costs of reconstruction or repair
of the Mortgaged Property, and upon completion of such reconstruction or repair
to apply any excess to the payment of the Obligations. Notwithstanding the
foregoing, the Agent shall make such net Insurance Proceeds available to the
Borrower, REA or such Guarantor to reconstruct and repair the Mortgaged
Property, in accordance with such terms and conditions as the Agent may
prescribe in the Agent's discretion for the disbursement of the proceeds,
provided that (i) the cost of such reconstruction or repair is not estimated by
the Agent to exceed twenty five percent (25%) of the replacement cost of the
damaged Building (as reasonably estimated by the Agent), (ii) no Event of
Default shall have occurred and be continuing, (iii) the Borrower, REA or such
Guarantor shall have provided to the Agent additional cash security in an amount
equal to the amount reasonably estimated by the Agent to be the amount in excess
of such proceeds which will be required to complete such repair or restoration,
(iv) the Agent shall have approved the plans and
53
specifications, construction budget, construction contracts, and construction
schedule for such repair or restoration and reasonably determined that the
repaired or restored Mortgaged Property will provide the Agent with adequate
security for the Obligations (provided that the Agent shall not disapprove such
plans and specifications if the Building is to be restored to its condition
immediately prior to such damage), (v) the Borrower, REA or such Guarantor shall
have delivered to the Agent written agreements binding upon not less than
seventy-five percent (75%) of the tenants or other parties having present or
future rights to possession of any portion of the affected Mortgaged Property or
having any right to require repair, restoration or completion of the Mortgaged
Property or any portion thereof, agreeing upon a date for delivery of possession
of the Mortgaged Property or their respective portions thereof, to permit time
which is sufficient in the judgment of the Agent for such repair or restoration
and approving the plans and specifications for such repair or restoration, or
other evidence satisfactory to the Agent that none of such tenants or other
parties may terminate their Leases as a result of such casualty or as a result
of having a right to approve the plans and specifications for such repair or
restoration (it being agreed that the foregoing percentage of seventy-five
percent (75%) shall be determined by reference to those tenants in the aggregate
occupying or having rights to occupy not less than seventy-five percent (75%) of
the Net Rentable Area of the Building so damaged), (vi) the Agent shall
determine that such repair or reconstruction can be completed prior to the
Maturity Date, (vii) the Agent shall receive evidence reasonably satisfactory to
it that any such restoration, repair or rebuilding complies in all respects with
any and all applicable state, federal and local laws, ordinances and
regulations, including without limitation, zoning laws, ordinances and
regulations, and that all required permits, licenses and approvals relative
thereto have been or will be issued in a manner so as not to impede the progress
of restoration, and (viii) the Agent shall receive evidence reasonably
satisfactory to it that the insurer under such policies of fire or other
casualty insurance does not assert any defense to payment under such policies
against the Borrower, REA, any Guarantor or the Agent. Any excess Insurance
Proceeds shall be paid to the Borrower, or if an Event of Default has occurred
and is continuing, such proceeds shall be applied to the payment of the
Obligations, unless in either case by the terms of the applicable insurance
policy the excess proceeds are required to be returned to such insurer. In no
event shall the provisions of this Section be construed to extend the Maturity
Date or to limit in any way any right or remedy of the Agent upon the occurrence
of an Event of Default hereunder. If the Mortgaged Property is sold or the
Mortgaged Property is acquired by the Agent, all right, title and interest of
the Borrower, REA and any Guarantor in and to any insurance policies and
unearned premiums thereon and in and to the proceeds thereof resulting from loss
or damage to the Mortgaged Property prior to the sale or acquisition shall pass
to the Agent or any other successor in interest to the Borrower or purchaser of
the Mortgaged Property.
(f) The Borrower, REA and each and Guarantor will require any general
contractor to obtain and maintain at all times during the construction of any
improvements to the Mortgaged Property the insurance required by the general
contractor's contract approved by the Agent and such other insurance as may be
reasonably required by the Agent (including, without limitation, commercial
general liability insurance, comprehensive automobile liability insurance,
all-risk contractor's equipment floater insurance, workmen's compensation
insurance and employer liability insurance). The Borrower, REA and each and
Guarantor will require its architect, engineer and any other design professional
providing design or engineering services in
54
connection with the construction of any improvements to the Mortgaged Property
to obtain and maintain professional liability insurance covering any claims
asserted with respect to the Mortgaged Property for such period of time as the
Agent may reasonably approve. All such insurance required by this paragraph
shall be in such amounts and form, to include such coverage and endorsements,
and to be issued by such insurers as shall be approved by the Agent, and to
contain the written agreement of the insurer to give the Agent thirty (30) days
prior written notice of cancellation, nonrenewal, modification or expiration.
The Borrower, REA and each Guarantor will provide or will cause its general
contractor or design professional to provide the Agent with certificates
evidencing such insurance upon the request of the Agent.
(g) The Borrower, REA and the Guarantors will, and will cause each of
their respective Subsidiaries to, at their expense, procure and maintain
insurance covering the Real Estate other than the Collateral in such amounts and
against such risks and casualties as are customary for properties of similar
character and location, due regard being given to the type of improvements
thereon, their construction, location, use and occupancy.
(h) The Borrower, REA and the Guarantors will provide to the Agent for
the benefit of the Lenders Title Policies for all of the Mortgaged Properties of
such Person. Each Title Policy shall also contain, to the extent available, a
tie-in endorsement aggregating the insurance coverage provided under all of the
policies issued by the same title insurance company relating to the Borrower,
REA and each Guarantor.
Section 7.8 Taxes. The Borrower, REA and the Guarantors will, and will
cause their respective Subsidiaries to, duly pay and discharge, or cause to be
paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges imposed upon them or upon the
Mortgaged Properties or the other Real Estate, sales and activities, or any part
thereof, or upon the income or profits therefrom, provided that any such tax,
assessment, charge or levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
which shall suspend the collection thereof with respect to such property,
neither such property nor any portion thereof or interest therein would be in
any danger of sale, forfeiture or loss by reason of such proceeding and the
Borrower, REA, any such Guarantor or any such Subsidiary shall have set aside on
its books adequate reserves in accordance with GAAP; and provided, further, that
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor, the Borrower, REA, any such Guarantor or any
such Subsidiary either (i) will provide a bond issued by a surety reasonably
acceptable to the Agent and sufficient to stay all such proceedings or (ii) if
no such bond is provided, will pay each such tax, assessment, charge or levy.
Section 7.9 Inspection of Properties and Books. The Borrower, REA and
the Guarantors will, and will cause their respective Subsidiaries to, permit the
Lenders, through the Agent or any representative designated by the Agent, at the
Borrower's expense and upon reasonable prior notice to visit and inspect any of
the properties of the Borrower, REA, each Guarantor or any of their respective
Subsidiaries, to examine the books of account of the Borrower, REA, each
Guarantor and their respective Subsidiaries (and to make copies thereof and
extracts therefrom) and to discuss the affairs, finances and accounts of the
Borrower, REA, any Guarantor and their respective Subsidiaries with, and to be
advised as to the same by, their respective officers, all at
55
such reasonable times and intervals as the Agent or any Lender may reasonably
request. The Lenders shall use good faith efforts to coordinate such visits and
inspections so as to minimize the interference with and disruption to the normal
business operations of the Borrower, REA, the Guarantors and their respective
Subsidiaries.
Section 7.10 Compliance with Laws, Contracts, Licenses, and Permits.
The Borrower, REA and the Guarantors will, and will cause each of their
respective Subsidiaries to, comply in all respects with (i) all applicable laws
and regulations now or hereafter in effect wherever its business is conducted,
including all Environmental Laws, (ii) the provisions of its corporate charter,
partnership agreement, limited liability company agreement or declaration of
trust, as the case may be, and other charter documents and bylaws, (iii) all
agreements and instruments in all material respects to which it is a party or by
which it or any of its properties may be bound, (iv) all applicable decrees,
orders, and judgments, and (v) all licenses and permits required by applicable
laws and regulations for the conduct of its business or the ownership, use or
operation of its properties. If any authorization, consent, approval, permit or
license from any officer, agency or instrumentality of any government shall
become necessary or required in order that the Borrower, REA, any Guarantor or
their respective Subsidiaries may fulfill any of its obligations hereunder, the
Borrower, REA, such Guarantor or such Subsidiary will immediately take or cause
to be taken all steps necessary to obtain such authorization, consent, approval,
permit or license and furnish the Agent and the Lenders with evidence thereof.
Section 7.11 Further Assurances. The Borrower, REA and each Guarantor
will and will cause each of their respective Subsidiaries to, cooperate with the
Agent and the Lenders and execute such further instruments and documents as the
Lenders or the Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Agreement and the other Loan Documents.
Section 7.12 Intentionally Omitted.
Section 7.13 Management. (a) There shall not occur, without the prior
written consent of the Majority Lenders, any material change in any unaffiliated
third party management of the Mortgaged Properties (including, without
limitation, the hiring or termination of any unaffiliated third party property
manager).
(b) Each of the Borrower, REA and each Guarantor shall have the right
to cause its Mortgaged Property to be managed pursuant to a Management Agreement
that (i) is with a property manager which is not an Affiliate and which has been
approved by the Agent, and (ii) contains provisions reasonably satisfactory to
the Agent, including with respect to compensation of the property manager,
subordination of management fees, termination rights and exercise by the Agent
of its remedies under the Loan Documents following an Event of Default. Neither
the Borrower, REA nor any Guarantor shall directly or indirectly enter into any
Management Agreement or similar agreement delegating to another Person which is
not an Affiliate substantial authority over the leasing, maintenance or
operation of any Mortgaged Property other than as aforesaid.
56
Section 7.14 Leases of the Property. Neither the Borrower, REA nor any
Guarantor will lease all or any portion of a Mortgaged Property or amend,
supplement or otherwise modify, terminate or cancel, or accept the surrender of,
or consent to the assignment or subletting of, or grant any concessions to or
waive the performance of any obligations of any tenant, lessee or licensee
under, any now existing or future Lease without the prior written consent of the
Agent; provided, however, with respect to any Lease which covers less than the
lesser of 20,000 square feet or five percent (5%) of the aggregate Net Rentable
Area of the Mortgaged Properties, the Borrower, REA or any Guarantor may amend,
supplement or otherwise modify, terminate or cancel, or accept the surrender of,
or consent to the assignment or subletting of, or granting concessions to or
waive the performance of any obligations of any tenant, lessee or licensee under
any such Lease in the ordinary course of business consistent with sound leasing
and management practices for similar properties. The Borrower, at the Agent's
request, shall furnish the Agent with executed copies of all Leases hereafter
made. Within 30 days from the date hereof, the Borrower will submit to the Agent
a form lease for use for office properties and a form lease for industrial
properties (collectively, the "Form Lease") for the Mortgaged Properties, which
shall be reasonably satisfactory to the Agent and shall thereafter be utilized
in connection with all leasing of space at the Mortgaged Properties. Upon the
Agent's request, the Borrower, REA and each Guarantor shall make a separate and
distinct assignment to the Agent as additional security, of all Leases hereafter
made. Notwithstanding the foregoing, following the Agent's approval of the
"Leasing Parameters" (as hereinafter defined) for a Mortgaged Property, the
Borrower, REA or any Guarantor may, without the prior approval of the Agent,
enter into any Lease provided that the Lease covers less than the lesser of
20,000 square feet or five percent (5%) of the aggregate Net Rentable Area of
the Mortgaged Properties, is a bona fide arm's length lease entered into in the
ordinary course of business with a party which is not an Affiliate of the
Borrower, REA or any Guarantor, falls within the Leasing Parameters and is on
the Form Lease (without material modification or addition). Any Lease submitted
to the Agent for approval shall be deemed approved by the Agent unless the Agent
expressly disapproves the same by written notice delivered to the Borrower
(which shall state the reasons for disapproval) within five (5) Business Days
after the date of the delivery of such Lease to the Agent for approval and all
other information reasonably requested by the Agent in order to make such
determination. As used herein, "Leasing Parameters" means leasing parameters for
a Mortgaged Property approved by the Agent. Leasing Parameters shall include,
without limitation, the minimum and maximum term, the minimum rent, tax and
operating stops, tenant standard improvements, tenant allowances and other
tenant inducements and leasing commissions, and shall be approved by the Agent
prior to the commencement of each calendar year during the term of the Notes.
The Agent agrees to provide a Subordination, Attornment and Nondisturbance
Agreement for the tenant under any Lease that covers more than the lesser of
20,000 square feet or five (5%) of the aggregate Net Rentable Area of the
Mortgaged Properties as requested by the Borrower, provided that (a) such tenant
is not an Affiliate of the Borrower, REA or any Guarantor, (b) the Lease is on
the Form Lease (without modifications or additions), (c) the Lease falls within
the Leasing Parameters, and (d) the terms of the Subordination, Attornment and
Nondisturbance Agreement are otherwise acceptable to the Agent. The Agent shall
provide a Subordination, Attornment and Nondisturbance Agreement with respect to
each other Lease that is approved by the Agent provided that the terms of the
Subordination, Attornment and Nondisturbance Agreement are acceptable to the
Agent.
57
Section 7.15 Fundamental Changes of Borrower. Each of the Borrower, REA
and each Guarantor: (a) does not own and will not own or lease any encumbered
asset other than (i) the Mortgaged Properties and incidental personal property
necessary for the operation of the Mortgaged Properties (which will only be
encumbered by liens in favor of the Agent), and (ii) other properties as
permitted by Section 8.2(iv), Section 8.2(v) and Section 8.2(viii); (b) is not
engaged and will not engage in any business other than the ownership, management
or leasing of the Mortgaged Properties and Investments permitted pursuant to
Section 8.3; (c) except for those agreements described on Schedule 6.15, has not
entered and will not enter into any contract or agreement with any of its
general partners, principals or Affiliates or any Affiliate of any such general
partner except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis
with third parties other than an Affiliate; (d) has not made and will not make
any loans or advances to any third party (including any Affiliate (other than
the loan evidenced by the promissory note described in Section 8.1(v)); (e) is
and will be solvent and pay its debt from its assets as the same shall become
due; (f) will not, nor will any partner, limited or general, or shareholder
thereof, amend, modify or otherwise change its partnership certificate,
partnership agreement, limited liability company agreement, articles of
incorporation or by-laws, except in connection with the admission of new limited
partners in the Borrower in accordance with the terms of this Agreement, or such
other amendments, modifications or changes to such organizational documents
which do not adversely affect the Lenders or their rights hereunder; (g) will
conduct and operate its business substantially as presently conducted and
operated and in compliance with the terms and conditions of this Agreement; (h)
will maintain books and records and accounts separate from those of its
Affiliates, including its general partners; (i) will be, and at all times will
hold itself out to the public as, a legal entity separate and distinct from any
other entity (including any Affiliate thereof, including any general partner or
any Affiliate of any general partner of the Borrower, REA or any Guarantor); (j)
will file its own tax returns; (k) 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; (l) will not seek the
dissolution or winding up, in whole or in part, of the Borrower, REA or any
Guarantor; (m) will not commingle the funds and other assets of the Borrower,
REA or any Guarantor with those of any general partner, any Affiliate or any
other Person; (n) has and will maintain its assets in such a manner that it is
not costly or difficult to segregate, ascertain or identify their respective
individual assets from those of any affiliate or any other person; and (o)
except as contemplated hereunder, does not and will not hold itself out to be
responsible for the debts or obligations of any other person.
Section 7.16 Registered Servicemark. Without the prior written consent
of the Agent, none of the Mortgaged Properties shall be owned or operated by the
Borrower, REA or any Guarantor under any registered or protected trademark,
tradename, servicemark or logo. Without limiting the foregoing, the Agent may
condition its consent to the use of any of the foregoing upon the granting to
the Agent for the benefit of the Lenders of a perfected first priority security
interest therein.
Section 7.17 Ownership of Real Estate. All Real Estate and all
interests (whether direct or indirect) of REA, the Borrower, the Guarantors and
any of their respective Subsidiaries in income-producing real estate assets now
owned or leased or acquired or leased after the Closing Date shall be owned or
leased directly by the Borrower; provided, however that (i) subject to the
58
restrictions contained in Section 8.3, the Borrower shall be permitted to own or
lease interests in Real Estate together with other third party joint venture
partners; (ii) Real Estate which is encumbered by Non-recourse Indebtedness of
the type described in Section 8.1 (f) or 8.1(h) may be owned or leased by the
Borrower or any of its Subsidiaries; and (iii) the Subsidiaries of the Borrower
or REA listed on Schedule 7.17 hereto may own or lease the Real Estate described
therein.
Section 7.18 Intentionally Omitted.
Section 7.19 Change in Control. The Borrower and REA covenant and agree
that: (i) REA will at all times (a) be the sole general partner of the Borrower,
(b)own the largest percentage interest of any partner in the Borrower which
percentage will be sufficient to permit the accounts of the Borrower and REA to
be determined on a consolidated basis in accordance with GAAP and (c) be
responsible for making all day-to-day operational and management decisions to be
made by the Borrower in the conduct of its business and (ii) each Guarantor will
be and remain a wholly owned subsidiary of the Borrower, except for Virginia
Street Associates Limited Partnership ("Virginia"), as to which a 0.1% limited
partnership interest may continue to be owned by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
Section 7.20 Intentionally Omitted.
Section 7.21 REIT Status. Subject to the terms of Section 8.7, REA
shall at all times comply with all requirements of applicable laws and
regulations necessary to maintain REIT Status.
Section 7.22 Maintenance of Property; Repair; Alterations. Each of the
Borrower, REA and each Guarantor (i) shall maintain or cause to be maintained
its Mortgaged Property and all other items of its Collateral in good condition
and repair, reasonable wear and tear excepted, (ii) except to the extent
required by any Lease, shall not remove, demolish or structurally alter, or
permit or suffer the removal, demolition or structural alteration of, any
Buildings except with the prior written consent of the Agent which consent shall
not be unreasonably withheld, conditioned or delayed, (iii) shall complete any
Buildings which may be now or hereafter constructed on any Mortgaged Property
and restore in like manner any portion of the Buildings which may be damaged or
destroyed thereof from any cause whatsoever, and pay when due all claims for
labor performed and materials furnished therefor, (iv) shall comply in all
material respects with all applicable requirements of insurance policies
required hereunder and all covenants, conditions and restrictions now or
hereafter affecting its Mortgaged Property or any other item of Collateral or
any part thereof or requiring any alterations or improvements, (v) shall not
commit, suffer or permit any act to be done in or upon the Collateral in
violation of any applicable law, (vi) except to the extent required by any
Lease, shall not remove any item of the Collateral without replacing it with a
comparable item of equal or greater quality, value and usefulness except for
sales in the ordinary course of business of property which is obsolete or no
longer useful, (vii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements of its Mortgaged Property and all
other items of Collateral in all cases in which the failure so to do would have
a material adverse effect on the condition of the applicable Mortgaged Property
or Collateral or on the financial condition, assets or operations of the
Borrower, REA, each Guarantor and their respective Subsidiaries and (viii) will
cause all of their respective properties and those of their respective
Subsidiaries used or useful in the conduct of their respective
59
business or the business of their respective Subsidiaries to be maintained and
kept in good condition, repair and working order (ordinary wear and tear
excepted) and supplied with all necessary equipment.
Section 7.23 Payment of Liens. (a) In the event that, notwithstanding
the covenants contained in Section 8.2, a lien not otherwise permitted under
Section 8.2 may encumber any Mortgaged Property or Collateral or any portion
thereof, the Borrower shall promptly discharge such lien or cause such lien to
be discharged by payment to the lienor or lien claimant or promptly secure
removal of such lien by bonding or deposit with the country clerk or otherwise
or, at the Agent's option, promptly obtain insurance against, any such lien
within thirty (30) days after the receipt of written notice thereof. The
Borrower shall make available to the Agent upon request all receipts or other
evidence satisfactory to the Agent of payment of taxes, assessments, liens or
any other item which may cause any such lien to be filed against any Mortgaged
Property or Collateral. The Borrower shall fully preserve the liens and the
priority of the Mortgages without cost or expense to the Agent.
(b) If the Borrower fails to promptly discharge or remove any such lien
described in paragraph (a) of this Section 7.23 within thirty (30) days after
the receipt of written notice thereof, then the Agent may, but shall not be
required to, procure the release and discharge of such lien, and any judgment or
decree thereon, and in furtherance thereof may, in its sole discretion, effect
any settlement or compromise with the lienor or lien claimant or post any bond
or furnish any security or indemnity as the Agent, in its sole discretion, may
elect. In settling, compromising or arranging for the discharge of any liens
under this subsection, the Agent shall not be required to establish or confirm
the validity or amount of the lien. The Borrower agrees that all costs and
expenses expended or otherwise incurred pursuant to this Section (including
reasonable attorneys' fees and disbursements) by the Lender shall be paid by the
Borrower in accordance with the terms hereof.
(c) In the event that the Agent reasonably suspects that a lien not
otherwise permitted under Section 8.2 may encumber any Mortgaged Property or
Collateral or any portion thereof, the Agent may, at the expense of the
Borrower, obtain an updated title and/or lien search regarding such Mortgaged
Property or Collateral; provided that if no such lien not otherwise permitted
hereunder is revealed by such updated title or lien search, the Borrower shall
have no obligation to pay for or reimburse the Agent in respect of, such title
or lien search.
Section 7.24 Distributions of Income to the Borrower. The Borrower
shall cause all of its Subsidiaries to promptly distribute to the Borrower (but
not less frequently than once each fiscal quarter of the Borrower, unless
otherwise approved by the Agent), whether in the form of dividends,
distributions or otherwise, all profits, proceeds or other income relating to or
arising from its Subsidiaries' use, operation, financing, refinancing, sale or
other disposition of their respective assets and properties after (a) the
payment by each Subsidiary of its Debt Service and Operating Expenses for such
quarter and (b) the establishment of reasonable reserves for the payment of
Operating Expenses not paid on at least a quarterly basis and capital
improvements to be made to such Subsidiary's assets and properties approved by
such Subsidiary in the ordinary course of business consistent with its past
practices.
60
Section 8 NEGATIVE COVENANTS.
Each of the Borrower and REA covenants and agrees that, so long as any
Loan or Note is outstanding or any of the Lenders has any obligation to make any
Loans:
Section 8.1 Restrictions on Indebtedness. Subject to the further
limitations contained in this Section 8.1, the Borrower REA and the Guarantors
will not, and will not permit their respective Subsidiaries to, create, incur,
assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than:
(a) Indebtedness to the Lenders arising under any of the Loan
Documents;
(b) current liabilities of the Borrower, REA, the Guarantors
or their respective Subsidiaries incurred in the ordinary course of
business but not incurred through (i) the borrowing of money, or (ii)
the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards for so long
as the existence of same is not an Event of Default under Section
12.1A(k);
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) subject to the provisions of Section 9, Non-recourse
Indebtedness in an aggregate principal amount not exceeding
$50,000,000; provided that (i) no such Non-recourse Indebtedness shall
be incurred unless the Borrower shall have provided to the Lenders a
statement that no Default or Event of Default exists and a Compliance
Certificate demonstrating compliance with the covenants referred to
therein after giving effect to such incurrence, (ii) such Non-recourse
Indebtedness bears interest at a fixed rate and has a maturity date
that is later than the Maturity Date; provided, that this clause (ii)
shall not apply to Non-recourse Indebtedness secured by a lien on Real
Estate which was proposed for inclusion in the Collateral pursuant to
Section 5.3 but not accepted by the Majority Lenders in accordance with
Section 5.3;
(g) Subject to the provisions of Section 9, the Non-recourse
Indebtedness described on Schedule 8.1 hereto;
(h) Subject to the provisions of Section 9, Non-recourse
Indebtedness that is assumed by the Borrower or a Subsidiary of the
Borrower in connection with the
61
acquisition of Real Estate; provided that the aggregate principal
amount of such Indebtedness shall not exceed (i) $150,000,000 during
any period that the Consolidated Total Assets of REA are less than
$750,000,000, and (ii) twenty percent (20%) of the Consolidated Total
Assets of REA during any period that the Consolidated Total Assets of
REA equal or exceed $750,000,000;
(i) Indebtedness in respect of reverse repurchase agreements
having a term of not more than 180 days with respect to Investments
described in Section 8.3(d) or (e); and
(j) That certain promissory note issued by REA to the Borrower
in the amount of $10,000,000.
Section 8.2 Restrictions on Liens, Etc. The Borrower, REA and the
Guarantors will not, and will not permit their respective Subsidiaries to (a)
create or incur or suffer to be created or incurred or to exist any lien,
security title, encumbrance, mortgage, pledge, negative pledge, charge,
restriction or other security interest of any kind upon any of their respective
property or assets of any character whether now owned or hereafter acquired, or
upon the income or profits therefrom; (b) transfer any of any of their property
or assets or the income or profits therefrom for the purpose of subjecting the
same to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement; (d)
suffer to exist for a period of more than thirty (30) days after the same shall
have been incurred any Indebtedness or claim or demand against any of them that
if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given
any priority whatsoever over any of their general creditors; (e) sell, assign,
pledge or otherwise transfer any accounts, contract rights, general intangibles,
chattel paper or instruments, with or without recourse; or (f) incur or maintain
any obligation to any holder of Indebtedness of the Borrower, REA, any Guarantor
or any such Subsidiary which prohibits the creation or maintenance of any lien
securing the Obligations; provided that the Borrower, REA, the Guarantors and
any such Subsidiary may create or incur or suffer to be created or incurred or
to exist:
(i) liens on properties to secure taxes, assessments and other
governmental charges or claims for labor, material or supplies in
respect of obligations not overdue;
(ii) liens on Real Estate other than the Mortgaged Property or
any interest therein (including the rents, issues and profits
therefrom) in respect of Indebtedness which is permitted by Section
8.1(d), Section 8.1(f), Section 8.1(g) or Section 8.1(h);
(iii) liens on Real Estate other than the Mortgaged Properties
or any interest therein in respect of judgments or awards for so long
as the existence of the same is not an Event of Default under Section
12.1A.(k);
62
(iv) encumbrances on properties other than the Mortgaged
Property consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities
in the title thereto, landlord's or lessor's liens under leases to
which the Borrower, REA, the Guarantors or any such Subsidiary is a
party, and other minor non-monetary liens or encumbrances none of which
interferes materially with the use of the property affected in the
ordinary conduct of the business of the Borrower, REA, the Guarantors
or any such Subsidiary, which defects do not individually or in the
aggregate have a materially adverse effect on the business of the
Borrower, REA or the Guarantors individually or of the Borrower, REA or
the Guarantors and their respective Subsidiaries on a consolidated
basis;
(v) liens on Short-term Investments securing Indebtedness
permitted by Section 8.1(h);
(vi) liens in favor of the Agent and the Lenders under the
Loan Documents;
(vii) liens and encumbrances on a Mortgaged Property expressly
permitted under the terms of the Mortgage relating thereto; and
(viii) equipment leases of personal property in connection
with the operation of its Real Estate in the ordinary course of
business.
Section 8.3 Restrictions on Investments. The Borrower, REA and the
Guarantors will not, and will not permit any of their respective Subsidiaries
to, make or permit to exist or to remain outstanding any Investment except
Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of purchase by
the Borrower, REA, any Guarantor or any such Subsidiary;
(b) marketable direct obligations of any of the following: Federal
Home Loan Mortgage Corporation, Student Loan Marketing Association, Federal Home
Loan Banks, Federal National Mortgage Association, Government National Mortgage
Association, Bank for Cooperatives, Federal Intermediate Credit Banks, Federal
Financing Banks, Export-Import Bank of the United States, Federal Land Banks, or
any other agency or bank of the United States of America;
(c) demand deposits, certificates of deposit, bankers acceptances
and time deposits of any of the Lenders or any United States banks having total
assets in excess of $100,000,000; provided, however, that the aggregate amount
at any time so invested with any single bank having total assets of less than
$1,000,000,000 will not exceed $1,000,000;
(d) securities commonly known as "commercial paper" issued by any
Lender, or by a corporation organized and existing under the laws of the United
States of America or any State which at the time of purchase are rated by
▇▇▇▇▇'▇ Investors Service, Inc. or by Standard &
63
Poor's Corporation at not less than "P 1" if then rated by ▇▇▇▇▇'▇ Investors
Service, Inc., and not less than "A 1", if then rated by Standard & Poor's
Corporation;
(e) mortgage-backed securities guaranteed by the Government
National Mortgage Association, the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation and other mortgage-backed bonds which at
the time of purchase are rated by ▇▇▇▇▇'▇ Investors Service, Inc. or by Standard
& Poor's Corporation at not less than "Aa" if then rated by ▇▇▇▇▇'▇ Investors
Service, Inc. and not less than "AA" if then rated by Standard & Poor's
Corporation;
(f) repurchase agreements having a term not greater than 180 days
and fully secured by securities described in the foregoing subsections (a), (b)
or (e) with the Lenders, banks described in the foregoing subsection (c) or
financial institutions or other corporations having total assets in excess of
$500,000,000;
(g) shares of so-called "money market funds" registered with the
Securities and Exchange Commission under the Investment Company Act of 1940
which maintain a level per-share value, invest principally in investments
described in the foregoing subsections (a) through (f) and have total assets in
excess of $50,000,000;
(h) subject to Section 7.17 and Section 9, fee interests and
leasehold interests in Real Estate utilized or to be utilized principally for
office and/or industrial purposes, including ▇▇▇▇▇▇▇ money deposits relating
thereto and transaction costs; provided that the Borrower, REA, or its
Subsidiaries shall be permitted to acquire or lease interests in Real Estate
which is not utilized or to be utilized for office or industrial purposes if (i)
such Real Estate is acquired or leased by the Borrower, REA, or its Subsidiaries
in connection with the acquisition of a portfolio of predominantly office and/or
industrial properties and (ii) the aggregate cost of such non-office/industrial
Real Estate and all other non-office/industrial Real Estate previously acquired
or leased by the Borrower pursuant to this proviso does not exceed at any time
ten percent (10%) of the Consolidated Total Assets of REA;
(i) Subsidiaries of the Borrower listed on Schedule 6.21 and any
wholly-owned Subsidiaries of the Borrower who become Guarantors pursuant to
Section 5.3 hereof; and
(j) Subject to Section 7.17, joint ventures formed for the purpose
of owning, leasing and/or developing Real Estate and which are not Subsidiaries
of REA or the Borrower; provided that the aggregate amount of such Investments
shall not at any time exceed ten percent (10%) of the Consolidated Total Assets
of REA.
Section 8.4 Merger, Consolidation. The Borrower, REA and the
Guarantors will not, and will not permit their respective Subsidiaries to,
become a party to any merger, consolidation or other business combination or
agree to effect any asset acquisition, stock acquisition or other acquisition,
in each case without the prior written consent of the Majority Lenders, except
for (i) the merger or consolidation of two or more Subsidiaries of the Borrower,
REA or any Guarantor, and (ii) the merger or consolidation of one or more of the
Subsidiaries of the Borrower, REA or any Guarantor with and into the Borrower,
REA or any Guarantor where the Borrower, REA or a
64
Guarantor is the sole surviving entity; provided that both the Borrower and REA
shall at all times continue their existence as separate entities.
Section 8.5 Sale and Leaseback. The Borrower, REA and the
Guarantors will not, and will not permit their respective Subsidiaries to enter
into any arrangement, directly or indirectly, whereby the Borrower, REA, any
Guarantor or any such Subsidiary shall sell or transfer any Real Estate owned by
it in order that then or thereafter the Borrower, REA, a Guarantor or any such
Subsidiary shall lease back such Real Estate.
Section 8.6 Compliance with Environmental Laws. The Borrower, REA
and the Guarantors will not, and will not permit their respective Subsidiaries
to, do any of the following: (a) use any of the Real Estate or any portion
thereof as a facility for the handling, processing, storage or disposal of
Hazardous Substances, except for small quantities of Hazardous Substances used
in the ordinary course of business and in compliance with all applicable
Environmental Laws, (b) cause or permit to be located on any of the Real Estate
any underground tank or other underground storage receptacle for Hazardous
Substances except in full compliance with Environmental Laws, (c) generate any
Hazardous Substances on any of the Real Estate except in full compliance with
Environmental Laws, (d) conduct any activity at any Real Estate or use any Real
Estate in any manner so as to cause a Release of Hazardous Substances on, upon
or into the Real Estate or any surrounding properties or any threatened Release
of Hazardous Substances which might give rise to liability under CERCLA or any
other Environmental Law, or (e) directly or indirectly transport or arrange for
the transport of any Hazardous Substances (except in compliance with all
Environmental Laws).
The Borrower, REA and the Guarantors shall, and shall cause their
respective Subsidiaries to:
(i) in the event of any change in Environmental Laws governing
the assessment, release or removal of Hazardous Substances, take all
reasonable action (including, without limitation, the conducting of
engineering tests at the sole expense of the Borrower) to confirm that
no Hazardous Substances are or ever were Released or disposed of on the
Real Estate in violation of applicable Environmental Laws, changed as
aforesaid; and
(ii) if any Release or disposal of Hazardous Substances shall
occur or shall have occurred on the Real Estate (including without
limitation any such Release or disposal occurring prior to the
acquisition or leasing of such Real Estate by the Borrower, REA,
Guarantor or any such Subsidiary), cause the prompt containment and
removal of such Hazardous Substances and remediation of the Real Estate
in full compliance with all applicable laws and regulations; provided,
that each of the Borrower, REA, the Guarantors and their respective
Subsidiaries shall be deemed to be in compliance with Environmental
Laws for the purpose of this clause (ii) so long as it or a responsible
third party with sufficient financial resources is taking reasonable
action to remediate or manage any event of noncompliance to the
satisfaction of the Majority Lenders and no action shall have been
commenced by any enforcement agency. The Majority
65
Lenders may engage their own Environmental Engineer to review the
environmental assessments and the compliance with the covenants
contained herein. Notwithstanding the foregoing, if any Release or
disposal of Hazardous Substances shall occur or shall have occurred on
the Real Estate (except any such Release or disposal occurring prior to
the acquisition or leasing of such Real Estate by the Borrower, REA, a
Guarantor or any such Subsidiary and disclosed in an environmental
assessment delivered to the Agent prior to the inclusion of such Real
Estate in the Collateral) and such Real Estate is a Mortgaged Property,
the Agent shall have the right to require that the Borrower, in
compliance with Section 9, provide to the Agent a substitute Mortgaged
Property which is Eligible Real Estate within ninety (90) days of
demand by the Agent in accordance with Section 5.3 or obtain the
release of such Mortgaged Property pursuant to Section 5.4.
At any time after an Event of Default shall have occurred hereunder,
or, whether or not an Event of Default shall have occurred, at any time that the
Agent or the Majority Lenders shall have reasonable grounds to believe that a
Release or threatened Release of Hazardous Substances may have occurred,
relating to any Real Estate, or that any of the Real Estate is not in compliance
with Environmental Laws, the Agent may at its election (and will at the request
of the Majority Lenders) obtain such environmental assessments of such Real
Estate prepared by an Environmental Engineer as may be necessary or advisable
for the purpose of evaluating or confirming (i) whether any Hazardous Substances
are present in the soil or water at or adjacent to such Real Estate and (ii)
whether the use and operation of such Mortgaged Property comply with all
Environmental Laws. Environmental assessments may include detailed visual
inspections of such Real Estate including, without limitation, any and all
storage areas, storage tanks, drains, dry ▇▇▇▇▇ and leaching areas, and the
taking of soil samples, as well as such other investigations or analyses as are
necessary or appropriate for a complete determination of the compliance of such
Real Estate and the use and operation thereof with all applicable Environmental
Laws. All such environmental assessments shall be at the sole cost and expense
of the Borrower; except for those assessments required by the Agent at a time
when an Event of Default does not exist and which fail to reveal the existence
of a Release of Hazardous Substance and/or that the Real Estate is not in
compliance with Environmental Laws, which assessments shall be at the sole cost
and expense of the Lenders.
Section 8.7 Distributions. Neither the Borrower, REA or the
Guarantors will, or will permit their respective Subsidiaries to, make any
Distributions which would violate any of the following covenants:
(a) Neither the Borrower nor REA will pay any Distribution to
its partners or shareholders the amount of which, when added to the
amount of all other Distributions paid by it in the same fiscal quarter
and the three immediately preceding fiscal quarters, would exceed one
hundred percent (100%) of its Funds from Operations for such period;
(b) In the event that an Event of Default shall have occurred
and be continuing, neither the Borrower nor REA shall make any
Distributions other than the minimum Distributions required under the
Code to maintain the REIT Status
66
of REA, as evidenced by a certification of an authorized representative
of each of the Borrower and REA containing calculations in reasonable
detail satisfactory in form and substance to the Agent; and
(c) In the event that an Event of Default shall have occurred
and be continuing and the maturity of the Obligations has been
accelerated, neither the Borrower, REA, the Guarantors nor any of their
respective Subsidiaries shall make any Distributions whatsoever, either
directly or indirectly.
Section 8.8 Asset Sales. Neither the Borrower, REA or the
Guarantors will, or will permit their respective Subsidiaries to, sell, transfer
or otherwise dispose of any Real Estate or equity interests therein (except as
the result of a condemnation or casualty and except for the granting of
Permitted Liens) unless there shall have been delivered to the Lenders a
statement of the Borrower that no Default or Event of Default exists and, in the
event that such disposition is of Real Estate having a value greater than
$10,000,000, a Compliance Certificate demonstrating compliance with the
covenants referred to therein after giving effect to such sale, transfer or
other disposition.
Section 8.9 Development Activity. Neither the Borrower, REA or the
Guarantors will, or will permit respective Subsidiaries to, engage, directly or
indirectly (including through any joint venture in which the Borrower, REA, any
Guarantor or their respective Subsidiaries owns a Minority Interest), in the
development of properties without the prior written consent of the Majority
Lenders in their sole discretion; provided that without the consent of the
Majority Lenders the Borrower, REA, the Guarantors or their respective
Subsidiaries may engage in the development of any number of properties to be
used principally for office and/or industrial purposes provided that the
aggregate cost (on a fully developed basis) of acquisition and development of
properties Under Development at any time shall not exceed twenty percent (20%)
of the Consolidated Total Assets of REA. Each of the Borrower, REA and the
Guarantors will, and will cause each of its respective Subsidiaries to, at all
times that it is engaging in any development as provided herein, maintain
available sources of capital equal to the total cost to acquire and complete
such developments and to purchase such properties, which sources of capital
shall be acceptable to the Agent in its reasonable discretion. Amounts available
to be disbursed for such purposes pursuant to this Agreement may be considered
as a source of capital for the purposes of this Section 8.9.
Section 8.10 Restriction on Prepayment of Indebtedness. Neither the
Borrower, REA or the Guarantors will, or will permit their respective
Subsidiaries to, prepay after the occurrence of any Event of Default the
principal amount, in whole or in part, of any Indebtedness other than the
Obligations; provided, that this Section 8.10 shall not prohibit the prepayment
of Indebtedness which is financed solely from the proceeds of a new loan which
would otherwise be permitted by the terms of Section 8.1.
Section 8.11 Zoning and Contract Changes and Compliance. Neither the
Borrower, REA nor any Guarantor shall initiate or consent to any zoning
reclassification of any of its Mortgaged Property or seek any variance under any
existing zoning ordinance or use or permit the use of any Mortgaged Property in
any manner that could result in such use becoming a non-conforming use
67
under any zoning ordinance or any other applicable land use law, rule
or regulation. Neither the Borrower, REA, nor the Guarantors shall
initiate or consent to any change in any laws, requirements of
governmental authorities or obligations created by private contracts
and Leases which now or hereafter may materially adversely affect the
ownership, occupancy, use or operation of any Mortgaged Property.
Section 8.12 Intentionally Omitted.
Section 8.13 Payments to Subsidiaries. Neither REA nor the Borrower
will make any payments to any of its Subsidiaries for any purpose other than to
provide any such Subsidiary with funds to be used by such Subsidiary to (a)
subject to Section 7.17, acquire Eligible Real Estate which will be added to the
Borrowing Base or (b) acquire Real Estate that is subject to Non-recourse
Indebtedness described in Section 8.1(f) or Section 8.1(h).
Section 8.14 Undeveloped Land. The aggregate cost of acquiring the
direct and indirect interests of the Borrower, REA, the Guarantors and their
respective Subsidiaries in undeveloped land will not at any time exceed ten
percent (10%) of the Consolidated Total Assets of REA. For the purposes of this
Section 8.14, land will not be considered "undeveloped" if grading and site
improvement permits have been obtained and such site improvement work has
commenced.
Section 9 FINANCIAL COVENANTS.
Each of the Borrower and REA covenants and agrees that, so long as any
Loan or Note is outstanding or any Lender has any obligation to make any Loans:
Section 9.1 Borrowing Base. The outstanding principal balance of the
Loans will not be greater than the Borrowing Base.
Section 9.2 Debt Coverage. The aggregate Net Operating Income of
the Mortgaged Properties for any rolling four (4) fiscal quarters minus the
Capital Improvement Reserves for the Mortgaged Properties for such period will
not be less than 1.3 times the Debt Service of the Borrower for such period.
Section 9.3 Net Worth. The Consolidated Tangible Net Worth of the
Borrower will not at any time be less than Minimum Tangible Net Worth.
Section 9.4 Liabilities to Assets Ratio. The ratio of Consolidated
Total Liabilities of REA to Consolidated Total Assets of REA at the end of any
fiscal quarter shall not exceed the ratios set forth below:
Fiscal Quarter Ending on or Before: Ratio
March 31, 1999 .65 to 1
March 31, 2000 .55 to 1
Thereafter .50 to 1
68
Section 9.5 Consolidated Operating Cash Flow Coverage. The Consolidated
Operating Cash Flow of REA for (i) each of the first three fiscal quarters of
1998 and (ii) each twelve month period ending on the last day of the fourth
fiscal quarter of 1998 and the last day of each fiscal quarter thereafter will
not be less than the multiple of Debt Service of REA on a consolidated basis for
such period as set forth below:
Fiscal Quarter Ending on or Before: Multiple of Debt Service:
March 31, 1999 1.60
March 31, 2000 1.65
Thereafter 1.75
Section 10 CLOSING CONDITIONS.
The obligation of the Lenders to make the Loans to be advanced on the
Closing Date shall be subject to the satisfaction of the following conditions
precedent:
Section 10.1 Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto and shall be
in full force and effect. The Agent shall have received a fully executed
counterpart of each such document, except that each Lender shall have received
the fully executed original of its Note.
Section 10.2 Certified Copies of Organizational Documents. The Agent
shall have received from the Borrower, REA and each applicable Guarantor the
partnership agreement, corporate charter or other organizational documents of
the Borrower, REA or such Guarantor, certified as true and complete as of a
recent date by (i) the appropriate officer of each State in which the Borrower,
REA and each such Guarantor, as applicable, is organized and in which the
Mortgaged Properties are located, and (ii) a duly authorized officer of the
Borrower, REA and each such Guarantor. In addition, the Agent shall have
received evidence of the Borrower's, REA's and each applicable Guarantor's
qualification to do business, as applicable, as in effect on such date of
certification.
Section 10.3 Bylaws; Resolutions. All action on the part of the
Borrower, REA and each applicable Guarantor, as applicable, necessary for the
valid execution, delivery and performance by such Person of this Agreement and
the other Loan Documents to which such Person is or is to become a party shall
have been duly and effectively taken, and evidence thereof satisfactory to the
Agent shall have been provided to the Agent.
Section 10.4 Incumbency Certificate; Authorized Signers. The Agent
shall have received from REA and each applicable corporate Guarantor an
incumbency certificate, dated as of the Closing Date, signed by a duly
authorized officer of such Person and giving the name and bearing a specimen
signature of each individual who shall be authorized to sign, in the name and on
behalf of such Person, each of the Loan Documents to which such Person is or is
to become a party. The Agent shall have also received from the Borrower and each
applicable partnership Guarantor a certificate, dated as of the Closing Date,
signed by a duly authorized representative of such Person and giving the name
and specimen signature of each individual who shall be authorized to
69
make Loan Requests and to give notices and to take other action on behalf of the
Borrower under the Loan Documents.
Section 10.5 Opinion of Counsel. The Agent shall have received an
opinion addressed to the Lenders and the Agent and dated as of the Closing Date
from counsel to the Borrower, REA and each Guarantor in form and substance
satisfactory to the Agent.
Section 10.6 Payment of Fees. The Borrower shall have paid to the Agent
the fees payable pursuant to Section 4.2.
Section 10.7 Intentionally omitted.
Section 10.8 Intentionally omitted.
Section 10.9 Insurance. The Agent shall have received duplicate
originals or certified copies of all policies of insurance required by this
Agreement.
Section 10.10 Performance; No Default. Each Borrower, REA and the
applicable Guarantors shall have performed and complied with all terms and
conditions herein required to be performed or complied with by it on or prior to
the Closing Date, and on the Closing Date there shall exist no Default or Event
of Default.
Section 10.11 Representations and Warranties. The representations and
warranties made by the Borrower, REA and the applicable Guarantors in the Loan
Documents or otherwise made by or on behalf of the Borrower, REA and the
applicable Guarantors in connection therewith or after the date thereof shall
have been true and correct in all material respects when made and shall also be
true and correct in all material respects on the Closing Date.
Section 10.12 Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory to the Agent and the Agent's
counsel in form and substance, and the Agent shall have received all information
and such counterpart originals or certified copies of such documents and such
other certificates, opinions, assurances, consents, approvals or documents as
the Agent and the Agent's counsel may reasonably require.
Section 10.13 Eligible Real Estate Qualification Documents. The
Eligible Real Estate Qualification Documents for each Mortgaged Property
included in the Collateral as of the Closing Date shall have been delivered to
the Agent at the Borrower's expense and shall be in form and substance
satisfactory to the Agent.
Section 10.14 Compliance Certificate. The Agent shall have received a
Compliance Certificate dated as of the date of the Closing Date demonstrating
compliance with each of the covenants calculated therein as of the most recent
fiscal quarter for which REA has provided financial statements under Section 6.4
adjusted in the best good faith estimate of REA as of the Closing Date.
Section 10.15 Intentionally Omitted.
70
Section 10.16 Intentionally Omitted.
Section 11 CONDITIONS TO ALL BORROWINGS.
The obligations of the Lenders to make any Loan, whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
Section 11.1 Prior Conditions Satisfied. All conditions set forth in
Section 10 shall continue to be satisfied with respect to all of the Mortgaged
Properties and otherwise as of the date upon which any Loan is to be made.
Section 11.2 Representations True; No Default. Each of the
representations and warranties made by or on behalf of the Borrower, REA or the
Guarantors or any of their respective Subsidiaries contained in this Agreement,
the other Loan Documents or in any document or instrument delivered pursuant to
or in connection with this Agreement shall be true in all material respects both
as of the date as of which they were made and shall also be true as of the time
of the making of such Loan, with the same effect as if made at and as of that
time (it being understood and agreed that any representation or warranty which
by its terms is made as of a specified date shall be required to be true and
correct only as of such specified date), and no Default or Event of Default
shall have occurred and be continuing. Each of the Lenders shall have received a
certificate of the Borrower and REA signed by an authorized representative of
the Borrower and REA to such effect.
Section 11.3 Intentionally Omitted.
Section 11.4 Intentionally Omitted.
Section 11.5 Proceedings and Documents. All proceedings in
connection with such Loan shall be reasonably satisfactory in substance and in
form to the Agent, and the Agent's counsel in form and substance and the Agent
shall have received all information and such counterpart originals or certified
or other copies of such documents and such other certificates, opinions,
assurances, consents, approvals or documents as the Agent and the Agent's
counsel may reasonably require.
Section 11.6 Borrowing Documents. The Agent shall have received a
fully completed Loan Request for such Loan and the other documents and
information (including, without limitation, a Compliance Certificate) as
required by Section 2.6.
Section 11.7 Endorsement to Title Policy. At such times as Agent
shall determine in its discretion, to the extent available under applicable law,
a "date down" endorsement to each Title Policy indicating no change in the state
of title and containing no survey exceptions not approved by the Agent, which
endorsement shall, expressly or by virtue of a proper "revolving credit" clause
or endorsement in each Title Policy, increase the coverage of each Title Policy
to the aggregate amount of all Loans advanced and outstanding on or before the
effective date of such endorsement (provided that the amount of coverage under
an individual Title Policy for an individual Mortgaged Property need not equal
the aggregate amount of all Loans), or if such endorsement is not available,
such other evidence and assurances as the Agent may reasonably
71
require (which evidence may include, without limitation, an affidavit from the
Borrower stating that there have been no changes in title from the date of the
last effective date of the Title Policy).
Section 11.8 Future Advances Tax Payment. As a condition precedent
to any Lender's obligations to make any Loans available to the Borrower
hereunder, the Borrower will pay to the Agent any mortgage, recording,
intangible, documentary stamp or other similar taxes and charges which the Agent
reasonably determines to be payable as a result of such Loan to any state or any
county or municipality thereof in which any of the Mortgaged Properties are
located, and deliver to the Agent such affidavits or other information which the
Agent reasonably determines to be necessary in connection with such payment in
order to insure that the Mortgages on Mortgaged Property located in such state
secure the Borrower' obligation with respect to the Loans then being requested
by the Borrower. The provisions of this Section 11.8 shall not limit the
Borrower's obligations under other provisions of the Loan Documents, including
without limitation Section 15 hereof.
Section 12 EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1 A. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or the lapse
of time or both is required, then, prior to such notice or lapse of time,
"Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans
when the same shall become due and payable, whether at the stated date
of maturity or any accelerated date of maturity or at any other date
fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans
or any other sums due hereunder or under any of the other Loan
Documents, within three (3) days from the date the same shall become
due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(c) the Borrower or REA shall fail to comply with the covenant
contained in Section 9.1 and such failure shall continue to exist after
written notice thereof shall have been given to the Borrower by the
Agent and the cure period provided in Section 12.1B(a) shall have
ended;
(d) the Borrower or REA shall fail to comply with any covenant
contained in Section 9.2, Section 9.3, Section 9.4 or Section 9.5 and
such failure shall continue for thirty (30) days after written notice
thereof shall have been given to the Borrower by the Agent;
(e) any of the Borrower, REA, the Guarantors, or any of their
respective Subsidiaries shall fail to perform any other term, covenant
or agreement contained herein or in any of the other Loan Documents
which they are required to perform (other than those specified in the
other subclauses of this Section 12) and such failure shall continue
for thirty (30) days after written notice thereof shall have been given
to the Borrower by the Agent or such longer period, not to exceed an
additional sixty (60) days, as may be required to cure such default,
provided that cure is being diligently pursued;
72
(f) any representation or warranty made by or on behalf of the
Borrower, REA, the Guarantors, or any of their respective Subsidiaries
in this Agreement or any other Loan Document, or any report,
certificate, financial statement, request for a Loan, or in any other
document or instrument delivered pursuant to or in connection with this
Agreement, any advance of a Loan or any of the other Loan Documents
shall prove to have been false in any material respect upon the date
when made or deemed to have been made or repeated and such
representation or warranty shall continue to be false after written
notice thereof shall have been given to the Borrower by the Agent and
the cure period provided in Section 12.1(B)(c) shall have ended;
(g) any of the Borrower, REA, the Guarantors, or any of their
respective Subsidiaries (i) shall fail to pay at maturity, or within
any applicable period of grace, any obligation for borrowed money or
credit received or other Indebtedness in a principal amount exceeding
$2,000,000, or (ii) shall fail to observe or perform any term, covenant
or agreement contained in any agreement by which it is bound,
evidencing or securing any obligation for borrowed money or credit
received or other Indebtedness in a principal amount exceeding
$2,000,000 for such period of time as would permit (assuming the giving
of appropriate notice if required) the holder or holders thereof or of
any obligations issued thereunder to accelerate the maturity thereof;
(h) any of the Borrower, REA, the Guarantors, or any of their
respective Subsidiaries, (i) shall make an assignment for the benefit
of creditors, or admit in writing its general inability to pay or
generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver for it or any substantial part of its assets,
(ii) shall commence any case or other proceeding relating to it under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or (iii) shall take any action to authorize
or in furtherance of any of the foregoing;
(i) a petition or application shall be filed for the
appointment of a trustee or other custodian, liquidator or receiver of
any of the Borrower, REA, the Guarantors, or any of their respective
Subsidiaries or any substantial part of the assets of any thereof, or a
case or other proceeding shall be commenced against any such Person
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, and any such Person shall
indicate its approval thereof, consent thereto or acquiescence therein
or such petition, application, case or proceeding shall not have been
dismissed within ninety (90) days following the filing or commencement
thereof;
(j) a decree or order is entered appointing a trustee,
custodian, liquidator or receiver for any of the Borrower, REA, the
Guarantors, or any of their respective Subsidiaries or adjudicating any
such Person, bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered in
respect of any such Person in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
73
(k) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than sixty (60) days, whether or not consecutive,
one or more uninsured final judgments against any of the Borrower, REA,
the Guarantors, or any of their respective Subsidiaries that, either
individually or in the aggregate, exceed $2,000,000;
(l) any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms
thereof or the express prior written agreement, consent or approval of
the Lenders, or any action at law, suit in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall
be commenced by or on behalf of any of the Borrower, REA or the
Guarantors, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination, or issue a judgment, order, decree or ruling, to the
effect that any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;
(m) any dissolution, termination, partial or complete
liquidation, merger or consolidation of any of the Borrower, REA or any
Guarantor shall occur or any sale, transfer or other disposition of the
assets of any of the Borrower, REA or any Guarantor shall occur other
than as permitted under the terms of this Agreement or the other Loan
Documents;
(n) the Borrower or REA shall fail to comply with the covenant
contained in Section 7.19;
(o) all of any portion of a Mortgaged Property (or any
interest therein) is forfeited as a result of any criminal or
quasi-criminal activity by the owner thereof (or any Person related to
the owner thereof);
(p) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Lenders shall
have determined in their reasonable discretion that such event
reasonably could be expected to result in liability of any of the
Borrower, REA, the Guarantors or any of their respective Subsidiaries
to the PBGC or such Guaranteed Pension Plan in an aggregate amount
exceeding $2,000,000 and such event in the circumstances occurring
reasonably could constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer
such Guaranteed Pension Plan; or a trustee shall have been appointed by
the United States District Court to administer such Plan; or the PBGC
shall have instituted proceedings to terminate such Guaranteed Pension
Plan;
(q) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to have chief executive
responsibilities of REA, and a competent and experienced successor for
such Person shall not be approved by the Majority Lenders within six
(6) months of such event, such approval not to be unreasonably
withheld;
74
(r) REA shall fail to pay or perform any of its obligations
under Section 32 or any Guarantor shall fail to pay or perform any of
its obligations under its Guaranty; or
(s) an event of default under any of the other Loan Documents
shall occur;
then, and in any such event, the Agent may, and upon the request of the Majority
Lenders shall, by notice in writing to the Borrower declare all amounts owing
with respect to this Agreement, the Notes and the other Loan Documents to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the event of any Event
of Default specified in Section 12.1(h), Section 12.1(i) or Section 12.1(j), all
such amounts shall become immediately due and payable automatically and without
any requirement of presentment , demand, protest or other notice of any kind
from any of the Lenders or the Agent.
Section 12.1 B. Certain Cure Periods.
(a) Within five (5) Business Days following its receipt of
notice from the Agent that a Default has occurred under Section 12.1 A. (c), the
Borrower shall notify the Agent in writing as to whether or not it will attempt
to cure such Default by providing additional Collateral consisting of Potential
Collateral and/or reducing the outstanding principal amount of Loans made to it.
Any such notice (the "Cure Proposal Notice") from the Borrower to the Agent
shall describe in detail the cure which the Borrower proposes to make. In the
event that the Agent does not receive the Cure Proposal Notice from the Borrower
within such five (5) Business Day period, the Borrower's cure period shall end
and the Default under Section 12.1 A. (c) shall immediately become an Event of
Default without any further notice from or other action by the Agent or the
Lenders. In the event that the Agent receives the Cure Proposal Notice from the
Borrower within such five (5) Business Day period, the Agent shall promptly
deliver the same to the Lenders and the actions proposed to be taken by the
Borrower as specified therein shall be completed not later than fifteen (15)
days following the date on which the Borrower is notified by the Agent that the
Majority Lenders have approved the Borrower's proposed actions (or within thirty
(30) days in the event that the Borrower's proposed actions include the Borrower
providing additional Collateral consisting of Potential Collateral). Within five
(5) Business Days after their receipt of the Cure Proposal Notice, the Agent
shall advise the Borrower as to whether or not the Majority Lenders approve the
Borrower's proposed actions based on their good faith business judgment as to
whether the actions proposed by the Borrower are sufficient to cure the Default
under Section 12.1 A. (c) without the creation of any other Default. In the
event that the Agent notifies the Borrower of the disapproval by the Majority
Lenders of the Borrower's proposed actions based on the determination by the
Majority Lenders that in their good faith business judgment that the actions
proposed by the Borrower are insufficient to so cure such Default, the Borrower
may, within three (3) Business Days following its receipt of such notice, submit
to the Agent an alternative cure proposal or evidence establishing that the
Borrower's original cure proposal was so sufficient. Any such submission by the
Borrower shall be in writing and shall describe in detail the alternative
actions which the Borrower proposes to take or the evidence establishing that
the Borrower's original cure proposal was so sufficient. In the event that the
Agent does not receive such submission within such three (3) Business Day
period, the Borrower's cure period shall end and the Default under Section 12.1
A. (c) shall immediately become an Event of Default
75
without any further notice from or other action by the Agent or the Lenders. In
the event that the Agent receives such submission from the Borrower within such
three (3) Business Day period, the Agent shall promptly deliver the same to the
Lenders and the Agent shall, within five (5) Business Days following their
receipt of such submission, advise the Borrower as to whether in the Majority
Lenders' good faith business judgment such alternative cure proposal is
sufficient to cure such Default without the creation of any other Default
hereunder or the Borrower's original cure proposal is so sufficient. In the
event that the Majority Lenders determine that the original or alternative cure
proposal is so sufficient, the actions so approved by the Majority Lenders to be
taken by the Borrower shall be completed not later than fifteen (15) days
following the date on which the Borrower is notified by the Agent that the
Majority Lenders have approved such original or alternative proposal (or within
thirty (30) days in the event that the approved actions include the Borrower
providing additional Collateral consisting of Potential Collateral). In the
event that the Agent notifies the Borrower that the Majority Lenders have
determined that the original or alternative cure proposal is not so sufficient,
the Borrower's cure period shall end and the Default under Section 12.1 A. (c)
shall immediately become an Event of Default without any further notice from or
other actions by the Agent or the Lenders. During any period that a Default
exists under Section 12.1 A. (c), the Lenders shall have no obligation to make
any further Loans hereunder.
(b) In the event that the Borrower shall elect under
subsection 12.1B(a) to provide additional Collateral consisting of Potential
Collateral, the Real Estate to be added to the Collateral shall be Eligible Real
Estate and on or prior to the expiration of the 30-day period referred to in
subclause (a) above each of the Eligible Real Estate Qualification Documents
shall have been completed at the Borrower's expense and provided to the Agent
for the benefit of the Lenders.
(c) Within five (5) Business Days following its receipt of
notice from the Agent that a Default has occurred under Section 12.1A(f) with
respect to any representation and warranty to Mortgaged Property (including,
without limitation, the representations and warranties contained in Section 6.20
and Section 6.24), the Borrower shall notify the Agent in writing as to whether
or not it will attempt to cure such Default by substituting for such Mortgaged
Property additional Collateral consisting of Potential Collateral. The Cure
Proposal Notice from the Borrower to the Agent shall describe in detail the cure
which the Borrower proposes to make. In the event that the Agent does not
receive the Cure Proposal Notice from the Borrower within such five (5) Business
Day period, the Borrower's Cure period shall end and the Default under Section
12.1 A. (f) shall immediately become an Event of Default without any further
notice from or other action by the Agent or the Lenders. In the event that the
Agent receives the Cure Proposal Notice from the Borrower within such five (5)
Business Day period, the Agent shall promptly deliver the same to the Lenders
and the actions proposed to be taken by the Borrower as specified therein shall
be completed not later than thirty (30) days following the date on which the
Borrower is notified by the Agent that the Majority Lenders have approved the
Borrower's proposed actions. Within five (5) Business Days after their receipt
of the Cure Proposal Notice, the Agent shall advise the Borrower as to whether
or not the Majority Lenders approve the Borrower's proposed actions based on
their good faith business judgment as to whether the actions proposed by the
Borrower are sufficient to cure the Default under Section 12.1 A. (f) without
the creation of any other Default. In the event that the Agent notifies the
Borrower of the disapproval by the Majority Lenders of the
76
Borrower's proposed actions based on the determination by the Majority Lenders
that in their good faith business judgment the actions proposed by the Borrower
are insufficient to so cure such Default, the Borrower may, within three (3)
Business Days following its receipt of such notice, submit to the Agent an
alternative cure proposal or evidence establishing that the Borrower's original
cure proposal was so sufficient. Any such submission by the Borrower shall be in
writing and shall describe in detail the alternative actions which the Borrower
proposes to take or the evidence establishing that the Borrower's original cure
proposal was so sufficient. In the event that the Agent does not receive such
submission within such three (3) Business Day period, the Borrower's cure period
shall end and the Default under Section 12.1 A. (f) shall immediately become an
Event of Default without any further notice from or other action by the Agent or
the Lenders. In the event that the Agent receives such submission from the
Borrower within such three (3) Business Day period, the Agent shall promptly
deliver the same to the Lenders and the Agent shall, within five (5) Business
Days following their receipt of such submission, advise the Borrower as to
whether in the Majority Lenders' good faith business judgment such alternative
cure proposal is sufficient to cure such Default without the creation of any
other Default hereunder or the Borrower's original cure proposal is so
sufficient. In the event that the Majority Lenders determine that the original
or alternative cure proposal is so sufficient, the actions so approved by the
Majority Lenders to be taken by the Borrower shall be completed not later than
thirty (30) days following the date on which the Borrower is notified by the
Agent that the Majority Lenders have approved such original or alternative cure
proposal. In the event that the Agent notifies the Borrower that the Majority
Lenders have determined that the original or alternative cure proposal is not so
sufficient, the Borrower's cure period shall end and the Default under Section
12.1 A. (f) shall immediately become an Event of Default without any further
notice from or other actions by the Agent or the Lenders. During any period that
a Default exists under Section 12.1A. (f), the Lenders shall have no obligation
to make any further Loans hereunder.
Section 12.2 Termination of Commitments. If any one or more Events of
Default specified in Section 12.1A.(h), Section 12.1A.(i) or Section 12.1A.(j)
shall occur, then immediately and without any action on the part of the Agent or
any Lender any unused portion of the credit hereunder shall terminate and the
Lenders shall be relieved of all obligations to make Loans to the Borrower. If
any other Event of Default shall have occurred, the Agent, upon the election of
the Majority Lenders, shall by notice to the Borrower terminate the obligation
to make Loans to the Borrower. No termination under this Section 12.2 shall
relieve the Borrower of its obligations to the Lenders arising under this
Agreement or the other Loan Documents.
Section 12.3 Remedies. In case any one or more Events of Default shall
have occurred and be continuing, and whether or not the Lenders shall have
accelerated the maturity of the Loans pursuant to Section 12.1A., the Agent on
behalf of the Lenders may, with the consent of the Majority Lenders but not
otherwise, proceed to protect and enforce their rights and remedies under this
Agreement, the Notes and/or any of the other Loan Documents by suit in equity,
action at law or other appropriate proceeding, including to the full extent
permitted by applicable law the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents, the
obtaining of the ex parte appointment of a receiver, and, if any amount shall
have become due, by declaration or otherwise, the enforcement of the payment
thereof. No remedy herein conferred upon the Agent or the holder of any Note is
intended to be exclusive of any
77
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or any other provision of law. In the event that
all or any portion of the Obligations is collected by or through an
attorney-at-law, the Borrower shall pay all costs of collection including, but
not limited to, reasonable attorney's fees.
Section 12.4 Distribution of Collateral Proceeds. In the event that,
following the occurrence and during the continuance of any Event of Default, any
monies are received in connection with the enforcement of any of the Security
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of, all reasonable costs,
expenses, disbursements and losses which shall have been paid, incurred
or sustained by the Agent to protect or preserve the Collateral or in
connection with the collection of such monies by the Agent, for the
exercise, protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent or the Lenders
under this Agreement or any of the other Loan Documents or in respect
of the Collateral or in support of any provision of adequate indemnity
to the Agent against any taxes or liens which by law shall have, or may
have, priority over the rights of the Agent or the Lenders to such
monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Lenders shall determine; provided, that (i)
distributions in respect of such other Obligations shall include, on a
pari passu basis, the Agent's fee payable pursuant to Section 4.3; (ii)
in the event that any Lender shall have wrongfully failed or refused to
make an advance under Section 2.7 and such failure or refusal shall be
continuing, advances made by other Lenders during the pendency of such
failure or refusal shall be entitled to be repaid as to principal and
accrued interest in priority to the other Obligations described in this
subsection (b), and (iii) except as otherwise provided in clause (ii),
Obligations owing to the Lenders with respect to each type of
Obligation such as interest, principal, fees and expenses shall be made
among the Lenders pro rata; and provided, further that the Majority
Lenders may in their discretion make proper allowance to take into
account any Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
Section 13 SETOFF.
Regardless of the adequacy of any Collateral, during the continuance of
any Event of Default, any deposits (general or specific, time or demand,
provisional or final, regardless of currency, maturity, or the branch where such
deposits are held) or other sums credited by or due from any Lender to the
Borrower, REA or the Guarantors and any securities or other property of the
Borrower , REA or the Guarantors in the possession of such Lender may be applied
to or set
78
off against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrower, REA or the Guarantors to such Lender.
Each of the Lenders agrees with each other Lender that if such Lender shall
receive from the Borrower, REA or the Guarantors, whether by voluntary payment,
exercise of the right of setoff, or otherwise, and shall retain and apply to the
payment of the Note or Notes held by such Lender any amount in excess of its
ratable portion of the payments received by all of the Lenders with respect to
the Notes held by all of the Lenders, such Lender will make such disposition and
arrangements with the other Lenders with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation or otherwise as
shall result in each Lender receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess payment is thereafter recovered from such Lender, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
Section 14 THE AGENT.
Section 14.1 Authorization. The Agent is authorized to take such action
on behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Agent. The
obligations of the Agent hereunder are primarily administrative in nature, and
nothing contained in this Agreement or any of the other Loan Documents shall be
construed to constitute the Agent as a trustee for any Lender or to create an
agency or fiduciary relationship. The Borrower and any other Person shall be
entitled to conclusively rely on a statement from the Agent that it has the
authority to act for and bind the Lenders pursuant to this Agreement and the
other Loan Documents.
Section 14.2 Employees and Agents. The Agent may exercise its powers
and execute its duties by or through employees or agents and shall be entitled
to take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent may reasonably
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrower.
Section 14.3 No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent, or employee thereof, shall be liable to any
of the Lenders for any waiver, consent or approval given or any action taken, or
omitted to be taken, in good faith by it or them hereunder or under any of the
other Loan Documents, or in connection herewith or therewith, or be responsible
for the consequences of any oversight or error of judgment whatsoever, except
that the Agent or such other Person, as the case may be, shall be liable for
losses due to its willful misconduct or gross negligence.
Section 14.4 No Representations. The Agent shall not be responsible for
the execution or validity or enforceability of this Agreement, the Notes, any of
the other Loan Documents or any instrument at any time constituting, or intended
to constitute, collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or collectibility of
79
any amounts owing with respect to the Notes, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on behalf of
the Borrower, REA, the Guarantors or any of their respective Subsidiaries, or be
bound to ascertain or inquire as to the performance or observance of any of the
terms, conditions, covenants or agreements herein or in any of the other Loan
Documents. The Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by the Borrower, REA, the Guarantors
or any holder of any of the Notes shall have been duly authorized or is true,
accurate and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Lenders, with respect to the creditworthiness or financial
condition of the Borrower, REA, the Guarantors, or any of their respective
Subsidiaries, or the value of the Collateral or any other assets of the
Borrower, REA or the Guarantors. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
upon such information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, based upon such information and documents as it deems
appropriate at the time, continue to make its own credit analysis and decisions
in taking or not taking action under this Agreement and the other Loan
Documents.
Section 14.5 Payments.
(a) A payment by the Borrower, REA or any Guarantor to the Agent
hereunder or under any of the other Loan Documents for the account of any Lender
shall constitute a payment to such Lender. The Agent agrees to distribute to
each Lender not later than one Business Day after the Agent's receipt of good
funds, determined in accordance with the Agent's customary practices, such
Lender's pro rata share of payments received by the Agent for the account of the
Lenders except as otherwise expressly provided herein or in any of the other
Loan Documents.
(b) If in the opinion of the Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any of the
other Loan Documents might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been adjudicated by
a court of competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be repaid,
each Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall be
determined by such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Lender that fails (i) to make
available to the Agent its pro rata share of any Loan or (ii) to comply with the
provisions of Section 13 with respect to making dispositions and arrangements
with the other Lenders, where such Lender's share of any payment received,
whether by setoff or otherwise, is in excess of its pro rata share of such
payments due and payable to all of the Lenders, in each case as, when and to the
full extent required by the provisions of this Agreement, shall be deemed
delinquent (a "Delinquent Lender") and shall be deemed a Delinquent Lender until
such time as such delinquency is satisfied. A Delinquent Lender shall be deemed
to have assigned any and all payments due to it from the Borrower, REA
80
or the Guarantors, whether on account of outstanding Loans, interest, fees or
otherwise, to the remaining nondelinquent Lenders for application to, and
reduction of, their respective pro rata shares of all outstanding Loans. The
Delinquent Lender hereby authorizes the Agent to distribute such payments to the
nondelinquent Lenders in proportion to their respective pro rata shares of all
outstanding Loans. A Delinquent Lender shall be deemed to have satisfied in full
a delinquency when and if, as a result of application of the assigned payments
to all outstanding Loans of the nondelinquent Lenders or as a result of other
payments by the Delinquent Lenders to the nondelinquent Lenders, the Lenders'
respective pro rata shares of all outstanding Loans have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
Section 14.6 Holders of Notes. Subject to the terms of Section 18, the
Agent may deem and treat the payee of any Note as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished in
writing with a different name by such payee or by a subsequent holder, assignee
or transferee.
Section 14.7 Indemnity. The Lenders ratably agree hereby to indemnify
and hold harmless the Agent from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Agent has not been reimbursed by the
Borrower as required by Section 15), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
Section 14.8 Agent as Lender. In its individual capacity, BankBoston
shall have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as the holder of any of
the Notes as it would have were it not also the Agent.
Section 14.9 Resignation. The Agent may resign at any time by giving 60
days' prior written notice thereof to the Lenders and the Borrower. Upon any
such resignation, the Majority Lenders (and so long as no Default or Event of
Default exists hereunder, after consultation with the Borrower) shall have the
right to appoint as a successor Agent any Lender or any financial institution
whose senior debt obligations are rated not less than "A" or its equivalent by
▇▇▇▇▇'▇ Investors Service, Inc. or not less than "A" or its equivalent by
Standard & Poor's corporation and which has a net worth of not less than
$500,000,000. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Lenders and
shall have accepted such appointment within 30 days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be any Lender or any financial
institution whose senior debt obligations are rated not less than "A" or its
equivalent by ▇▇▇▇▇'▇ Investors Service, Inc. or not less than "A" or its
equivalent by Standard & Poor's Corporation and which has a net worth of not
less than $500,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights,
81
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder as Agent. After
any retiring Agent's resignation, the provisions of this Agreement and the other
Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
Section 14.10 Duties in the Case of Enforcement. In case one or more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, if (a) so
requested by the Majority Lenders and (b) the Lenders have provided to the Agent
such additional indemnities and assurances against expenses and liabilities as
the Agent may reasonably request, proceed to enforce the provisions of the
Security Documents authorizing the sale or other disposition of all or any part
of the Collateral and exercise all or any such other legal and equitable and
other rights or remedies as it may have in respect of such Collateral. The
Majority Lenders may direct the Agent in writing as to the method and the extent
of any such sale or other disposition, the Lenders hereby agreeing to indemnify
and hold the Agent harmless from all liabilities incurred in respect of all
actions taken or omitted in accordance with such directions.
Section 15 EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of reproducing this
Agreement, the other Loan Documents and the other agreements and instruments
mentioned herein, (b) any taxes (including any interest and penalties in respect
thereto) payable by the Agent or any of the Lenders (other than taxes based upon
the Agent's or any Lender's gross or net income, except that the Agent and the
Lenders shall be entitled to indemnification for any and all amounts paid by
them in respect of taxes based on income or other taxes assessed by any State in
which Mortgaged Property or other Collateral is located, such indemnification to
be limited to taxes due solely on account of the granting of Collateral under
the Security Documents and to be net of any credit allowed to the indemnified
party from any other State on account of the payment or incurrence of such tax
by such indemnified party), including any recording, mortgage, documentary or
intangibles taxes in connection with the Mortgages and other Loan Documents, or
other taxes payable on or with respect to the transactions contemplated by this
Agreement, including any such taxes payable by the Agent or any of the Lenders
after the Closing Date (the Borrower hereby agreeing to indemnify the Agent and
each Lender with respect thereto), (c) all title insurance premiums, appraisal
fees, engineer's fees, environmental reviews and the reasonable fees, expenses
and disbursements of the counsel to the Agent and any local counsel to the Agent
incurred in connection with the preparation, administration, syndication or
interpretation of the Loan Documents and other instruments mentioned herein
(excluding, however, the preparation of agreements evidencing participations
granted under Section 18.4), and amendments, modifications, approvals, consents
or waivers hereto or hereunder, (d) all other reasonable out of pocket fees,
expenses and disbursements of the Agent actually incurred by the Agent in
connection with the preparation or interpretation (arising from a request from
Borrower or any failure by Borrower, REA or the Guarantors to perform any of
their obligations under the Loan Documents) of the Loan Documents and other
instruments mentioned herein, the addition or substitution of additional
Mortgaged Properties or other Collateral, the review of leases and
Subordination, Nondisturbance and Attornment Agreements, the making of each
advance
82
hereunder and the syndication of the Commitments pursuant to Section 18 (without
duplication of those items addressed in subparagraph (c), above), (e) all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
costs, and the fees and costs of appraisers, engineers, investment bankers or
other experts retained by any Lender or the Agent) actually incurred by any
Lender or the Agent in connection with (i) the enforcement of or preservation of
rights under any of the Loan Documents against the Borrower, REA or the
Guarantors or the administration thereof after the occurrence of a Default or
Event of Default and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to the Agent's or any of the Lenders'
relationship with the Borrower, REA or the Guarantors, (f) all reasonable fees,
expenses and disbursements of any Lender or the Agent incurred in connection
with UCC searches, UCC filings, title rundowns, title searches or mortgage
recordings, and (g) all reasonable fees, expenses and disbursements (including
reasonable attorneys' fees and costs) which may be incurred by BankBoston or DLJ
in connection with the execution and delivery of this Agreement and the other
Loan Documents (without duplication of any of the items listed above). The
covenants of this Section 15 shall survive the repayment of the Loans and the
termination of the obligations of the Lenders hereunder.
Section 16 INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and the
Lenders and each director, officer, employee, agent and Person who controls the
Agent or any Lender from and against any and all claims, actions and suits,
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of or
relating to this Agreement or any of the other Loan Documents or the
transactions contemplated hereby and thereby including, without limitation, (a)
any and all claims for brokerage, leasing, finders or similar fees which may be
made relating to the Mortgaged Properties or the Loans (other than claims
resulting from agreements made by a Lender providing for the payment of such
fees), (b) any condition of the Mortgaged Properties, (c) any actual or proposed
use by the Borrower of the proceeds of any of the Loans, (d) any actual or
alleged infringement of any patent, copyright, trademark, service ▇▇▇▇ or
similar right of the Borrower, REA, the Guarantors, or any of their respective
Subsidiaries comprised in the Collateral, (e) the Borrower, REA and the
Guarantors entering into or performing this Agreement or any of the other Loan
Documents, or (f) any actual or alleged violation of any law, ordinance, code,
order, rule, regulation, approval, consent, permit or license relating to the
Mortgaged Property, in each case including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding; provided, however, that the
Borrower shall not be obligated under this Section 16 to indemnify any Person
for liabilities arising from such Person's own gross negligence or willful
misconduct. In litigation, or the preparation therefor, the Lenders and the
Agent shall be entitled to select a single law firm as their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Borrower under this Section 16 are unenforceable for any
reason, the Borrower hereby agrees to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law. The provisions of this Section 16 shall survive the repayment of
the Loans and the termination of the obligations of the Lenders hereunder.
83
Section 17 SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower, REA or the Guarantors or any
of their respective Subsidiaries pursuant hereto or thereto shall be deemed to
have been relied upon by the Lenders and the Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
making by the Lenders of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this Agreement
or the Notes or any of the other Loan Documents remains outstanding or any
Lender has any obligation to make any Loans. The indemnification obligations of
the Borrower provided herein and in the other Loan Documents shall survive the
full repayment of amounts due and the termination of the obligations of the
Lenders hereunder and thereunder to the extent provided herein and therein. All
statements contained in any certificate delivered to any Lender or the Agent at
any time by or on behalf of the Borrower, REA or the Guarantors or any of their
respective Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by such
Person hereunder.
Section 18 ASSIGNMENT AND PARTICIPATION.
Section 18.1 Conditions to Assignment by Lenders. Except as provided
herein, each Lender may assign to one or more banks or other entities all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment Percentage and Commitment and the same
portion of the Loans at the time owing to it and the Notes held by it); provided
that (a) the Agent and, so long as no Default or Event of Default exists
hereunder, the Borrower shall have each given its prior written consent to such
assignment, which consent shall not be unreasonably withheld or delayed
(provided that such consent shall not be required for any assignment to another
Lender, to a lender which is and remains under common control with the assigning
Lender or to a wholly-owned Subsidiary of such Lender, provided that such
assignee shall remain a wholly-owned Subsidiary of such Lender), (b) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Agreement, (c) the parties
to such assignment shall execute and deliver to the Agent, for recording in the
Register (as hereinafter defined), a notice of such assignment, (d) in no event
shall any voting, consent or approval rights of a Lender be assigned to any
Person controlling, controlled by or under common control with, or which is not
otherwise free from influence or control by, the Borrower or REA, which rights
shall instead be allocated pro rata among the other remaining Lenders (e) such
assignee shall have a net worth as of the date of such assignment of not less
than $200,000,000, (f) such assignee shall acquire an interest in the Loans of
not less than $5,000,000 (or if less the remaining Loans of the assignor), and
(g) such assignment shall be of an equal percentage of such assignee's
Commitment Percentage. In addition, each Lender shall attempt (but shall not be
obligated) to assign its interests, rights and obligations under this Agreement
to a Person who shall be able to deliver to the Borrower the documentation
described in Section 4.4(c) evidencing no need to withhold or deduct amounts
from payments to be made such Person hereunder. Upon execution, delivery,
acceptance and recording of such notice of assignment, (i) the assignee
thereunder shall be a party hereto and all other Loan Documents executed by the
Lenders and have the rights and obligations of a Lender hereunder, (ii) the
84
assigning Lender shall, upon payment to the Agent of the registration fee
referred to in Section 18.2, be released from its obligations under this
Agreement arising after the effective date of such assignment with respect to
the assigned portion of its interests, rights and obligations under this
Agreement, and (iii) the Agent may unilaterally amend Schedule 1 to reflect such
assignment. In connection with each assignment, the assignee shall represent and
warrant to the Agent, the assignor and each other Lender as to whether such
assignee is controlling, controlled by, under common Control with or is not
otherwise free from influence or control by, the Borrower or REA.
Section 18.2 Register. The Agent shall maintain on behalf of the
Borrower a copy of each assignment delivered to it and a register or similar
list (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitment Percentages of and principal amount of the Loans
owing to the Lenders from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, REA, the
Guarantors, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower and
the Lenders at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Lender agrees to pay to the
Agent a registration fee in the sum of $2,000.
Section 18.3 New Notes. Upon its receipt of an assignment executed by
the parties to such assignment, the Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrower and the Lenders (other than the assigning Lender). The assigning Lender
shall deliver to the Agent each Note which is the subject of an assignment.
Within five (5) Business Days after receipt of confirmation from the Agent that
it has received each Note subject to such assignment, the Borrower, at its own
expense, shall execute and deliver to the Agent, in exchange for each
surrendered Note, a new Note to the order of such assignee in an amount equal to
the amount assigned to such assignee pursuant to such assignment and, if the
assigning Lender has retained some portion of its obligations hereunder, a new
Note to the order of the assigning Lender in an amount equal to the amount
retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such assignment and shall otherwise be in
substantially the form of the assigned Notes. The surrendered Notes shall be
canceled and returned to the Borrower.
Section 18.4 Participations. Each Lender may sell participations to one
or more Lenders or other entities in all or a portion of such Lender's rights
and obligations under this Agreement and the other Loan Documents; provided that
(a) any such sale or participation shall not affect the rights and duties of the
selling Lender hereunder, (b) such participation shall not entitle such
participant to any rights or privileges under this Agreement or any Loan
Documents, including without limitation, rights granted to the Lenders under
Section 4.8, Section 4.9 and Section 4.10, (c) such participation shall not
entitle the participant to the right to approve waivers, amendments or
modifications, (provided that the Lender granting the participation interest
shall not be prohibited from granting any participant (in the participation
agreement to be entered into between the Lender and such participant) the right
to approve waivers, amendments or modifications if any such waiver, amendment or
modification would (i) extend the Maturity Date or reduce the rate or
85
extend the time of payment of interest on the Loans or any fees payable in
respect thereof or reduce the principal amount thereof or increase the amount of
the participant's participation over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Commitments or any amendment to the Borrowing Base shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any participant
if the participant's participation is not increased as a result thereof) or (ii)
constitute a consent to the assignment or transfer by the Borrower of any of its
rights or obligations under this Agreement), (d) such participant shall have no
direct rights against the Borrower, (e) such sale is effected in accordance with
all applicable laws, and (f) such participant shall not be a Person Controlling,
Controlled by or under common Control with, or which is not otherwise free from
influence or control by any of the Borrower or REA.
Section 18.5 Pledge by Lender. Any Lender may at any time pledge all or
any portion of its interest and rights under this Agreement (including all or
any portion of its Note) to any of the twelve Federal Reserve Lenders organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or the enforcement thereof shall release the pledgor Lender from its
obligations hereunder or under any of the other Loan Documents.
Section 18.6 No Assignment by Borrower. The Borrower shall not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of each of the Lenders.
Section 18.7 Disclosure. The Borrower and REA agree that in addition to
disclosures made in accordance with standard banking practices any Lender may
disclose information obtained by such Lender pursuant to this Agreement to
BankBoston Securities, Inc., assignees or participants and potential assignees
or participants hereunder. The Agent and each Lender shall otherwise use
reasonable efforts to hold any confidential information which it may receive
from the Borrower or REA pursuant to this Agreement in confidence, except for
disclosure to (i) legal counsel, accountants and other professional advisors to
the Agent, any Lender, any assignee, participant, potential assignee or
participant, (ii) regulatory officials having jurisdiction over Agent, any
Lender or any assignee, participant, potential assignee or participant, and
(iii) as required by law or legal process or in connection with any legal
proceeding to which the Agent, any Lender or any assignee, participant,
potential assignee or participant is a party. Confidential information shall not
include any information which is or subsequently becomes publicly available, or
prior to the delivery to the Agent or the Lenders hereunder is within the
possession of such party, or is disclosed with the prior written approval of the
Borrower.
Section 18.8 Amendments to Mortgages. Upon any such assignment or
participation, the Borrower, REA and the Guarantors shall, upon the request of
the Agent, enter into such documents as may be reasonably required by the Agent
to modify the Loan Documents to reflect such assignment or participation.
Section 19 NOTICES.
86
Each notice, demand, election or request provided for or permitted to
be given pursuant to this Agreement (hereinafter in this Section 19 referred to
as "Notice"), but specifically excluding to the maximum extent permitted by law
any notices of the institution or commencement of foreclosure proceedings, must
be in writing and shall be deemed to have been properly given or served by
personal delivery or by sending same by overnight courier or by depositing same
in the United States Mail, postpaid and registered or certified, return receipt
requested, or as expressly permitted herein, by telegraph, telecopy, telefax or
telex, and addressed as follows:
If to the Agent or BankBoston:
BankBoston, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Real Estate Division
87
With a copy to:
BankBoston, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to DLJ:
DLJ Capital Funding, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower:
American Real Estate Investment, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
Plymouth Meeting, Pennsylvania 19462
Attn: ▇▇▇▇▇▇▇ Butte
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to REA:
American Real Estate Investment Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
Plymouth Meeting, Pennsylvania 19462
Attn: ▇▇▇▇▇▇▇ Butte
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to any Lender which may hereafter become a party to this Agreement, at such
address as may be designated by such Lender. Each Notice shall be effective upon
being personally delivered or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. The time period in which a
response to such Notice must be given or any action taken with respect thereto
(if any), however, shall commence to run from the date of receipt if personally
delivered or sent by overnight courier, or if so deposited in the United States
Mail, the earlier of three (3) Business Days following such deposit or the date
of receipt as disclosed on the return receipt. Rejection or other refusal to
accept or the inability to deliver because of changed address for which no
notice was given shall be deemed to be receipt of the Notice sent. By giving at
least fifteen (15) days prior Notice thereof, the Borrower, a Lender or Agent
shall have the right from
88
time to time and at any time during the term of this Agreement to change their
respective addresses and each shall have the right to specify as its address any
other address within the United States of America.
Section 20 RELATIONSHIP.
The relationship between each Lender and the Borrower is solely that of
a lender and borrower, and nothing contained herein or in any of the other Loan
Documents shall in any manner be construed as making the parties hereto
partners, joint venturers or any other relationship other than lender and
borrower.
Section 21 GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED HEREIN OR THEREIN, SHALL FOR ALL PURPOSES BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWER, REA
AND THE GUARANTORS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWER, REA OR THE GUARANTOR S BY MAIL AT THE ADDRESS SPECIFIED
IN Section 19. EACH OF THE BORROWER, REA AND THE GUARANTORS HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 22 HEADINGS.
The captions in this Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
Section 23 COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
Section 24 ENTIRE AGREEMENT, ETC.
89
The Loan Documents express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated, except as provided
in Section 27.
Section 25 WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.
EACH OF THE BORROWER, REA, THE GUARANTORS, THE AGENT AND THE LENDERS
HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF
THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY
PROHIBITED BY LAW, THE BORROWER, REA, AND THE GUARANTORS HEREBY WAIVE ANY RIGHT
THEY MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE BORROWER, REA, AND THE GUARANTORS (A) CERTIFY THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER OR THE AGENT HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH LENDER OR THE AGENT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGE THAT THE
AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS Section 25. THE BORROWER, REA AND
THE GUARANTORS ACKNOWLEDGE THAT THEY HAVE HAD AN OPPORTUNITY TO REVIEW THIS
Section 25 WITH THEIR LEGAL COUNSEL AND THAT THE BORROWER, REA AND THE
GUARANTORS AGREE TO THE FOREGOING AS THEIR FREE, KNOWING AND VOLUNTARY ACT.
Section 26 DEALINGS WITH THE BORROWER.
The Lenders and their Affiliates may accept deposits from, extend
credit to and generally engage in any kind of banking, trust or other business
with the Borrower, REA, the Guarantors and their respective Subsidiaries or any
of their Affiliates regardless of the capacity of the Lender hereunder.
Section 27 CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement may be given, and any term
of this Agreement or of any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrower, REA or the
Guarantors of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Majority Lenders. Notwithstanding the
foregoing, none of the
90
following may occur without the written consent of each Lender: a change in the
rate of interest on or the term of the Notes; a change in the amount of the
Commitments of the Lenders; a forgiveness, reduction or waiver of the principal
of any unpaid Loan or any interest thereon or fee payable under the Loan
Documents; a change in the amount of any fee payable to a Lender hereunder; the
postponement of any date fixed for any payment of principal of or interest on
the Loan; an extension of the Maturity Date; a change in the manner of
distribution of any payments to the Lenders or the Agent; the release of the
Borrower, REA, any Guarantor, or any Collateral except as otherwise provided
herein; an amendment of the definition of Majority Lenders or of any requirement
for consent by all of the Lenders; any modification to require a Lender to fund
a pro rata share of a request for an advance of the Loan made by the Borrower
other than based on its Commitment Percentage; an amendment to this Section 27;
or an amendment of any provision of this Agreement or the Loan Documents which
requires the approval of all of the Lenders or the Majority Lenders to require a
lesser number of Lenders to approve such action. The provisions of Section 14
may not be amended without the written consent of the Agent. No waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent thereon. No course of dealing or delay or omission on the part of the
Agent or any Lender in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand upon any of the
Borrower, REA or the Guarantors shall entitle the Borrower, REA or any Guarantor
to other or further notice or demand in similar or other circumstances.
Section 28 SEVERABILITY.
The provisions of this Agreement are severable, and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
Section 29 TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrower, REA and the Guarantors under this
Agreement and the other Loan Documents.
Section 30 NO UNWRITTEN AGREEMENTS.
THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
Section 31 REMEDIES OF THE BORROWER.
In the event that a claim is made that the Agent has, or the Lenders
have, acted unreasonably or unreasonably delayed acting in any case where by law
or under this Agreement or the other Loan Documents, the Agent has, or the
Lenders have an obligation to act reasonably
91
or promptly, each of the Borrower, REA and the Guarantors agrees to the extent
permitted by law, that neither the Agent nor the Lenders shall be liable for any
monetary damages, and the sole remedy of the Borrower, REA and the Guarantors
shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. In any action or proceeding to determine whether the Agent
has, or the Lenders have, acted reasonably or promptly, each of the Borrower,
REA and the Guarantors agrees to the extent permitted by law, that neither the
Agent nor the Lenders nor their respective agents shall be liable for any
monetary damages, and the sole remedies of the Borrower, REA and the Guarantors
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 the Agent has, or the Lenders have, acted reasonably shall be
determined by an action seeking declaratory judgment.
Section 32 REA Guaranty
Section 32.1 The Guaranty. In order to induce the Lenders and the Agent
to enter into this Agreement and to extend credit hereunder and in recognition
of the direct benefits to be received by REA from the proceeds of the Loans, REA
hereby agrees with the Agent and each of the Lenders as follows: REA hereby
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment and performance when due, whether upon
maturity, by acceleration or otherwise, of any and all of the Obligations. If
any or all of the Obligations becomes due and payable hereunder, REA
unconditionally promises to pay such indebtedness to the Lenders or order, on
written demand, together with any and all reasonable expenses which may be
incurred by the Lenders in collecting any of the Obligations, and until paid to
the Lenders, such sums shall bear interest at the interest rate payable on
overdue amounts set forth in Section 4.12.
Section 32.2 Bankruptcy. Additionally, REA unconditionally and
irrevocably guarantees the payment and performance of any and all of the
Obligations to the Lenders and the Agent whether or not then due or payable by
the Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 12.1A(h), (i) or (j), and unconditionally and irrevocably
promises to pay the Obligations to the Lenders, or order, on demand, in lawful
money of the United States.
Section 32.3 Nature of Liability. The liability of REA hereunder is
exclusive and independent of any security for or other guaranty of the
Obligations whether executed by REA, any Guarantor or by any other party, and
the liability of REA hereunder shall not be affected or impaired by (a) any
direction as to application of payment by the Borrower or by any other party, or
(b) any other continuing or other guaranty, undertaking or maximum liability of
a Guarantor or of any other party as to the Obligations or (c) any payment on or
in reduction of any such other guaranty or undertaking, or (d) any dissolution,
termination or increase, decrease or change in personnel by the Borrower, or (e)
any payment made to any Lenders on the indebtedness which such Lenders repay the
Borrower pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and REA waives any right to the
deferral or modification of its obligations hereunder by reason of any such
proceeding.
Section 32.4 Independent Obligation. This is a guaranty of payment and
performance and not of collection. The obligations of REA hereunder are
independent of the obligations of any
92
Guarantor or the Borrower, and a separate action or actions may be brought and
prosecuted against REA whether or not action is brought against any Guarantor or
the Borrower and whether or not any Guarantor or the Borrower be joined in any
such action or actions. Any payment or performance by the Borrower or other
circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to REA.
Section 32.5 Authorization. REA authorizes the Agent and each of the
Lenders without notice or demand (except as shall be required by applicable
statue and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(e) change the manner, place or terms of payment or
performance of, and/or change or extend the time of payment or
performance of, renew, increase, accelerate or alter, any of the
Obligations (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply
to the Obligations as so changed, extended, renewed or altered;
(f) take and hold security for the payment and performance of
the Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Obligations or any liabilities (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(g) exercise or refrain from exercising any rights against the
Borrower, any Guarantor or any other Person or otherwise act or refrain
from acting;
(h) release or substitute one or more of the Borrower, the
Guarantors, endorsers, and guarantors or other obligors;
(i) settle or compromise any of the Obligations, any security
therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of the Borrower to its creditors
other than the Lenders;
(j) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Lenders regardless
of what liability or liabilities of the Borrower remain unpaid;
(k) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements; and/or
(l) take any other lawful action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of REA from its liabilities under this Section 32.
93
Section 32.6 Partial Invalidity. No invalidity, irregularity or
unenforceability of all or any part of the Obligations or of any security
therefore shall affect, impair or be a defense to this guaranty, and this
guaranty shall be primary, absolute, irrevocable and unconditional
notwithstanding the occurrence of any event or the existence of any other
circumstances which might constitute a legal or equitable discharge of a surety
or guarantor except payment in full of the Obligations.
Section 32.7 Continuing Obligation. This guaranty is a continuing one
and all liabilities to which it applies or may apply under the terms hereof
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of the Agent or any Lender in exercising any right,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise thereof or the exercies of
any other right, power or privilege. The rights and remedies herein expressly
specified are cumulative and not exclusive of any rights or remedies which the
Agent or any Lender would otherwise have. No notice to or demand on REA in any
case shall entitle REA to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or any
Lender to any other or further action in any circumstances without notice or
demand. It is not necessary for the Agent or any Lender to inquire into the
capacity or powers of the Borrower or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercised of such powers shall be
guaranteed hereunder.
Section 32.8 Reliance. It is not necessary for the Agent or the other
Lenders to inquire into the capacity or powers of the Borrower or any Guarantor
or the officers, directors, partners or agents acting or purporting to act on
its behalf, and any Obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
Section 32.9 Subordination. Any indebtedness of the Borrower now or
hereafter owing to REA is hereby subordinated to the Obligations and if the
Agent so requests at a time when an Event of Default exists, all such
indebtedness of the Borrower to REA shall be collected, enforced and received by
REA for the benefit of the Lenders and be paid over to the Agent on behalf of
the Lenders on account of the Obligations but without affecting or impairing in
any manner the liability of REA under the other provisions of this guaranty.
Prior to the transfer by REA of any note or negotiable instrument evidencing any
of the indebtedness of the Borrower to REA, REA shall ▇▇▇▇ such note or
negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, REA hereby
agrees with the Lenders that it will not exercise any right of subrogation which
it may at any time otherwise have as a result of this guaranty (whether
contractual, under Section 509 of the Bankruptcy Code, or otherwise) until all
Obligations have been paid in full in cash (it being understood that REA is not
waiving any right of subrogation that it may otherwise have but is only waiving
the exercise thereof as provided above).
Section 32.10 Waiver. (a) REA waives any right (except as shall be
required by applicable law and cannot be waived) to require the Agent or the
other Lenders to (i) proceed against the Borrower, any Guarantor or any other
Person, (ii) proceed against or exhaust any security held from the Borrower, any
Guarantor or any other Person or (iii) pursue any other remedy in the Agent's or
the other Lender's power whatsoever. REA waives (except as shall be required by
94
applicable law and cannot be waived) any defense to its obligations under this
Section 32 based on or arising out of any defense of the Borrower, any Guarantor
or any other Person, other than payment and performance in full of the
Obligations, based on or arising out of the disability of the Borrower, any
Guarantor or any other person, or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
the Borrower other than payment and performance in full of the Obligations. The
Agent and the other Lenders may, at their selection, foreclose on any security
held by the Agent or the other Lenders by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Agent and the other Lenders may have against the Borrower or
any other party, or any security, without affecting or impairing in any way the
liability of REA hereunder except to the extent the Obligations have been paid
or performed. REA waives any defense arising out of any such election by the
Agent and the other Lenders, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
REA against the Borrower or any other party or any security.
(b) REA waives, except as shall be required by applicable law and
cannot be waived, all presentments, demands for performance, protests and
notices, including without limitation notices of nonperformance, notices of
protest, notices of dishonor, notices of acceptance of this guaranty, and
notices of the existence, creation of incurring of new or additional
Obligations. REA assumes all responsibility for being and keeping itself
informed of the financial condition and assets of the Borrower, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks which REA assumes and incurs hereunder,
and agrees that the Agent and the other Lenders shall have no duty to advise REA
of information known to them regarding such circumstances or risks. REA warrants
and agrees that each of the waivers set forth above is made with full knowledge
of its significance and consequences and that if any of such waivers are
determined to be contrary to any applicable law or public policy, such waivers
shall be effective only to the maximum extent permitted by law.
Section 32.11 Nature of Liability. It is the desire and intent of REA
and the Lenders that this guaranty shall be enforced against REA to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of REA under this guaranty shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation, because
of any applicable state or federal law relating to fraudulent conveyances or
transfers), then, solely for purposes of this Section 32 and without relieving
the Borrower or any Guarantor of liability for the Obligations, the amount of
the Obligations shall be deemed to be reduced and REA shall pay the maximum
amount of the Obligations which would be permissible under applicable law.
Section 32.12 Rights in Bankruptcy. In the event of the business
failure of REA or if there shall be pending any bankruptcy or insolvency case or
proceeding with respect to REA under federal bankruptcy law or any other
applicable law or in connection with the insolvency of REA or if a liquidator,
receiver, or trustee shall have been appointed for REA or REA's properties or
assets, the Agent or the Lenders may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Agent and the Lenders allowed in any proceedings relative to REA, or any of
REA's properties or assets, and, irrespective of
95
whether the Obligations of the Borrower guaranteed hereby shall then be due and
payable, by declaration or otherwise, the Agent or the Lenders shall be entitled
and empowered to file and prove a claim for the whole amount of any sum or sums
owing with respect to the Obligations of the Borrower guaranteed hereby, and to
collect and receive any moneys or other property payable or deliverable on any
such claim. REA covenants and agrees that upon the commencement of a voluntary
or involuntary bankruptcy proceeding by or against Borrower, REA shall not seek
a supplemental stay or otherwise pursuant to 11 U.S.C. Section 105 or any other
provision of the Bankrutpcy Reform Act of 1978, as amended, or any other debtor
relief law (whether statutory, common law, case law, or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, to stay, interdict, condition, reduce or inhibit the ability of the
Agent or the Lenders to enforce any rights of the Agent or the Lenders against
REA by virtue of this guaranty or otherwise.
Section 32.13 Set-off. REA hereby grants to each Lender, as security
for the full and prompt payment and performance of REA's obligations hereunder,
a continuing lien on and security interest in any and all securities or other
property belonging to REA now or hereafter held by such Lender and in any and
all deposits (general or specific, time or demand, provisional or final,
regardless of currency, maturity, or the branch of such Lender where the
deposits are held) now or hereafter held by such Lender and other sums credited
by or due from such Lender to REA or subject to withdrawal by REA; and
regardless of the adequacy of any collateral or other means of obtaining
repayment of such obligations, during the continuance of any Event of Default
under the Notes or the other Loan Documents, each Lender may at any time and
without notice to REA set-off and apply the whole or any portion or portions of
any or all such deposits and other sums against amounts payable under this
guaranty, whether or not any other Person or Persons could withdraw money
therefrom. Any security now or hereafter held by or for REA and provided by the
Borrower, or by anyone on Borrower's behalf, in respect of liabilities of REA
hereunder shall be held in trust for the Lenders as security for the liabilities
of REA hereunder.
Section 32.14 Assignment. This guaranty is assignable by any Lender in
whole or in part in conjunction with any assignment of the Notes or portions
thereof, and any assignment hereof or any transfer or assignment of the Notes or
portions thereof by such Lender shall operate to vest in any such assignee the
rights and powers, in whole or in part, as appropriate, herein conferred upon
and granted to such Lender.
96
IN WITNESS WHEREOF, each of the undersigned have caused this Agreement
to be executed by its duly authorized representatives as of the date first set
forth above.
AMERICAN REAL ESTATE INVESTMENT,
L.P., a Delaware limited partnership
By: American Real Estate Investment
Corporation, its general partner
By:/s/ ▇▇▇▇▇▇▇ ▇. Butte
Name: ▇▇▇▇▇▇▇ ▇. Butte
Title: Vice President
AMERICAN REAL ESTATE
INVESTMENT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. Butte
Name: ▇▇▇▇▇▇▇ ▇. Butte
Title: Vice President
BANKBOSTON, N.A., individually and as
Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
DLJ CAPITAL FUNDING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
97
SCHEDULE 1
LENDERS AND COMMITMENTS
Commitment
Commitment Percentage
------------ -----------
BankBoston, N.A. $75,000,000 50%
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Real Estate Division
Eurodollar Lending Office:
Same as above
$75,000,000 50%
DLJ Capital Funding, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Eurodollar Lending
Office:
--------------------
SCHEDULE 2
EXAMPLE OF CALCULATION OF
DEBT SERVICE COVERAGE AMOUNT
SCHEDULE 3
ELIGIBLE REAL ESTATE QUALIFICATION DOCUMENTS
With respect to any parcel of Real Estate of the Borrower, REA or a Guarantor
proposed to be included in the Collateral, each of the following:
(a) Security Documents. Such Security Documents relating to such
Real Estate as the Agent shall require, duly executed and delivered by the
respective parties thereto.
(b) Enforceability Opinion. The favorable legal opinion of counsel
to Borrower, REA or such Guarantor, from counsel reasonably acceptable to the
Agent and qualified to practice in the State in which such Real Estate is
located, addressed to the Lenders and the Agent covering the enforceability
of such Security Documents and such other matters as the Agent shall
reasonably request.
(c) Perfection of Liens. Evidence reasonably satisfactory to the
Agent that the Security Documents are effective to create in favor of the
Agent a legal, valid and enforceable first lien or security title and
security interest in such Real Estate and that all filings, recordings,
deliveries of instruments and other actions necessary or desirable to protect
and preserve such liens or security title or security interests have been
duly effected.
(d) Survey and Taxes. The Survey of such Real Estate, together with
the Surveyor Certification and evidence of payment of all real estate taxes,
assessments and municipal charges on such Real Estate which on the date of
determination are required to have been paid under Section 7.8.
(e) Title Insurance; Title Exception Documents. The Title Policy
covering such Real Estate, including all endorsements thereto, and together
with proof of payment of all fees and premiums for such policy, and true and
accurate copies of all documents listed as exceptions under such policy.
(f) UCC Certification. A certification from the Title Insurance
Company or counsel satisfactory to the Agent that a search of the appropriate
public records disclosed no conditional sales contracts, security agreements,
chattel mortgages, leases of personalty, financing statements or title
retention agreements which affect any property, rights or interests of the
Borrower, REA or such Guarantor that are or are intended to be subject to the
security interest, security title, assignments, and mortgage liens created by
the Security Documents relating to such Real Estate except to the extent that
the same are discharged and removed prior to or simultaneously with the
inclusion of the Real Estate in the Collateral.
(g) Management Agreement. A true copy of the Management Agreement,
if any, relating to such Real Estate.
Schedule 3
Page 2
(h) Leases. True copies of all Leases relating to such Real Estate
together with Lease Summaries for all such Leases if available, and a Rent
Roll for such Real Estate certified by the Borrower or Guarantor as accurate
and complete as of a recent date.
(i) Lease Form. The form of Lease to be used by the Borrower, REA or
such Guarantor in connection with future leasing of such Mortgaged Property.
(j) Subordination Agreements. A Subordination, Attornment and
Non-Disturbance Agreement from each tenant of such Real Estate as required by
the Agent.
(k) Estoppel Certificates. Estoppel certificates from (i) tenants
occupying at least seventy five percent (75%) of the Net Rentable Area of
such Real Estate in the aggregate and (ii) each tenant of Real Estate which
occupies 10,000 square feet or more of such Real Estate or fifteen percent
(15%) or more of the Net Rentable Area of such Real Estate, and the Borrower
shall use reasonable efforts to obtain estoppel certificates from all other
tenants of such Real Estate as such certificates to be dated not more than
sixty (60) days prior to the inclusion of such Real Estate in the Collateral,
each such estoppel certificate to be in form and substance satisfactory to
the Agent.
(l) Certificates of Insurance. Each of (i) a current certificate of
insurance as to the insurance maintained by the Borrower, REA or such
Guarantor on such Real Estate (including flood insurance if necessary) from
the insurer or an independent insurance broker dated as of the date of
determination, identifying insurers, types of insurance, insurance limits,
and policy terms; (ii) certified copies of all policies evidencing such
insurance (or certificates therefor signed by the insurer or an agent
authorized to bind the insurer); and (iii) such further information and
certificates from the Borrower, REA or such Guarantor, its insurers and
insurance brokers as the Agent may reasonably request, all of which shall be
in compliance with the requirements of this Agreement.
(m) Hazardous Substance Assessments. A hazardous waste site
assessment report addressed to the Agent (or the subject of a reliance letter
addressed to, and in a form satisfactory to, the Agent) concerning Hazardous
Substances and asbestos on such Real Estate dated or updated not more than
three months prior to the inclusion of such Real Estate in the Collateral,
from the Environmental Engineer, such report to contain no qualifications
except those that are acceptable to the Majority Lenders in their sole
discretion and to otherwise be in form and substance satisfactory to the
Agent in its sole discretion.
(n) Certificate of Occupancy. A copy of the certificate(s) of
occupancy issued for such parcel of Real Estate permitting the use and
occupancy of the Building thereon (or, to the extent a certificate of
occupancy is not available in the jurisdiction in which such Real Estate is
located, an equivalent certificate or other evidence satisfactory to the
Agent) and evidence satisfactory to the Agent that any certificate(s) of
occupancy previously issued to a prior owner of such parcel of Real Estate is
not required to be reissued to the Borrower or Guarantor.
(o) Appraisal. An Appraisal of such Real Estate dated not more than
three months prior to the inclusion of such Real Estate in the Collateral.
Schedule 3
Page 3
(p) Zoning and Land Use Compliance. Such evidence regarding zoning
and land use compliance as the Agent may require and approve in its
reasonable discretion.
(q) Construction Inspector Report and Capital Expenditure Budget. A
report or written confirmation from the Construction Inspector satisfactory
in form and content to the Majority Lenders, dated or updated not more than
three months prior to the inclusion of such Real Estate in the Collateral,
addressing such matters as the Majority Lenders may reasonably require,
including without limitation that the Construction Inspector has reviewed the
plans and specifications or other available materials for all Buildings on
the Real Estate, that the condition of the Buildings is good, that all
Buildings were constructed and completed in a good and workmanlike manner,
and that the Buildings satisfy all applicable building codes and regulations.
The capital expenditure budget for the Real Estate must show adequate
reserves or cash flow to cover capital expenditure needs of the Real Estate.
(r) Permit and Legal Compliance Assurances. Evidence satisfactory to
the Agent that all activities being conducted on such Real Estate which
require federal, state or local licenses or permits have been duly licensed
and that such licenses or permits are in full force and effect, and that the
Real Estate, the Buildings and the use and occupancy thereof are in
compliance with all applicable federal, state or local laws, ordinances or
regulations (including, without limitation, the Americans with Disabilities
Act, and any laws of the State in which such Real Estate is located regarding
disability requirements).
(s) Operating Statements. Operating statements for such Real Estate
in the form of such statements delivered to the Lenders under Section 7.4(c)
covering each of the four fiscal quarters ending immediately prior to the
addition of such Real Estate to the Collateral, to the extent available.
(t) Doing Business Opinion. An opinion, dated the date of the
inclusion of such Real Estate in the Collateral, of legal counsel to the
Borrower, REA or such Guarantor reasonably acceptable to the Agent and
qualified to practice in the State in which such Real Estate is located to
the effect that neither the Agent nor any Lender shall be required to qualify
to do business in such State or any political subdivision thereof or to
become liable to pay any taxes in such State or any political subdivision
thereof solely on account of the receipt of the lien or security title on
such Real Estate securing the Obligation.
(u) Additional Documents. Such other agreements, documents,
certificates, reports or assurances as the Agent may reasonably require.
SCHEDULE 6.3
List of all Encumbrances on REA Assets
Properties Owned as of December 31, 1997
12/31/97
Balance
Property Entity Type Outstanding Lender
-------- ------ ---- ----------- ------
40 Potash MBP/BRE, LLC Mortgage Debt $24,565,878 Nomura Asset Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇. Mortgage Debt
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Mortgage Debt
1500 ▇▇▇▇▇▇▇ FLIP/BRE, Inc. Mortgage Debt 12,590,822 Nomura Asset Capital Corporation
1900 ▇▇▇▇▇▇▇ Mortgage Debt
1701 ▇▇▇▇▇▇▇ Mortgage Debt
1905 ▇▇▇▇▇▇ Mortgage Debt
95 ▇▇▇▇▇ OIP/BRE, LLC Mortgage Debt 1,464, 073 Normura Asset Capital Corporation
99 ▇▇▇▇▇ Mortgage Debt
5 ▇▇▇▇▇▇▇▇ NJA/BRE, LLC Mortgage Debt 6,289,424 Nomura Asset Capital Corporation
100 Oak Hill REA Mortgage Debt 1,155,000 First Union National Bank
One Tabas The Borrower Mortgage Debt 2,871, 871 Equitable of Iowa
Two Tabas Mortgage Debt 4,373,672 Equitable of Iowa
1305 Goshen Mortgage Debt 3,351,564 Equitable of Iowa
1057 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Properties Mortgage Debt 3,500,000 Column Financial
("▇▇▇▇▇▇▇")
Quadrangles Village American Quadrangles Mortgage Debt 16,251,000 HUD
Apartments Partners, L.P.
Americana Virginia Mortgage Debt 10,088,000(a) GECC
Lakewood ----------
Apartments
December 31, 1997 $86,501,304
-----------
-----------
Schedule 6.3
Page 2
Properties Acquired Since December 31, 1997
12/31/97
Balance
Property Entity Type Outstanding Lender
-------- ------ ---- ----------- ------
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ $7,487,741 Column Financial
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ American Sedona 16,972.214 Column Financial
Partners, L.P.
Steelway Boulevard Virginia 8,430,000 Column Financial
Ground Lease Obligations
12/31/97
Balance
Property Entity Type Outstanding Lender
-------- ------- ---- ----------- ------
1057 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ground Lease $2,662,236(b) Column Financial
1091 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ground Lease 1,586,187(c)
Other
-- $10,000,000 promissory note payable between REA and the Borrower. Note is
secured by REA's units of partnership interest in the Borrower.
-- The ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Property is subject to a ground lease which requires an
annual payment by RROP, L.L.C. of $1.00. This property is subleased to a
tenant until July 1, 2004. This tenant has the right to purchase the
building at lease expiration for $10.00.
(a) Property was sold in January 1998.
(b) Amount represents the cumulative annual payments to be made over the
remaining lease term which will terminate in May 2029.
(c) Amount represents the cumulative annual payments to be made over the
remaining lease term which will terminate in June 2031.
SCHEDULE 6.4
REA's Report On Form 10-K For The Year Ended December 31, 1997
SCHEDULE 6.7
PENDING LITIGATION
None
SCHEDULE 6.15
List of Transactions with Affiliates and Subsidiaries
-- Employment agreement, dated December 12, 1997, between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇
-- Employment agreement, dated December 12, 1997, between ▇▇▇▇▇ ▇▇▇▇▇▇▇
and REA
-- Warrant agreement, dated December 12, 1997, between the Borrower and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-- Warrant agreement, dated December 12, 1997, between the Borrower and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-- Warrant agreement, dated December 12, 1997, between REA and ▇▇▇▇▇▇ Bay
Partners, L.P.
-- Leases between various entities (which are affiliates of ▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇), listed below, and various Subsidiaries of the
Borrower.
- ▇▇▇▇▇▇▇ Energy, Inc. (1600 ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇)
- ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Real Estate, Inc. (Urban Farms Shopping Center)
- ▇▇▇▇▇▇▇ Enterprises, Inc. (Urban Farms Shopping Center)
-- Management and leasing agreement(s) to be dated March 31, 1998 between
American Real Estate Management Inc., REA, the Borrower and its
Subsidiaries.
-- Promissory note between REA and the Borrower in the amount of
$10,000,000
-- Management agreements between American Real Estate Management Inc. and
various limited partnerships in which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ has an ownership
interest, as shown below:
- Management agreement between ▇▇▇▇▇▇▇ Associates Limited
Partnership and FKB Management, Inc. dated July 18, 1991 as
amended on July 1, 1997
- Management and leasing agreement dated as of August 18, 1997
between ▇▇ ▇▇▇▇▇▇▇, ▇.▇., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Properties, Inc.
-- Commission arrangements with ▇▇▇▇▇▇▇ Corporate Real Estate, Inc. related
to certain leases at various properties which were acquired as a result
of the December 12, 1997 transactions.
SCHEDULE 6.24(k)
PENDING CONDEMNATION/EMINENT DOMAIN
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇, possible 20 foot road widening
to enhance access to the property and not affecting any improvements thereon.
SCHEDULE 6.24(l)
TENANT IMPROVEMENTS
1. Tyson Gettysburg Road lights $11,700
2. ▇▇▇▇▇▇ Publishing ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ paint and carpet every
four years, not to exceed
$13,000 (next work -
8/13/20)
3 Nextel/Homestead ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ tenant fit-out
$75,000
SCHEDULE 6.24(l)
LEASE COMMISSION OBLIGATIONS
1. Kiddie Academy ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 5/1/99 $14,906.55
5/1/01 $20,625.00
2. ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 5/1/96-4/2002 $ 6,304.26 annually
3. NY-NJ Milk Market-storage ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/1/98 $ 101.88
11/1/99 $ 103.92
11/1/00 $ 106.00
11/1/01 $ 108.12
5/1/02 $ 55.14
4. Atlantic-Pacific Automotive ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 6/1/98-5/31/01 $ 16,174.68 annually
5. Purina ▇▇▇▇▇, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 2/1/98-1/31/01 $ 6,552.00 annually
6. FDA Packaging AIP Dive 4/1/98-3/31/02 $ 13,500.00 annually
7. T.P.D.C. Inc. (Tyson) AIP Dive 3/15/98-2/28/01 $ 8,809.52 annually
8. DAS Distributors, Inc. AIP Dive 1/1/99-12/31/00 $ 6,769.22 annually
9. ▇▇▇▇▇ Products AIP Dive 10/1/98-1/1/01 $ 4,620.00 annually
SCHEDULE 6.26
OWNERSHIP
Subsidiaries of the Borrower
Form and Jurisdiction Ownership
Name of Organization Percentage
---- --------------------- ----------
Virginia Colorado limited partnership 69.9% limited partner interest and
30% general partner interest
American Emerald Partners, Delaware limited partnership 99% limited partner interest
L.P.
American Timberleaf Partners, Delaware limited partnership 99% limited partner interest
L.P.
American Quadrangles Partners, L.P. Delaware limited partnership 99% limited partner interest
American Sedona Partners, Colorado limited partnership 99% limited partner interest
L.P.
RROP, L.L.C. New Jersey limited liability Company 99.9% member interest
▇▇▇▇▇▇▇ New Jersey general partnership 99.9% general partner interest
New Jersey Associates New Jersey general partnership 99.9% general partner interest
UFSC,L.L.C New Jersey limited liability Company 99.9% general partner interest
Subsidiaries of REA
Form and Jurisdiction Ownership
Name of Organization Percentage
---- --------------------- ----------
American Emerald Corp. Delaware corporation 100%
American Timberleaf Corp. Delaware corporation 100%
SCHEDULE 6.26
Page 2
Form and Jurisdiction Ownership
Name of Organization Percentage
---- --------------------- ----------
American Quadrangles Corp. Delaware corporation 100%
American Sedona Corporation Colorado corporation 100%
FLIP/BRE II, INC. New Jersey corporation 100%
REA/SPC II, INC. New Jersey corporation 100%
Avalanche Investment Corporation Maryland corporation 100%
Subsidiaries of ▇▇▇▇▇▇▇
Form and Jurisdiction Ownership
Name of Organization Percentage
---- --------------------- ----------
MBP/BRE, L.L.C. New Jersey limited liability company 99% member interest
Subsidiaries of Virginia
None
Limited Partners of the Borrower
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ III
JKP Family Associates
▇▇▇▇▇ ▇▇▇▇▇
Lervo Investments, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Houston ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Bay, ▇.▇.
▇▇▇▇▇▇▇▇▇▇ Avenue Ventures, Inc.
Rotterdam Ventures, Inc.
Eastwick Development Corporation
Equinox Equities, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
SWF, L.P.
Guilderland Ventures, inc.
Northeastern Industrial Park Inc.
Schedule 6.27
AGREEMENTS RELATED TO INDEBTEDNESS
Pomissory Note dated January 8, 1998 between American Sedona Partners, L.P.,
American Real Estate Investment Corporation and Column Financial, Inc. in the
principal amount of $17,000,000
▇▇▇▇ Perfumes Mortgage Note dated September 11, 1997 by Fair Lawn Industrial
Park, Inc. and First Union National Bank in the principal amount of $1,155,000
L&W Promissory Note dated August 4, 1995 between L&W Associates and USG
Annuity & Life Company in the principal sum of $3,525,000
Northfield Business Center Promissory Note dated December 24, 1997 between
▇▇▇▇▇▇▇ and Column Financial, Inc. in the principal amount of $3,500,000
One Tabas Promissory Note dated August 9, 1995 between ▇▇▇▇▇-▇▇▇▇ Associates,
Inc. and USG Annuity & Life Company in the principal amount of $3,025,000
▇▇▇▇▇▇▇▇ Promissory Note dated January 5, 1998 between ▇▇▇▇▇▇▇ and Column
Financial, Inc. in the amount of $7,500,000
Two Tabas Promissory Note dated August 9, 1995 between ▇▇▇▇▇-▇▇▇▇ Associates,
Inc. and USG Annuity & Life Company in the principal amount of $4,600,000
Loan Agreement dated September 23, 1997 by and between FLOP/BRE, Inc.
OIP/BRE, L.L.C., MBP/BRE, L.L.C., and NJA/BRE, L.L.C. and Nomura Asset
Capital Corporation
GATX Promissory Note dated April 1, 1998 between the Borrower and Column
Financial, Inc. in the amount of $8,430,000.
Loan Agreement dated as of May 1, 1993 between The Industrial Development
Authority of the City of Tempe, Arizona and Quadrangles I Limited Partnership.
(i) Modification of Deed of Trust, Note and Deed of Trust dated May 14, 1993.
(ii) Modification Agreement dated December 1, 1994.
(iii) Assignment of the Loan Agreement, the Arbitrage Regulation Agreement
and the Amended Restated Regulatory Agreement as to Tax Exemption
dated December 2, 1994.
Loan Agreement dated as of February 18, 1993 between the Independent Order of
Foresters and Columbia Executive & Associates in the principal amount of
$5,300,000.
Loan Agreement dated as of August 7, 1995 between M&T Trust Company and
Columbia Executive II Associates in the principal amount of $5,200,000.
Schedule 6.27
Page 2
Loan Agreement dated as of July 31, 1996 between M&T Real Estate, Inc. and
Columbia Executive VII Associates in the principal amount of $1,600,000.
Loan Agreement dated as of October 31, 1994 between M&T Trust Company and
Columbia Executive IV Associates in the principal amount of $7,250,000.
Schedule 7.17
OWNERSHIP OF REAL ESTATE BY SUBSIDIARIES
Subsidiaries of the Borrower Real Estate Assets
---------------------------- ------------------
Virginia Street Associates Limited Partnership ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Sedona Partners, L.P. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Partners, L.P. Quadrangles Apartments
RROP, L.L.C. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Properties ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
1 ▇▇▇▇▇▇▇▇ Drive
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ Associates 2 Volvo Drive
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇-▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇, L.L.C Urban Farms Shopping Center
OIP/BRE, L.L.C. ▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇/▇▇▇, ▇.▇.▇. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
1600 Route 208
NJA/BRE, L.L.C. 5 ▇▇▇▇▇▇▇▇
Subsidiaries of REA
FLIP/BRE II, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
1905 ▇▇▇▇▇▇ Road
Schedule 8.1
EXISTING NON-RECOURSE INDEBTEDNESS
March 31, 1998
Lender Outstanding Amount Entity Ownership Collateral
------ ------------------ ---------------- ----------
Nomura Asset Capital Corporation $24,483,136 MBP/BRE, LLC ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ 208
Nomura Asset Capital Corporation 12,548,416 FLIP/BRE II, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
1905 ▇▇▇▇▇▇ Road
Nomura Asset Capital Corporation 1,459,141 OIP/BRE, LLC ▇▇ ▇▇▇▇▇ ▇▇▇▇▇
99 ▇▇▇▇▇ Drive
Nomura Asset Capital Corporation 6,268,240 NJA/BRE, LLC ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 1,155,000 REA ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
Equitable of Iowa 2,859,768 REA One Tabas Lane
Equitable of Iowa 4,355,730 REA Two Tabas Lane
Equitable of Iowa 3,337,814 REA ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Column Financial 3,500,000 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
HUD 16,199,000 American Quadrangles Partners, Quadrangles Village
Limited Partnership Apartments
Column Financial 7,487,741 ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Column Financial 16,972,214 American Sedona Partners, Limited ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Partnership
Industrial Order of Forresters 5,060,984 The Borrower ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Manufacturers and Traders Trust Company 5,034,191 The Borrower ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Manufacturers and Traders Trust Company 1,566,124 The Borrower ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Manufacturers and Traders Trust Company 6,837,720 The Borrower ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Column Financial 8,430,000 Virginia Street Associates Limited ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Schedule 8.1
Page 2
Partnership ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
EXHIBITS AND SCHEDULES
EXHIBIT A ASSIGNMENT OF LEASES AND RENTS
EXHIBIT B UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE
EXHIBIT C INDEMNITY AGREEMENT REGARDING HAZARDOUS MATERIALS
EXHIBIT D MORTGAGE AND SECURITY AGREEMENT
EXHIBIT E SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
EXHIBIT F FORM OF NOTE
EXHIBIT G FORM OF REQUEST FOR LOAN
EXHIBIT H FORM OF COMPLIANCE CERTIFICATE
EXHIBIT I FORM LEASE
EXHIBIT J OPINION
SCHEDULE 1 LENDERS AND COMMITMENTS
SCHEDULE 2 EXAMPLES OF CALCULATION OF DEBT SERVICE
OVERAGE AMOUNT
SCHEDULE 3 ELIGIBLE REAL ESTATE QUALIFICATION DOCUMENTS
SCHEDULE 6.3 LIST OF ALL EMCUMBRANCES ON REA ASSETS
SCHEDULE 6.4 REA'S REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997
SCHEDULE 6.7 PENDING LITIGATION
SCHEDULE 6.15 LIST OF TRANSACTIONS WITH AFFILIATES AND SUBSIDIARIES
SCHEDULE 6.24(k) PENDING CONDEMNATION/EMINENT DOMAIN
SCHDULE 6.24(l) TENANT IMPROVEMENTS; LEASING COMMISSION OBLIGATIONS
SCHEDULE 6.26 OWNERSHIP
SCHEDULE 6.27 AGREEMENTS RELATED TO INDEBTEDNESS
SCHEDULE 7.17 OWNERSHIP OF REAL ESTATE BY SUBSIDIARIES
SCHEDULE 8.1 EXISTING NON-RECOURSE INDEBTEDNESS