1
Exhibit (b)(12)
LOAN AGREEMENT
Dated as of July 27, 1999
by and among
NORTH VALLEY TECH LLC
as Borrower,
SALOMON BROTHERS REALTY CORP.
as Agent,
LASALLE BANK NATIONAL ASSOCIATION
as Collateral Agent
and
Each Lender Signatory hereto
2
Table of Contents
Page
ARTICLE I. CERTAIN DEFINITIONS...............................................1
Section 1.1. Definitions......................................................1
ARTICLE II. GENERAL TERMS....................................................1
Section 2.1. The Loan.........................................................1
Section 2.2. Use of Proceeds..................................................1
Section 2.3. Security for the Loan............................................1
Section 2.4. Borrower's Note..................................................1
Section 2.5. Principal and Interest...........................................1
Section 2.6. Voluntary Prepayment.............................................1
Section 2.7. Mandatory Prepayment.............................................1
Section 2.8. Application of Payments After Event
of Default.......................................................1
Section 2.9. Method and Place of Payment From the
Collection Account to Agent......................................1
Section 2.10. Taxes...........................................................1
Section 2.11. Release of Collateral...........................................1
Section 2.12. Central Cash Management.........................................1
Section 2.13. Reserve Accounts................................................1
Section 2.14. Security Agreement..............................................1
Section 2.15. Mortgage Recording Taxes........................................1
Section 2.16. General Collateral Agent Provisions.............................1
ARTICLE III. CONDITIONS PRECEDENT............................................1
Section 3.1. Conditions Precedent to Effectiveness............................1
Section 3.2. Execution and Delivery of Agreement..............................1
Section 3.3. Acceptance of Borrowings.........................................1
Section 3.4. Form of Loan Documents and Related Matters.......................1
ARTICLE IV. REPRESENTATIONS AND WARRANTIES...................................1
Section 4.1. Representations and Warranties as to Borrower....................1
Section 4.2. Representations and Warranties as to the
Mortgaged Property...............................................1
Section 4.3. Survival of Representations......................................1
ARTICLE V. AFFIRMATIVE COVENANTS.............................................1
Section 5.1. Affirmative Covenants............................................1
ARTICLE VI. NEGATIVE COVENANTS...............................................1
Section 6.1. Negative Covenants...............................................1
ARTICLE VII. EVENT OF DEFAULT................................................1
Section 7.1. Event of Default.................................................1
Section 7.2. Remedies.........................................................1
Section 7.3. Remedies Cumulative..............................................1
Section 7.4. Default Administration Fee.......................................1
Section 7.5. Curative Advances................................................1
ARTICLE VIII. MISCELLANEOUS..................................................1
Section 8.1. Survival.........................................................1
Section 8.2. Agent's Discretion...............................................1
Section 8.3. Governing Law....................................................1
Section 8.4. Modification, Waiver in Writing..................................1
Section 8.5. Delay Not a Waiver...............................................1
Section 8.6. Notices..........................................................1
SECTION 8.7. TRIAL BY JURY....................................................1
Section 8.8. Headings.........................................................1
Section 8.9. Assignment.......................................................1
Section 8.10. Severability....................................................1
Section 8.11. Preferences.....................................................1
Section 8.12. Waiver of Notice................................................1
Section 8.13. Failure to Consent..............................................1
Section 8.14. Exhibits Incorporated...........................................1
Section 8.15. Offsets, Counterclaims and Defenses.............................1
Section 8.16. No Joint Venture or Partnership.................................1
Section 8.17. Waiver of Marshalling of Assets Defense.........................1
Section 8.18. Waiver of Counterclaim..........................................1
Section 8.19. Conflict; Construction of Documents.............................1
Section 8.20. Brokers and Financial Advisors..................................1
Section 8.21. Counterparts....................................................1
Section 8.22. Estoppel Certificates...........................................1
Section 8.23. Payment of Expenses.............................................1
Section 8.24. Non-Recourse....................................................1
ARTICLE IX. THE AGENT........................................................1
Section 9.1. Appointment, Powers and Immunities...............................1
Section 9.2. Reliance by Agent................................................1
Section 9.3. Defaults.........................................................1
Section 9.4. Rights as a Lender...............................................1
Section 9.5. Indemnification..................................................1
Section 9.6. Non-Reliance on Agent and Other Lenders..........................1
Section 9.7. Failure to Act...................................................1
Section 9.8. Resignation of Agent.............................................1
Section 9.9. Agency Fee.......................................................1
Section 9.10. Consents under Loan Documents...................................1
Section 9.11. Notices, Reports and Other Communications.......................1
Page 1
3
EXHIBITS
A - Leasehold Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing (Form)
B - Assignment of Contracts, Licenses, Permits, Agreements,
Warranties and Approvals (Form)
C - Promissory Note (Form)
D - Management Agreement
E - Manager's Consent and Subordination of Management Agreement (Form)
F-1 - Opinion of Counsel to Borrower (corporate)
F-2 - Opinion of Counsel to Borrower (Mortgage and Assignment of Rents
and Leases enforceability) (Form)
F-3 - Opinion of Counsel to Borrower (substantive non-consolidation)
G - Assignment of Rents and Leases
H - Financing Statements (Form)
I - Lien Search Locations
J - Pledge Agreement (Form)
K - Environmental Indemnity Agreement (Form)
L - Guaranty of Non-Recourse Obligations (Form)
M - Irrevocable Direction Letter (Form)
N - Collateral Assignment of Hedge (Form)
Page 2
4
LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of July 27, 1999, is by and among NORTH
VALLEY TECH LLC, a Delaware limited liability company, having an address at c/o
First Union Real Estate Investments, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Borrower"); each of the financial institutions signatory
hereto that is identified as a "Lender" on the signature pages hereto or that,
pursuant to Section 8.9 hereof, shall become a "Lender" hereunder (individually,
a "Lender", and collectively, the "Lenders"); SALOMON BROTHERS REALTY CORP., a
New York corporation, having an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as agent for the Lenders (in such capacity together with
its successors in such capacity, the "Agent"); and LASALLE BANK NATIONAL
ASSOCIATION, a nationally chartered bank, having an address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as collateral agent for Lenders
("Collateral Agent").
RECITALS
--------
WHEREAS, Borrower desires to obtain from the initial Lender the Loan
in an amount equal to the Loan Amount (each as hereinafter defined) to refinance
the Mortgaged Property (as hereinafter defined) and to pay certain other fees
and expenses;
WHEREAS, the initial Lender is unwilling to make the Loan unless
Borrower joins in the execution and delivery of this Agreement, the Note and the
Loan Documents (each as hereinafter defined) to which it is a party which shall
establish the terms and conditions of, and provide security for, the Loan;
WHEREAS, Borrower has agreed to establish certain accounts and to
grant to the Agent on behalf of, and for the benefit of, the Lenders, a security
interest therein upon the terms and conditions of the security agreement set
forth in Section 2.14; and
WHEREAS, LaSalle Bank National Association, in its capacity as
Collateral Agent, is willing to join in this Agreement in that capacity.
NOW, THEREFORE, in consideration of the making of the Loan by the
Page 3
5
Lenders and for other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, the parties hereby covenant,
agree, represent and warrant as follows:
ARTICLE I.
CERTAIN DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement: (1) the
capitalized terms defined in this Article I have the meanings assigned to them
in this Article I and include the plural as well as the singular; (2) all
accounting terms have the meanings assigned to them in accordance with GAAP (as
hereinafter defined); (3) the words "herein", "hereof", and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section, or other subdivision; and (4) the following terms
have the following meanings:
"Accepted Practices" means such customary practices as commercial
mortgage collateral agents or banks would follow in the normal course of their
business in performing administrative and custodial duties with respect to
collateral which is generally similar to the Account Collateral; provided,
however, that "Accepted Practices" shall not be deemed to include any custodial
practices now followed by Collateral Agent for any such collateral held for its
own account to the extent that such practices are more stringent than the
practices followed by commercial mortgage collateral agents or banks generally.
"Account Collateral" has the meaning set forth in Section 2.14(a)
hereof.
"Accounts" means all accounts (as defined in the relevant UCC), now
owned or hereafter acquired by Borrower, and arising out of or in connection
with, the operation of the Mortgaged Property and all other accounts described
in the Management Agreement and all present and future accounts receivable,
inventory accounts, chattel paper, notes, insurance policies, Instruments,
Documents or other rights to payment and all forms of obligations owing at any
time to Borrower thereunder, whether now existing or hereafter created or
otherwise acquired by or on behalf of Borrower, and all Proceeds thereof and all
liens, security interests, guaranties, remedies, privileges and other rights
pertaining thereto, and all rights and remedies of any kind forming the subject
matter of any of the foregoing.
"Activity Statement" has the meaning set forth in Section 2.12(d).
"Activity Statement Date" has the meaning set forth in Section
2.12(d).
"Adjusted Operating Expenses" means, as of any date of calculation,
the Operating Expenses with respect to the Mortgaged Property during the most
recent twelve (12) month period for which such information was furnished to
Agent pursuant to Section 2.12(e) hereof, as the same are adjusted by Agent as
necessary to reflect (1) expenses for management fees equal to the greater of
actual management fees and 4.0% of Gross Revenues, (2) material increases in
future Operating Expenses as reasonably determined by the Agent (with
consideration given to operating costs of comparable buildings within the same
geographic area which provide similar services), (3) an annual minimum
replacement equal to the product of $0.20 and the gross square footage at the
Mortgaged Property and (4) normalized TI Costs and Leasing Commissions
reasonably determined by the Agent based on relevant market data (but not less
than the product of $1.25 and the occupied square footage at the Mortgaged
Property, but subject to a minimum 10% vacancy allowance).
Page 4
6
"Adjusted Operating Revenue" means, as of any date of calculation, the
sum of (A) the Operating Revenues reasonably projected by Borrower to be
received with respect to the Mortgaged Property during the twelve (12) month
period beginning on the first day of the following month and ending on the last
day of the month in which such calculation is being made in the following year
on a pro forma basis from the most recently delivered rent roll based solely
upon the base rent portion of the Rents and recoveries due pursuant to executed
Leases for part or all of such period, but excluding all Rents from any tenant
(a) where the tenant is in monetary or other material default or (b) where the
date for exercising a renewal option has passed and either written evidence of
on-going good faith negotiations for a renewal with the same tenant or an
executed letter or intent specifying the basic business terms with a replacement
tenant cannot be provided by the Borrower and (B) any other income deemed
recurring by Agent with respect to the Mortgaged Property during the most recent
twelve (12) month period for which such information was furnished to the Agent
pursuant to Section 2.12(e) hereof, as the same are adjusted by the Agent as
necessary to reflect (1) a credit loss/vacancy allowance equal to the greater of
10.0% and actual vacancy as reasonably determined by the Agent and (2) with
respect to any Lease other than a Lease to an investment grade rated tenant
which by its terms expires after the Maturity Date, a reduction of above market
Rents to market as reasonably determined by the Agent.
"Adjusted Property Net Cash Flow" for the Mortgaged Property for any
period shall mean the amount by which Adjusted Operating Revenues exceeds
Adjusted Operating Expenses for such period.
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or
other beneficial interests, by contract or otherwise; and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.
"Agent" has the meaning provided in the first paragraph of this
Agreement.
"Agreement" means this Loan Agreement, together with the Schedules and
Exhibits hereto, as the same may from time to time hereafter be modified,
supplemented or amended.
"Application Deposit" has the meaning provided in the mortgage loan
application attached to the Commitment.
"Appraisal" means an appraisal with respect to the Mortgaged Property
prepared by an Appraiser in accordance with the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation, in compliance with
the requirements of Title 11 of the Financial Institution Reform, Recovery and
Enforcement Act and utilizing customary valuation methods such as the income,
sales/market or cost approaches.
"Appraiser" means CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. or any other nationally
recognized MAI appraiser agreed to by the Agent and Borrower in their
reasonable discretion.
"Assignment" has the meaning set forth in Section 5.1(W) hereof.
"Assignment of Rents and Leases" means, with respect to the Mortgaged
Property, an Assignment of Rents and Leases, in the form attached
Page 5
7
hereto as Exhibit G, dated as of the Closing Date, granted by Borrower to Agent
for the benefit of the Lenders with respect to the Leases, as same may
thereafter from time to time be supplemented, amended, modified or extended by
one or more agreements supplemental thereto.
"Basic Carrying Costs" means the following costs with respect to the
Mortgaged Property: (i) Impositions and (ii) insurance premiums for policies of
insurance required to be maintained pursuant to this Agreement or the other Loan
Documents.
"Basic Carrying Costs Account" has the meaning provided in Section
2.13(b).
"Borrower" has the meaning provided in the first paragraph of this
Agreement.
"Business Day" means any day other than a Saturday and a Sunday and a
day on which federally insured depository institutions in the State of New York
or Illinois or the State where the Mortgaged Property is located are authorized
or obligated by law, governmental decree or executive order to be closed. When
used with respect to an Interest Determination Date, "Business Day" shall mean a
day on which banks are open for dealing in foreign currency and exchange in
London and New York City.
"Capital Event" means any transfer, sale, assignment, conveyance,
liquidation or disposition (other than a Taking) of all or substantially all of
the Mortgaged Property and "Capital Events" shall have a meaning correlative to
the foregoing.
"Capital Expenditure Reserve Account" has the meaning set forth in
Section 2.13(a) hereof.
"Capital Improvement Costs" means costs incurred or to be incurred in
connection with replacements and capital repairs required to be made to the
Mortgaged Property (including without limitation, TI Costs and Leasing
Commissions).
"Closing Date" means the date on which this Agreement shall become
effective pursuant to Section 3.1, such date being the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Collateral" means, collectively, the Land, Improvements, Contracts,
Documents, Equipment, Leases, Rents, Accounts, General Intangibles, Instruments,
Inventory, Personalty, Money and all Proceeds, and (to the full extent
assignable) Permits, all whether now owned or hereafter acquired and all other
property which is or hereafter may become subject to a Lien in favor of the
Agent on behalf of the Lenders as security for the Loan and including all
property of any kind described as part of the Mortgaged Property under the
Mortgage.
"Collateral Agent" means LaSalle Bank National Association or such
Person's successor in interest or other successor.
"Collateral Assignment of Hedge" means the Collateral Assignment of
Hedge, in the form attached hereto as Exhibit N, dated as of the Closing Date
and executed by the Borrower, the Agent and the hedge counterparty.
"Collateral Securitization" has the meaning provided in Section
Page 6
8
6.1(R).
"Collateral Security Instrument" means any right, document or
instrument, other than the Mortgage, given as security for the Loan.
"Collection Account" has the meaning set forth in Section 2.12(a)
hereof.
"Collection Period" means, with respect to any Payment Date, the
calendar month preceding such Payment Date; provided, however, that in the case
of the first Payment Date, the "Collection Period" shall be the period from the
Closing Date to the last day of the calendar month prior to such Payment Date.
"Commitment" means the commitment dated July 14, 1999, entered into by
the Borrower and the initial Lender.
"Commitment Fee" means the fee designated as such in the Commitment
payable by Borrower to Agent.
"Condemnation Proceeds" means, in the event of a Taking with respect
to the Mortgaged Property, the proceeds in respect of such Taking less any
reasonable third party out-of-pocket expenses incurred in collecting such
proceeds.
"Consumer Price Index" means the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, in the area where the Mortgaged Property is located; All
Items (1993 95-100), or any successor index thereto, appropriately adjusted and
if the Consumer Price Index ceases to be published and there is no successor
thereto, such other index as Agent and Borrower shall mutually agree upon.
"Contingent Obligation" means, as used in the definition of Other
Borrowings, without duplication, any obligation of Borrower guaranteeing any
indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly. Without limiting the generality of the foregoing, the term
"Contingent Obligation" shall include any obligation of Borrower:
(i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor;
(ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity
capital of the primary obligor;
(iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation; or
(iv) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming Borrower
is required to perform thereunder) as determined by Agent in good faith.
Page 7
9
"Contract Assignment" means, with respect to the Mortgaged Property,
the Assignment of Contracts, Licenses, Permits, Agreements, Warranties and
Approvals in the form attached hereto as Exhibit B, dated as of the Closing Date
and executed by the Borrower.
"Contracts" means the Management Agreement and all other agreements to
which the Borrower is a party or which are assigned to the Borrower by the
Manager in the Management Agreement and which are executed in connection with
the construction, operation and management of the Mortgaged Property (including,
without limitation, agreements for the sale, lease or exchange of goods or other
property and/or the performance of services by it, in each case whether now in
existence or hereafter arising or acquired) as any such agreements have been or
may be from time to time amended, supplemented or otherwise modified.
"Debt Service Coverage Test" means, as of any date of calculation with
respect to the Mortgaged Property, a test which shall be satisfied if the
Adjusted Property Net Cash Flow is at least equal to the product of 1.25 and the
Loan Debt Service. The Debt Service Coverage Test shall be calculated monthly by
the Agent as of each Payment Date (using in the Loan Constant calculation the
interest rate on the Loan for the related Interest Accrual Period) based upon
the Adjusted Property Net Cash Flow computed quarterly by the Agent from the
most recent Quarterly Statement delivered by the Borrower.
"Deed of Trust Trustee" means the trustee under the Mortgage that
constitutes a "deed of trust" under applicable law.
"Default" means the occurrence of any event which, but for the giving
of notice or the passage of time, or both, would be an Event of Default.
"Default Administration Fee" means an amount equal to the product of
(x) 1% and (y) the Principal Indebtedness as of the date the Default
Administration Fee becomes payable; provided, that notwithstanding the
foregoing, the aforementioned percentage shall be reduced from 1.0% to 0.5% if
the Principal Indebtedness is repaid after the Maturity Date but prior to the
commencement of a foreclosure proceeding by the Lenders.
"Default Rate" means the per annum interest rate equal to 5.0% per
annum in excess of the rate otherwise applicable hereunder.
"Documents" means all "documents" as defined in the relevant UCC or
other receipts covering, evidencing or representing goods now owned or hereafter
acquired by Borrower.
"Eligible Account" means a separate and identifiable account from all
other funds held by the holding institution that is: (i) an account maintained
with a federal or state chartered depository institution or trust company whose
(1) commercial paper, short-term debt obligations or other short-term deposits
(or, in the case of a depository institution or trust company that is the
principal subsidiary of a holding company, the commercial paper, short-term debt
obligations or other short-term deposits of such holding company) are rated by
the Rating Agencies not less than "A-1"(or the equivalent), if the deposits are
to be held in the account for less than thirty (30) days or (2) long-term
unsecured debt obligations are rated at least "AA-" (or the equivalent), if the
deposits are to be held in the account more than thirty (30) days, (ii) an
account the deposits in which are fully insured by the FDIC or (iii) a
segregated trust account maintained with the corporate trust department of a
federal or state chartered depository institution or trust company subject to
regulations regarding fiduciary funds on deposit similar to Title 12 of the Code
of Federal Regulations Section 9.10(b) which, in either case, has corporate
Page 8
10
trust powers, acting in its fiduciary capacity. An Eligible Account shall not be
evidenced by a certificate of deposit, passbook, other instrument or any other
physical indicia of ownership. Following a downgrade, withdrawal, qualification
or suspension of such institution's rating, each account must promptly (and in
any case within not more than thirty (30) calendar days) be moved to a
qualifying institution or to one or more segregated trust accounts in the trust
department of such institution, if permitted.
"Engineer" means MJS Consultants, Inc. or an Independent Engineer
selected by Borrower and reasonably approved by Agent.
"Engineering Report" means the structural engineering reports with
respect to the Mortgaged Property prepared by an Engineer and delivered to Agent
in connection with the Loan and any amendments or supplements thereto delivered
to Agent.
"Environmental Auditor" means Property Solutions, Inc. PSI or an
Independent environmental auditor selected by Borrower and reasonably approved
by Agent.
"Environmental Claim" means any notice, notification, request for
information, claim, administrative, regulatory or judicial action, suit,
judgment, demand or other written communication (whether written or oral) by any
Person or Governmental Authority alleging or asserting liability with respect to
Borrower or the Mortgaged Property (whether for damages, contribution,
indemnification, cost recovery, compensation, injunctive relief, investigatory,
response, remedial or cleanup costs, damages to natural resources, personal
injuries, fines or penalties) arising out of, based on or resulting from (i) the
presence, Use or Release into the environment of any Hazardous Substance at any
location (whether or not owned, managed or operated by Borrower) that affects
the Borrower or the Mortgaged Property, (ii) any fact, circumstance, condition
or occurrence forming the basis of any violation, or alleged violation, of any
Environmental Law or (iii) any alleged injury or threat of injury to human
health, safety or the environment.
"Environmental Indemnity" means the Environmental Indemnity Agreement
in the form attached hereto as Exhibit K, dated as of the Closing Date, from the
Borrower and the Guarantor, as indemnitor, to the Lenders, Agent and Collateral
Agent, as indemnitees.
"Environmental Laws" means any and all present and future federal,
state or local laws, statutes, ordinances or regulations, any judicial or
administrative orders, decrees or judgments thereunder issued by a Governmental
Authority, and any permits, approvals, licenses, registrations, filings and
authorizations, in each case as now or hereafter in effect, relating to the
environment, human health or safety, or the Release or threatened Release of
Hazardous Substances or otherwise relating to the Use of Hazardous Substances.
"Environmental Reports" means a "Phase I Environmental Site
Assessment" (and, if necessary, a "Phase II Environmental Site Assessment") as
referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-94 and an asbestos survey, with respect to the
Mortgaged Property, prepared by an Environmental Auditor and delivered to Agent
and any amendments or supplements thereto delivered to Agent.
"Equipment" means all "equipment" as defined in the relevant UCC, now
or hereafter owned by the Borrower or in which Borrower has or shall acquire an
interest, now or hereafter located on, attached to or contained in or used or
usable in connection with the Mortgaged Property, and shall also mean and
include all building materials, construction materials, personal property
constituting furniture, fittings, appliances, apparatus,
Page 9
11
leasehold improvements, machinery, devices, interior improvements,
appurtenances, equipment, plant, furnishings, fixtures, computers, electronic
data processing equipment, telecommunications equipment and other fixed assets
now owned or hereafter acquired by Borrower and now or hereafter used in the
operation of the business conducted at the Mortgaged Property, and all Proceeds
thereof and as well as all additions to, substitutions for, replacements of or
accessions to any of the items recited as aforesaid and all attachments,
components, parts (including spare parts) and accessories, whether installed
thereon or affixed thereto, and wherever located, now or hereafter owned by
Borrower and used or intended to be used in connection with, or with the
operation of, the Mortgaged Property or the buildings, structures, or other
improvements now or hereafter located at such Mortgaged Property, or in
connection with any construction being conducted or which may be conducted
thereon, all regardless of whether the same are located on such Mortgaged
Property or are located elsewhere (including, without limitation, in warehouses
or other storage facilities or in the possession of or on the premises of a
bailee, vendor or manufacturer) for purposes of manufacture, storage,
fabrication or transportation and all extensions and replacements to, and
proceeds of, any of the foregoing, but exclusive of those items which are
property of tenants of the Mortgaged Property or owned by the Manager, a third
party contractor or any third party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this Agreement
and, as of the relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Borrower is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Borrower is a
member.
"Event of Default" has the meaning set forth in Section 7.1 hereof.
"Expense Account" has the meaning set forth in Section 2.13(b).
"Fee Letter" means the letter dated the date hereof entered into
between Borrower and the Collateral Agent, with respect to the fees of the
Collateral Agent under this Agreement.
"Fiscal Year" means the 12-month period ending on December 31st of
each year (or, in the case of the first fiscal year, such shorter period from
the Closing Date through such date) or such other fiscal year of Borrower as
Borrower may select from time to time with the prior consent of Agent.
"Fund" has the meaning set forth in the definition of "Permitted
Investments".
"GAAP" means generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"General Intangibles" means all "general intangibles" as defined in
the relevant UCC, now owned or hereafter acquired by Borrower.
"Governmental Authority" means any national or federal
Page 10
12
government, any state, regional, local or other political subdivision thereof
with jurisdiction and any Person with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Gross Revenue" means, for any period, the total dollar amount of all
income and receipts received by, or for the account of, Borrower in the ordinary
course of business with respect to the Mortgaged Property, but excluding Loss
Proceeds (other than the proceeds of business interruption insurance).
"Ground Lease" means that certain Lease, dated as of July 22, 1964, by
and between ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇ and the May Stores Shopping Centers, Inc., as modified by that
certain Assignment of Lease, dated as of February 15, 1966, by and between the
May Stores Shopping Centers, Inc. and Noval Corporation, as further modified by
that certain Assignment and Release Agreement, dated as of May 12, 1992, by and
between Noval Corporation and First Union Management, Inc, as further modified
by that certain Assignment and Assumption of Ground Lease, dated as of the date
hereof, by and between First Union Management, Inc. and Borrower, as the same
may in the future be supplemented, amended, modified, renewed or extended.
"Ground Lease Impairment" means with respect to the Ground Lease: (i)
any termination, cancellation or surrender (in each case in whole or in part and
whether or not pursuant to an express right contained in the Ground Lease); (ii)
any modification, amendment, supplementation, or other change affecting the
Ground Lease which is reasonably likely to result in a Material Adverse Effect;
(iii) any subordination, or consent to the subordination of, the Ground Lease to
any mortgage or other Lien encumbering the Ground Lease; or (iv) Borrower's
delivery of any notice to lessor under the Ground Lease that impairs or may
impair, or purports to limit the exercise of, Agent's rights and remedies under
the Mortgage or the applicable Ground Lease, whether caused by Borrower or
suffered or permitted to occur by Borrower.
"Ground Rent" means any and all payments required of Borrower under
the Ground Lease, including base rent, fixed rent, additional rent, and any
other payments, sums or charges payable or required to be paid, whether to the
ground lessor or to a third party, under the Ground Lease.
"Guarantor" means First Union Real Estate Equity and Mortgage
Investments, an Ohio business trust.
"Guaranty of Nonrecourse Obligations" means, with respect to the Loan,
the Guaranty of Nonrecourse Obligations guaranteeing the exceptions to the
nonrecourse provisions of the Loan Documents for which liability is retained as
described in Section 8.24 hereof, from the Guarantor to the Agent for the
benefit of the Lenders, in the form attached hereto as Exhibit L.
"Hazardous Substance" means, collectively, (i) any petroleum or
petroleum products or waste oils, explosives, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), lead in
drinking water, and lead-based paint, (ii) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definitions of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", "toxic pollutants", "contaminants", "pollutants" or words of
similar import under any Environmental Law and (iii) any other chemical or any
other hazardous material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
Page 11
13
"Impositions" means all taxes (including, without limitation, all real
estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible transaction privilege,
privilege or license or similar taxes), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or not
commenced or completed within the term of the Loan), ground rents, water, sewer
or other rents and charges, excises, levies, governmental fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of every character
in respect of the Mortgaged Property (including all interest and penalties
thereon), which at any time prior to, during or in respect of the term hereof
may be assessed against or imposed on or in respect of Borrower (including,
without limitation, all income, franchise, single business or other taxes
imposed on Borrower for the privilege of doing business in the jurisdiction in
which the Mortgaged Property, or any other collateral delivered or pledged to
Agent in connection with the Loan, is located) or Lenders, or may be assessed
against or imposed on or in respect of or be a Lien upon (i) the Mortgaged
Property, or any other collateral delivered or pledged to Lenders in connection
with the Loan, or any part thereof or any Rents therefrom or any estate, right,
title or interest therein, or (ii) any occupancy, operation, use or possession
of, or sales from, or activity conducted on, or in connection with the Mortgaged
Property or the leasing or use of the Mortgaged Property or any part thereof, or
the acquisition or financing of the acquisition of the Mortgaged Property by
Borrower.
"Improvements" means all buildings, structures, fixtures and
improvements now or hereafter owned by Borrower of every nature whatsoever
situated on any Land constituting part of the Mortgaged Property (including,
without limitation, all gas and electric fixtures, radiators, heaters, engines
and machinery, boilers, ranges, elevators and motors, plumbing and heating
fixtures, carpeting and other floor coverings, water heaters, awnings and storm
sashes, and cleaning apparatus which are or shall be attached to the Land or
said buildings, structures or improvements and including any additions,
enlargements, extensions, modifications, repairs or replacements thereto, but
exclusive of those items which are the property of the tenants of the Mortgaged
Property or of any other Person other than the Borrower).
"Indebtedness" means the Principal Indebtedness, together with all
other obligations and liabilities due or to become due to the Lenders pursuant
hereto, under the Note or in accordance with any of the other Loan Documents,
and all other amounts, sums and expenses paid by or payable to the Lenders
hereunder or pursuant to the Note or any of the other Loan Documents.
"Indemnified Parties" has the meaning set forth in Section 5.1(I).
"Independent" means, when used with respect to any Person, a Person
that (i) does not have any direct financial interest or any material indirect
financial interest in Borrower or in any Affiliate of Borrower, and (ii) is not
connected with Borrower or any Affiliate of Borrower as an officer, employee,
trustee, partner, director or person performing similar functions.
"Index Maturity" has the meaning set forth in the definition of LIBOR.
"Instruments" means (i) all "instruments" as defined in the relevant
UCC, "chattel paper" as defined in the UCC, or letters of credit,
Page 12
14
evidencing, representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Collateral
(including, without limitation, promissory notes, drafts, bills of exchange and
trade acceptances) and chattel paper obtained by Borrower in connection with the
Mortgaged Property (including, without limitation, all ledger sheets, computer
records and printouts, data bases, programs, books of account and files of
Borrower relating thereto), (ii) notes or other obligations of indebtedness
owing to Borrower from whatever source arising, in each case now owned or
hereafter acquired by Borrower and (iii) all material covenants, agreements,
restrictions and encumbrances contained in any instruments, at any time in force
affecting the Mortgaged Property or any part thereof (including, without
limitation, any which may (a) require material repairs, modifications or
alterations in or to the Mortgaged Property or any part thereof, or (b) in any
way limit the use and enjoyment thereof).
"Insurance Proceeds" means, in the event of a casualty with respect to
the Mortgaged Property, the proceeds received under any insurance policy
applicable thereto.
"Insurance Requirements" means all material terms of any insurance
policy required pursuant to this Agreement or the Mortgage and all material
regulations and then current standards applicable to or affecting the Mortgaged
Property or any part thereof or any use or condition thereof, which may, at any
time, be recommended by the Board of Fire Underwriters, if any, having
jurisdiction over the Mortgaged Property, or such other body exercising similar
functions.
"Interest Accrual Period" means, in connection with the calculation of
interest accrued with respect to any Payment Date, the period from and including
the preceding Payment Date to but excluding such Payment Date; provided,
however, that the first Interest Accrual Period for the Loan shall be from the
Closing Date to but excluding the first Payment Date.
"Interest Determination Date" means, in connection with the
calculation of interest to accrue for any Interest Accrual Period or portion
thereof, the second Business Day preceding the first day of such Interest
Accrual Period.
"Inventory" means all of Borrower's right, title and interest in and
to any "inventory" as defined in the relevant UCC, whether now or hereafter
existing or acquired, and which arises out of or is used in connection with,
directly or indirectly, the ownership and operation of the Mortgaged Property,
all Documents representing the same and all Proceeds and products of such
Inventory.
"Land" has the meaning provided in the Mortgage.
"Leases" means all leases, subleases, lettings, occupancy agreements,
tenancies and licenses by Borrower as landlord of the Mortgaged Property or any
part thereof now or hereafter entered into, and all amendments, extensions,
renewals and guarantees thereof, and all security therefor.
"Leasing Commissions" means leasing commissions incurred by Borrower
in connection with leasing the Mortgaged Property or any portion thereof
(including renewals of existing Leases).
"Legal Requirements" means all governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including, without limitation, Environmental Laws)
affecting Borrower or the Mortgaged Property or any part thereof or
Page 13
15
the construction, use, alteration or operation thereof, or any part thereof
(whether now or hereafter enacted and in force), and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, at any time in force
affecting the Mortgaged Property or any part thereof (including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to the Mortgaged Property or any part thereof, or (ii) in any way limit the
use and enjoyment thereof).
"Lender" has the meaning provided in the first paragraph of this
Agreement.
"Lender's Terms" has the meaning provided in Section 5.1(V).
"LIBOR" means the rate per annum calculated as set forth below:
(i) On each Interest Determination Date, LIBOR will be determined on
the basis of the offered rate for deposits of not less than U.S. $1,000,000
for a period of one month (the "Index Maturity"), commencing on such
Interest Determination Date, which appears on Dow ▇▇▇▇▇ Market Service
(formerly Telerate) Page 3750 as of 11:00 a.m., London time (or such other
page as may replace the Dow ▇▇▇▇▇ Market Service (formerly Telerate) Page
on that service for the purposes of displaying London interbank offered
rates of major banks). If no such offered rate appears, LIBOR with respect
to the relevant Interest Accrual Period will be determined as described in
(ii) below.
(ii) With respect to an Interest Determination Date on which no such
offered rate appears on Dow ▇▇▇▇▇ Market Service (formerly Telerate) Page
3750 as described in (i) above, LIBOR shall be the arithmetic mean,
expressed as a percentage, of the offered rates for deposits in U.S.
dollars for the Index Maturity which appears on the Reuters Screen LIBO
Page as of 11:00 a.m., London time, on such date. If, in turn, such rate is
not displayed on the Reuters Screen LIBO Page at such time, then LIBOR for
such date will be obtained from the preceding Business Day for which the
Reuters Screen LIBO Page displayed a rate for the Index Maturity.
(iii) If on any Interest Determination Date Agent is required but
unable to determine LIBOR in the manner provided in paragraphs (i) and (ii)
above, LIBOR for the next Interest Accrual Period shall be LIBOR as
determined on the previous Interest Determination Date or, in the case of
the first Interest Accrual Period, 5.176%.
All percentages resulting from any calculations of LIBOR referred to in this
Agreement will be rounded to the nearest multiple of 1/100 of 1% (with one-half
of 1/100 of 1 % or more being rounded upwards) and all U.S. dollar amounts used
in or resulting from such calculations will be rounded to the nearest cent (with
one-half cent or more being rounded upwards).
"Lien" means any mortgage, deed of trust, lien (statutory or other),
pledge, hypothecation, assignment, security interest, or any other encumbrance
or charge on or affecting Borrower or the Mortgaged Property or any portion
thereof, or any interest therein (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement or similar instrument under the UCC or comparable law of
any other jurisdiction, domestic or foreign, and mechanic's, materialmen's and
other similar liens and encumbrances).
"Loan" means the loan made by Agent to Borrower pursuant to the terms
of this Agreement.
Page 14
16
"Loan Amount" means an amount equal to $16,000,000.
"Loan Debt Service" means the product of the Market Constant and the
outstanding Principal Indebtedness.
"Loan Documents" means this Agreement, the Note, the Contract
Assignment, the Management Agreement, the Manager's Subordination, the Mortgage,
the Assignment of Rents and Leases, the Pledge Agreement, the Environmental
Indemnity, the Guaranty of Non-Recourse Obligations, the Collateral Assignment
of Hedge and all other agreements, instruments, certificates and documents
delivered by or on behalf of Borrower or an Affiliate to evidence or secure the
Loan or otherwise in satisfaction of the requirements of this Agreement or the
other documents listed above as same may be amended or modified from time to
time.
"Loan to Value Test" means, as of any date of calculation, the test
that shall be satisfied if the Principal Indebtedness is not greater than the
product of the Market Value and 75%.
"Loss Proceeds" means Condemnation Proceeds and/or Insurance Proceeds.
"Losses" has the meaning provided in Section 5.1(J).
"Management Agreement" means with respect to the Mortgaged Property,
the Property Management Agreement entered into between the Borrower and the
Manager, in the form attached hereto as Exhibit D, or in such other form as may
be reasonably approved by the Agent, as such agreement may be amended, modified
or supplemented and in effect from time to time.
"Manager" means NVT Corp., a Delaware corporation.
"Manager's Subordination" means, with respect to the Mortgaged
Property, the Manager's Consent and Subordination of Management Agreement,
executed by the Manager, the Borrower and the Agent, in the form attached hereto
as Exhibit E, dated as of the Closing Date.
"Market Constant" means the highest of (a) the current annual interest
rate on the Loan adjusted to reflect amortization on a twenty-five (25) year
schedule, (b) 9.50% and (c) the Treasury Rate plus 300 basis points adjusted to
reflect amortization on a twenty-five (25) year schedule.
"Market Value" means, with respect to the Mortgaged Property at any
time, Agent's estimate of the current market value of the Mortgaged Property
based upon such methods of analysis as Agent shall determine in its sole
discretion exercised in good faith. Whenever a Market Value determination is
required under this Agreement, Borrower shall cooperate with Agent in its
determination of Market Value of the Mortgaged Property (including, without
limitation, making available all information and documentation in the possession
of Borrower regarding the Mortgaged Property).
"Material Adverse Effect" means a material adverse effect upon (i) the
business operations, properties, assets or condition (financial or otherwise) of
Borrower, (ii) the ability of Borrower to perform, or of Agent to enforce, any
of the Loan Documents or (iii) the aggregate value of the Mortgaged Property.
"Maturity Date" means the earlier of (a) the third anniversary of the
date of this Agreement, or (b) such earlier date on which the entire
Page 15
17
Loan is required to be paid in full, by acceleration or otherwise under this
Agreement or any of the other Loan Documents.
"Money" means all moneys, cash, or other items of legal tender
obtained from or for use in connection with the operation of the Mortgaged
Property.
"Monthly Property Expenses" means, with respect to any Payment Date,
an amount equal to not less than 100% and up to 110% of the monthly Property
Expenses projected by the Borrower to be incurred during the Collection Period
in which such Payment Date occurs as set forth in the Operating Budget for the
applicable Fiscal Year; provided, however, that the Agent's prior written
consent shall be required for any amount greater than 110% of the projected
monthly amount in such Operating Budget for Property Expenses.
"Monthly Statement" has the meaning provided in Section 2.12(d).
"Mortgage" means, with respect to the Mortgaged Property, a first
priority Leasehold Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, substantially in the form attached hereto as
Exhibit A, dated as of the Closing Date, granted by Borrower to or for the
benefit of Deed of Trust Trustee for the benefit of Agent with respect to the
Mortgaged Property as security for the Loan, as same may thereafter from time to
time be supplemented, amended, modified or extended by one or more agreements
supplemental thereto.
"Mortgaged Property" individually and in the aggregate, means, at any
time, the leasehold estate in and to the Land, the Improvements, the Personalty,
the Leases, the Rents and the Equipment (to the extent the same shall be deemed
to be fixtures), and all rights, titles, interests and estates appurtenant
thereto, encumbered by, and more particularly described in, the Mortgage.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been, or were required to
have been, made by Borrower or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"Net Proceeds" means either (x) the purchase price (at foreclosure or
otherwise) actually received by Agent from a third party purchaser with respect
to the Mortgaged Property, as a result of the exercise by Agent of its rights,
powers, privileges and other remedies after the occurrence of an Event of
Default or (y) in the event that Agent (or its nominee) or a Lender is the
purchaser at foreclosure of the Mortgaged Property, the higher of (i) the amount
of Agent's or such Lender's credit bid or (ii) such amount as shall be
determined in accordance with applicable law, and in either case minus all
reasonable costs and expenses (including, without limitation, all attorneys'
fees and disbursements and any brokerage fees, if applicable) incurred by Agent
(and its nominee, if applicable) or such Lender in connection with the exercise
of such remedies; provided, however, that such costs and expenses shall not be
deducted to the extent such amounts previously have been added to the
Indebtedness in accordance with the terms of the Loan Documents or applicable
law.
"New Ground Lease" means, after the termination or expiration of the
Ground Lease, any new, replacement or substitute Ground Lease issued to or
obtained by Agent or its designee with respect to or in place of the termination
Ground Lease, whether pursuant to any provision of the termination Ground Lease
or otherwise.
"Note" means the promissory note substantially in the form of
Page 16
18
Exhibit C hereto, made by Borrower to initial Lender pursuant to this Agreement,
as such note may be modified, amended, supplemented or extended.
"Officer's Certificate" means a certificate delivered to Agent by
Borrower which is signed by an authorized officer of Borrower.
"Operating Budget" means, with respect to any Fiscal Year, the
operating budget for the Mortgaged Property reflecting Borrower's projections of
Gross Revenues and Property Expenses for the Mortgaged Property for such Fiscal
Year and on an annual and monthly basis and submitted by Borrower to Agent in
accordance with the provisions of Section 5.1(R)(i).
"Operating Expenses" means, for any period of calculation, all
expenditures incurred and required to be expensed under GAAP during such period
in connection with the ownership, operating, maintenance, repair and/or leasing
of the Mortgaged Property. Notwithstanding the foregoing, Operating Expenses
shall not include (a) Capital Improvement Costs, (b) any extraordinary items
(unless Agent and Borrower approve of the inclusion of such items as Operating
Expenses), (c) depreciation, amortization and other non-cash charges or (d) any
payments of principal or interest on the Indebtedness or otherwise payable to
the holder of the Indebtedness. Operating Expenses shall be calculated on the
accrual basis of accounting.
"Operating Revenues" means, for any period, all regular ongoing income
during such period from the operation of the Mortgaged Property which, in
accordance with GAAP, is included in annual financial statements as operating
income. Notwithstanding the foregoing, Operating Revenues shall not include (a)
any Loss Proceeds (other than business interruption proceeds or Condemnation
Proceeds in connection with a temporary Taking and, in either case, only to the
extent allocable to such period or other applicable reporting period), (b) any
proceeds resulting from the sale, exchange, transfer, financing or refinancing
of the Mortgaged Property, (c) any Rent attributable to a Lease either prior to
the date on which the actual payment of Rent is required to be made thereunder,
(d) any interest income from any source, or (e) any other extraordinary items as
reasonably determined by Agent. Operating Revenues shall be calculated on the
accrual basis of accounting.
"Organizational Agreements" means the limited liability operating
agreement of Borrower, dated as of May 25, 1999, and the Certificate of
Incorporation of the Manager of the Borrower, dated May 25, 1999, each as
amended or restated from time to time.
"Origination Fee" means the fee designated as such in the application
letter attached to the Commitment payable to Agent on the Closing Date.
"Other Borrowings" means, with respect to Borrower, without
duplication (but not including the Indebtedness) (i) all indebtedness of
Borrower for borrowed money or for the deferred purchase price of property or
services, (ii) all indebtedness of Borrower evidenced by a note, bond, debenture
or similar instrument, (iii) the face amount of all letters of credit issued for
the account of Borrower and, without duplication, all unreimbursed amounts drawn
thereunder, and obligations evidenced by bankers' acceptances, (iv) all
indebtedness of Borrower secured by a Lien on any property owned by Borrower
(whether or not such indebtedness has been assumed), (v) all Contingent
Obligations of Borrower, (vi) liabilities and obligations for the payment of
money relating to a capitalized lease obligation or sale/leaseback obligation,
(vii) liabilities and obligations representing the balance deferred and unpaid
of the purchase price of any property or services, except those incurred in the
ordinary course of Borrower's business that would constitute ordinarily a trade
payable to
Page 17
19
trade creditors, and (viii) all payment obligations of Borrower under any
interest rate protection agreement (including, without limitation, any interest
rate swaps, caps, floors, collars or similar agreements) and similar agreements.
"Other Property Expenses Account" has the meaning provided in Section
2.13(b).
"Participation" has the meaning provided in Section 5.1(W).
"Payment Date" has the meaning provided in Section 2.5(a).
"Payment Date Statement" has the meaning provided in Section 2.12(d).
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"Permits" means all licenses, permits, variances and certificates
required by Legal Requirements to be obtained by Borrower and used in connection
with the ownership, operation, use or occupancy of the Mortgaged Property
(including, without limitation, business licenses, state health department
licenses, licenses to conduct business and all such other permits, licenses and
rights, obtained from any Governmental Authority or private Person concerning
ownership, operation, use or occupancy of the Mortgaged Property); provided,
that "Permits" shall not include such licenses, permits and certificates
required by Legal Requirements to be obtained by a tenant to conduct its
business at the Mortgaged Property.
"Permitted Encumbrances" means, with respect to the Mortgaged
Property, collectively, (i) the Lien created by the Mortgage, or any other Loan
Documents of record, (ii) all Liens and other matters disclosed on the Title
Insurance Policy concerning the Mortgaged Property, (iii) Liens, if any, for
Impositions imposed by any Governmental Authority not yet delinquent or being
contested in good faith and by appropriate proceedings in accordance with the
Mortgage, (iv) mechanic's or materialmen's Liens, if any, being contested in
good faith and by appropriate proceedings in accordance with the Mortgage,
provided that no foreclosure has been commenced by the lien claimant, (v) rights
of existing and future tenants and residents as tenants only pursuant to Leases,
(vi) Liens permitted pursuant to Section 6.1(A) and (vii) Liens which are the
responsibility of tenants to remove, provided, that with respect to any Lien
referred to in this clause (vii), (w) the Lien claimant shall not have asserted
Lien priority over the Lien of the Mortgage, (x) the amount of the claim is less
than $100,000, (y) the Borrower is diligently enforcing its rights under the
Lease to require the tenant to remove such Lien and (z) the Lien claimant has
not commenced foreclosure proceedings on the Borrower's estate in the Mortgaged
Property.
"Permitted Investments" means any one or more of the following
obligations or securities acquired at a purchase price of not greater than par:
(i) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full
faith and credit of the United States of America;
(ii) obligations of the following United States of America government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations),
the Farm Credit System (consolidated systemwide bonds and notes), the
Federal Home Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt
Page 18
20
obligations), the Student Loan Marketing Association (debt obligations),
the Financing Corp. (debt obligations), and the Resolution Funding Corp.
(debt obligations);
(iii) federal funds, unsecured certificates of deposit, time deposits,
bankers' acceptances and repurchase agreements with maturities of not more
than 365 days of any bank, the short-term obligations of which are rated in
the highest short-term rating category by the Rating Agencies;
(iv) certificates of deposit, demand or time deposits, federal funds
or banker's acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or debt
obligations of such depository institution or trust company (or in the case
of the principal depository institution in a holding company system, the
commercial paper or debt obligations of such holding company) has the
highest short-term rating of at least two of the Rating Agencies or is
rated with a long term rating of at least AA- by Standard & Poor's Ratings
Services or at least Aa3 by ▇▇▇▇▇'▇ Investors Service, Inc. for such
securities;
(v) debt obligations with maturities of not more than 365 days and
rated by the Rating Agencies in its highest long-term unsecured rating
category;
(vi) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof)
with maturities of not more than 270 days and that is rated by the Rating
Agencies in their highest short-term unsecured debt rating;
(vii) the Federated Prime Obligation Money Market Fund (the "Fund") so
long as the Fund is rated "AAA" (or the equivalent) by the Rating Agencies;
(viii) units of taxable money market funds which funds are regulated
investment companies and seek to maintain a constant net asset value per
share and which are rated in the highest category by at least one of the
Rating Agencies; and
(ix) any other demand, money market or time deposit, demand obligation
or any other obligation, security or investment, which the Agent shall have
approved in writing;
provided, however, that (A) the investments described in clauses (i) through
(vi) above must have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (C)
such investments must not be subject to liquidation prior to their maturity; and
provided, further, that, in the judgment of Agent, such instrument continues to
qualify as a "cash flow investment" pursuant to Code Section 860G(a)(6) earning
a passive return in the nature of interest and that no instrument or security
shall be a Permitted Investment if such instrument or security evidences (x) a
right to receive only interest payments or (y) the right to receive principal
and interest payments derived from an underlying investment at a yield to
maturity in excess of 120% of the yield to maturity at par of such underlying
investment.
Page 19
21
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Personalty" means all right, title and interest of Borrower in and to
all Equipment, Inventory, Accounts, General Intangibles, Instruments, and all
other personal property as defined in the relevant UCC, now owned or hereafter
acquired by Borrower and now or hereafter affixed to, placed upon, used in
connection with, arising from or otherwise related to the Mortgaged Property or
which may be used in or relating to the planning, development, financing or
operation of such Mortgaged Property, including, without limitation, furniture,
furnishings, equipment, machinery, money, insurance proceeds, accounts, contract
rights, trademarks, goodwill, chattel paper, documents, trade names, licenses
and/or franchise agreements, rights of Borrower under leases of fixtures or
other personal property or equipment, inventory, all refundable, returnable or
reimbursable fees, deposits or other funds or evidences of credit or
indebtedness deposited by or on behalf of Borrower with any governmental
authorities, boards, corporations, providers of utility services, public or
private, including specifically, but without limitation, all refundable,
returnable or reimbursable tap fees, utility deposits, commitment fees and
development costs, but exclusive of those items which are property of tenants of
the Mortgaged Property or owned by the Manager, a third party contractor or any
third party.
"Plan" means an employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate during the five year period ended
prior to the date of this Agreement or to which Borrower or any ERISA Affiliate
makes, is obligated to make or has, within the five year period ended prior to
the date of this Agreement, been required to make contributions and that is
covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code,
other than a Multiemployer Plan.
"Pledge Agreement" means, with respect to the Borrower, the Pledge
Agreement in the form attached hereto as Exhibit J, from each of the members of
Borrower to Agent, dated as of the Closing Date, as same may thereafter from
time to time be supplemented, amended, modified or extended by one or more
agreements supplemental thereto.
"Principal Indebtedness" means the principal amount of the Loan
outstanding as adjusted by each increase (including for advances made by Lenders
to protect the Collateral), or decrease in such principal amount of the Loan
outstanding, whether as a result of prepayment or otherwise, from time to time.
"Principal Reserve Account" has the meaning provided in Section
2.13(d).
"Proceeds" shall have the meaning given in the relevant UCC and, in
any event, shall include, without limitation, all of Borrower's right, title and
interest in and to proceeds, product, offspring, rents, profits or receipts, in
whatever form, arising from the Collateral.
"Property Expenses" means, with respect to the Mortgaged Property, the
following costs and expenses but only, in the case of costs and expenses in
respect of goods and services, to the extent that they (x) are paid to Persons
who are generally in the business of providing such goods and services, (y) are
reasonable for the types of goods or services provided in the geographical area
in which such goods or services are provided and (z) do not constitute Capital
Improvement Costs:
Page 20
22
(a) Impositions and Ground Rent;
(b) insurance premiums for policies of insurance required to be
maintained with respect to the Mortgaged Property pursuant to this
Agreement;
(c) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar item
and overtime services with respect to the Mortgaged Property;
(d) payments required under service contracts (including, without
limitation, service contracts for heating, ventilation and air conditioning
systems, elevators, landscape maintenance, pest extermination, security,
furniture, trash removal, answering service and credit checks);
(e) wages, benefits, payroll taxes, uniforms, the cost of cleaning
supplies, insurance costs and all related expenses for on-site maintenance
personnel (including, without limitation, housekeeping employees, porters
and general repair, maintenance and security employees), whether hired by
Borrower, Manager, Collateral Agent or any other Person;
(f) costs required in connection with the enforcement of any Lease
(including, without limitation, reasonable attorneys' fees, charges for
lock changes and storage and moving expenses for furniture, fixtures and
equipment);
(g) advertising and rent-up expenses (including, without limitation,
leasing services, tenant rent concessions, promotions for existing and
prospective tenants, banners and signs);
(h) out-of-pocket cleaning, maintenance and repair expenses;
(i) any expense the total cost of which is passed through to tenants
pursuant to executed Leases;
(j) legal, accounting, auditing and other professional fees and
expenses incurred in connection with the ownership, leasing and operation
of the Mortgaged Property (including, without limitation, collection costs
and expenses);
(k) permits, licenses and registration fees and costs;
(l) any expense necessary in order to prevent a breach under a Lease;
(m) any expense necessary in order to prevent or cure a violation of
any Legal Requirement (including Environmental Law), regulation, code or
ordinance;
(n) costs and expenses of any appraisals, valuations, surveys,
inspections, environmental assessments or market studies;
(o) costs and expenses of security and security systems provided to
and/or installed and maintained with respect to the Mortgaged Property;
(p) costs of title, UCC, litigation and other searches and costs of
maintaining the Lien of the Mortgage thereon and the security interest in
any related Collateral;
(q) fees and expenses of property managers contracted with by
Page 21
23
Borrower to perform management, administrative, payroll or other services
in connection with the operation of the Mortgaged Property (including,
without limitation, the fees and expenses owed to Manager under the
Management Agreement);
(r) any other costs and expenses contemplated by the Operating Budget
and customarily incurred in connection with operating properties similar in
type and character to the Mortgaged Property;
(s) security deposits which are due and payable to tenants under the
Leases (unless previously segregated and held in a separate account and not
treated as income when received); and
(t) any other category of property expense which is customary for a
property of the type and size as the Mortgaged Property and is reasonably
approved by Agent on behalf of the Lenders.
"Property Manager" means First Union Real Estate Investments, an Ohio
business trust, or its successor in interest.
"Proposed Terms" means, with respect to any Refinancing Loan, to the
extent applicable, interest rate, amount, term, application and financing fees,
lock box requirements, recourse guarantees, indemnity requirements and
prepayment penalties and prohibitions, closing and funding conditions, reserve
requirements, closing date and any other material or non-customary terms in a
transaction of such type.
"Quarterly Statement" has the meaning provided in Section 2.12(e).
"Rating Agencies" means at least two of Fitch IBCA, Inc., ▇▇▇▇▇'▇
Investors Service, Inc., Duff & ▇▇▇▇▇▇ Credit Rating Co. and Standard &
Poor's Ratings Services.
"Refinancing Fee" means 0.50% of the outstanding Principal
Indebtedness prepaid or repaid on any Payment Date (including the Maturity Date)
where the Borrower obtains the funds for such prepayment or repayment through a
refinancing of the Loan from a source of funds other than the Lenders; provided,
however, that notwithstanding the foregoing, in the event the Agent provides the
funds for such refinancing, then the Refinancing Fee shall be payable in the
amount as hereinbefore described, but shall be credited against any origination
fee payable to the Agent in connection with the refinancing transaction;
provided, further, that no Refinancing Fee shall be payable in connection with
(i) a Capital Event, (ii) the application of Loss Proceeds to repay the Loan,
(iii) if the initial Lender shall no longer be in the business of originating
long-term, fixed rate commercial mortgage loans or (iv) a voluntary prepayment
of the Loan in part pursuant to Section 2.6(a) in the event the Agent has
notified the Borrower that the Loan to Value Test or the Debt Service Coverage
Test has not been satisfied, but only to the extent necessary to satisfy both
such tests.
"Refinancing Loan" has the meaning set forth in Section 5.1(V).
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including, without limitation, the movement
of Hazardous Substances through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata).
"Remedial Work" has the meaning provided in Section 5.1(D)(i).
"Rents" means all income, rents, issues, profits, revenues
Page 22
24
(including all oil and gas or other mineral royalties and bonuses), deposits
(other than utility and security deposits) and other benefits from the Mortgaged
Property.
"Reserve Account" means the Capital Expenditure Reserve Account, the
Expense Account and the Principal Reserve Account, collectively.
"Securitization Vehicle" means a trust, partnership, business trust or
other entity to which the Mortgaged Property is sold or transferred in
connection with the simultaneous issuance by such vehicle of a debt or equity
security backed by or representing an interest in the Mortgaged Property, either
alone or together with other assets.
"Single-Purpose Entity" means a Person, other than an individual,
which (i) is formed or organized under the laws of a state of the United States
or the District of Columbia solely for the purpose of acquiring and directly
holding an ownership interest in the Mortgaged Property, (ii) does not engage in
any business unrelated to the Mortgaged Property, (iii) does not have any assets
other than those related to its interest in the Mortgaged Property or any
indebtedness other than as permitted by this Agreement, the Mortgage or the
other Loan Documents, (iv) has its own separate books and records and has its
own accounts, in each case which are separate and apart from the books and
records and accounts of any other Person, (v) is subject to all of the
limitations on powers set forth in the Organizational Agreement of Borrower and
the Manager of Borrower as of the Closing Date, (vi) holds itself out as being a
Person separate and apart from any other Person and (vii) has or is controlled,
directly or indirectly, by a Person that has at least one independent director
that is not an employee, officer, director, or paid consultant of any Affiliate
of such Person or of any principal or officer of such Person.
"SSBI" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and its successors in interest.
"Survey" means a certified ALTA/ACSM survey of the Mortgaged Property
prepared by a registered Independent surveyor, containing the form of survey or
certification provided to Borrower by the Agent and in form and content
satisfactory to the Agent and the company issuing the Title Insurance Policy for
the Mortgaged Property.
"Taking" means a taking or voluntary conveyance during the term hereof
of all or part of the Mortgaged Property, or any interest therein or right
accruing thereto or use thereof, as the result of, or in settlement of, any
condemnation or other eminent domain proceeding by any Governmental Authority
affecting the Mortgaged Property or any portion thereof whether or not the same
shall have actually been commenced.
"TI Costs" means tenant improvement costs and allowances incurred by
Borrower in connection with renewing existing Leases or executing new Leases for
space located in the Mortgaged Property.
"Title Insurance Policy" means a mortgagee's title insurance policy or
policies (a) issued by one or more title companies reasonably satisfactory to
Agent which policy or policies shall be in form ALTA 1992 (with waiver of
arbitration provisions) (with co-insurance or reinsurance as Agent may require
reasonably satisfactory to Agent), naming Agent as the insured party for benefit
of the Lenders, (b) insuring the Mortgage as being a first and prior lien upon
the Mortgaged Property, (c) showing no encumbrances against the Mortgaged
Property (whether junior or superior to the Mortgage) which are not acceptable
to Agent other than Permitted Encumbrances, (d) in an amount acceptable to
Agent, and (e) otherwise in form and content reasonably acceptable to Agent.
Such Title Insurance Policy shall include the following endorsements or
affirmative coverages in
Page 23
25
form and substance reasonably acceptable to Agent: variable rate endorsement;
survey endorsement; comprehensive endorsement; zoning (ALTA 3.1 with parking
added) endorsement; first loss, last dollar and tie-in endorsement; access
coverage; separate tax parcel coverage; contiguity (if applicable) coverage; and
such other endorsements as Agent shall reasonably require in order to provide
insurance against specific risks identified by Agent in connection with the
Mortgaged Property.
"Trademark" means the trademark licenses, trademarks, rights in
intellectual property, trade names, service marks and copyrights relating to the
Mortgaged Property or the license to use intellectual property such as computer
software owned or licensed by Borrower or other proprietary business information
relating to Borrower's policies, procedures, manuals and trade secrets.
"Transaction" means the transactions contemplated by the Loan
Documents.
"Transaction Costs" means all costs and expenses paid or payable by
Borrower relating to the Transaction (including, without limitation, appraisal
fees, legal fees and accounting fees and the costs and expenses described in
Section 8.23).
"Transfer" means the conveyance, assignment, sale, mortgaging,
encumbrance (other than a Permitted Encumbrance), pledging, hypothecation,
granting of a security interest in, granting of options with respect to, or
other disposition of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) all or any portion of any legal or beneficial interest (a) in all or any
portion of the Mortgaged Property; (b) in the stock or membership interests or
other beneficial ownership interests in the Manager or the Borrower; or (c) in
any Person having a direct or indirect legal or beneficial ownership in Borrower
and shall also include, without limitation to the foregoing, the following: an
installment sales agreement wherein the Borrower agrees to sell the Mortgaged
Property or any part thereof or any interest therein for a price to be paid in
installments; an agreement by Borrower leasing all or a substantial part of the
Mortgaged Property to one or more Persons pursuant to a single or related
transactions, or a sale, assignment or other transfer of, or the grant of a
security interest in, the Borrower's right, title and interest in and to any
Leases or any Rent; a transaction or other event pursuant to which Guarantor no
longer controls (directly or indirectly) Borrower; any instrument subjecting the
Mortgaged Property to a condominium regime or transferring ownership to a
cooperative corporation; the dissolution or termination of Borrower or the
merger or consolidation of the Borrower with any other Person; and any transfer
of management of the Mortgaged Property to an entity that is not controlled by
Guarantor; provided, that a "Transfer" shall not include (1) purchases and sales
of stock of the Guarantor on a national stock exchange or (2) a merger,
reorganization or consolidation of the Guarantor where in either case the
successor entity following such purchase and sale or merger or consolidation is
the Guarantor as of the Closing Date.
"Treasury Rate" means the yield on the U.S. Treasury issue (primary
issue) with a maturity date closest to, but not earlier than, the tenth
anniversary of the date on which such rate is calculated with such yield being
based on the bid price for such issue as reasonably determined by the Agent.
"UCC" means with respect to any Collateral, the Uniform Commercial
Code as in effect on the date hereof in the state where such Collateral is
located, as amended from time to time; provided, that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any item or
Page 24
26
portion of the Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the state where such Collateral is located
or where the Borrower is located, "UCC" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"UCC Searches" has the meaning set forth in Section 3.1(V) hereof.
"Use" means, with respect to any Hazardous Substance, the generation,
manufacture, processing, distribution, handling, use, treatment, recycling or
storage of such Hazardous Substance or transportation of such Hazardous
Substance in connection with or affecting the Borrower or the Mortgaged
Property.
"Welfare Plan" means an employee welfare benefit plan as defined in
Section 3(1) of ERISA established or maintained by Borrower or any ERISA
Affiliate or with respect to which Borrower or any ERISA Affiliate has an
obligation to make contributions and covers any current or former employee of
Borrower or any ERISA Affiliate.
"Yield Maintenance Amount" means an amount payable in connection with
any prepayment of the Principal Indebtedness pursuant to Section 2.6(a) prior to
May 27, 2002, equal to (1) from the Closing Date through and including July 27,
2001, the product of (x) 0.246%, (y) the number of Payment Dates remaining from
and after the Business Day on which such prepayment is being made to and
including the Maturity Date and (z) the portion of the Principal Indebtedness
being prepaid, (2) from the Business Day following July 27, 2001 through and
including the January 27, 2002, the product of 2.0% and the portion of the
Principal Indebtedness being prepaid and (3) from the Business Day following
January 27, 2002 through but excluding May 27, 2002, the product of 1.0% and the
portion of the Principal Indebtedness being prepaid. The Yield Maintenance
Amount shall not be payable on April 27, 2002 and on any Business Day following
such date or in connection with any repayment of the Principal Indebtedness
required hereunder and made from Loss Proceeds.
ARTICLE II.
GENERAL TERMS
Section 2.1 The Loan.
(a) Subject to the terms and conditions of this Agreement, the Lenders
shall lend to Borrower on the Closing Date the Loan Amount. The proceeds of the
Loan shall be used solely for the purposes identified in Section 2.2 hereof. On
the Closing Date, upon the satisfaction of the conditions set forth in Sections
3.1, the Agent shall initiate a wire or other transfer of immediately available
funds to an account designated by Borrower in an amount equal to (x) the Loan
Amount, less (y) the sum of (i) the Origination Fee (giving credit to the
Commitment Fee (including the Application Deposit)), (ii) the required deposits
to the Capital Expenditure Reserve Account and the Replacement Reserve Account
pursuant to Section 2.13(a)(i) and the Basic Carrying Costs Sub-Account pursuant
to Section 2.13(b), (iii) the out-of-pocket expenses incurred by Agent in
connection with the origination and funding of the Loan and (iv) the reasonable
fees and expenses of Agent's counsel and Collateral Agent's counsel.
(b) The Loan shall constitute one general obligation of Borrower to
Lenders and shall be secured by the security interest in and Liens granted upon
all of the Collateral, and by all other security interests and Liens at any time
or times hereafter granted by Borrower to Agent or to
Page 25
27
Collateral Agent on behalf of Lenders.
Section 2.2 Use of Proceeds. Proceeds of the Loan shall be used only
for the following purposes: (a) to return equity to the Borrower, (b) to pay to
Agent the Origination Fee then due, (c) to make required deposits to the Capital
Expenditure Reserve Account, the Replacement Reserve Account and the Basic
Carrying Costs Sub-Account, (d) to pay to Lenders the reasonable out of pocket
expenses incurred by Lenders in connection with the origination and funding of
the Loan and (e) to pay to counsel to each of Collateral Agent, the Agent and
Borrower its respective reasonable fees, expenses and disbursements.
Section 2.3 Security for the Loan. The Note and Borrower's obligations
hereunder and under all other Loan Documents shall be secured by (a) Liens upon
the Mortgaged Property pursuant to the Mortgage, (b) the Contract Assignment,
(c) the Manager's Subordination, (d) the Assignment of Leases and Rents, (e) the
Pledge Agreement, (f) the Collateral Assignment of Hedge and all other security
interests and Liens granted in this Agreement and in the other Loan Documents.
Certain of the Borrower's obligations shall be guaranteed pursuant to the
Guaranty of Non-Recourse Obligations.
Section 2.4 Borrower's Note. Borrower's obligation to pay the
principal of and interest on the Loan and all other amounts due under the Loan
Documents shall be evidenced initially by the Note, duly executed and delivered
by Borrower on the Closing Date. The Note shall be payable as to principal,
interest and all other amounts due under the Loan Documents, as specified in
this Agreement, with a final maturity on the Maturity Date. Each Lender is
hereby authorized to endorse on the schedule attached to the Note (or on a
continuation of such schedule attached to the Note and made a part thereof) an
appropriate notation evidencing the date and amount of the Loan and each payment
of principal, interest or other amounts due under the Loan Documents, in respect
thereof. Such schedule shall, absent manifest error, constitute prima facie
evidence of the accuracy of the information contained therein. The failure of a
Lender to make a notation on the schedule to the Note as aforesaid shall not
affect the obligations of Borrower to such Lender under the Note or any other
Loan Document in any respect. The initial Lender shall have the right to have
the Note subdivided, by exchange for promissory notes of lesser denominations in
the form of the initial Note, upon written request to the Borrower and, in such
event, the Borrower shall promptly execute additional or replacement Notes. At
no time shall the aggregate original principal amount of the Note (or of such
replacement Notes) exceed the Loan Amount.
Section 2.5 Principal and Interest.
(a) Borrower shall pay to Agent interest on the Principal Indebtedness
of the Loan from the Closing Date to but excluding the date the Loan shall be
paid in full at the interest rate provided in Section 2.5(b) below. Interest on
the Loan shall accrue on the Principal Indebtedness commencing on the Closing
Date and shall be payable in arrears on the fifth day of the month following the
month in which the Closing Date occurs and on the first day of each and every
month thereafter through the month in which the Maturity Date occurs, unless, in
any such case, such day is not a Business Day, in which event such interest
shall be payable on the first Business Day following such date (such date for
any particular month, the "Payment Date"). The Agent and the Collateral Agent
shall calculate LIBOR on each Interest Determination Date for the related
Interest Accrual Period and communicate to the Borrower such rate for such
period. The entire outstanding Principal Indebtedness of the Loan and the Note,
together with all accrued but unpaid interest thereon and all other amounts due
under the Loan Documents (including, without limitation, the Refinancing Fee, if
applicable), shall be due and payable by Borrower to
Page 26
28
the Lenders on the Maturity Date. Interest shall be computed on the basis of a
360 day year and the actual number of days elapsed.
(b) For the initial Interest Accrual Period, the Principal
Indebtedness shall bear interest at a rate per annum equal to 8.126%. For each
Interest Accrual Period thereafter, the Principal Indebtedness shall bear
interest at a rate per annum equal to the sum of LIBOR determined as of the
Interest Determination Date immediately preceding such Interest Accrual Period
plus 2.95%.
(c) Principal payments on the Loan shall be made on each Payment Date
in an amount equal to the amount, if any, required to be paid pursuant to clause
first of Section 2.12(b) or available to be paid pursuant to clause sixth of
Section 2.12(b).
(d) While an Event of Default has occurred and is continuing, Borrower
shall pay to Agent interest at the Default Rate on any amount owing to the
Lenders not paid when due until such amount is paid in full.
Section 2.6 Voluntary Prepayment.
(a) Borrower may voluntarily prepay the Loan at par, in whole or in
part, on any Payment Date (or, with respect to a prepayment out of Loss Proceeds
only, on any Business Day); provided, however, that, any such prepayment shall
be accompanied by an amount representing (1) all accrued interest on the portion
of the Loan being prepaid, (2) with respect to a prepayment out of Loss Proceeds
only, interest on the portion of the Loan being prepaid from and including such
Business Day to the next succeeding Payment Date, (3) if applicable, the Yield
Maintenance Amount and/or the Refinancing Fee and (4) any other amounts then due
under the Loan Documents.
(b) In the event of any such voluntary prepayment, Borrower shall give
Agent written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay, which notice shall be given at least thirty (30) days' prior
to the date upon which prepayment is to be made and shall specify the Payment
Date on which such prepayment is to be made and the amount of such prepayment
(which shall not be less than $1,000,000). If any such notice is given, the
amount specified in such notice shall be due and payable on the Payment Date
specified therein (unless such notice is revoked by Borrower prior to the date
specified therein in which event Borrower shall immediately reimburse Agent for
any out-of-pocket costs incurred in connection with the giving of such notice
and its revocation).
Section 2.7 Mandatory Prepayment.
(a) Borrower shall not Transfer the Mortgaged Property or any part
thereof or interest therein or permit the Mortgaged Property or any part thereof
or interest therein to be the subject of a Transfer, unless the Capital Event
Proceeds (and, if necessary, any contributions from the principals of the
Borrower necessary to make the payments required hereunder) are deposited in the
Collection Account and such Capital Event Proceeds (and contributions, if
applicable) are applied on the date of deposit in the Collection Account to
repay the Indebtedness in full (including (1) all accrued interest on the
Principal Indebtedness to but excluding the next succeeding Payment Date, (2)
the Yield Maintenance Amount, if any, and (3) other amounts then due under the
Loan Documents). Notwithstanding, the foregoing, Borrower may Transfer the
Mortgaged Property subject to the Loan Agreement, the Mortgage and the other
Loan Documents, provided (1) if a securitization of the Note by the Agent has
not occurred, Borrower obtains the prior written approval of the Agent with
respect to the purchaser in its reasonable discretion or if a securitization of
the Note by the Agent has occurred, the applicable rating
Page 27
29
agencies have confirmed that such Transfer shall not adversely affect the rating
of any securities issued in connection with such transaction and (2) Borrower
delivers an assumption of the Note, this Agreement and the Loan Documents and
pays or causes to be paid an assumption fee of one percent (1%) of the
outstanding Principal Indebtedness and all of Agent's reasonable expenses
incurred in connection with such Transfer.
(b) Except as otherwise provided in Section 2.12(f) in the event Loss
Proceeds are required to be made available for restoration pursuant to this
Agreement and excluding Loss Proceeds which Borrower is obligated to turn over
to tenants or other third persons pursuant to applicable law, in the event of a
casualty or a Taking of the Mortgaged Property, in whole or in part, Borrower
shall cause all such Loss Proceeds otherwise payable with respect to the
Mortgaged Property to be deposited directly into the Collection Account in
accordance with Section 2.12(a)(iii) and prior to the next succeeding Payment
Date may request in writing that Collateral Agent apply such Loss Proceeds to
make a voluntary prepayment pursuant to Section 2.6 on any Business Day. If the
Borrower shall not have elected to make the voluntary prepayment as described in
the preceding sentence, on the Payment Date occurring immediately following the
Collection Period during which such Loss Proceeds were received, such Loss
Proceeds shall be applied solely to make the payments required pursuant to item
(y) of clause first of Section 2.12(b) of this Agreement.
(c) Upon payment or prepayment of the Loan in full, Borrower shall pay
to the Lenders, in addition to the amounts specified in Section 2.6, Section 2.7
and Section 2.12, as applicable, all other amounts then due and payable to the
Lenders pursuant to the Loan Documents.
Section 2.8 Application of Payments After Event of Default. All
proceeds relating to any repayments of the Loan after the Collateral Agent shall
have received written notice of the occurrence of an Event of Default shall be
applied by Agent, in Agent's sole discretion, to amounts then outstanding under
this Agreement (including, without limitation, any unpaid fees of the Collateral
Agent payable pursuant to the Fee Letter and any reasonable out-of-pocket costs
and expenses of Collateral Agent and the Lenders, in that order, reimbursable
pursuant to the terms of this Agreement arising as a result of such repayment;
any accrued and unpaid interest then payable with respect to the Loan or the
portion thereof being repaid; any accrued and unpaid Refinancing Fee or Yield
Maintenance Amount; the outstanding Principal Indebtedness or the portion
thereof being repaid; and any other sums then due payable to or for the benefit
of Agent pursuant to this Agreement or any other Loan Document(s)).
Section 2.9 Method and Place of Payment From the Collection Account to
Agent.
(a) Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Agent not later
than 2:00 p.m., New York City time, on the date when due and shall be made in
lawful money of the United States of America by wire transfer in federal or
other immediately available funds to its account at Chase Manhattan Bank, New
York, New York (ABA No. ▇▇▇-▇▇▇-▇▇▇, Account No. ▇▇▇-▇▇▇-▇▇▇, Reference: North
Valley) and Agent shall disburse such payments to the Person entitled thereto on
the Business Day of receipt of such payments (or the next Business Day if the
payments are received after 2:00 p.m., New York City time on such Business Day)
to the account designated by such Person in writing to Agent from time to time.
Any funds received by Agent after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day. Agent shall notify
Borrower in writing of any changes in the account to which payments are to be
made. All payments made by Borrower hereunder, or by Borrower under the other
Loan Documents, shall be made irrespective of, and without any
Page 28
30
deduction for, any set-offs or counterclaims.
(b) Except to the extent otherwise provided herein, (i) each payment
or prepayment of principal of the Loan by Borrower shall be made to Agent for
the account of the Lenders pro rata in accordance with the respective unpaid
portion of the Loan held by such Lenders and (ii) each payment of interest on
the Loan by Borrower shall be made to Agent for the account of the Lenders pro
rata in accordance with the amounts of interest on the portion of the Loan held
by such Lenders then due and payable to the respective Lenders.
Section 2.10 Taxes. All payments made by Borrower under the Note and
this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority (other than taxes imposed on the income of the Lenders).
Section 2.11 Release of Collateral.
(a) Notwithstanding any other provision of this Agreement or any other
Loan Document, upon the occurrence of a Capital Event with respect to the
Mortgaged Property as described in Section 2.7(a) hereof, Agent, on behalf of
the Lenders, shall, simultaneously with such Capital Event, release the Lien of
the Mortgage and UCC-1 financing statements and any other Liens in favor of the
Lenders relating to the Mortgaged Property or the portion thereof affected by
such Capital Event.
(b) In the event Borrower satisfies the outstanding Indebtedness in
full, Agent and, at the written direction of Agent, Collateral Agent shall
withdraw and hold uninvested for Borrower in a LaSalle Bank National Association
account from the Business Day immediately preceding the date upon which the
release of funds is to be made to Borrower and release on the date on which the
outstanding Indebtedness is repaid in full any and all amounts then on deposit
in the Reserve Account to Borrower. Upon repayment of the Loan and all other
amounts due hereunder and under the Loan Documents in full in accordance with
the terms hereof and thereof, the Lenders shall, promptly after such payment,
release or cause to be released all Liens with respect to all Collateral or, to
the extent necessary to facilitate future savings of mortgage tax in states that
impose mortgage taxes, assign such Liens to Borrower's new lender(s), provided
that any such assignments shall be without recourse, representation, or warranty
of any kind, except that Agent and each Lender shall represent and warrant (1)
the then outstanding amount of the Principal Indebtedness and (2) that such
Liens have not been previously assigned by Agent or any Lender.
Section 2.12 Central Cash Management.
(a) Collection Account; Deposits to and Withdrawals from the
Collection Account.
(i) On or before the Closing Date, Borrower shall establish and
maintain with the Collateral Agent a collection account (the "Collection
Account"), which shall be an Eligible Account with a separate and unique
identification number and entitled "North Valley Tech LLC, with a security
interest therein granted to Salomon Brothers Realty Corp. as Agent (on
behalf of the Lenders) pursuant to a Loan Agreement, dated as of July __,
1999, among North Valley Tech LLC, Salomon Brothers Realty Corp. as Agent
and initial Lender and LaSalle Bank National Association, as Collateral
Agent". Not later than the Closing Date, the Borrower shall deliver to each
tenant under a Lease an irrevocable direction letter in the form attached
as Exhibit M to
Page 29
31
this Agreement requiring the tenant to pay all Rents and Money received
from Accounts or under Leases and derived from the Mortgaged Property and
Proceeds thereof directly to the Collection Account. Borrower shall provide
to Agent proof of such delivery. In addition, Borrower shall deliver an
irrevocable direction letter in such form to each tenant under a new Lease
entered into after the date hereof prior to the commencement of such Lease.
If a tenant under a Lease forwards such Rents, Money or Proceeds to the
Borrower rather than directly to the Collection Account, the Borrower shall
(i) deliver an additional irrevocable direction letter to the tenant and
make other commercially reasonable efforts to cause the tenant to forward
such Rents, Money or Proceeds directly to the Collateral Account and (ii)
immediately deposit or cause the Manager to deposit in the Collection
Account such Rents, Money or Proceeds. Borrower shall not have any right to
withdraw Money from the Collection Account.
(ii) In the event that Collateral Agent has received written notice
from Agent on behalf of the Lenders has notified the Collateral Agent and
the Borrower that an Event of Default has occurred and is continuing,
a. (w) all Rents and Money received from Accounts or under Leases and
derived from the Mortgaged Property and all Proceeds thereof shall be
payable to Agent for the account of Lenders or as otherwise directed
by Agent on behalf of Lenders (provided that such direction shall not
result in the nonpayment of any outstanding fees payable to the
Collateral Agent pursuant to the Fee Letter),
b. (x) Agent on behalf of the Lenders shall make deposits, or cause
deposits to be made, of such Rents, Money and Proceeds directly to the
Collection Account, and Borrower shall cooperate (and shall cause the
Manager to cooperate) with Agent on behalf of the Lenders in the
making of such deposits or causing such deposits to be made,
c. (y) Borrower shall not have any right to make or direct any
withdrawals from the Collection Account or the Reserve Account without
the prior written consent of Agent on behalf of the Lenders, and
d. (z) proceeds on deposit in the Collection Account and the Reserve
Account may be applied by Collateral Agent on behalf of the Lenders
for the payment of the Indebtedness pursuant to Section 2.8 of this
Agreement.
(iii) So long as no Event of Default shall have occurred and be
continuing, the Borrower shall deposit in the Collection Account: (a) as
and when required by Section 2.7(b), Loss Proceeds received by the Borrower
and (b) simultaneously with the consummation of any Capital Event, the
Capital Event Proceeds resulting from such Capital Event.
(b) Distribution of Cash. So long as the Collateral Agent shall not
have received written notice from Agent on behalf of the Lenders that an Event
of Default has occurred and is continuing, the Collateral Agent shall hold
uninvested for Borrower or the Lenders in a LaSalle Bank National Association
account, the funds on deposit in the Collection Account as of the close of
business on the Business Day immediately preceding each Payment Date to such
Payment Date and shall apply such funds on such Payment Date, in each case to
the extent of the amounts set forth in the related Payment Date Statement
delivered by Borrower to the Collateral Agent, as follows:
Page 30
32
first, to the payment to the Agent of (i) the interest then due
and payable on the Note with respect to the related Interest Accrual
Period, (ii) the Refinancing Fee or the Yield Maintenance Amount, if
any, then due and payable and (iii) the Principal Indebtedness in an
amount equal to any additional amount to which the Agent is entitled
pursuant to Section 2.7(b) of this Agreement;
second, to the payment to the Collateral Agent of its fees then
due and payable;
third, to the Expense Account in the amount required (or
permitted) to be deposited therein as described in Section 2.13(b);
fourth, to the Capital Expenditure Reserve Account in the amount
required to be deposited therein as described in Section 2.13(a);
fifth, to the payment of any indemnification to which an
Indemnified Party is entitled pursuant to Sections 5.1(I) and 5.1(J);
and
sixth, to the Borrower; provided, that if the Agent shall have
notified the Borrower that the Loan to Value Test or the Debt Service
Coverage Test has not been satisfied, then all remaining available
funds shall be distributed to the Principal Reserve Account until the
earlier of the date that (i) the Loan to Value Test and the Debt
Service Coverage Test have been satisfied for three consecutive
Payment Dates or (ii) the Loan has been repaid in full.
(c) Permitted Investments. Borrower shall, or shall direct Collateral
Agent in writing to, invest and reinvest any balance in the Collection Account,
from time to time in Permitted Investments; provided, however, that (i) the
maturity of the Permitted Investments on deposit therein shall be at the
discretion of Borrower, but in any event no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
therefrom pursuant to Section 2.12(a) or (b) of this Agreement, (ii) after
Collateral Agent has received written notice from Agent that an Event of Default
has occurred and is continuing Borrower shall not have any right to direct
investment of the balance in the Collection Account, (iii) all such Permitted
Investments shall be held in the name of Collateral Agent on behalf of the
Lenders and (iv) if no written investment direction is provided to Collateral
Agent by Borrower, Collateral Agent shall invest any balance in the Collection
Account in an investment of the type described in clause (viii) of the
definition of Permitted Investments. Agent, the Lenders and Collateral Agent
shall have no liability for any loss in investments of funds in the Collection
Account that are invested in Permitted Investments (unless, in the case of
Collateral Agent, invested contrary to Borrower's or Agent's written direction)
and no such loss shall affect Borrower's obligation to fund, or liability for
funding, the Collection Account. All interest paid or other earnings on the
Permitted Investments of funds deposited into the Collection Account made
hereunder shall be deposited into the Collection Account. Borrower shall include
all earnings on the Collection Account as income of Borrower for federal and
applicable state tax purposes.
(d) Monthly and Payment Date Statements. With respect to each
Collection Period, Borrower shall prepare and deliver, or shall cause to be
prepared and delivered, to Agent a statement no later than ten (10) Business
Days after the end of such Collection Period setting forth the aggregate
deposits to and withdrawals from the Collection Account and each
Page 31
33
account of the Reserve Account and the opening and closing balances in such
accounts (collectively, the "Monthly Statement"). With respect to each Payment
Date and the related Collection Period and Interest Accrual Period, Borrower
shall prepare and deliver, or shall cause to be prepared and delivered to
Collateral Agent and Agent, a statement (each, a "Payment Date Statement") no
later than the Business Day prior to such Payment Date with respect to each of
the items below, setting forth the following:
(i) the aggregate deposits to the Collection Account during the
related Collection Period for each type of deposit under this Agreement and
the opening and closing balances in the Collection Account;
(ii) the amount of interest then due and payable on the Note with
respect to the Interest Accrual Period (including the applicable number of
days and interest rate which were applied in determining such amount);
(iii) the amount of the Refinancing Fee or Yield Maintenance Amount,
if any, then due and payable;
(iv) the amount of the fees of the Collateral Agent and any expenses
payable to the Collateral Agent and any indemnification to which an
Indemnified Party is entitled under this Agreement;
(v) the following information with respect to the Principal
Indebtedness in a format reasonably acceptable to Agent: (1) the Principal
Indebtedness as of the preceding Payment Date, (2) any principal payable to
the Lenders pursuant to Section 2.6 or 2.12 on such Payment Date, and (3)
the Principal Indebtedness on the current Payment Date (taking into account
such payments); and
(vi) the amount withdrawn from or remitted to each account of the
Reserve Account in accordance with Sections 2.12 and 2.13.
In addition, no later than the twentieth (20th) day of each calendar month (the
"Activity Statement Date"), Borrower shall prepare and deliver, or shall cause
to be prepared and delivered to Collateral Agent and Agent, a statement (each,
an "Activity Statement") with respect to the Collection Period and Interest
Accrual Period for the Payment Date immediately preceding such Activity
Statement Date setting forth (i) a cash flow report in a format reasonably
acceptable to Agent describing on the basis of the Mortgaged Property, the
related Gross Revenue, Property Expenses, Capital Improvements Costs and net
operating income, (ii) actual property vacancy level (expressed as a percentage)
and (iii) a summary report of Lease modifications and similar proposals.
(e) Quarterly Statements. No later than thirty (30) days following the
end of each of the months of December, March, June, and September, beginning
with the month ending at June 30, 1999, the Borrower shall prepare and deliver
to the Agent and the Collateral Agent a statement (each a "Quarterly Statement")
in hard copy and on diskette and/or a copy through electronic mail, in form and
substance reasonably satisfactory to Agent, setting forth with respect to the
Mortgaged Property (i) a cash flow report detailing the Operating Revenues and
the Operating Expenses, in each case on a trailing twelve month basis, (ii) a
current property rent roll and a projected rent roll for at least the succeeding
twelve (12) month period, (iii) actual vacancy level for the Mortgaged Property
(expressing the level as a percentage) for the most recent date available, (iv)
a list of Capital Improvement Costs incurred and work completed during the
period covered by such Quarterly Statement and any updates to local market
studies or reports in the Borrower's possession and (v) any additional
information reasonably requested by Agent to enable Agent to calculate Adjusted
Page 32
34
Operating Expenses and Adjusted Operating Revenues.
(f) Loss Proceeds. In the event of a casualty or Taking with respect
to the Mortgaged Property, unless pursuant to this Agreement or applicable law,
the Loss Proceeds are to be made available to the Borrower for restoration or to
the tenants, all of Borrower's interest in Loss Proceeds shall be paid directly
to the Collection Account to satisfy the requirements of Section 2.7(b). If the
Loss Proceeds are to be made available for restoration pursuant to this
Agreement or to the tenants pursuant to applicable law, such Loss Proceeds shall
be held by the Collateral Agent in a segregated interest-bearing Eligible
Account in the name of the Collateral Agent on behalf of the Lenders to be
opened by the Collateral Agent within three (3) Business Days after the
Collateral Agent receives written notice of the necessity therefor from the
Agent, to be withdrawn by the Collateral Agent and held uninvested in a LaSalle
Bank National Association account from the Business Day immediately preceding
the date upon which payment to Borrower or to the tenants is to be made to such
payment date for delivery to Borrower or to the tenants from time to time to pay
restoration costs pursuant to a schedule reasonably acceptable to Agent and
Borrower. Funds on deposit in any such account opened by the Collateral Agent
shall be invested in Permitted Investments in the same manner and subject to the
same restrictions as set forth in Section 2.12(c) with respect to the Collection
Account (except that the maturity shall be not later than as necessary to
satisfy the schedule referred to in the preceding sentence). If any Loss
Proceeds are received by Borrower, such Loss Proceeds shall be received in trust
for the Lenders, shall be segregated from other funds of Borrower, and shall be
forthwith paid to Collateral Agent to the extent necessary to comply with this
Agreement.
(g) Collateral Agent's Reliance. Collateral Agent may rely and shall
be protected in acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or parties.
Collateral Agent may rely on written notice from Agent as to the occurrence and
continuance of an Event of Default, without further written notice by the
Lenders to the contrary.
Section 2.13 Reserve Accounts.
(a) Capital Expenditure Reserve Account.
(i) On or before the Closing Date, Borrower shall establish and
maintain with the Collateral Agent a master capital expenditure reserve
account (which shall not itself be a separate account) (the "Capital
Expenditure Reserve Account") comprised of three separate accounts, each of
which shall be an Eligible Account and shall have the same title as the
Collection Account, for the benefit of the Lenders until the Loan is paid
in full. The three accounts shall be designated the Deferred Maintenance
Account (the "Deferred Maintenance Account"), the Replacement Reserve
Account (the "Replacement Reserve Account"), and the Normalized Leasing
Costs Account (the "Normalized Leasing Costs Account"). On the Closing
Date, the initial Lender shall deposit out of the Loan proceeds $143,125 in
the Deferred Maintenance Account and $488,300 in the Replacement Reserve
Account. On each Payment Date, the Borrower shall deposit (including, if
the funds for such deposit are not available pursuant to Section 2.12(b),
from a deposit of the Borrower's funds sourced from equity capital
contributions) (i) in the Replacement Reserve Account, an amount equal to
$7,903.17 and (ii) in the Normalized Leasing Costs Account, an amount equal
to $36,690.00.
(ii) If the Collateral Agent shall not have received written notice
that the Loan to Value Test or the Debt Service Coverage Test
Page 33
35
is not satisfied or that an Event of Default has occurred and is continuing
under any of the Loan Documents, Borrower may make withdrawals, without the
prior consent of the Agent, from each account of the Capital Expenditure
Reserve Account as described below upon delivery to the Agent and
Collateral Agent of a request together with reasonable supporting
documentation or other evidence (including invoices or receipts) with
respect to the use of such funds. If the Agent shall have given the
Collateral Agent and the Borrower written notice that Borrower is not in
compliance with the Loan to Value Test or the Debt Service Coverage Test
(and continuing until the Agent shall have notified the Borrower and the
Collateral Agent that both such tests are satisfied), the Agent shall have
the right to notify Borrower and Collateral Agent that Agent's prior
written approval is required with respect to any withdrawals from any
account of the Capital Expenditure Reserve Account.
(iii) Any and all Moneys remitted to the Deferred Maintenance Account,
together with any Permitted Investments in which such Moneys are or will be
invested or reinvested during the term of this Agreement, shall be held in
the Deferred Maintenance Account (i) to be withdrawn by Collateral Agent
upon written request of Borrower made not more than once each month and
held uninvested for Borrower or the Lenders in a LaSalle Bank National
Association account from the close of business on the Business Day
immediately preceding the date upon which payment is to be made to Borrower
to such date, to pay for immediate repairs constituting Capital Improvement
Costs referenced in the Engineering Reports, or (ii) for purposes otherwise
requested by Borrower and reasonably approved by the Agent in writing. Any
and all Moneys remitted to the Replacement Reserve Account, together with
any Permitted Investments in which such Moneys are or will be invested or
reinvested during the term of this Agreement, shall be held in the
Replacement Reserve Account (i) to be withdrawn by Collateral Agent upon
written request by Borrower and held uninvested for Borrower or the Lenders
in a LaSalle Bank National Association account from the close of business
on the Business Day immediately preceding the date upon which payment is to
be made to Borrower to such date, to pay replacement reserve costs or (ii)
for purposes otherwise requested by Borrower and reasonably approved by the
Agent in writing. Any and all Moneys remitted to the Normalized Leasing
Costs Account, together with any Permitted Investments in which such Moneys
are or will be invested or reinvested during the term of this Agreement,
shall be held in the Normalized Leasing Costs Account (i) to be withdrawn
by Collateral Agent upon written request by Borrower and held uninvested
for Borrower or the Lenders in a LaSalle Bank National Association account
from the close of business on the Business Day immediately preceding the
date upon which payment is to be made to Borrower to such date, to pay or
reimburse Borrower for Leasing Commissions and TI Costs incurred in
connection with leasing activities relating to the Mortgaged Property after
the Closing Date specified by Borrower in a written request delivered to
Collateral Agent and the Agent or (ii) for purposes otherwise requested by
Borrower and reasonably approved by the Agent in writing.
(iv) Not less than three (3) Business Days prior to Borrower's
delivery of a request to Collateral Agent to withdraw the funds on deposit
in any account of the Capital Expenditure Reserve Account, in whole or in
part, Borrower shall provide the Agent with written notice (with a copy to
Collateral Agent) of such request (including therein a statement of the
purpose for the withdrawal). In the event Borrower completes the repairs
for which funds were reserved in the Deferred Maintenance Account to the
reasonable satisfaction of the Agent, Agent and, at the written direction
of Agent, Collateral Agent shall withdraw and hold uninvested for Borrower
in a LaSalle Bank National
Page 34
36
Association account from the Business Day immediately preceding the date
upon which the release of funds is to be made to Borrower and release on
the date of release any and all amounts then on deposit in the Deferred
Maintenance Account to Borrower. In the event Borrower satisfies the
outstanding Indebtedness in full, Agent and, at the written direction of
Agent, Collateral Agent shall withdraw and hold uninvested for Borrower in
a LaSalle Bank National Association account from the Business Day
immediately preceding the date upon which the release of funds is to be
made to Borrower and release on the date on which the outstanding
Indebtedness is repaid in full any and all amounts then on deposit in each
account of the Capital Expenditure Reserve Account to Borrower.
(b) Expense Account. On or before the Closing Date, the Borrower shall
establish and maintain with the Collateral Agent a master expense account (which
shall not itself be a separate account) (the "Expense Account") comprised of two
separate accounts, each of which shall be an Eligible Account and shall have the
same title as the Collection Account for the benefit of the Lenders until the
Loan is paid in full. The two accounts shall be designated the Basic Carrying
Costs Account (the "Basic Carrying Costs Account") and the Other Property
Expenses Account (the "Other Property Expenses Account"). On the Closing Date,
the initial Lender shall deposit out of the Loan proceeds $122,990.27 in the
Basic Carrying Costs Sub-Account. Prior to each Payment Date, the Borrower shall
instruct the Collateral Agent in the Payment Date Statement to deposit from the
Collection Account, an amount equal to the Basic Carrying Costs portion of
Monthly Property Expenses in the Basic Carrying Costs Account (which shall equal
$32,851.76 unless agreed otherwise by the Agent and the Borrower) and the
remainder of the Monthly Property Expenses in the Other Property Expenses
Account. Any and all Moneys remitted to the Expense Account together with any
Permitted Investments in which such Moneys are or will be invested or reinvested
during the terms of this Agreement, shall be held in the Expense Account and as
long as no Event of Default shall have occurred and be continuing, shall be
withdrawn from the applicable account of the Expense Account by the Collateral
Agent within three (3) Business Days of written request of the Borrower
delivered to Agent and Collateral Agent together with documentation and other
evidence (including invoices) with respect to the Basic Carrying Costs or, upon
request of the Agent, other Property Expenses towards which such funds are to be
applied. Provided that the Agent shall not have notified the Collateral Agent of
any objection within two (2) Business Days of Borrower's delivery of such
request to Agent and Collateral Agent, the Collateral Agent shall pay or
reimburse the Borrower for (i) any Basic Carrying Costs (in the case of the
Basic Carrying Costs Account) or any other Property Expenses (in the case of the
Other Property Expenses Account) shown on the Operating Budget, in each case
currently due to be paid and not previously paid or reimbursed and (ii) any
Property Expenses not shown on the Operating Budget but reasonably approved by
the Agent in writing for payment or reimbursement. In the event the Borrower
satisfies the outstanding Indebtedness in full, the Lenders and the Collateral
Agent (upon receipt of written notice thereof from the Agent) shall release any
and all amounts on deposit in the Expense Account to the Borrower on the
Business Day on which the Borrower repays the outstanding Indebtedness in full.
(c) Principal Reserve Account. On or before the Closing Date, Borrower
shall establish and maintain with the Collateral Agent an account designated the
Principal Reserve Account (the "Principal Reserve Account") which shall be an
Eligible Account and shall have the same title as the Collection Account for the
benefit of the Lenders until the Loan is paid in full. On any Payment Date as of
which the Loan to Value Test or the Debt Service Coverage Test has not been
satisfied, Agent shall deposit or cause to be deposited in the Principal Reserve
Account the remaining available funds pursuant to clause sixth of Section
2.12(b). Any and all Moneys
Page 35
37
remitted to the Principal Reserve Account, together with any Permitted
Investments in which such Moneys are or will be invested or reinvested during
the term of this Agreement, shall be held in the Principal Reserve Account to be
withdrawn by Collateral Agent and held uninvested for Borrower or the Lenders in
a LaSalle Bank National Association account from the Business Day immediately
preceding the date upon which payment is to be made to such date, and paid
either (x) upon written request of Borrower to pay for Capital Improvement Costs
approved in writing by Agent or (y) upon written request of the Agent on behalf
of the Lenders to pay the Principal Indebtedness following the occurrence of an
Event of Default or (z) upon written request of Borrower to the Borrower
following the delivery of written confirmation from the Agent that the Debt
Service Coverage Test has been satisfied for three consecutive Payment Dates,
subject in the case of this clause (z) to the restrictions in the following
sentence. In the event the Borrower is entitled to the release of funds from the
Principal Reserve Account pursuant to clause (z) of the preceding sentence, such
funds shall be released in three equal installments on consecutive Payment Dates
(i.e. one-third of the amount on deposit therein on each of the third, fourth
and fifth consecutive Payment Dates where the Debt Service Coverage Test has
been satisfied), provided that such release shall be suspended if following the
third or fourth Payment Dates and prior to the fourth or fifth Payment Dates,
respectively, the Debt Service Coverage Test is no longer satisfied.
(d) Investment of Funds. All or a portion of any Moneys in the Reserve
Account shall be invested and reinvested, so long as Collateral Agent has not
received written notice from Agent that an Event of Default has occurred and is
continuing, by Collateral Agent in accordance with written instructions
delivered by Borrower, or after Collateral Agent has received written notice
from Agent that an Event of Default has occurred and is continuing, by Agent, in
one or more Permitted Investments. So long as Collateral Agent has not received
written notice from Agent that an Event of Default has occurred and is
continuing, all such Permitted Investments shall be made in the name of
Borrower, and after Collateral Agent has received written notice from Agent that
an Event of Default has occurred and is continuing, all such Permitted
Investments shall be made in the name of Agent on behalf of the Lenders or as
otherwise directed by Agent. Borrower or Agent, as applicable, shall cause all
income or other gain from investments of Money held in the Reserve Account to be
deposited in the respective account of the Reserve Account immediately upon
receipt and any loss resulting from such investments shall be charged to the
respective account of the Reserve Account. Unless and until title to the funds
therein shall have vested in any Person other than Borrower, Borrower shall
include all such income or gain on any account of the Reserve Account as income
of Borrower for federal and applicable state tax purposes.
(e) Event of Default. After Collateral Agent has received written
notice from Agent that an Event of Default has occurred and is continuing,
Borrower shall not be permitted to make any withdrawal(s) from the Reserve
Account and Collateral Agent at the written direction of Agent may liquidate any
Permitted Investments of the amount on deposit in such account, withdraw and
hold the proceeds of such liquidation uninvested for Lenders in a LaSalle Bank
National Association account from the Business Day immediately preceding the
date such funds are to be used and use such amount on deposit in the Reserve
Account on the succeeding Business Day to make payments on account of the Loan
in accordance with the priorities set forth in Section 2.8.
Section 2.14 Security Agreement.
(a) Pledge of Account. To secure the full and punctual payment and
performance of all of the Indebtedness, Borrower hereby assigns, conveys,
pledges and transfers to the Agent on behalf of the Lenders as secured party,
and grants Agent on behalf of the Lenders a first and
Page 36
38
continuing security interest in and to, the following property, whether now
owned or existing or hereafter acquired or arising and regardless of where
located (collectively, the "Account Collateral"):
(i) all of Borrower's right, title and interest in the Collection
Account and the Reserve Account and all Money and Permitted Investments, if
any, from time to time deposited or held in the Collection Account and the
Reserve Account;
(ii) all of Borrower's right, title and interest in interest,
dividends, Money, Instruments and other property from time to time
received, receivable or otherwise payable in respect of, or in exchange
for, any of the foregoing until such time as such items are disbursed from
the Collection Account and the Reserve Account; and
(iii) to the extent not covered by clause (i) or (ii) above, all
Borrower's right, title and interest in Proceeds of any or all of the
foregoing.
(b) Covenants. So long as any portion of the Indebtedness is
outstanding, Borrower shall not open (or permit Collateral Agent to open) any
account other than the Collection Account for the deposit of Rents or Money
received from Accounts or under Leases and derived from the Mortgaged Property
and all Proceeds to pay amounts owing hereunder, other than any account for
amounts required by law to be segregated by Borrower. The Account Collateral
shall be subject to such applicable laws, and such applicable regulations of the
Board of Governors of the Federal Reserve System and of any other banking
authority or Governmental Authority, as may now or hereafter be in effect, and
to the rules, regulations and procedures of Collateral Agent relating to demand
deposit accounts generally from time to time in effect.
(c) Financing Statements; Further Assurances. On the Closing Date,
Borrower shall execute and deliver to the Agent for filing a financing statement
or statements in connection with the Account Collateral in the form required to
properly perfect Agent's security interest on behalf of the Lenders in the
Account Collateral to the extent that it may be perfected by such a filing. From
time to time, at the expense of Borrower, Borrower shall promptly execute and
deliver all further instruments, and take all further action, that Agent may
reasonably request, in order to perfect and protect the pledge and security
interest granted or purported to be granted hereby, or to enable Agent to
exercise and enforce Agent's rights and remedies hereunder with respect to, any
Account Collateral. Agent shall not be responsible for the determination of the
financing statements and other instruments necessary to perfect such security
interest or for the filing of such financing statements and other instruments at
the locations necessary to perfect such security interest and may rely on an
opinion of counsel to Borrower as to the perfection of such security interest.
(d) Transfers and Other Liens. Borrower shall not sell or otherwise
dispose of any of the Account Collateral other than pursuant to the terms of
this Agreement and the other Loan Documents, or create or permit to exist any
Lien upon or with respect to all or any of the Account Collateral, except for
the Lien granted to Agent, and the rights of the institution acting as Agent,
under or as contemplated by this Agreement.
(e) No Waiver. Every right and remedy granted to Agent under this
Agreement or by law may be exercised by Agent at any time and from time to time,
and as often as Agent may deem it expedient. Any and all of Agent's rights with
respect to the pledge of and security interest in the Account Collateral granted
hereunder shall continue unimpaired, and to the extent permitted by law,
Borrower shall be and remain obligated in accordance with
Page 37
39
the terms hereof, notwithstanding (i) any proceeding of Borrower under the
United States Bankruptcy Code or any bankruptcy, insolvency or reorganization
laws or statutes of any state, (ii) the release or substitution of Account
Collateral at any time, or of any rights or interests therein or (iii) any
delay, extension of time, renewal, compromise or other indulgence granted by
Agent in the event of any Default with respect to the Account Collateral or
otherwise hereunder. No delay or extension of time by Agent in exercising any
power of sale, option or other right or remedy hereunder, and no notice or
demand which may be given to or made upon Borrower by Agent, shall constitute a
waiver thereof, or limit, impair or prejudice Agent's right, without notice or
demand, to take any action against Borrower or to exercise any other power of
sale, option or any other right or remedy.
(f) Agent Appointed Attorney-In-Fact. Borrower hereby irrevocably
constitutes and appoints Agent as Borrower's true and lawful attorney-in-fact,
with full power of substitution, at any time after the occurrence and during the
continuation of an Event of Default, to execute, acknowledge and deliver any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of Borrower with respect to the Account Collateral, and do in the
name, place and stead of Borrower, all such acts, things and deeds for and on
behalf of and in the name of Borrower with respect to the Account Collateral,
which Borrower could or might do or which Agent may deem necessary or desirable
to more fully vest in Agent the rights and remedies provided for herein with
respect to the Account Collateral and to accomplish the purposes of this
Agreement. The foregoing powers of attorney are irrevocable and coupled with an
interest and shall terminate upon repayment of the Indebtedness in full.
(g) Continuing Security Interest; Termination. This Section 2.14 shall
create a continuing pledge of and security interest in the Account Collateral
and shall remain in full force and effect until payment in full by Borrower of
the Indebtedness. Upon payment in full by Borrower of the Indebtedness, Borrower
shall be entitled to the return, upon its request and at its expense, of such of
the Account Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof, and, upon written notification by Agent that the
Indebtedness has been paid in full, Agent shall release any funds then held by
it in accounts established by Borrower with Collateral Agent pursuant to this
Agreement and shall execute such instruments and documents as may be reasonably
requested by Borrower to evidence such termination and the release of the pledge
and lien hereof; provided, however, that Borrower shall simultaneously pay on
demand upon presentation of invoices all of Collateral Agent's expenses in
connection therewith (including reasonable attorneys' fees and disbursements).
(h) Right of Set-off. Collateral Agent and Agent waive any and all
rights they may have at law or otherwise to set off or make any claim against
the Account Collateral, except, with respect to any checks returned for
insufficient funds, the payment of Collateral Agent's fees and expenses
(including reasonable attorney fees and disbursements), for the maintenance of
the Account Collateral.
Section 2.15 Mortgage Recording Taxes. The Lien to be created by the
Mortgage is intended to encumber the Mortgaged Property to the full extent of
the Loan Amount. On the Closing Date, the Borrower shall have paid all state,
county and municipal recording and all other taxes imposed upon the execution
and recordation of the Mortgage, if any.
Section 2.16 General Collateral Agent Provisions.
(a) Appointment. The Lenders hereby designate and appoint LaSalle Bank
National Association as Collateral Agent on behalf of the Lenders under this
Agreement, and authorize LaSalle Bank National Association, as
Page 38
40
Collateral Agent for the Lenders, to take such actions on their behalf under the
provisions of this Agreement and to exercise such powers and perform such duties
as are expressly delegated to Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
Collateral Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with the Lenders, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Collateral Agent.
(b) Collateral Agent's Right to Perform. If an Event of Default shall
have occurred and be continuing, then Collateral Agent may, but shall have no
obligation to, itself perform, or cause performance of, such covenant or
obligation giving rise to such Event of Default, after giving Borrower at least
five (5) Business Days prior written notice of such intent. The reasonable fees
and expenses of Collateral Agent incurred in connection therewith shall be
payable by Borrower to Collateral Agent upon demand, which obligation shall be
secured by all Collateral.
(c) Standard of Care. Beyond the observance of Accepted Practices and
the exercise of reasonable care in the custody or disbursements thereof,
Collateral Agent shall not have any duty as to any Account Collateral or any
income thereon in its possession or control or in the possession or control of
any agents for, or of Collateral Agent, or the preservation of rights against
any Person or otherwise with respect thereto. Collateral Agent shall be deemed
to have exercised reasonable care in the custody of the Account Collateral in
its possession if the Account Collateral is accorded treatment in accordance
with the Accepted Practices.
(d) Exculpatory Provisions. Neither Collateral Agent nor any of its
officers, directors, employees, agents, attorneys, attorneys-in-fact or
Affiliates shall be responsible in any manner to the Lenders for any recitals,
statements, representations or warranties made by Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by Collateral Agent under or in connection with, this Agreement or
any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Note or any other Loan
Document or for any failure of Borrower to perform its obligations hereunder or
thereunder. Collateral Agent shall not be under any obligation to the Lenders to
ascertain or to inquire as to the agreements contained in, or conditions of,
this Loan Agreement or any other Loan Document, or to inspect the properties,
books or records of Borrower. Collateral Agent shall not be required to take any
discretionary actions hereunder except at the written direction of Borrower or
Agent, it being understood and agreed that Collateral Agent's duties hereunder
shall be wholly ministerial in nature and that Collateral Agent shall not be
responsible for calculating any financial ratios or generating any reports
(other than the Monthly Statement) for the Lenders or Borrower. In connection
with any discretionary action which Borrower is permitted hereunder to direct
Collateral Agent to take, if Collateral Agent shall follow Agent's directions
and not Borrower's directions, it shall have no liability to Borrower (or to any
other Person) for following any such directions of Agent and for not following
such directions of Borrower (if expressly permitted herein). Collateral Agent
shall not be under any obligation or duty to perform any act which, in
Collateral Agent's sole reasonable judgment, could involve it in expense or
liability or to institute or defend any suit in respect hereof, or to advance
any of its own monies, unless Agent or Borrower, as the case may be, shall have
offered to Collateral Agent reasonable security or indemnity against such
expense, liability, suit or advance.
Page 39
41
(e) Indemnification. Borrower shall indemnify and hold Collateral
Agent, and its agents, attorneys, employees and officers harmless from and
against any loss, cost or damage (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by Collateral Agent in connection
with the transactions contemplated hereby, excluding any loss, cost or damage
arising as a result of Collateral Agent's failure to adopt and follow Accepted
Practices, gross negligence, bad faith, willful misconduct or violation of
applicable law. The indemnification set forth in this paragraph shall survive
the satisfaction and payment of the Indebtedness and the termination of this
Agreement.
(f) Collateral Agent's Reliance. Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram, fax,
electronic mail message, telex or teletype message, statement, order or other
document reasonably believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel and other experts selected by Collateral Agent.
Collateral Agent may deem and treat the payee of the Note as the owner thereof
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with Collateral Agent. Collateral Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of Agent as it deems appropriate or it shall first be indemnified to
its satisfaction by Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.
Provided that Collateral Agent acts in accordance with Accepted Practices,
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request of
Agent, and such request and any action taken or failure to act pursuant thereto
shall be binding upon Agent and all future holders of the Note. All requests to
Collateral Agent for wire transfers of funds, for transfers between accounts
established pursuant to this Agreement or any other transfer not specifically
described in this Agreement shall be in writing.
(g) Notice of Default. Collateral Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless Collateral Agent has received written notice from Agent
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". Collateral Agent shall take
such action with respect to such Default or Event of Default as shall be
directed by Agent, including any action under this Agreement.
(h) Non-Reliance on Collateral Agent. Neither Collateral Agent nor any
of its officers, directors, employees, agents, attorneys, attorneys-in-fact or
Affiliates has made any representations or warranties to the Lenders and no act
by Collateral Agent hereinafter taken (including any review of the affairs of
Borrower) shall be deemed to constitute any representation or warranty by
Collateral Agent to the Lenders. Except for notices, reports and other documents
expressly required to be furnished to Agent by Collateral Agent hereunder,
Collateral Agent shall not have any duty or responsibility to provide the
Lenders with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of Borrower which may come into the possession of Collateral
Agent or any of its officers, directors, employees, agents, attorneys,
attorneys-in-fact or Affiliates.
(i) Removal and Resignation. Collateral Agent shall have the right to
resign as collateral agent hereunder and Agent shall have the right to remove
Collateral Agent as collateral agent hereunder, in each
Page 40
42
case upon thirty (30) days' written notice to the other parties to this
Agreement. In the event of such resignation or removal, Agent shall appoint a
successor Collateral Agent with the consent of Borrower (such consent not to be
unreasonably withheld or delayed), or at Agent's option in Agent's sole and
absolute discretion Agent may assume and perform the rights and obligations of
Collateral Agent. No such removal of or resignation by Collateral Agent shall
become effective until a successor Collateral Agent shall have accepted such
appointment (or Agent shall have determined to designate itself as Collateral
Agent) and executed an instrument by which it shall have assumed all of the
rights and obligations of Collateral Agent hereunder. If no such successor
Collateral Agent is appointed within sixty (60) days (or, if fees payable under
the Fee Letter have not been paid, thirty (30) days) after receipt of the
resigning Collateral Agent's notice of resignation or removal, the resigning
Collateral Agent may petition a court for the appointment of a successor
Collateral Agent unless Agent elects, in its sole and absolute discretion, to
assume the rights and obligations of Collateral Agent itself. In connection with
any removal of or resignation by Collateral Agent, (A) the removed or resigning
Collateral Agent shall (1) duly assign, transfer and deliver to the successor
Collateral Agent this Agreement and all Money and Permitted Investments held by
it hereunder, (2) execute such financing statements and other instruments as may
be necessary to assign to the successor Collateral Agent the security interest
existing in favor of the retiring Collateral Agent hereunder, and to otherwise
give effect to such succession and (3) take such other actions as may be
reasonably required by Borrower, Agent or the successor Collateral Agent in
connection with the foregoing and (B) the successor Collateral Agent shall
establish in its name, as agent for the Lenders, as secured party, the
Collection Account and Reserve Account as Borrower is required to maintain
pursuant to the terms of this Agreement.
(j) Individual Capacity. Collateral Agent and its Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
Borrower or any Affiliate, as though Collateral Agent were not Collateral Agent
hereunder, or under the other Loan Documents.
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Effectiveness. This Agreement
shall become effective on the date that all of the following conditions shall
have been satisfied (or waived in accordance with Section 8.4) (the "Closing
Date"):
(A) Loan Agreement. Borrower, Collateral Agent, Agent and initial
Lender shall have executed and delivered this Agreement to initial Lender.
(B) Note. Borrower shall have executed and delivered to initial Lender
the Note.
(C) Environmental Indemnity Agreement; Pledge Agreement; Guaranty of
Non-Recourse Obligations. Borrower and Guarantor shall have executed and
delivered the Environmental Indemnity Agreement to the Agent for benefit of the
Lenders. Each of the members of Borrower shall have executed and delivered the
Pledge Agreement to the Agent for benefit of the Lenders. Guarantor shall have
executed and delivered the Guaranty of Non-Recourse Obligations to the Agent for
benefit of the Lenders.
(D) Opinions of Counsel. The initial Lender and Collateral Agent shall
have received from counsel to Borrower and Guarantor, legal opinions in
substantially the forms attached hereto as Exhibit F-1, with respect to
corporate matters and as Exhibit F-3, with respect to substantive
non-consolidation of the Guarantor and the Borrower in the event of the
bankruptcy of the Guarantor. Such legal opinions shall be addressed to
Page 41
43
Agent and Collateral Agent and their successors and assigns, dated the Closing
Date, and in form and substance reasonably satisfactory to Agent and Collateral
Agent and their respective counsel.
(E) Organizational Documents. The initial Lender shall have received
with respect to each of Borrower and the Guarantor its certificate of formation
or certificate of incorporation, as applicable, as amended, modified or
supplemented to the Closing Date, as filed with the Secretary of State in the
jurisdiction of organization and in effect on the Closing Date and certified to
be true, correct and complete by the appropriate Secretary of State as of a date
not more than ten (10) days prior to the Closing Date, together with, if
available, a good standing certificate from such Secretary of State and a good
standing certificate from the Secretaries of State (or the equivalent thereof)
of each other State in which Borrower is required to be qualified to transact
business.
(F) Certified Resolutions, etc. The initial Lender shall have received
a certificate of the manager or secretary of the Manager of Borrower and
Guarantor dated the Closing Date, certifying (i) the names and true signatures
of its incumbent officers authorized to sign the Loan Documents to which
Borrower or Guarantor is a party, (ii) the Organizational Agreement of each of
Borrower, its Manager and the Guarantor, in each case as in effect on the
Closing Date, (iii) the resolutions of the manager or board of directors of the
Manager of Borrower and Guarantor, approving and authorizing the execution,
delivery and performance of the Loan Documents to which it is a party, and (iv)
that there have been no changes in the Organizational Agreement since the date
of execution thereof.
(G) Additional Matters. The Agent shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Agent. All corporate and other organizational
proceedings, all other documents (including, without limitation, all documents
referred to herein and not appearing as exhibits hereto) and all legal matters
in connection with the Loan shall be reasonably satisfactory in form and
substance to Agent.
(H) Transaction Costs. Borrower shall have paid all Transaction Costs
for which bills have been submitted in accordance with the provisions of Section
8.23.
(I) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on the Closing Date.
(J) No Injunction. No law or regulation shall have been adopted, no
order, judgment or decree of any Governmental Authority shall have been issued,
and no litigation shall be pending or threatened, which in the good faith
judgment of the initial Lender would enjoin, prohibit or restrain, or impose or
result in the imposition of any material adverse condition upon, the making or
repayment of the Loan or the consummation of the Transaction.
(K) Representations and Warranties. The representations and warranties
herein and in the other Loan Documents shall be true and correct in all material
respects on the Closing Date.
(L) Survey; Appraisal. Agent shall have received the Survey and the
Appraisal with respect to the Mortgaged Property which shall be in form and
substance satisfactory to Agent.
(M) Engineering Report. Agent shall have received the Engineering
Report with respect to the Mortgaged Property prepared by the Engineer, which
Engineering Report shall be acceptable to Agent.
Page 42
44
(N) Environmental Matters. Agent shall have received an Environmental
Report prepared by an Environmental Auditor with respect to the Mortgaged
Property, which Environmental Report shall be reasonably acceptable to Agent. In
addition, the Agent shall have received a "spill prevention and control plan"
for the above ground storage tanks at the Mortgaged Property exceeding 1,350
gallons which plan shall be reasonably acceptable to Agent.
(O) Financial Information. Agent shall have received reasonably
acceptable financial information relating to the Mortgaged Property. Such
information shall include the following, to the extent reasonably available:
(ii) operating statements for the current year (including actual to
date information, an annual budget and trailing twelve month data in hard
copy and on diskette) and for not less than the three preceding years
(including tenant improvements costs, leasing commissions, capital
reserves, major repairs, replacement items and occupancy rates in hard copy
and on diskette);
(iii) copies of Leases with respect to the tenants of the Mortgaged
Property, a copy of the standard lease form, if any, and tenant lease
abstracts, if available;
(iv) current property rent roll data on a tenant by tenant basis in
hard copy (including name, square footage, lease term, expiration date,
renewal options, base rent per square foot, sales volume psf (if
applicable), percentage rent terms (if applicable), additional rent clauses
(including stops, offsets, and other special provisions), escalation
clauses for increase in operating expense, maintenance, insurance, real
estate taxes and utilities, assignment, sublet and cancellation provisions
and purchase options);
(v) current real estate tax bills and historical real estate tax bills
of record for the Mortgaged Property for not less than the three preceding
years;
(vi) insurance certificates indicating the type and amount of
coverage; and
(vii) the most recent annual financial statements and unaudited
quarterly financial statements).
The annual financial statements relating to the Mortgaged Property shall be
either (x) audited by a "Big Five" accounting firm or another firm of certified
public accountants reasonably acceptable to Agent or (y) done in accordance with
agreed upon procedures reasonably acceptable to Agent to be performed by a "Big
Five" accounting firm or another firm of certified public accountants reasonably
acceptable to Agent to create similar information.
(A) Pro-Forma Financial Statement; Operating Budget. Agent shall have
received (i) the initial pro forma financial statement and Operating Budget for
the Mortgaged Property for the following twelve months (including on an annual
and monthly basis a break-down of projected Gross Revenues, Property Expenses,
Capital Improvement Costs (including Leasing Commissions and TI Costs),
replacement reserve costs and average occupancy level (expressed as a
percentage)), (ii) a financial statement that forecasts projected revenues and
operating expenses for not less than three years (including the assumptions used
in such forecast), and (iii) any local market study and/or research and
demographics report prepared for Borrower and/or commercially available.
Page 43
45
(B) Site Inspection. Borrower shall have provided to Agent the
opportunity to perform, or cause to be performed on its behalf, an on-site due
diligence review of the Mortgaged Property to be refinanced with the Loan which
inspection is satisfactory to Agent in its sole discretion.
(C) Mortgaged Property Documents.
a. (i) Mortgage; Assignment of Rents and Leases. Borrower shall have executed
and delivered to Agent the Mortgage and the Assignment of Rents and Leases with
respect to the Mortgaged Property and such Mortgage and Assignment of Rents and
Leases or amendment shall have been filed of record in the appropriate filing
office in the jurisdiction in which the Mortgaged Property is located or
irrevocably delivered to a title agent for such recordation.
b. (ii) Financing Statements. Borrower shall have executed and delivered to
Agent all financing statements specified on Exhibit H attached hereto and such
financing statements shall have been filed of record in the appropriate filing
offices in each of the appropriate jurisdictions or irrevocably delivered to a
title agent for such recordation.
c. (iii) Management Agreement and Manager's Subordination. With respect to the
Mortgaged Property, Agent shall have received the executed Management Agreement
and the Property Manager shall have executed and delivered Manager's
Subordination to Agent.
d. (iv) Contract Assignment. With respect to the Mortgaged Property, Borrower
shall have executed and delivered to Agent a Contract Assignment with respect to
the Mortgaged Property.
(D) Opinions of Counsel. Agent shall have received from counsel to
Borrower its legal opinion as to the enforceability of the Mortgage and
Assignment of Rents and Leases, and other matters referred to therein. The legal
opinions will be addressed to Agent and Lenders and their successors and
assigns, dated the Closing Date, and in form and substance reasonably
satisfactory to Agent and its counsel.
(E) Insurance. Agent shall have received certificates of insurance
demonstrating insurance coverage in respect of the Mortgaged Property of types,
in amounts, with insurers and otherwise in compliance with the terms, provisions
and conditions set forth in this Agreement. Such certificates shall indicate
that Agent is a named additional insured and shall contain a loss payee
endorsement in favor of Agent with respect to the property policies required to
be maintained under this Agreement.
(F) Title Insurance Policy. Agent shall have received an unconditional
commitment (in form and substance reasonably satisfactory to Agent) to issue the
Title Insurance Policy covering the Mortgaged Property with an amount of
insurance reasonably acceptable to Agent.
(G) Lien Search Reports. Agent shall have received satisfactory
reports of UCC (collectively, the "UCC Searches"), tax lien, judgment and
litigation searches and title updates conducted by search firms and/or title
companies acceptable to Agent with respect to the Collateral, Borrower and
Guarantor, such searches to be conducted in each of the locations set forth on
Exhibit I attached hereto and such other locations as Agent shall reasonably
require.
(H) Consents, Licenses, Approvals, etc. Agent shall have received
copies of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by Borrower and Collateral Agent,
and the validity and enforceability, of the Loan Documents, and such consents,
licenses and approvals shall be in full force
Page 44
46
and effect.
(I) Additional Real Estate Matters. Agent shall have received such
other real estate related certificates and documentation relating to the
Mortgaged Property as may have been reasonably requested by Agent. Such
documentation shall include the following as requested by Agent and to the
extent reasonably available:
(i) certificates of occupancy issued by the appropriate Governmental
Authority of the jurisdiction in which the Mortgaged Property is located
reflecting, and consistent with, the use of the Mortgaged Property as of
the Closing Date;
(ii) letters from the appropriate local Governmental Authority of the
jurisdiction in which the Mortgaged Property is located, certifying that
the Mortgaged Property is in compliance with all applicable zoning laws,
rules and regulations, or a zoning endorsement to the applicable Title
Insurance Policy with respect to the Mortgaged Property or an opinion of
zoning counsel to such effect;
(iii) copies of the Ground Lease; and
(iv) graphics (including interior and exterior photographs, rental
brochures and a competitive properties map) as required by Agent.
(J) Closing Statement. The Agent shall have received a detailed
closing statement from Borrower in a form reasonably acceptable to the Agent,
which includes a complete description of Borrower's sources and uses of funds on
the Closing Date.
(K) Ground Lease Extension; Ground Lease Estoppel Certificates; Tenant
Estoppel Certificates. The Agent shall have received evidence satisfactory to it
that the term of the Ground Lease has been extended to a date not earlier than
thirty-five (35) years after the Closing Date. The Agent shall have received an
estoppel certificate from the lessors under the Ground Lease, in form and
substance acceptable to Agent. The Agent shall have received tenant estoppel
certificates in form and substance reasonably acceptable to the Agent from the
following significant tenants: Qwest, Teletech, Lockheed ▇▇▇▇▇▇ and ITT
Education Systems.
(L) Interest Rate Protection. The Borrower shall have entered into an
interest rate protection agreement acceptable to the Agent for the entire term
of the Loan which provides for a strike rate of 7.0% and delivered to the Agent
the fully executed Collateral Assignment of Hedge with respect to such agreement
pledging to the Agent on behalf of the Lenders the benefits of such agreement.
Section 3.2 Execution and Delivery of Agreement. The execution and
delivery by Borrower of this Agreement shall constitute a representation and
warranty by Borrower to Agent that all of the conditions required to be
satisfied under Section 3.1 have been satisfied or waived in accordance with
Section 8.4.
Section 3.3 Acceptance of Borrowings. The acceptance by Borrower of
the proceeds of an Advance shall constitute a representation and warranty by
Borrower to Agent that all of the conditions to be satisfied under Section 3.1
in connection with the making of the Loan have been satisfied or waived in
accordance with Section 8.4.
Section 3.4 Form of Loan Documents and Related Matters. All of the
Loan Documents to which Borrower is a party, whether or not referred to in this
Article III, unless otherwise specified, shall be delivered to
Page 45
47
Agent, and shall be satisfactory in form and substance to Agent in its sole
discretion (unless the form thereof is prescribed herein).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties as to Borrower. Borrower
represents and warrants that, as of the Closing Date:
(A) Organization. Borrower (i) is a duly organized and validly
existing limited liability company in good standing under the laws of the State
of Delaware, (ii) has the requisite power and authority to own its properties
(including, without limitation, the Mortgaged Property) and to carry on its
business as now being conducted and is qualified to do business in the
jurisdiction in which the Mortgaged Property is located, and (iii) has the
requisite power to execute and deliver, and perform its obligations under, this
Agreement, the Note and all of the other Loan Documents to which it is a party.
(B) Authorization; No Conflict; Consents and Approvals. The execution
and delivery by Borrower of this Agreement, the Note and each of the other Loan
Documents, Borrower's performance of its obligations hereunder and thereunder
and the creation of the security interests and liens provided for in this
Agreement and the other Loan Documents to which it is a party (i) have been duly
authorized by all requisite action on the part of Borrower, (ii) will not
violate any provision of any Legal Requirements, any order of any court or other
Governmental Authority, the Organizational Agreement or any indenture or
material agreement or other instrument to which Borrower is a party or by which
Borrower is bound, and (iii) will not be in conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a default under, or
result in the creation or imposition of any Lien of any nature whatsoever upon
the Mortgaged Property pursuant to, any such indenture or agreement or material
instrument. Other than those obtained or filed on or prior to the Closing Date,
Borrower is not required to obtain any consent, approval or authorization from,
or to file declaration or statement with, any Governmental Authority or other
agency in connection with or as a condition to the execution, delivery or
performance of this Agreement, the Note or the other Loan Documents executed and
delivered by Borrower.
(C) Enforceability. This Agreement, the Note and each other Loan
Document executed by Borrower in connection with the Loan (including, without
limitation, any Collateral Security Instrument), is the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, subject to bankruptcy, insolvency, and other limitations on creditors'
rights generally and to equitable principles. This Agreement, the Note and such
other Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower (including the defense of usury), and
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(D) Litigation. There are no actions, suits or proceedings at law or
in equity by or before any Governmental Authority or other agency now pending
and served or, to the best knowledge of Borrower, threatened against Borrower or
any Collateral, which actions, suits or proceedings, if determined against
Borrower or such Collateral, are reasonably likely to result in a Material
Adverse Effect.
(E) Agreements. To the best knowledge of the Borrower, Borrower is not
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which it is a party or by which Borrower or any Collateral is bound which is
reasonably likely to have a Material Adverse Effect.
Page 46
48
Borrower is not a party to any agreement or instrument or subject to any
restriction which is reasonably likely to have a Material Adverse Effect.
(F) No Bankruptcy Filing. Borrower is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of its assets or property. To
the best knowledge of Borrower, no Person is contemplating the filing of any
such petition against it.
(G) Solvency. Giving effect to the transactions contemplated hereby,
the fair saleable value of Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed Borrower's total liabilities
(including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities). The fair saleable value of Borrower's assets is and
will, immediately following the making of the Loan, be greater than Borrower's
probable liabilities (including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured). Borrower's assets do
not and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debts and liabilities (including, without limitation, contingent
liabilities and other commitments) beyond its ability to pay such debts as they
mature (taking into account the timing and amounts to be payable on or in
respect of obligations of Borrower).
(H) Other Debt. Except for the debt permitted under Section 6.1(C),
Borrower has not borrowed or received other debt financing whether unsecured or
secured by the Mortgaged Property or any part thereof.
(I) Full and Accurate Disclosure. No statement of fact made by or on
behalf of Borrower in this Agreement or in any of the other Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading. To
the best knowledge of Borrower, there is no fact which has not been disclosed to
Agent which is likely to result in a Material Adverse Effect.
(J) Financial Information. All financial data concerning Borrower and
the Mortgaged Property that has been delivered by or on behalf of Borrower to
Agent is true, complete and correct in all material respects and has been
prepared in accordance with GAAP. Since the delivery of such data, except as
otherwise disclosed in writing to Agent, there has been no change in the
financial position of Borrower or the Mortgaged Property, or in the results of
operations of Borrower, which change results or is reasonably likely to result
in a Material Adverse Effect. Borrower has not incurred any obligation or
liability, contingent or otherwise, not reflected in such financial data which
is likely to have a Material Adverse Effect upon its business operations or the
Mortgaged Property.
(K) Investment Company Act; Public Utility Holding Company Act.
Borrower is not (i) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, (ii) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (iii) subject to any other federal or state law or regulation
which purports to restrict or regulate its ability to borrow money in accordance
with this Agreement.
(L) Compliance. Borrower is in compliance with all applicable Legal
Requirements, except for noncompliance which is not reasonably likely to have a
Material Adverse Effect. Borrower is not in default or violation
Page 47
49
of any order, writ, injunction, decree or demand of any Governmental Authority
except for defaults or violations which are not reasonably likely to have a
Material Adverse Effect.
(M) Use of Proceeds; Margin Regulations. Borrower will use the
proceeds of the Loan for the purposes described in Section 2.2. No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors, or
for any purposes prohibited by Legal Requirements.
(N) Single-Purpose Entity.
(ii) Borrower at all times since its formation has been a duly formed
and existing Delaware limited liability company and a Single-Purpose
Entity.
(iii) Borrower at all times since its formation has complied with the
provisions of its Organizational Agreement since such agreement was
executed and delivered and the laws of the State of Delaware relating to
limited liability companies.
(iv) All customary formalities regarding the limited liability company
existence of Borrower have been observed at all times since the
Organizational Agreement was executed and delivered.
(v) Borrower has at all times since it began maintaining such items
accurately maintained its financial statements, accounting records and
other limited liability company documents separate from those of its
members, Affiliates of its members and any other Person. Borrower has not
at any time since its formation commingled its assets with those of its
members, any Affiliates of its members, or any other Person. Borrower has
at all times since establishing its own bank accounts accurately maintained
its own bank accounts and separate books of account.
(vi) Borrower has at all times since receiving funds paid its own
liabilities from its own separate assets.
(vii) Borrower has at all times since its formation identified itself
in all dealings with the public, under Borrower's own name and as a
separate and distinct entity. Borrower has not at any time since its
formation identified itself as being a division or a part of any other
entity. Borrower has not at any time since its formation identified its
members or any Affiliates of its members as being a division or part of
Borrower.
(viii) Borrower is as of the date hereof adequately capitalized
in light of the nature of its business.
(ix) Borrower has not at any time since its formation assumed or
guaranteed the liabilities of its members (or any predecessor corporation,
partnership or limited liability company), any Affiliates of its members,
or any other Persons, except for liabilities relating to the Collateral and
except as permitted by or pursuant to this Agreement. Borrower has not at
any time since its formation acquired obligations or securities of its
members (or any predecessor corporation, partnership or limited liability
company), or any Affiliates of its members. Borrower has not at any time
since its formation pledged its assets for the benefit of any other entity
(other than the Agent) or made loans or advances to its members (or
Page 48
50
any predecessor corporation, partnership or limited liability company), or
any Affiliates of its members or any other Persons.
(x) Borrower has not at any time since its formation entered into and
was not a party to any transaction with its members (or any predecessor
corporation, partnership or limited liability company) or any Affiliates of
its members, except for in the ordinary course of business of Borrower on
terms which are no less favorable to Borrower than would be obtained in a
comparable arm's length transaction with an unrelated third party (other
than in connection with the execution by Borrower and Manager of the
Management Agreement).
(A) No Defaults. No Default or Event of Default exists under or with
respect to any Loan Document.
(B) Plans and Welfare Plans. The assets of Borrower are not treated as
"plan assets" under regulations currently promulgated under ERISA. Each Plan,
and, to the best knowledge of Borrower, each Multiemployer Plan, is in
compliance in all material respects with, and has been administered in all
material respects in compliance with, its terms and the applicable provisions of
ERISA, the Code and any other federal or state law, and no event or condition
has occurred and is continuing as to which Borrower would be under an obligation
to furnish a report to Lender under Section 5.1(U)(i). Other than an application
for a favorable determination letter with respect to a Plan, there are no
pending issues or claims before the Internal Revenue Service, the United States
Department of Labor or any court of competent jurisdiction related to any Plan
or Welfare Plan. No event has occurred, and there exists no condition or set of
circumstances, in connection with any Plan or Welfare Plan under which Borrower
or, to the best knowledge of Borrower, any ERISA Affiliate, directly or
indirectly (through an indemnification agreement or otherwise), is reasonably
likely to be subject to any material risk of liability under Section 409 or
502(i) of ERISA or Section 4975 of the Code. No Welfare Plan provides or will
provide benefits, including, without limitation, death or medical benefits
(whether or not insured) with respect to any current or former employee of
Borrower, or, to the best knowledge of Borrower, any ERISA Affiliate beyond his
or her retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death or disability benefits that have been
fully provided for by fully paid up insurance or (iii) severance benefits.
(C) Location of Chief Executive Offices. The location of Borrower's
principal place of business and chief executive office is c/o First Union Real
Estate Investments, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
(D) Not Foreign Person. Borrower is not a "foreign person" within
the meaning ofss.1445(f)(3) of the Code.
(E) Labor Matters. Borrower is not a party to any collective
bargaining agreements.
(F) Pre-Closing Date Activities. Borrower has not conducted any
business or other activity on or prior to the Closing Date, other than in
connection with the acquisition, management and ownership of the Mortgaged
Property.
Section 4.2 Representations and Warranties as to the Mortgaged
Property. Borrower hereby represents and warrants to the Agent that, as to the
Mortgaged Property and the Mortgage, as of the Closing Date:
(A) Title to the Mortgaged Property. Borrower owns good, marketable
and insurable leasehold title to the applicable Mortgaged
Page 49
51
Property, free and clear of all Liens, other than the Permitted Encumbrances
applicable to the Mortgaged Property. There are no outstanding options to
purchase or rights of first refusal or restrictions on transferability affecting
such Mortgaged Property.
(B) No Defaults. No Default or Event of Default exists under or with
respect to any Loan Document.
(C) Condemnation. No Taking has been commenced or, to the best of
Borrower's knowledge, is contemplated with respect to all or any portion of the
Mortgaged Property or for the relocation of roadways providing access to the
Mortgaged Property.
(D) Compliance. The Mortgaged Property is in compliance with all
applicable Legal Requirements (including, without limitation, building and
zoning ordinances and codes) and all applicable Insurance Requirements, except
for noncompliance which is not reasonably likely to have a Material Adverse
Effect.
(E) Environmental Compliance. Except for matters set forth in the
Environmental Reports delivered to Agent in connection with the Loan (true,
correct and complete copies of which have been provided to Agent by Borrower):
(ii) Borrower is in full compliance with all applicable Environmental
Laws (which compliance includes, but is not limited to, the possession by
Borrower or the Manager of all environmental, health and safety permits,
licenses and other governmental authorizations required in connection with
the ownership and operation of the Mortgaged Property under all
Environmental Laws), except for noncompliance which is not reasonably
likely to have a Material Adverse Effect.
(iii) There is no Environmental Claim pending or, to the actual
knowledge of Borrower, threatened, and no penalties arising under
Environmental Laws have been assessed, against Borrower or the Manager or,
to the actual knowledge of the Borrower, against any Person whose liability
for any Environmental Claim Borrower or the Manager has or may have
retained or assumed either contractually or by operation of law, and no
investigation or review is pending or, to the actual knowledge of the
Borrower, threatened by any Governmental Authority, citizens group,
employee or other Person with respect to any alleged failure by Borrower or
the Manager or the Mortgaged Property to have any environmental, health or
safety permit, license or other authorization required under, or to
otherwise comply with, any Environmental Law or with respect to any alleged
liability of Borrower or the Manager for any Use or Release of any
Hazardous Substances.
(iv) There are no present and, to the actual knowledge of the
Borrower, there have been no past Releases of any Hazardous Substance that
are reasonably likely to form the basis of any Environmental Claim against
Borrower, the Manager or, to the actual knowledge of the Borrower, against
any Person whose liability for any Environmental Claim Borrower or the
Manager has or may have retained or assumed either contractually or by
operation of law.
(v) Without limiting the generality of the foregoing, there is not
present at, on, in or under the Mortgaged Property, PCB-containing
equipment, asbestos or asbestos containing materials, underground storage
tanks or surface impoundments for Hazardous Substances, lead in drinking
water (except in concentrations that comply with all Environmental Laws),
or lead based paint, the presence of which is reasonably likely to result
in a Material Adverse Effect.
Page 50
52
(vi) No liens are presently recorded with the appropriate land records
under or pursuant to any Environmental Law with respect to the Mortgaged
Property and no Governmental Authority has been taking or, to the actual
knowledge of Borrower, is in the process of taking any action that could
subject the Mortgaged Property to Liens under any Environmental Law.
(vii) There have been no environmental investigations, studies,
audits, reviews or other analyses conducted by or that are in the
possession of Borrower in relation to the Mortgaged Property which have not
been made available to the Agent.
(A) Mortgage and Other Liens. The Mortgage creates a valid and
enforceable first priority Lien on the Mortgaged Property described therein, as
security for the repayment of the Indebtedness, subject only to the Permitted
Encumbrances applicable to the Mortgaged Property. Each Collateral Security
Instrument establishes and creates a valid, subsisting and enforceable Lien on
and a security interest in, or claim to, the rights and property described
therein. All property covered by any Collateral Security Instrument in which a
security interest can be perfected by the filing of a financing statement is
subject to a UCC financing statement filed and/or recorded, as appropriate (or
irrevocably delivered to an agent for such recordation or filing) in all places
necessary to perfect a valid first priority Lien with respect to the rights and
property that are the subject of such Collateral Security Instrument to the
extent governed by the UCC.
(B) Assessments. There are no pending or, to the best knowledge of the
Borrower, proposed special or other assessments for public improvements or
otherwise affecting the Mortgaged Property, nor, to the best knowledge of the
Borrower, are there any contemplated improvements to the Mortgaged Property that
may result in such special or other assessments.
(C) No Joint Assessment; Separate Lots. Borrower has not suffered,
permitted or initiated the joint assessment of the Mortgaged Property (i) with
any other real property constituting a separate tax lot, and (ii) with any
portion of the Mortgaged Property which may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
the Mortgaged Property as a single lien. The Mortgaged Property is comprised of
one or more parcels, each of which constitutes a separate tax lot and none of
which constitutes a portion of any other tax lot.
(D) No Prior Assignment. The Agent is the assignee of Borrower's
interest under the Leases. There are no prior assignments of the Leases or any
portion of the Rent due and payable or to become due and payable which are
presently outstanding.
(E) Permits; Certificate of Occupancy. Borrower has obtained all
Permits necessary to the use and operation of the Mortgaged Property except
where the failure to obtain such Permits is not reasonably likely to have a
Material Adverse Effect. The use being made of the Mortgaged Property is in
conformity with the certificate of occupancy and/or such Permits for the
Mortgaged Property and any other restrictions, covenants or conditions affecting
the Mortgaged Property, except for such non-conformity as is not reasonably
likely to result in a Material Adverse Effect.
(F) Flood Zone. Except as shown on the Survey, the Mortgaged Property
described therein is not located in a flood hazard area as defined by the
Federal Insurance Administration.
Page 51
53
(G) Physical Condition. Except as set forth in the Engineering Report,
to the best knowledge of the Borrower, the Mortgaged Property is free of
structural defects and all building systems contained therein are in good
working order subject to ordinary wear and tear.
(H) Security Deposits. Borrower and the Manager are in compliance with
all Legal Requirements relating to all security deposits with respect to the
Mortgaged Property, except where the failure to comply is not reasonably likely
to result in a Material Adverse Effect.
(I) Intellectual Property. All material Trademarks that Borrower owns
or has pending, or under which it is licensed, are in good standing and
uncontested. There is no right under any Trademark necessary to the business of
Borrower as presently conducted or as Borrower contemplates conducting its
business. Borrower has not infringed, is not infringing, and has not received
notice of infringement with respect to asserted Trademarks of others. There is
no infringement by others of material Trademarks of Borrower.
(J) No Encroachments. Except as shown on the Survey, to the best
knowledge of the Borrower, (i) all of the Improvements which were included in
determining the appraised value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of the Mortgaged Property, (ii) no
improvements on adjoining properties encroach upon the Mortgaged Property, (iii)
no easements or other encumbrances upon the Mortgaged Property encroach upon any
of the Improvements, so as to affect the value or marketability of the Mortgaged
Property and (iv) all of the Improvements comply with all material requirements
of any applicable zoning and subdivision laws and ordinances.
(K) Management Agreement. The Management Agreement is in full force
and effect. There is no default, breach or violation existing thereunder by the
Borrower or, to the best knowledge of the Borrower, any other party thereto and
no event (other than payments due but not yet delinquent) which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach or violation by the Borrower or, to the best
knowledge of the Borrower, any other party thereunder or entitle the Borrower
or, to the best knowledge of the Borrower, any other party thereto to terminate
any such agreement.
(L) Leases. The Mortgaged Property is not subject to any Leases other
than the Leases described in the rent roll or the Engineering Report delivered
to Agent in connection with the making of the Loan. No person has any possessory
interest in the Mortgaged Property or right to occupy the same except under and
pursuant to the provisions of the Leases. The current Leases are in full force
and effect and there are no defaults thereunder by either party and no
conditions which with the passage of time and/or notice would constitute
defaults thereunder, except for such defaults as are not reasonably likely to
result in a Material Adverse Effect.
(M) Utilities and Public Access. The Mortgaged Property has adequate
rights of access to public ways and is served by water, electric, sewer,
sanitary sewer and storm drain facilities. All public utilities necessary to the
continued use and enjoyment of the Mortgaged Property as presently used and
enjoyed are located in the public right-of-way abutting the premises, and all
such utilities are connected so as to serve the Mortgaged Property without
passing over other property except for land of the utility company providing
such utility service. All roads necessary for the full utilization of the
Mortgaged Property for its current purpose have been completed and dedicated to
public use and accepted by all Governmental Authorities or are the subject of
access easements for the benefit of the Mortgaged Property.
Page 52
54
(N) Ground Leases. Other than the Ground Lease, the Mortgaged Property
does not consist of a leasehold estate in whole or in part. With respect to the
Ground Lease:
a. (i) The Ground Lease or memorandum thereof, including all amendments and
modifications thereto, or a separate agreement signed by the applicable lessor
has been duly recorded; the Ground Lease by its terms permits the interest of
the Leasehold Borrower thereunder to be encumbered by the Mortgage; and there
has been no change in the terms of such Ground Lease since its recordation.
b. (ii) The Ground Lease is not subject to any Liens or encumbrances other than
the Mortgage and the Permitted Encumbrances, and the Ground Lease is prior to
all other Liens, charges and encumbrances on the fee interest of the lessor
thereunder.
(iii) The Ground Lease is valid and subsisting and is in full force
and effect in accordance with its terms and no uncured default has occurred
and is continuing under the Ground Lease.
c. (iv) The Mortgage encumbering the Ground Lease conforms and complies with the
Ground Lease, does not constitute a violation or default under the Ground Lease,
and constitutes a valid Lien (subject only to Permitted Encumbrances) on the
Borrower's entire estate under such Ground Lease.
d. (v) All Ground Rent due and payable through and including the Closing Date
has been paid; and
e. (vi) All terms, conditions, and agreements contained in the Ground Lease have
been performed to the extent they apply to periods through and including the
Closing Date.
f. (vii) The Ground Lease grants any leasehold mortgagee protections necessary
to protect the security of a leasehold mortgagee (including the right of the
leasehold mortgagee to receive notice of lessee's default under the Ground
Lease, the right of the leasehold mortgagee to cure such default and, in the
case of incurable defaults of lessee, the right of the leasehold mortgagee to
enter into a New Ground Lease with lessor on the same terms as the existing
Ground Lease);
g. (viii) The Ground Lease has an original term and renewal options which
extends not less than ten (10) years beyond the term of the Mortgage; and
h. (ix) The Ground Lease requires the lessor to enter into a New Ground Lease
upon the termination of the Ground Lease for any reason, including the rejection
of a Ground Lease in bankruptcy.
Section 4.3 Survival of Representations. Borrower agrees that (i) all
of the representations and warranties of Borrower set forth in Section 4.1 and
4.2 and in the other Loan Documents delivered on the Closing Date are made as of
the Closing Date, and (ii) all of the representations and warranties of Borrower
set forth in Section 4.1 and 4.2 and elsewhere in this Agreement and in the
other Loan Documents are made, or reaffirmed, as of the funding date of the
Additional Advance, and (iii) all representations and warranties made by
Borrower shall survive the delivery of the Note and making of the Loan and
continue for so long as any amount remains owing to the Lenders under this
Agreement, the Note or any of the other Loan Documents; provided, however, that
the representations set forth in Section 4.2(E) shall survive in perpetuity. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents shall be deemed to have been relied upon by the
Lenders and Collateral Agent notwithstanding any investigation heretofore or
hereafter
Page 53
55
made by the Lenders and Collateral Agent or on their behalf.
ARTICLE V.
AFFIRMATIVE COVENANTS
Section 5.1 Affirmative Covenants. Borrower covenants and agrees that,
from the date hereof and until payment in full of the Indebtedness:
(A) Existence; Compliance with Legal Requirements: Insurance. Borrower
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence as a limited liability company, rights,
licenses, Permits and franchises necessary for the conduct of its business and
comply with all Legal Requirements and Insurance Requirements applicable to it
and the Mortgaged Property, except for such non-compliance which is not
reasonably likely to result in a Material Adverse Effect. Borrower shall at all
times maintain, preserve and protect all franchises and trade names and preserve
all the remainder of its property necessary for the continued conduct of its
business and keep the Mortgaged Property in good repair, working order and
condition, except for reasonable wear and use (and except for casualty losses as
to which other provisions hereof shall govern), and from time to time make, or
cause to be made, all reasonably necessary repairs, renewals, replacements,
betterments and improvements thereto. Borrower shall keep the Mortgaged Property
insured at all times, by financially sound and reputable insurers, to such
extent and against such risks, and maintain liability and such other insurance,
as more fully provided in this Agreement, and otherwise perform and comply with
all obligations of Borrower under the Mortgage.
(B) Basic Carrying Cost and Other Claims. Borrower shall pay and
discharge all Impositions, as well as all lawful claims for labor, materials and
supplies or otherwise when due and payable all as more fully provided in, and
subject to any rights to contest contained in, the Mortgage. Borrower shall pay
all Basic Carrying Costs with respect to Borrower and the Mortgaged Property in
accordance with the provisions of the Mortgage, subject, however, to Borrower's
rights to contest payment of Impositions in accordance with the Mortgage.
Borrower's obligation to pay Basic Carrying Costs pursuant to this Agreement
shall include, to the extent permitted by applicable law, Impositions resulting
from future changes in law which impose upon a Lender an obligation to pay any
property taxes on the Mortgaged Property or other Impositions.
(C) Litigation. Borrower shall give prompt written notice to Agent of
any litigation or governmental proceedings pending or threatened (in writing)
against Borrower, or the Mortgaged Property which is reasonably likely to have a
Material Adverse Effect.
(D) Environmental Remediation.
(ii) If any investigation, site monitoring, cleanup, removal,
restoration or other remedial work of any kind or nature is required
pursuant to an order or directive of any Governmental Authority or under
any applicable Environmental Law, because of or in connection with the
current or future presence, suspected presence, Release or suspected
Release of a Hazardous Substance on, under or from the Mortgaged Property
or any portion thereof (collectively, the "Remedial Work"), Borrower shall
promptly commence and diligently prosecute to completion all such Remedial
Work, and shall conduct such Remedial Work in accordance with the National
Contingency Plan promulgated under the Comprehensive Environmental
Response, Compensation and Liability Act, if applicable, and in accordance
with other applicable Environmental Laws. In all events, such Remedial Work
shall be commenced within such period of time as required under any
applicable Environmental Law; provided, however, that Borrower shall not be
Page 54
56
required to commence such Remedial Work within the above specified time
periods: (x) if prevented from doing so by any Governmental Authority, (y)
if commencing such Remedial Work within such time periods would result in
Borrower or such Remedial Work violating any Environmental Law or (z) if
Borrower, at its expense and after prior notice to Agent, is contesting by
appropriate legal, administrative or other proceedings conducted in good
faith and with due diligence the need to perform Remedial Work, as long as
(1) Borrower is permitted by the applicable Environmental Laws to delay
performance of the Remedial Work pending such proceedings, (2) neither the
Mortgaged Property nor any part thereof or interest therein shall be sold,
forfeited or lost if Borrower does not perform the Remedial Work being
contested, and Borrower would have the opportunity to do so, in the event
of Borrower's failure to prevail in the contest, (3) the Lenders would not,
by virtue of such permitted contest, be exposed to any risk of any civil
liability for which Borrower has not furnished additional security as
provided in clause (4) below, or to any risk of criminal liability, and
neither the Mortgaged Property nor any interest therein would be subject to
the imposition of any lien for which Borrower has not furnished additional
security as provided in clause (4) below, as a result of the failure to
perform such Remedial Work and (4) Borrower shall have furnished to the
Agent additional security in respect of the Remedial Work being contested
and the loss or damage that may result from Borrower's failure to prevail
in such contest in such amount as may be reasonably requested by the Agent.
(iii) If requested by the Agent, all Remedial Work under clause (i)
above shall be performed by contractors, and under the supervision of a
consulting Engineer, each approved in advance by the Agent which approval
shall not be unreasonably withheld or delayed. All costs and expenses
reasonably incurred in connection with such Remedial Work shall be paid by
the Borrower. If Borrower does not timely commence and diligently prosecute
to completion the Remedial Work, the Agent may (but shall not be obligated
to), upon 30 days prior written notice to Borrower of its intention to do
so, cause such Remedial Work to be performed. Borrower shall pay or
reimburse the Agent on demand for all expenses (including reasonable
attorneys' fees and disbursements, but excluding internal overhead,
administrative and similar costs of the Lenders) reasonably relating to or
incurred by the Agent in connection with monitoring, reviewing or
performing any Remedial Work in accordance herewith.
(iv) Borrower shall not commence any Remedial Work under clause (i)
above, nor enter into any settlement agreement, consent decree or other
compromise relating to any Hazardous Substances or Environmental Laws
without providing notice to the Agent as provided in Section 5.1(F).
Notwithstanding the foregoing, if the presence or threatened presence of
Hazardous Substances on, under or about the Mortgaged Property poses an
immediate threat to the health, safety or welfare of any Person or the
environment, or is of such a nature that an immediate response is necessary
or required under applicable Environmental Law, Borrower may complete all
necessary Remedial Work. In such events, Borrower shall notify Agent as
soon as practicable and, in any event, within three Business Days, of any
action taken.
(A) Environmental Matters: Inspection.
(i) Borrower shall not permit a Hazardous Substance to be present on,
under or to emanate from the Mortgaged Property, or migrate from adjoining
property controlled by Borrower onto or into the Mortgaged Property, except
under conditions permitted by applicable Environmental Laws and, in the
event that such Hazardous Substances are present on, under or emanate from
the Mortgaged Property, or
Page 55
57
migrate onto or into the Mortgaged Property, Borrower shall cause the
removal or remediation of such Hazardous Substances, in accordance with
this Agreement and Environmental Laws (including, where applicable, the
National Contingency Plan promulgated pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act), either on its own
behalf or by causing a tenant to perform such removal and remediation.
Borrower shall use commercially reasonable efforts to prevent, and to seek
the remediation of, any migration of Hazardous Substances onto or into the
Mortgaged Property from any adjoining property.
(ii) Upon reasonable prior written notice, the Agent shall have the
right, except as otherwise provided under Leases, at all reasonable times
during normal business hours to enter upon and inspect all or any portion
of the Mortgaged Property, provided that such inspections shall not
unreasonably interfere with the operation or the tenants, residents or
occupants of the Mortgaged Property. If the Agent has reasonable grounds to
suspect that Remedial Work may be required, the Agent shall notify Borrower
and, thereafter, may select a consulting Engineer to conduct and prepare
reports of such inspections (with notice to Borrower prior to the
commencement of such inspection). Borrower shall be given a reasonable
opportunity to review any reports, data and other documents or materials
reviewed or prepared by the Engineer, and to submit comments and suggested
revisions or rebuttals to same. The inspection rights granted to the Agent
in this Section 5.1(E) shall be in addition to, and not in limitation of,
any other inspection rights granted to the Agent in this Agreement, and
shall expressly include the right (if the Agent reasonably suspects that
Remedial Work may be required) to conduct soil borings, establish ground
water monitoring ▇▇▇▇▇ and conduct other customary environmental tests,
assessments and audits.
(iii) Borrower agrees to bear and shall pay or reimburse the Lenders
on demand for all sums advanced and reasonable expenses incurred (including
reasonable attorneys' fees and disbursements, but excluding internal
overhead, administrative and similar costs of the Lenders) reasonably
relating to, or incurred by Lenders in connection with, the inspections and
reports described in this Section 5.1(E) (to the extent such inspections
and reports relate to the Mortgaged Property) in the following situations:
a. (x) If the Agent has reasonable grounds to believe, at the time any
such inspection is ordered, that there exists an occurrence or
condition that could lead to an Environmental Claim;
b. (y) If any such inspection reveals an occurrence or condition that
is reasonably likely to lead to an Environmental Claim; or
c. (z) If an Event of Default with respect to the Mortgaged Property
exists at the time any such inspection is ordered, and such Event of
Default relates to any representation, covenant or other obligation
pertaining to Hazardous Substances, Environmental Laws or any other
environmental matter.
(B) Environmental Notices. Borrower shall promptly provide notice
to Agent of:
(i) any Environmental Claim asserted by any Governmental Authority
with respect to any Hazardous Substance on, in, under or emanating
from the Mortgaged Property, which might involve remediation cost or
liability greater than $50,000;
Page 56
58
(ii) any proceeding, investigation or inquiry commenced or threatened
in writing by any Governmental Authority, against Borrower, with respect to
the presence, suspected presence, Release or threatened Release of
Hazardous Substances from or onto, in or under any property not owned by
Borrower (including, without limitation, proceedings under the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, 42 U.S.C. ss.9601, et seq.), which might involve remediation cost
or liability greater than $50,000;
(iii) all Environmental Claims asserted or threatened against
Borrower, against any other party occupying the Mortgaged Property or any
portion thereof which become known to Borrower or against the Mortgaged
Property, which might involve remediation cost or liability greater than
$50,000;
(iv) the discovery by Borrower of any occurrence or condition on the
Mortgaged Property or on any real property adjoining or in the vicinity of
the Mortgaged Property which could involve remediation cost or liability
greater than $50,000;
(v) the commencement or completion of any Remedial Work; and
(vi) any of the foregoing clauses (i) - (v) which a tenant notifies to
the Borrower under a Lease with respect to such tenant.
(C) Copies of Notices. Borrower shall transmit to the Agent copies of
any citations, orders, notices or other written communications received
from any Person and any notices, reports or other written communications
submitted to any Governmental Authority with respect to the matters
described in Section 5.1(F).
(D) Environmental Claims. The Agent may join and participate in, as a
party if the Agent so determines, any legal or administrative proceeding or
action concerning the Mortgaged Property or any portion thereof under any
Environmental Law, if, in the Agent's reasonable judgment, the interests of the
Lenders shall not be adequately protected by Borrower; provided, however, that
the Lenders shall not participate in day-to-day decision making with respect to
environmental compliance. Borrower shall pay or reimburse the Lenders on demand
for all reasonable sums advanced and reasonable expenses incurred (including
reasonable attorneys' fees and disbursements, but excluding internal overhead,
administrative and similar costs of the Lenders) by the Lenders in connection
with any such action or proceeding.
(E) Environmental Indemnification. The Borrower shall indemnify,
reimburse, defend, and hold harmless the Agent, each Lender, the Collateral
Agent and each of its respective parents, subsidiaries, Affiliates,
shareholders, directors, officers, employees, representatives, agents,
successors, assigns and attorneys (collectively, the "Indemnified Parties") for,
from, and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses (including, without limitation,
interest, penalties, reasonable attorneys' fees, disbursements and expenses, and
reasonable consultants' fees, disbursements and expenses (but excluding internal
overhead, administrative and similar costs of the Lenders and the Collateral
Agent)), asserted against, resulting to, imposed on, or incurred by any
Indemnified Party, directly or indirectly, in connection with any of the
following (except to the extent same are directly and solely caused by the
fraud, bad faith, gross negligence or willful misconduct of any Indemnified
Party and except that any Indemnified Party shall not be indemnified against
claims resulting from actions taken or events occurring with respect to the
Mortgaged Property after the Agent forecloses its Lien or security interest upon
the
Page 57
59
Mortgaged Property or accepts a deed in lieu of foreclosure or is a so-called
"mortgagee-in-possession" unless and to the extent such indemnification relates
to any of the following which occurred while the Borrower owned the Mortgaged
Property):
(i) events, circumstances, or conditions which form the basis for an
Environmental Claim;
(ii) any pollution or threat to human health or the environment that
is related in any way to Borrower's or any previous owner's or operator's
management, use, control, ownership or operation of the Mortgaged Property
(including, without limitation, all on-site and off-site activities
involving Hazardous Substances), and whether occurring, existing or arising
prior to or from and after the date hereof, and whether or not the
pollution or threat to human health or the environment is described in the
Environmental Reports;
(iii) any Environmental Claim against any Person whose liability for
such Environmental Claim the Borrower has or may have assumed or retained
either contractually or by operation of law; or
(iv) the breach of any representation, warranty or covenant set forth
in Section 4.2(E) and Sections 5.1(D) through 5.1(I), inclusive.
The provisions of and undertakings and indemnification set forth in this Section
5.1(I) shall survive the satisfaction and payment of the Indebtedness and
termination of this Agreement.
(F) General Indemnity.
(i) The Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties for, from and
against any and all claims, suits, liabilities (including, without
limitation, strict liabilities), administrative and judicial actions and
proceedings, obligations, debts, damages, losses, costs, expenses,
diminutions in value, fines, penalties, charges, fees, expenses, judgments,
awards, amounts paid in settlement, and litigation costs, of whatever kind
or nature and whether or not incurred in connection with any judicial or
administrative proceedings (including, but not limited to, reasonable
attorneys' fees and other reasonable costs of defense) (the "Losses")
imposed upon or incurred by or asserted against any Indemnified Parties
(except to the extent same are caused by the fraud, bad faith, gross
negligence or willful misconduct of any Indemnified Party and except that
any Indemnified Party shall not be indemnified against claims resulting
from actions taken or events occurring with respect to the Mortgaged
Property after the Agent forecloses its Lien or security interest upon the
Mortgaged Property or accepts a deed in lieu of foreclosure or is a
so-called "mortgagee-in-possession" unless and to the extent such
indemnification relates to any of the following which occurred while
Borrower owned the Mortgaged Property), and directly or indirectly arising
out of or in any way relating to any one or more of the following: (a)
ownership of the Note, any of the other Loan Documents or the Mortgaged
Property or any interest therein or receipt of any Rents or Accounts; (b)
any amendment to, or restructuring of, the Indebtedness, and the Note, or
any of the other Loan Documents; (c) any and all lawful action that may be
taken by the Lender in connection with the enforcement of the provisions of
this Agreement, the Note or any of the other Loan Documents, whether or not
suit is filed in connection with same, or in connection with the Borrower
or any Affiliate of the Borrower becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding;
(d) any accident, injury to or death of persons or
Page 58
60
loss of or damage to property occurring in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (e) any use, nonuse or
condition in, on or about the Mortgaged Property or any part thereof or on
the adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (f) any failure on the part of the Borrower to
perform or be in compliance with any of the terms of this Agreement or any
of the other Loan Documents; (g) performance of any labor or services or
the furnishing of any materials or other property in respect of the
Mortgaged Property or any part thereof; (h) the failure of Borrower to file
timely with the Internal Revenue Service an accurate Form ▇▇▇▇-▇, ▇▇▇▇▇▇▇▇▇
for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Agreement; (i)
any failure of the Mortgaged Property to be in compliance with any Legal
Requirement; (j) the enforcement by any Indemnified Party of the provisions
of this Section 5.1(J); or (k) any and all claims and demands whatsoever
which may be asserted against the Lenders by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the
terms, covenants, or agreements contained in any Lease. Any amounts payable
to an Indemnified Party by reason of the application of this Section
5.1(J)(i) shall become due and payable ten (10) days after written demand
and shall bear interest at the Default Rate from the tenth (10th) day after
demand until paid.
(ii) The Borrower shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless the Indemnified Parties from
and against any and all Losses imposed upon or incurred by or asserted
against any of the Indemnified Parties and directly or indirectly arising
out of or in any way relating to any tax on the making and/or recording of
this Agreement, the Note or any of the other Loan Documents (other than
income taxes of the Lenders).
(iii) The Borrower shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless the Indemnified Parties from
and against any and all Losses (including, without limitation, reasonable
attorneys' fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or
in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, in the
Lender's reasonable discretion) that the Indemnified Parties may incur,
directly or indirectly, as a result of a default under the Borrower's
covenants with respect to ERISA and employee benefits plans contained
herein.
(iv) Promptly after receipt by an Indemnified Party under this Section
5.1(J) of notice of the making of any claim or the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is to
be made by such Indemnified Party against the Borrower under this Section
5.1(J), notify the Borrowers in writing, but the omission so to notify the
Borrower will not relieve the Borrower from any liability which it may have
to any Indemnified Party under this Section 5.1(J) or otherwise unless and
to the extent that the Borrower did not otherwise possess knowledge of such
claim or action and such failure resulted in the forfeiture by the Borrower
of substantial rights and defenses. In case any such claim is made or
action is brought against any Indemnified Party and such Indemnified Party
seeks or intends to seek indemnity from the Borrower, the Borrower will be
entitled to participate in, and, to the extent that it may wish, to assume
the defense thereof with counsel reasonably satisfactory to the Indemnified
Party; and, upon receipt of notice from the Borrower to such Indemnified
Party of its election so to assume the defense of such claim or action and
only upon approval by
Page 59
61
the Indemnified Party of such counsel (such approval not to be unreasonably
withheld or delayed), the Borrower will not be liable to such Indemnified
Party under this Section 5.1(J) for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof. Notwithstanding the preceding sentence, each Indemnified
Party will be entitled to employ counsel separate from such counsel for the
Borrower and from any other party in such action if such Indemnified Party
reasonably determines that a conflict of interest exists which makes
representation by counsel chosen by the Borrower not advisable. In such
event, the reasonable fees and disbursements of such separate counsel will
be paid by the Borrower. The Borrower shall not, without the prior written
consent of an Indemnified Party, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not such Indemnified Party is an actual or
potential party to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each Indemnified Party from
all liability arising out of such claim, action, suit or proceeding. Each
Indemnified Party shall not enter into a settlement of or consent to the
entry of any judgment with respect to any action, claim, suit or proceeding
as to which an Indemnified Party would be entitled to indemnification
hereunder without the prior written consent of the Borrower.
The provisions of and undertakings and indemnification set forth in this Section
5.1(J) shall survive the satisfaction and payment of the Indebtedness and
termination of this Agreement.
(G) Access to Mortgaged Property. Borrower shall permit agents,
representatives and employees of the Agent to inspect the Mortgaged Property or
any part thereof at such reasonable times as may be requested by Agent upon
reasonable advance written notice, subject, however, to the rights of Borrower
and of the tenants of the Mortgaged Property.
(H) Notice of Default. Borrower shall promptly advise Agent in writing
upon Borrower becoming aware of any change in Borrower's condition, financial or
otherwise, that is reasonably likely to have a Material Adverse Effect, or of
the occurrence of any Default or Event of Default.
(I) Cooperate in Legal Proceedings. Except with respect to any claim
by Borrower or Guarantor against the Agent or any Lender, Borrower shall
reasonably cooperate with Agent with respect to any proceedings before any
Governmental Authority that are reasonably likely to in any way materially
affect the rights of the Lenders hereunder or any rights obtained by the Lenders
under any of the Loan Documents and, in connection therewith, shall not prohibit
Agent, at its election, from participating in any such proceedings.
(J) Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions required to be
observed, performed or satisfied by it, and shall pay when due all costs, fees
and expenses required to be paid by it, under the Loan Documents.
(K) Insurance Benefits. Borrower shall reasonably cooperate with Agent
in obtaining for the Lenders the benefits of any Insurance Proceeds lawfully or
equitably payable to the Borrower or Lenders in connection with the Mortgaged
Property. Agent shall be reimbursed for any expenses reasonably incurred in
connection therewith (including reasonable attorneys' fees and disbursements and
the payment by Borrower of the expense of an Appraisal on behalf of Agent in
case of a fire or other casualty affecting the Mortgaged Property or any part
thereof, but excluding internal overhead, administrative and similar costs of
Agent) out
Page 60
62
of such Insurance Proceeds, all as more specifically provided in this Agreement.
(L) Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
(i) upon Agent's reasonable request therefor given from time to time
(but not more frequently than once during any six month period following
the Closing Date), pay for (a) reports of UCC, tax lien, judgment and
litigation searches with respect to Borrower, and (b) searches of title to
the Mortgaged Property, each such search to be conducted by search firms
designated by Agent in each of the locations designated by Agent;
(ii) furnish to Agent all instruments, documents, certificates, title
and other insurance reports and agreements, and each and every other
document, certificate, agreement and instrument required to be furnished
pursuant to the terms of the Loan Documents or reasonably necessary to
evidence, preserve and/or protect the Collateral at any time securing or
intended to secure the Note;
(iii) execute and deliver to Agent such documents, instruments,
certificates, assignments and other writings, and do such other acts
necessary, to evidence, preserve and/or protect the Collateral at any time
securing or intended to secure the Note, as Agent may reasonably require
(including, without limitation, an amended or replacement Mortgage, UCC
financing statements or Collateral Security Instruments); and
(iv) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Loan Documents,
as Agent shall reasonably require from time to time.
(M) Management of Mortgaged Property.
(i) The Mortgaged Property shall be managed at all times by the
Property Manager or another manager reasonably satisfactory to Agent,
pursuant to a Management Agreement. Any such manager may be an Affiliate of
Borrower, provided that: (a) the terms and conditions of such manager's
engagement are at arm's length, reasonable, competitive and customary in
the applicable marketplace; and (b) Agent has approved such manager and
such terms, which approval shall not be unreasonably withheld or delayed.
Borrower shall cause the manager of the Mortgaged Property to agree that
such manager's management agreement is subject and subordinate in all
respects to the Lien of the Mortgage. A Management Agreement may be
terminated (1) by Borrower at any time in accordance with the provisions of
such Management Agreement so long as a successor manager as specified below
shall have been appointed and such successor manager has (i) entered into a
Management Agreement, subject to any modifications approved by Agent, which
approval shall not be unreasonably withheld, conditioned or delayed, and
(ii) has executed and delivered the Management Subordination to Agent, and
(2) by Agent upon thirty (30) days' prior written notice to Borrower and
the Property Manager (a) upon the occurrence and continuation of an Event
of Default or (b) if the Property Manager commits any act which would
permit termination under the Management Agreement (subject to any
applicable notice, grace and cure periods provided in the Management
Agreement) or (c) if a change of majority control occurs with respect to
the Property Manager. Borrower may from time to time appoint a successor
manager to manage the Mortgaged Property with Agent's prior written
consent, such
Page 61
63
consent not to be unreasonably withheld or delayed. Notwithstanding the
foregoing, any successor manager selected hereunder by Agent or Borrower to
manage the Mortgaged Property shall be a reputable management company
having substantial experience in the management of real property of a
similar type, size and quality in the state in which the Mortgaged Property
is located. Borrower further covenants and agrees that any manager of
Mortgaged Property shall at all times while any Indebtedness is outstanding
maintain worker's compensation insurance as required by Governmental
Authorities.
(ii) The Borrower further covenants and agrees that the Mortgaged
Property shall be operated pursuant to the Management Agreement and that
the Borrower shall: (w) promptly perform and/or observe all of the material
covenants and agreements required to be performed and observed by it under
the Management Agreement and do all things reasonably necessary to preserve
and to keep unimpaired its material rights thereunder; (x) promptly notify
the Agent of any material default under the Management Agreement of which
it is aware; (y) promptly deliver to the Agent a copy of each financial
statement, business plan, capital expenditures plan, notice and report
received by it under the Management Agreement, including, but not limited
to, financial statements; and (z) promptly enforce the performance and
observance in all material respects of the covenants and agreements
required to be performed and/or observed by the Property Manager under the
Management Agreement.
(N) Financial Reporting.
(i) Borrower shall keep and maintain or shall cause to be kept and
maintained on a Fiscal Year basis in accordance with GAAP consistently
applied, books, records and accounts reflecting in reasonable detail all of
the financial affairs of Borrower and all items of income and expense in
connection with the operation of the Mortgaged Property and ownership of
the Mortgaged Property and in connection with any services, equipment or
furnishings provided in connection with the operation of the Mortgaged
Property, whether such income or expense may be realized by Borrower or by
any other Person whatsoever. Agent shall have the right from time to time
at all times during normal business hours upon reasonable prior written
notice to Borrower to examine such books, records and accounts at the
office of Borrower or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Agent shall desire.
During the continuation of an Event of Default, Borrower shall pay any
reasonable costs and expenses incurred by Agent to examine Borrower's
accounting records, as Agent shall reasonably determine to be necessary or
appropriate in the protection of the Lenders' interest.
(ii) Borrower shall furnish to Agent annually, within ninety (90) days
following the end of each Fiscal Year, a complete copy of Borrower's
financial statement audited by a "Big Five" accounting firm or such other
Independent certified public accountant acceptable to Agent in accordance
with GAAP consistently applied covering Borrower's financial position and
results of operations, for such Fiscal Year and containing a statement of
revenues and expenses, a statement of assets and liabilities and a
statement of Borrower's equity, all of which shall be in form and substance
reasonably acceptable to Agent. Agent shall have the right from time to
time to review the auditing procedures used in the preparation of such
annual financial statements and to request additional procedures. Together
with Borrower's annual financial statements, Borrower shall furnish to
Agent an Officer's Certificate certifying as of the date thereof (x) that
the annual financial statements present fairly in all material respects the
results of operations and financial condition of Borrower all in
Page 62
64
accordance with GAAP consistently applied, and (y) whether there exists an
Event of Default or Default, and if such Event of Default or Default
exists, the nature thereof, the period of time it has existed and the
action then being taken to remedy same.
(iii) Borrower shall furnish to Agent, within forty-five (45) days
following the end of each Fiscal Year quarter a true, complete and correct
quarterly financial statement with respect to the Borrower for the portion
of the Fiscal Year then ended.
(iv) Borrower shall furnish to Agent, within fifteen (15) Business
Days after request, such further information with respect to the operation
of the Mortgaged Property and the financial affairs of Borrower as may be
reasonably requested by Agent, including all business plans prepared for
Borrower.
(v) Borrower shall furnish to Agent, within fifteen (15) Business Days
after request, such further information regarding any Plan or Multiemployer
Plan and any reports or other information required to be filed under ERISA
as may be reasonably requested by Agent in writing.
(vi) At least thirty (30) days prior to the end of each of Borrower's
Fiscal Years, Borrower shall submit or cause to be submitted to Agent for
its approval, such approval not to be unreasonably withheld or delayed, an
Operating Budget for Property Expenses, Capital Improvement Costs, Leasing
Commissions, TI Costs and replacement reserve costs for the next Fiscal
Year for any Mortgaged Property. Until so approved by Agent for the
subsequent Fiscal Year, the Operating Budget approved by Agent for the
preceding Fiscal Year shall remain in effect for purposes of Section 2.12;
provided, that for so long as such prior Operating Budget remains in
effect, amounts set forth in the prior Operating Budget with respect to
Property Expenses, TI Costs and Leasing Commissions shall be deemed
increased on a percentage basis by an amount equal to the greater of (x)
actual increases then known to the Borrower and (y) the increase in the
Consumer Price Index (expressed as a percentage) as measured over the
calendar year that the prior Operating Budget was in effect.
(O) Operation of Mortgaged Property. Borrower shall cause the
operation of the Mortgaged Property to be conducted at all times in a manner
consistent with at least the level of operation of the Mortgaged Property as of
the Closing Date, including, without limitation, the following:
(i) to maintain or cause to be maintained the standard of the
Mortgaged Property at all times at a level not lower than that maintained
by prudent managers of similar facilities or land in the region where the
Mortgaged Property is located;
(ii) to operate or cause to be operated the Mortgaged Property in a
prudent manner in compliance in all material respects with applicable Legal
Requirements and Insurance Requirements relating thereto and maintain or
cause to be maintained all licenses, Permits and any other agreements
necessary for the continued use and operation of the Mortgaged Property;
and
(iii) to maintain or cause to be maintained sufficient Inventory and
Equipment of types and quantities at the Mortgaged Property to enable
Borrower to operate the Mortgaged Property and to comply in all material
respects with all Leases affecting the Mortgaged Property.
(P) Single-Purpose Entity.
Page 63
65
(i) Borrower at all times will continue to be a duly formed and
validly existing limited liability company under the laws of the State of
its formation and a Single-Purpose Entity.
(ii) Borrower shall at all times comply with the provisions of its
Organizational Agreement and the laws of the State of its formation
relating to limited liability companies.
(iii) Borrower shall observe all customary formalities regarding its
existence.
(iv) Borrower shall accurately maintain its financial statements,
accounting records and other corporate documents separate from those of its
members, Affiliates of its members and any other Person. Borrower shall not
commingle its assets with those of its members, any Affiliates of its
members, or any other Person. Borrower shall continue to accurately
maintain its own bank accounts and separate books of account.
(v) Borrower shall continue to pay its own liabilities from its own
separate assets.
(vi) Borrower shall continue to identify itself in all dealings with
the public, under its own name or trade names and as a separate and
distinct entity. Borrower will not identify itself as being a division or a
part of any other entity. Borrower will not identify its members or any
Affiliates of its members as being a division or part of Borrower.
Notwithstanding the foregoing, in any such dealings or identification, the
Borrower may describe its relationship to the Guarantor.
(vii) Borrower shall continue to be adequately capitalized in light of
the nature of its business.
(viii) Borrower shall not assume or guarantee the liabilities of its
members (or any predecessor corporation), any Affiliates of its members or
any other Persons, except for liabilities relating to the Mortgaged
Property and except as permitted by or pursuant to this Agreement. Borrower
shall not acquire obligations or securities of its members (or any
predecessor corporation, partnership or limited liability company), or any
Affiliates of its members. Except for the Liens granted pursuant to the
Loan Documents, Borrower shall not pledge its assets for the benefit of any
other Person (other than the Agent) or make loans or advances to its
members (or any predecessor corporation), or any Affiliates of its members
or any other Persons.
(ix) Borrower shall not enter into or be a party to any transaction
with its members (or any predecessor corporation, partnership or limited
liability company) or any Affiliates of its members, except for in the
ordinary course of business on terms which are no less favorable to
Borrower than would be obtained in a comparable arm's length transaction
with an unrelated third party (other than in connection with the execution
by Borrower and the Manager of the Management Agreement).
(Q) ERISA. Borrower shall deliver to Agent as soon as possible, and in
any event within ten days after Borrower knows or has reason to believe that any
of the events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, an Officer's Certificate setting
forth details respecting such event or condition and the action, if any, that
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by
Borrower or an ERISA Affiliate with respect
Page 64
66
to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which PBGC
has not by regulation waived the requirement of Section 4043(a) of ERISA
that it be notified within thirty (30) days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of Section
412 of the Code or Section 302 of ERISA, including, without limitation, the
failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in accordance
with Section 412(d) of the Code); and any request for a waiver under
Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a notice of
intent to terminate any Plan or any action taken by Borrower or an ERISA
Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by Borrower or any ERISA Affiliate of
Borrower of a notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan by
Borrower or any ERISA Affiliate of Borrower that results in material
liability under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or the
receipt by Borrower or any ERISA Affiliate of Borrower of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate of Borrower to
enforce Section 515 of ERISA, which proceeding is not dismissed within
thirty (30) days;
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the
loss of tax-exempt status of the trust of which such Plan is a part if
Borrower or an ERISA Affiliate of Borrower fails to timely provide security
to the Plan in accordance with the provisions of said Sections; and
(vii) the imposition of a lien or a security interest in connection
with a Plan.
(R) Refinancing Loan. If during the term of the Loan or upon maturity,
either Borrower or any Affiliate of Borrower or any other Person in which
Borrower or its members have a direct or indirect beneficial ownership interest
proposes to obtain a loan from any Person (other than the initial Lender) and to
cause the proceeds of such loan to be used to pay or prepay the Loan in whole or
in part (including, without limitation, on the Maturity Date or otherwise
pursuant to Section 2.6(a) or 2.7(a)) (any such transaction, a "Refinancing
Loan"), Borrower shall provide to the initial Lender in writing the Proposed
Terms. The Agent shall have ten (10) days from its receipt in writing of such
proposal to offer to Borrower a Refinancing Transaction on terms specified by
the Agent in writing (the "Lender's Terms"). If prior to the expiration of such
ten (10) day period, the initial Lender shall offer to Borrower or such
Affiliate a transaction with the same material terms as the Proposed Terms
provided to the initial
Page 65
67
Lender, Borrower or such Affiliate shall accept, and enter into, the transaction
offered by the initial Lender and shall not accept, or enter into, such
Refinancing Transaction. If the initial Lender declines to offer a transaction
on the same terms as the Proposed Terms and Borrower or such Affiliate
subsequently either proposes to obtain a Refinancing Transaction with financial
terms less advantageous to Borrower or such Affiliate than those previously
disclosed to the initial Lender or does not consummate a Refinancing Transaction
on the terms provided within one hundred twenty (120) days of the initial Lender
declining to offer a transaction on the same terms as the Proposed Terms, then
Borrower or such Affiliate shall provide the initial Lender with a further
opportunity to make the Refinancing Transaction in accordance with the timing
provisions set forth above.
(S) Assignment or Participation of Note. In the event that the initial
Lender notifies Borrower that a secondary market sale (an "Assignment") of, or a
sale of a participation interest ( a "Participation") in, the Note to another
party is a desirable course of action with respect to the Loan, or in the event
the initial Lender intends to securitize the Note, in whole or in part, the
initial Lender shall have the unilateral right to execute any such transaction
and the Borrower (1) shall reasonably cooperate with the initial Lender, in the
preparation of any information reasonably necessary or incidental to such
Assignment or Participation or securitization with respect to the Collateral
which is reasonably within the possession or control of Borrower or is
obtainable by Borrower and (2) upon request of the initial Lender, shall in good
faith enter into any amendments to this Agreement, the other Loan Documents, the
Organizational Agreement or the legal opinions previously delivered or execute
such additional documents reasonably necessary to accomplish the Assignment or
Participation or securitization (including, but not limited to, to conform such
documentation to the "special purpose bankruptcy remote" entity criteria of the
Rating Agencies relating to such entities in the context of commercial mortgage
backed securities transactions); provided, the Borrower shall not be required
(x) to comply with any of the foregoing which would impair or reduce the
benefits of ownership of the Mortgaged Property or impose material additional
obligations on, or reduce the rights of, the Borrower and (y) to incur and the
initial Lender shall be responsible for the payment of any out-of-pocket
expenses in connection therewith. Such cooperation shall include, upon request
of the initial Lender, the right during the term of the Loan the bifurcate the
Loan into (a) a senior first mortgage loan to the Borrower secured by the
Mortgage (modified as reasonably necessary in connection with such bifurcation)
and (b) a mezzanine loan to a special purpose entity parent of the Borrower
secured by a pledge of the entire ownership interests in the Borrower; provided,
that the effective interest rate of the first mortgage loan and the mezzanine
loan shall not exceed the interest rate on the Loan in the absence of such
bifurcation.
(T) Insurance.
(i) Borrower, at its sole cost and expense, shall keep the
Improvements and Equipment insured (including, but not limited to, any
period of renovation, alteration and/or construction) during the term of
the Loan with the coverage and in the amounts required under this Agreement
for the mutual benefit of Borrower and the Agent against loss or damage by
fire and against loss or damage by other risks and hazards covered by a
standard extended coverage insurance policy (including, without limitation,
riot and civil commotion, vandalism, malicious mischief, burglary,
collapse, theft and such other coverages as may be reasonably required by
the Agent on the special form (formerly known as an all risk form)). Such
insurance shall be in an amount (i) equal to at least the full replacement
cost of the Improvements and Equipment (exclusive of the cost of
foundations and
Page 66
68
footings), without deduction for physical depreciation, and (ii) such that
the insurer would not deem Borrower a co-insurer under said policies. The
policies of insurance carried in accordance with this Section 5.1(X) shall
be paid not less than thirty (30) days in advance and shall contain the
"Replacement Cost Endorsement" with a waiver of depreciation. The Borrower
shall also maintain building law and ordinance coverage in such amount as
to satisfactorily address any increased cost of construction, debris
removal and/or demolition expenses incurred as a result of the application
of a building law and/or ordinance.
(ii) Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and the Agent, shall also obtain and maintain or cause to be
obtained and maintained during the entire term of the Loan the following
policies of insurance:
(1) flood insurance, if any Improvements are located in an area
identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been
made available under the National Flood Insurance Act of 1968 (and any
amendment or successor act thereto) in an amount at least equal to the
maximum limit of coverage available with respect to the Improvements
and Equipment under said Act;
(2) commercial general liability insurance, including but not
limited to broad form property damage, blanket contractual and
personal injuries, and non-owned and hired automobile liability
(including death resulting therefrom) coverages and containing minimum
limits of $2,000,000 per location aggregate, together with
excess/umbrella liability coverage containing minimum limits of
$8,000,000;
(3) business interruption insurance in an amount equal to the net
operating income plus continuing expenses for all Mortgaged Property
operations, such insurance to cover a period of at least one year
commencing the date of the fire or casualty in question plus an
extended period of indemnity of not less than 30 days with such
extended period of indemnity commencing at the time of completion of
repairs and/or replacement of all damage and to be increased or
decreased, as applicable, from time to time during the term of the
Loan (but not more than once) if and when the net income and
continuing expenses materially increase or decrease, as applicable;
(4) insurance against loss or damage from (x) leakage of
sprinkler systems and (y) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure
vessels or similar apparatus now or hereafter installed in the
Improvements (without exclusion for explosions), in an amount equal to
the Loan Amount or such other amount reasonably required by the Agent;
(5) worker's compensation insurance coverage (in amounts not less
than the statutory minimums for all persons employed by Borrower or
its tenants at the Mortgaged Property and in compliance with all other
requirements of applicable local, state and federal law) and
"Employers Liability" insurance in amounts not less than $500,000 per
accident with the employers liability limit being included as a
scheduled underlying limit within the umbrella liability policy
required in Section 5.1(X)(ii)(2);
(6) earthquake damage insurance with a limit of liability equal
to the amount established by the application of the
Page 67
69
independently determined probable maximum loss percentage applied
against the 100% building damage replacement cost appraisal amount and
the annual net income and continuing expense figures; and
(7) such other insurance as may from time to time be reasonably
required by the Agent in order to protect its interests with respect
to the Loan and the Mortgaged Property.
(iii) All policies of insurance (the "Policies") required pursuant to
this Section 5.1(X) (i) shall be issued by an insurer which has a claims
paying ability rating of not less than A+ (FSC xiv) by A.M. Best's Rating
or "AA" by Standard & Poor's, (ii) shall name the Agent as an additional
insured and contain a standard noncontributory mortgagee clause naming the
Agent (and/or such other party as may be designated by the Agent) as the
party to which all payments made by such insurance company shall be paid,
(iii) shall be maintained throughout the term of the Loan without cost to
the Agent, (iv) shall contain such provisions as the Agent deems reasonably
necessary or desirable to protect its interest (including, without
limitation, endorsements providing that neither Borrower, the Agent nor any
other party shall be a co-insurer under said Policies and that the Agent
shall receive at least thirty (30) days prior written notice of any
material modification, reduction or cancellation), (v) shall contain a
waiver of subrogation against the Agent and (vi) shall be reasonably
satisfactory in form and substance to the Agent and reasonably approved by
the Agent as to amounts, form, risk coverage, deductibles, loss payees and
insureds. Borrower shall pay the premiums for such Policies as the same
become due and payable. Copies of said Policies, certified as true and
correct by Borrower, or insurance certificates thereof, shall be delivered
to the Agent. Not later than ten (10) Business Days prior to the expiration
date of each of the Policies, Borrower will deliver to the Agent
satisfactory evidence of the renewal of each Policy. The insurance coverage
required under this Section 5.1(X) may be effected under a blanket policy
or policies covering the Mortgaged Property and other property and assets
not constituting a part of the Mortgaged Property; provided that any such
blanket policy shall provide at least the same amount and form of
protection as would a separate policy insuring the Mortgaged Property
individually, which amount shall not be less than the amount required
pursuant to this Section 5.1(X) and which shall in any case comply in all
other respects with the requirements of this Section 5.1(X).
(iv) If the Mortgaged Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty, Borrower shall give prompt notice
thereof to the Agent.
(8) In case of loss covered by Policies, the Agent may either (A)
jointly with a Borrower settle and adjust any claim or (B) allow such
Borrower to agree with the insurance company or companies on the
amount to be paid upon the loss; provided, that such Borrower may
adjust losses aggregating not in excess of $250,000; provided,
further, that if at the time of the settlement of such claim a
monetary Event of Default has occurred and is continuing, then the
Agent shall settle and adjust such claim without the consent of such
Borrower. In any such case the Agent shall and is hereby authorized to
collect and receipt for any such Insurance Proceeds subject to and to
the extent provided for in this Agreement. The reasonable
out-of-pocket expenses incurred by the Agent in the adjustment and
collection of Insurance Proceeds shall become part of the Indebtedness
and be secured by the Mortgage and shall be reimbursed by Borrower to
the Agent upon demand therefor.
Page 68
70
(9) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (herein called an "Insured
Casualty") where the aggregate amount of the loss, as reasonably
determined by an Independent insurance adjuster, is less than
twenty-five percent (25%) of the Loan Amount, and if, in the
reasonable judgment of the Agent, such Mortgaged Property can be
restored within twelve (12) months of settlement of the claim
(exclusive of TI Costs) and at least six (6) months prior to the
Maturity Date to an economic unit not less materially valuable
(including an assessment of the impact of the termination of any
Leases due to such Insured Casualty) and not less useful than the same
was prior to the Insured Casualty, or if the Agent otherwise elects to
allow a Borrower to restore the Mortgaged Property, then, if no Event
of Default shall have occurred and be continuing, the Insurance
Proceeds (after reimbursement of any reasonable out-of-pocket expenses
incurred by the Agent in connection with the collection of any
applicable Insurance Proceeds) shall be made available to Borrower for
the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or part thereof subject to the Insured Casualty, as
provided for below. Borrower hereby covenants and agrees to commence
and diligently to prosecute such restoring, repairing, replacing or
rebuilding; provided, that Borrower shall pay all out-of-pocket costs
(and if required by the Agent, Borrower shall deposit the total
thereof with the Agent in advance) of such restoring, repairing,
replacing or rebuilding in excess of the Insurance Proceeds made
available pursuant to the terms hereof (the "Deficient Amount").
(10) Except as provided above, the Insurance Proceeds collected
upon any Insured Casualty shall be held in an Eligible Account by the
Agent and shall, at the option of the Agent in its sole discretion, be
applied to the payment of the Indebtedness as provided in Section
2.12(f) of this Agreement or applied to the cost of restoring,
repairing, replacing or rebuilding the Mortgaged Property or part
thereof subject to the Insured Casualty, in the manner set forth
below.
(11) In the event that Insurance Proceeds (after reimbursement of
any reasonable expenses incurred by the Agent in connection with the
collection of any applicable Insurance Proceeds), if any, shall be
made available to Borrower for the restoring, repairing, replacing or
rebuilding of any portion of the Mortgaged Property, Borrower
covenants to restore, repair, replace or rebuild the same to be of at
least comparable value as prior to such damage or destruction, all to
be effected in accordance with Legal Requirements and plans and
specifications approved in advance by the Agent, such approval not to
be unreasonably withheld or delayed. Borrower shall pay all
out-of-pocket costs (and if required by the Agent, Borrower shall
deposit the total thereof with the Agent in advance) of such
restoring, repairing, replacing or rebuilding in excess of the
Insurance Proceeds made available pursuant to the terms hereof.
(12) In the event Borrower is entitled to reimbursement out of
Insurance Proceeds held by the Agent, such proceeds shall be disbursed
from time to time upon the Agent (or at the Agent's election, the
Collateral Agent) being furnished with (A) evidence reasonably
satisfactory to it of the estimated cost of completion of the
restoration, repair, replacement and rebuilding, (B) funds, or, at the
Agent's option, assurances reasonably satisfactory to the Agent that
such funds are available and
Page 69
71
sufficient in addition to the Insurance Proceeds to complete the
proposed restoration, repair, replacement and rebuilding, and (C) such
architect's certificates, waivers of lien, contractor's sworn
statements, title insurance endorsements, bonds and other evidences of
cost, payment and performance of the foregoing repair, restoration,
replacement or rebuilding as the Agent may reasonably require and
approve. The Agent may, in any event, require that all plans and
specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by the Agent prior to
commencement of work, such approval not to be unreasonably withheld or
delayed. All proceeds of rental or business interruption insurance
shall be administered in accordance with Section 2.12(a) of this
Agreement. The Agent may retain a construction consultant to inspect
such work and review Borrower's request for payments and Borrower
shall, on demand by the Agent, reimburse the Agent for the reasonable
fees and disbursements of such consultant. No payment made prior to
the final completion of the restoration, repair, replacement and
rebuilding shall exceed ninety percent (90%) of the value of the work
performed from time to time (except for restoration work on a trade by
trade basis in which event, payment may be made in full upon the
completion of such work); funds other than Insurance Proceeds shall be
disbursed prior to disbursement of such proceeds; and, at all times,
the undisbursed balance of such proceeds remaining in the accounts of
the Agent, together with funds deposited for that purpose or
irrevocably committed to the repayment of the Agent by or on behalf of
Borrower for that purpose, shall be at least sufficient in the
reasonable judgment of the Agent to pay for the cost of completion of
the restoration, repair, replacement or rebuilding, free and clear of
all liens or claims for lien, except for Permitted Encumbrances. Any
surplus which may remain out of Insurance Proceeds held by the Agent
after payment of such costs of restoration, repair, replacement or
rebuilding shall be paid to Borrower so long as no Event of Default
has occurred and is continuing.
(v) Borrower shall not carry separate insurance, concurrent in kind or
form or contributing in the event of loss, with any insurance required
under this Agreement; provided, however, that notwithstanding the
foregoing, Borrower may carry insurance not required under this Agreement
if any such insurance affecting the Mortgaged Property shall be for the
mutual benefit of Borrower and the Agent, as their respective interests may
appear, and shall be subject to all other provisions of this Section
5.1(X).
(U) Condemnation.
(i) Borrower shall promptly give the Agent written notice of the
actual or threatened commencement of any proceeding for a Taking and shall
deliver to the Agent copies of any and all papers served in connection with
such proceedings. The Agent is hereby irrevocably appointed as Borrower's
attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any Condemnation Proceeds for said Taking. With
respect to any compromise or settlement in connection with such proceeding,
the Borrower may after consulting with Agent compromise and reach
settlement of any amount up to $250,000 and the Agent shall jointly with
Borrower compromise and reach settlement of any amount in excess of
$250,000; provided, that if at the time of such Taking a monetary Event of
Default has occurred and is continuing, then the Agent shall compromise and
reach settlement without the consent of Borrower. Notwithstanding any
Taking, Borrower shall continue to pay the Indebtedness at the time and in
the manner provided for in this Agreement and the other Loan
Page 70
72
Documents and the Indebtedness shall not be reduced except in accordance
therewith.
(ii) Borrower shall cause the Condemnation Proceeds to be paid
directly to the Agent as provided in Section 2.12(f) of this Agreement. The
Agent may, in its sole discretion, apply any such Condemnation Proceeds to
the reduction or discharge of the Indebtedness (whether or not then due and
payable). If Condemnation Proceeds in respect of such Taking are applied to
the payment of the Indebtedness as provided for in this Agreement, Borrower
shall be relieved of any duty to restore, repair, replace or rebuild the
Mortgaged Property.
(iii) With respect to a Taking in part, which shall mean any Taking
which does not render the Mortgaged Property physically or economically
unsuitable in the reasonable judgment of the Agent for the use to which it
was devoted prior to the Taking, Borrower shall cause the Condemnation
Proceeds to be paid to the Agent as described above or deposited into the
applicable account pursuant to the provisions of this Agreement, to be
applied to the cost of repairing, replacing, restoring or rebuilding the
Mortgaged Property as follows:
(1) Provided that Condemnation Proceeds shall be made available
to Borrower for the restoring, repairing, replacing or rebuilding of
the Mortgaged Property, Borrower hereby covenants to restore, repair,
replace or rebuild the same to be of at least comparable value and, to
the extent commercially practicable, of substantially the same
character as prior to the Taking, all to be effected in accordance
with applicable law and plans and specifications approved in advance
by the Agent, such approval not to be unreasonably withheld or
delayed. Borrower shall pay all costs (and if required by the Agent,
Borrower shall deposit the total thereof with the Agent in advance) of
such restoring, repairing, replacing or rebuilding in excess of the
Condemnation Proceeds made available pursuant to the terms hereof.
(2) The Condemnation Proceeds held by the Agent shall be held in
an Eligible Account and shall be disbursed from time to time upon the
Agent (or at the Agent's election, the Collateral Agent) being
furnished with (A) evidence reasonably satisfactory to it of the
estimated cost of completion of the restoration, repair, replacement
and rebuilding, (B) funds, or, at the Agent's option, assurances
satisfactory to the Agent that such funds are available and sufficient
in addition to the Condemnation Proceeds to complete the proposed
restoration, repair, replacement and rebuilding, and (C) such
architect's certificates, waivers of lien, contractor's sworn
statements, title insurance endorsements, bonds and other evidences of
cost, payment and performance of the foregoing repair, restoration,
replacement or rebuilding as the Agent may reasonably require and
approve. The Agent may, in any event, require that all plans and
specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by the Agent prior to
commencement of work, which approval shall not be unreasonably
withheld or delayed. The Agent may retain a construction consultant to
inspect such work and review any request by Borrower for payments and
Borrower shall, on demand by the Agent, reimburse the Agent for the
reasonable fees and disbursements of such consultant. No payment made
prior to the final completion of the restoration, repair, replacement
and rebuilding shall exceed ninety percent (90%) of the value of the
construction work performed from time to time; funds other than
Condemnation Proceeds shall be disbursed prior to disbursement of such
proceeds;
Page 71
73
and at all times, the undisbursed balance of such proceeds remaining
in the hands of the Agent, together with funds deposited for that
purpose or irrevocably committed to the repayment of the Agent by or
on behalf of Borrower for that purpose, shall be at least sufficient
in the reasonable judgment of the Agent to pay for the cost of
completion of the restoration, repair, replacement or rebuilding, free
and clear of all liens or claims for lien. Any surplus which may
remain out of Condemnation Proceeds held by the Agent after payment of
such costs of restoration, repair, replacement or rebuilding shall be
paid to Borrower so long as no Event of Default has occurred and is
continuing.
(3) If the Mortgaged Property is sold, through foreclosure or
otherwise, prior to the receipt by the Agent of any such Condemnation
Proceeds to which it is entitled hereunder, the Agent shall have the
right, whether or not a deficiency judgment on the Note shall have
been sought, recovered or denied, to have reserved in any foreclosure
decree a right to receive said award or payment, or a portion thereof
sufficient to pay the Indebtedness. In no case shall any such
application reduce or postpone any payments otherwise required
pursuant to this Agreement, other than the final payment on the Note.
(V) Leases and Rents.
(i) Borrower absolutely and unconditionally assigns to the Agent,
Borrower's right, title and interest in all current and future Leases and
Rents, it being intended by Borrower that this assignment constitutes a
present, absolute assignment and not an assignment for additional security
only. Such assignment to the Agent shall not be construed to bind the Agent
to the performance of any of the covenants, conditions or provisions
contained in any such Lease or otherwise impose any obligation upon the
Agent. Borrower shall execute and deliver to the Agent such additional
instruments, in form and substance reasonably satisfactory to the Agent, as
may hereafter be reasonably requested in writing by the Agent to further
evidence and confirm such assignment. Nevertheless, subject to the terms of
this Section 5.1(Z), the Agent grants to Borrower a license to lease, own,
maintain, operate and manage the Mortgaged Property and to collect, use and
apply the Rent, which license is revocable upon the occurrence of an Event
of Default under this Agreement. Any portion of the Rents held by Borrower
shall be held in trust for the benefit of the Agent for use in the payment
of the Indebtedness. Upon the occurrence of an Event of Default and during
the continuance thereof, the license granted to Borrower herein shall
automatically be revoked, and the Agent shall immediately be entitled to
possession of all Rents, whether or not the Agent enters upon or takes
control of the Mortgaged Property. The Agent is hereby granted and assigned
by Borrower the right, at its option, upon revocation of the license
granted herein, to enter upon the Mortgaged Property in person, by agent or
by court-appointed receiver to collect the Rents. Any Rents collected after
the revocation of the license shall be applied toward payment of the
Indebtedness in the priority and proportions set forth in Section 2.8
hereof or otherwise as the Agent in its discretion shall deem proper.
(ii) All Leases entered into by Borrower shall provide for rental
rates comparable to then-existing local market rates and terms and
conditions commercially reasonable and consistent with then-prevailing
local market terms and conditions for properties of a similar type, age and
condition. With respect to any Lease for more than 5% of the rentable
square footage of the Mortgaged Property, Borrower shall not
Page 72
74
enter into such Lease, without the prior written consent of the Agent, such
consent not to be unreasonably withheld or delayed; provided, that the
Agent's consent shall be deemed to have been given if the Agent fails to
reject or consent to a proposed lease within ten (10) Business Days after
receipt of a written consent request. Borrower shall furnish the Agent with
(1) detailed term sheets in advance in the case of any Leases,
modifications, amendments or renewals for which Agent's consent is required
and (2) in the case of any other Leases, executed copies of such Leases
upon written request. All renewals or amendments or modifications of Leases
which do not satisfy the requirements of the first sentence of this Section
5.1(Z)(ii) shall be subject to the prior approval of the Agent; provided,
that any such renewal or amendment or modification shall be deemed approved
if the Agent fails to approve or disapprove any such renewal or amendment
within ten (10) Business Days of receipt of a written approval request. All
Leases shall be written on the standard lease form previously approved by
Lender which form shall not be materially changed without the Agent's prior
written consent, such consent not to be unreasonably withheld or delayed;
provided, that the Agent's consent shall be deemed to have been given if
the Agent fails to reject or consent to a proposed form modification within
ten (10) Business Days after receipt of a written consent request. All
Leases executed after the date hereof shall provide that they are
subordinate to the Mortgage, and that the lessee agrees to attorn to the
Agent. The Agent shall, upon the request of any tenant occupying space in
excess of 25,000, execute and deliver a non-disturbance agreement in form
reasonably satisfactory to the Agent. With respect to any other tenant, the
Agent agrees also to execute and deliver a non-disturbance agreement in
form reasonably satisfactory to the Agent; provided, that the Agent shall
have determined with respect to such request of other tenants that such
request is not unreasonable. Borrower (i) shall observe and perform all of
the material obligations imposed upon the lessor under the Leases and shall
not do or permit to be done anything to materially impair the value of the
Leases as security for the Indebtedness; (ii) shall promptly send copies to
the Agent of all written notices of default which Borrower shall send or
receive thereunder; (iii) shall enforce all of the material terms,
covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed and shall effect a
termination or diminution of the obligations of tenants under leases, only
in a manner that a prudent owner of a similar property to the Mortgaged
Property would enforce such terms, covenants and conditions or effect such
termination or diminution in the ordinary course of business or would
terminate or effect a diminution of such obligations (including, without
limitation, in the event of a breach or default thereunder by the tenant or
if a Lease provides for contractual termination); (iv) shall not collect
any of the Rents more than one (1) month in advance; (v) shall not execute
any other assignment of lessor's interest in the Leases or Rents; and (vi)
shall not convey or transfer or suffer or permit a conveyance or transfer
of the Mortgaged Property or of any interest therein so as to effect a
merger of the estates and rights of, or a termination or diminution of the
obligations of, lessees thereunder.
(iii) Borrower shall deposit security deposits of lessees which are
turned over to or for the benefit of Borrower or otherwise collected by or
on behalf of Borrower, into an Eligible Account pledged to the Agent with
the same name as the Collection Account and shall not commingle such funds
with any other funds of Borrower. Any bond or other instrument which
Borrower is permitted to hold in lieu of cash security deposits under any
applicable Legal Requirements shall be maintained in full force and effect
unless replaced by cash deposits as hereinabove described, shall, if
permitted pursuant to
Page 73
75
Legal Requirements, name the Agent as payee or mortgagee thereunder (or at
the Agent's option, be fully assignable to the Agent) and shall, in all
respects, comply with any applicable Legal Requirements and otherwise be
reasonably satisfactory to the Agent. Borrower shall, upon request, provide
the Agent with evidence reasonably satisfactory to the Agent of Borrower's
compliance with the foregoing. Upon the occurrence and during the
continuance of any Event of Default, Borrower shall, upon the Agent's
request, if permitted by any applicable Legal Requirements, turn over to
the Agent the security deposits (and any interest theretofore earned
thereon) with respect to all or any portion of the Mortgaged Property, to
be held by the Agent subject to the terms of the Leases.
(W) Maintenance of Mortgaged Property. Borrower shall cause the
Mortgaged Property to be maintained in a good and safe condition and repair,
subject to wear and tear and damage caused by casualty or condemnation. The
Improvements and the Equipment shall not be removed, demolished or altered
(except for normal replacement of the Equipment, Improvements contemplated in an
approved Operating Budget or pursuant to Leases in effect from time to time or
for removals, demolition or alterations that cost up to $50,000) without the
consent of the Agent which consent shall not be unreasonably withheld or
delayed. Except with respect to an Insured Casualty which shall be governed by
the terms and conditions provided herein, Borrower shall, or shall cause any
tenants obligated under their respective Leases to, promptly repair, replace or
rebuild any part of the Mortgaged Property that becomes damaged, worn or
dilapidated except where the failure to do so is not reasonably likely to have a
Material Adverse Effect. Borrower shall complete and pay for any structure at
any time in the process of construction or repair on the Land. Borrower shall
not initiate, join in, or consent to any change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Mortgaged Property or any part
thereof which can be reasonably likely to result in a Material Adverse Effect
without consent of the Agent, such consent not to be unreasonably withheld or
delayed. If under applicable zoning provisions the use of all or any portion of
the Mortgaged Property is or shall become a nonconforming use, Borrower will not
cause or permit such nonconforming use to be discontinued or abandoned without
the express written consent of the Agent, such consent not to be unreasonably
withheld or delayed. Borrower shall not (i) change the use of the Land in any
material respect, (ii) permit or suffer to occur any waste on or to the
Mortgaged Property or to any portion thereof or (iii) take any steps whatsoever
to convert the Mortgaged Property, or any portion thereof, to a condominium or
cooperative form of management.
(X) Ground Lease.
a. (i) Borrower shall pay, promptly when due and payable (before the
commencement of any "cure" or "grace" period), all Ground Rent. Upon notice from
Agent, simultaneously with the making of each and every payment of Ground Rent
payable after the delivery of such notice, Borrower shall simultaneously deliver
to Agent a copy of the check in the amount of or other evidence of such payment
delivered to the payee.
b. (ii) Borrower shall perform and observe (before the commencement of any
"cure" or "grace" period) all terms, covenants, and conditions that Borrower is
required to perform and observe under the Ground Lease and do everything
necessary to preserve and to keep unimpaired and in full force and effect the
applicable Ground Lease. The Borrower shall not permit any Ground Lease to go
into default (whether or not any cure period in the Ground Lease has expired).
c. (iii) Borrower shall enforce the obligations of the applicable lessor
Page 74
76
under the Ground Lease in all material respects so that Borrower may at all
times enjoy all its rights, benefits and privileges under the Ground Lease.
d. (iv) The Borrower shall not, without Agent's consent, cause, agree to,
permit, or suffer to occur any Ground Lease Impairment. Any Ground Lease
Impairment made without Agent's consent shall be null, void, and of no force or
effect. Any party entering into or purportedly obtaining the benefit of such a
purported Ground Lease Impairment is hereby placed on notice that Borrower has
no power or authority to cause, consent, or agree to such Ground Lease
Impairment without Agent's consent.
e. (v) The Borrower shall obtain Agent's consent prior to refusing to provide or
providing any consent to any action that any lessor under a Ground Lease or any
third party takes or desires to take under or with respect to any Ground Lease.
f. (vi) Borrower shall promptly deliver to Agent a copy of any notice of default
or termination, or demand for performance (other than routine bills for current
Ground Rent) that it receives from the lessor under the Ground Lease. The
Borrower shall furnish to Agent all information that Agent may reasonably
request from time to time concerning the Ground Lease and Borrower's compliance
with the Ground Lease. Borrower, immediately upon learning that any lessor under
a Ground Lease has failed to perform the terms and provisions under the Ground
Lease in any material respect (including by reason of a rejection or
disaffirmance or purported rejection or disaffirmance of the Ground Lease
pursuant to any state or federal bankruptcy law), shall notify Agent thereof.
Promptly after the Closing Date, and again promptly after execution of any
amendment to the Mortgage, Borrower shall notify the applicable Ground Lessor of
the execution and delivery of the Mortgage or such amendment. Such notice shall
set forth, verbatim, in a form reasonably satisfactory to Agent, all provisions
of the Mortgage relating to Ground Lease Impairments. Agent shall have the
right, but not the obligation, to give any lessor under a Ground Lease at any
time any notice described in this paragraph or otherwise relating to the
Mortgage or the Loan.
g. (vii) The Borrower shall promptly notify Agent of any request that any party
to a Ground Lease makes for arbitration or other dispute resolution procedure
pursuant to such Ground Lease and of the institution of any such arbitration or
dispute resolution. The Borrower hereby authorizes Agent to participate in any
such arbitration or dispute resolution. If an Event of Default has occurred and
is continuing, such participation may, at Agent's option, be to the exclusion
of, and in place of, the Borrower. The Borrower shall promptly deliver to Agent
a copy of the determination of each such arbitration or dispute resolution
mechanism.
h. (viii) If Agent or its designee shall acquire or obtain a New Ground Lease,
then Borrower shall have no right, title or interest whatsoever in or to such
New Ground Lease, or any proceeds or income arising from the estate arising
under any such New Ground Lease, including from any sale or other disposition
thereof. Agent or its designee shall hold such New Ground Lease free and clear
of any right or claim of Borrower.
i. (ix) Borrower shall not amend, modify or cancel the Ground Lease without
Agent's consent, which consent shall not be unreasonably withheld or delayed.
(Y) Post-Closing Environmental Items. By not later than ten (10)
Business Days following the Closing Date, the Borrower shall deliver to the
Agent (i) a spill prevention and control plan with respect to the two
above-ground storage tanks at the Mortgaged Property and (ii) an operations and
maintenance (O&M) plan with respect to lead-based paint, each in form and
substance acceptable to the Agent.
Page 75
77
ARTICLE VI.
NEGATIVE COVENANTS
Section 6.1 Negative Covenants. Borrower covenants and agrees that,
until payment in full of the Indebtedness, it will not do, directly or
indirectly, any of the following unless Agent consents thereto in writing:
(A) Liens on the Mortgaged Property. Incur, create, assume, become or
be liable in any manner with respect to, or permit to exist, except as permitted
by the Mortgage, any Lien with respect to the Mortgaged Property, except: (i)
Liens in favor of the Lenders and (ii) the Permitted Encumbrances.
(B) Ownership and Transfer. Except as expressly permitted by or
pursuant to this Agreement or the Loan Documents, own any property of any kind
other than the Mortgaged Property, or Transfer the Mortgaged Property or any
portion thereof.
(C) Other Borrowings. Incur, create, assume, become or be liable in
any manner with respect to Other Borrowings, except that Borrower may (i) incur
secured or unsecured indebtedness relating solely to financing of trade
payables, the acquisition of goods, services and supplies (including, but not
limited to attorney's fees and costs) used in the ordinary course of business or
the acquisition or leasing of Equipment used in the ordinary course of business,
to the extent that such loans or leases are ordinary and customary in the
industry of operating similar properties, and the proceeds of which are not
distributed to Borrower except as reimbursement for monies expended to pay for
trade payables, the acquisition of goods, services and supplies and to fund the
financing, acquisition or leasing of such Equipment, (ii) incur loans from its
members or their Affiliates, provided that (a) such loans are subordinate to the
Loan and unsecured, (b) the terms of such loans provide that the related member
shall not take any judicial or non-judicial action to commence any foreclosure
proceeding with respect thereto for so long as any of the Indebtedness remains
outstanding, (c) the proceeds of such loans are used by Borrower to pay expenses
(including Property Expenses) or closing costs relating to the Mortgaged
Property, to provide working capital, to acquire Equipment or to make interest
payments on the Loan, and (d) such loans are on terms satisfactory to Agent on
behalf of the Lenders, or (iii) incur other indebtedness previously approved by
Agent in its reasonable discretion.
(D) Dissolution; Merger or Consolidation. Dissolve, terminate,
liquidate, merge with or consolidate into another Person.
(E) Change In Business. Cease to be a Single-Purpose Entity, or make
any material change in the scope or nature of its business objectives, purposes
or operations, or undertake or participate in activities other than the
continuance of its present business.
(F) Debt Cancellation. Cancel or otherwise forgive or release any
material claim or debt owed to Borrower by any Person, except for adequate
consideration or in the ordinary course of Borrower's business.
(G) Affiliate Transactions. Enter into, or be a party to, any
transaction with an Affiliate of Borrower, except in the ordinary course of
business and on terms which are fully disclosed to Agent in advance and on terms
which are no less favorable to Borrower or such Affiliate than would be obtained
in a comparable arm's length transaction with an unrelated third party.
(H) Creation of Easements. Except as expressly permitted by or
Page 76
78
pursuant to the Mortgage or this Agreement, create, or permit the Mortgaged
Property or any part thereof to become subject to, any easement, license or
restrictive covenant, other than a Permitted Encumbrance, provided, that the
consent of Agent shall not be unreasonably withheld or delayed to the extent
that any such easement, license or restrictive covenant is reasonably necessary
for the continued use, enjoyment, access to or operation of the applicable
Mortgaged Property.
(I) Misapplication of Funds. Distribute any Rents or Moneys received
from Accounts in violation of the provisions of Section 2.12, or fail to pledge
any security deposit to Agent, or misappropriate any security deposit or portion
thereof.
(J) Certain Restrictions. Enter into any agreement which expressly
restricts the ability of Borrower to enter into amendments, modifications or
waivers of any of the Loan Documents.
(K) Assignment of Licenses and Permits. Assign or transfer any of its
interest in any Permits pertaining to the Mortgaged Property, or assign,
transfer or remove or permit any other Person to assign, transfer or remove any
records pertaining to the Mortgaged Property.
(L) Place of Business. Change its chief executive office or its
principal place of business without giving Agent at least fifteen (15) days'
prior written notice thereof and promptly providing Agent such information as
Agent may reasonably request in connection therewith.
(M) Leases. Enter into, amend or cancel Leases, except as permitted by
or pursuant to this Agreement.
(N) Management Agreement. (i) Terminate or cancel the Management
Agreement except in accordance with this Agreement, (ii) consent to either the
reduction of the term of or the assignment of the Management Agreement, (iii)
increase or consent to the increase of the amount of any charges under the
Management Agreement, or (iv) otherwise modify, change, supplement, alter or
amend, or waive or release any of its rights and remedies under, the Management
Agreement in any material respect.
(O) Plans and Welfare Plans. Knowingly engage in or permit any
transaction in connection with which Borrower or any ERISA Affiliate could be
subject to either a material civil penalty or tax assessed pursuant to Section
502(i) or 502(1) of ERISA or Section 4975 of the Code, permit any Welfare Plan
to provide benefits, including without limitation, medical benefits (whether or
not insured), with respect to any current or former employee of Borrower beyond
his or her retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death or disability benefits that have been
fully provided for by paid up insurance or otherwise or (iii) severance benefits
(unless such coverage is provided after notification of and with the reasonable
approval of Agent), permit the assets of Borrower to become "plan assets",
whether by operation of law or under regulations promulgated under ERISA or
adopt, amend (except as may be required by applicable law) or increase the
amount of any benefit or amount payable under, or permit any ERISA Affiliate to
adopt, amend (except as may be required by applicable law) or increase the
amount of any benefit or amount payable under, any Plan or Welfare Plan, except
for normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits expense to Borrower or any ERISA Affiliate.
(P) Transfer of Ownership Interests. Permit any Transfer of a direct
or indirect ownership interest or voting right in Borrower.
(Q) Equipment and Inventory. Except pursuant to the Management
Page 77
79
Agreement, permit any Equipment owned by the Borrower to be removed at any time
from the Mortgaged Property unless the removed item is consumed or sold in the
usual and customary course of business, removed temporarily for maintenance and
repair or, if removed permanently, replaced by an article of equivalent
suitability and not materially less value, owned by the Borrower free and clear
of any Lien.
(R) Collateral Securitization. Sell or transfer the Mortgaged Property
to a Securitization Vehicle accompanied by the simultaneous issuance by such
vehicle of, or propose to itself cause the issuance of, a security backed in
part or in full by, or representing an interest in part or in full in, such
Mortgaged Property (the proceeds of such issuance paid to Borrower being applied
in accordance with Article II) (any such transaction, a "Collateral
Securitization"), unless Borrower consummates the Collateral Securitization in
accordance with the following:
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ("SSBI") or an Affiliate of SSBI
designated by SSBI shall have the exclusive right to act as the sole
underwriter or placement agent for any commercial mortgage backed
securities offering with respect to the Mortgaged Property issued in a
Collateral Securitization and the right to be a co-manager for any equity
offering with respect to the Borrower or the Mortgaged Property, in each
case on market terms;
(b) Borrower shall bear all customary expenses incurred in connection
with the Collateral Securitization (including, without limitation,
underwriter/placement agent fees, rating agency costs and reasonable legal
and accounting expenses);
(c) Borrower shall reimburse such underwriter/placement agent for all
reasonable out-of-pocket expenses incurred by such underwriter/placement
agent related to any Collateral Securitization; and
(d) Upon written request of Borrower, SSBI shall notify Borrower
within fifteen (15) Business Days if SSBI intends to exercise its rights
under this Section 6.1(R).
(S) Management Fees. Pay Borrower or any Affiliate of the Borrower any
management fees with respect to the Mortgaged Property except as contemplated by
the Organizational Agreements or the relevant Management Agreement.
(T) Working Capital Line. Obtain a working capital line.
ARTICLE VII.
EVENT OF DEFAULT
Section 7.1 Event of Default. The occurrence of one or more of the
following events shall be an "Event of Default" hereunder:
(i) if on any Payment Date Borrower fails to pay any accrued and
unpaid interest on the Loan or any principal amount referred to in Section
2.12(b) then due and payable in accordance with the provisions hereof and not
more frequently than twice during any twelve month period during the term of the
Loan such failure continues for three (3) Business Days;
(ii) if Borrower fails (a) to pay (1) the outstanding Indebtedness on
the Maturity Date or (2) the fees payable to Collateral Agent pursuant to
the Fee Letter on any Payment Date or (b) to deposit into the Collection
Account, the amount required pursuant to Section 2.7(a) or 2.7(b),
respectively;
Page 78
80
(iii) if Borrower fails to pay any other amount payable pursuant to
this Agreement or any other Loan Document when due and payable in
accordance with the provisions hereof or thereof, as the case may be, and
such failure continues for ten (10) days after Agent delivers written
notice thereof to such Borrower;
(iv) if any representation or warranty made herein or in any other
Loan Document, or in any report, certificate, financial statement or other
Instrument, agreement or document furnished by Borrower in connection with
this Agreement, the Note or any other Loan Document executed and delivered
by any Borrower shall be false as of the date such representation or
warranty was made (or if such representation or warranty relates to an
earlier date, then as of such earlier date) and such false representation
of warranty is reasonably likely to result in a Material Adverse Effect;
(v) if Borrower or the general partner of the Borrower makes an
assignment for the benefit of creditors;
(vi) if a receiver, liquidator or trustee shall be appointed for
Borrower or the Managing Member of the Borrower or if Borrower or the
Managing Member of the Borrower shall be adjudicated a bankrupt or
insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state law,
shall be filed by or against, consented to, or acquiesced in by, Borrower
or the Managing Member of the Borrower, or if any proceeding for the
dissolution or liquidation of Borrower or the Managing Member of the
Borrower shall be instituted; provided, however, that if such appointment,
adjudication, petition or proceeding was involuntary and not consented to
by Borrower or the Managing Member of the Borrower, upon the same not being
discharged, stayed or dismissed within ninety (90) days, or if Borrower or
the Managing Member of the Borrower shall generally not be paying its debts
as they become due;
(vii) if Borrower attempts to delegate its obligations or assign its
rights under this Agreement, any of the other Loan Documents or any
interest herein or therein, or if any Transfer occurs other than in
accordance with this Agreement and such delegation or assignment of rights
or impermissible Transfer continues or is not corrected for ten (10) days
after Agent delivers written notice thereof to Borrower;
(viii) if any provision of the Organizational Agreement affecting the
purpose for which Borrower or the general partner of the Borrower is formed
is amended or modified in any material respect which may adversely affect
the Lenders, Agent or Collateral Agent, or if Borrower or its partners
fails to perform or enforce the provisions of the Organizational Agreements
and such failure has a Material Adverse Effect or attempts to dissolve
Borrower or the general partner of the Borrower without Agent's consent;
(ix) if an Event of Default as defined or described in the Note or any
other Loan Document occurs, whether as to Borrower or the Mortgaged
Property or any portion thereof;
(x) any action or inaction by Borrower that constitutes a default
under the Ground Lease; or
(xi) if Borrower shall continue to be in Default under any of the
terms, covenants or conditions of this Agreement, the Note, the Mortgage or
the other Loan Documents, other than as specifically otherwise referred to
above in this definition of "Event of Default," for ten (10) days after
notice to Borrower from Agent or its
Page 79
81
successors or assigns, in the case of any Default which can be cured by the
payment of a sum of money (other than Events of Default pursuant to clauses
(i) and (ii) above as to which the grace period, if any, set forth therein
is applicable), or for thirty (30) days after notice from Agent or its
successors or assigns, in the case of any other Default (unless a longer
notice period is otherwise provided herein or in such other Loan Document);
provided, however, that if such non-monetary Default is susceptible of cure
but cannot reasonably be cured within such thirty (30) day period and such
Borrower shall have commenced to cure such Default within such thirty (30)
day period and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30) day period shall be extended for an additional sixty
(60) days;
then, upon the occurrence of any such Event of Default and at any time
thereafter, Agent or Collateral Agent or its successors or assigns, may, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents, or at law or in equity, take such
action, without further notice or demand, as Agent on behalf of the Lenders or
its successors or assigns, deems advisable to protect and enforce its rights
against Borrower and in and to all or any portion of the Collateral (including,
without limitation, declaring the entire Indebtedness to be immediately due and
payable) and may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents against Borrower and/or the Collateral
(including, without limitation, all rights or remedies available at law or in
equity).
Section 7.2 Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or more
of the rights, powers, other remedies available to Agent or Collateral Agent or
the Lenders against Borrower under this Agreement or any of the other Loan
Documents executed by or with respect to Borrower, or at law or in equity may be
exercised by Lenders at any time and from time to time, whether or not all or
any portion of the Indebtedness shall be declared due and payable, and whether
or not Agent shall have commenced any foreclosure proceeding or other action for
the enforcement of its rights and remedies under any of the Loan Documents with
respect to all or any portion of the Collateral. Any such actions taken by Agent
or Collateral Agent shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Agent may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Agent and the Lenders permitted by law, equity or contract or as set
forth herein or in the other Loan Documents.
(b) In the event of the foreclosure or other action by Agent or
Collateral Agent to enforce Agent's remedies in connection with all or any
portion of the Collateral, Agent shall apply all Net Proceeds received to repay
the Indebtedness in accordance with Section 2.8, the Indebtedness shall be
reduced to the extent of such Net Proceeds and the remaining portion of the
Indebtedness shall remain outstanding and secured by the Loan Documents, it
being understood and agreed by Borrower that Borrower is liable for the
repayment of all the Indebtedness; provided, however, that the Note shall be
deemed to have been accelerated only to the extent of the Net Proceeds actually
received by Agent with respect to the Collateral and applied in reduction of the
Indebtedness evidenced by the Note in accordance with the provisions of this
Agreement, after payment by Borrower of all Transaction Costs and costs of
enforcement.
Section 7.3 Remedies Cumulative. The rights, powers and remedies of
Agent, Collateral Agent, or any Lender under this Agreement shall be cumulative
and not exclusive of any other right, power or remedy which
Page 80
82
Agent, Collateral Agent or any Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents executed by or with respect to Borrower,
or existing at law or in equity or otherwise. Agent or any Lender's rights,
powers and remedies may be pursued singly, concurrently or otherwise, at such
time and in such order as Agent may determine in Agent's sole discretion. No
delay or omission to exercise any remedy, right or power accruing upon an Event
of Default shall impair any such remedy, right or power or shall be construed as
a waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of any Default or
Event of Default shall not be construed to be a waiver of any subsequent Default
or Event of Default or to impair any remedy, right or power consequent thereon.
Notwithstanding any other provision of this Agreement, Agent for the benefit of
the Lenders reserves the right to seek a deficiency judgment or preserve a
deficiency claim, in connection with the foreclosure of the Mortgage on the
Mortgaged Property, to the extent necessary to foreclose on other parts of the
Collateral.
Section 7.4 Default Administration Fee. At any time after the
occurrence of an Event of Default and the acceleration of the Indebtedness, as
reimbursement and compensation for the additional internal expenditures,
administrative expenses, fees and other costs associated with actions to be
taken in connection with such Event of Default, and regardless of whether Agent
shall have commenced the exercise of any remedies pursuant to Section 7.2, the
Default Administration Fee shall be payable by Borrower to Agent upon demand.
Section 7.5 Curative Advances. If any Event of Default occurs and is
not cured by the Borrower after notice from the Agent, then Agent or Collateral
Agent may expend such sums as either shall reasonably deem appropriate to cure
or attempt to cure such Event of Default. Borrower shall immediately repay all
such sums so advanced, which sums shall immediately become part of the
Indebtedness, bear interest at the Default Rate from the date advanced until the
date repaid, and be secured by all Collateral.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the execution and delivery of this Agreement, the
making by the initial Lender of the Loan hereunder and the execution and
delivery by Borrower to the initial Lender of the Loan Documents, and shall
continue in full force and effect so long as any portion of the Indebtedness is
outstanding and unpaid. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party. All covenants, promises and agreements in this Agreement
contained, by or on behalf of Borrower, shall inure to the benefit of the
respective successors and assigns of Agent and each Lender. Nothing in this
Agreement or in any other Loan Document, express or implied, shall give to any
Person other than the parties and the holder of the Note and the other Loan
Documents, and their legal representatives, successors and assigns, any benefit
or any legal or equitable right, remedy or claim hereunder.
Section 8.2 Agent's Discretion. Whenever pursuant to this Agreement,
Agent exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Agent, the decision of Agent to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Agent and shall be final and
conclusive.
Page 81
83
Section 8.3 Governing Law.
(a) This Agreement was negotiated in New York and made by the initial
Lender and accepted by Borrower in the State of New York, and the proceeds of
the Note delivered pursuant hereto were disbursed from New York, which State the
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby, and in all respects (including, without
limitation, matters of construction, validity, performance, and maximum
permissible rates of interest), this Agreement and the obligations arising
hereunder shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts made and performed in such State
and any applicable law of the United States of America.
(b) Any legal suit, action or proceeding against the Lenders or
Borrower arising out of or relating to this Agreement may be instituted in any
federal or state court in New York, New York. Borrower hereby (i) irrevocably
waives, to the fullest extent permitted by applicable law, any objection which
it may now or hereafter have to the laying of venue of any such suit, action or
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum, and (ii)
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. Borrower does hereby designate and appoint Solomon and
▇▇▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq., as its authorized agent to accept and acknowledge on its
behalf service of any and all process which may be served in any such suit,
action or proceeding in any federal or state court in New York, New York, and
agrees that service of process upon said agent at said address (or at such other
office in New York, New York as may be designated by Borrower from time to time
in accordance with the terms hereof) with a copy to Borrower at its principal
executive offices, and written notice of said service of Borrower mailed or
delivered to Borrower in the manner provided herein shall be deemed in every
respect effective service of process upon Borrower, in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give prompt notice to
Agent of any change in address of its authorized agent hereunder, (ii) may at
any time and from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the address
for service of process), and (iii) shall promptly designate such a substitute if
its authorized agent ceases to have an office in New York, New York or is
dissolved without leaving a successor.
Section 8.4 Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement or any other Loan Document, or consent or waiver referred to in any
Loan Document or consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in a writing signed by the party
against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to or demand on
Borrower shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
Section 8.5 Delay Not a Waiver. Neither any failure nor any delay on
the part of Agent or any Lender in insisting upon strict performance of any
term, condition, covenant or agreement, or exercising any right, power,
Page 82
84
remedy or privilege hereunder, or under any other Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, the Note or any other Loan
Document, Agent and each Lender shall not be deemed to have waived any right
either to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 8.6 Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by facsimile transmission,
addressed if to Lender at its address set forth on the first page hereof,
Attention: A. ▇▇▇▇▇▇ ▇▇▇▇▇▇, if to Collateral Agent at its address set forth on
the first page hereof, and if to Borrower at its address set forth on the first
page hereof, or at such other address and Person as shall be designated from
time to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section 8.6. A copy of
all notices, consents, approvals and requests directed to Agent shall be
delivered to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.; a copy of all notices, consents, approvals and
requests directed to Borrower shall be delivered to (1) c/o First Union Real
Estate Investments LLC, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ and (2) Solomon and ▇▇▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.; and a
copy of all notices, consents, approvals and requests directed to Collateral
Agent shall be delivered to Collateral Agent at its address set forth on the
first page hereof, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. A notice shall be deemed to
have been given: in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or two Business Days after
mailing; or in the case of expedited prepaid delivery and facsimile
transmission, on the Business Day after the same was sent. A party receiving a
notice which does not comply with the technical requirements for notice under
this Section 8.6 may elect to waive any deficiencies and treat the notice as
having been properly given.
Section 8.7 SECTION TRIAL BY JURY. BORROWER, TO THE FULLEST EXTENT
THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH
RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
Section 8.8 Headings. The Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.9 Assignment. Borrower may not sell, assign or transfer any
interest in the Loan Documents, any Collateral, or any portion of either of the
foregoing (including, without limitation, Borrower's rights, title, interests,
remedies, powers and duties hereunder and thereunder) without Agent's prior
written consent. Each Lender shall have the right to assign or participate this
Agreement and/or its interest in any of the other Loan Documents and the
obligations hereunder to any Person. In the event of an Assignment by any
Lender, (a) the assignee shall have, to the extent of such Assignment, the same
rights, benefits and obligations as it would have if it were an original
"Lender" hereunder; (b) the assignee shall be deemed for all purposes to be a
"Lender" hereunder; and (c) upon any such substitution of Lender, a replacement
or addition "Lender signature page" shall be executed by the new Lender and
attached to this Agreement and thereupon become a part of this Agreement. Each
potential
Page 83
85
assignee or participant lender shall be required to sign a confidentiality
agreement which shall provide for protection of all proprietary and confidential
information of Borrower and the transferor or prospective transferor Lender
shall provide a copy of such agreement to Borrower, signed by the prospective
assignee. Subject to the preceding sentence, each participating Lender shall be
entitled to receive all information received by Agent under this Agreement.
After the effectiveness of any Assignment, the new Lender shall provide notice
to Borrower of the identity, address and other pertinent information pertaining
to the new Lender. Notwithstanding anything in this Agreement to the contrary,
after an Assignment by any Lender, the "Lender" (prior to such Assignment) shall
continue to have the benefits of any rights or indemnifications and shall
continue to have the obligations contained herein which such Lender had during
the period such party was a "Lender" hereunder.
Section 8.10 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 8.11 Preferences. Agent and the Lenders shall have no
obligation to marshal any assets in favor of Borrower or any other party or
against or in payment of any or all of the obligations of Borrower pursuant to
this Agreement, the Note or any other Loan Document. The Lenders shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower hereunder,
provided that such application or reapplication is performed by the Lenders in
accordance with the terms of this Agreement or any other applicable Loan
Document. To the extent Borrower makes a payment or payments to Agent or any
Lender for Borrower's benefit, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by Agent
or such Lender.
Section 8.12 Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Agent, any Lender or Collateral Agent
except with respect to matters for which this Agreement or another Loan Document
specifically and expressly provides for the giving of notice by Agent, such
Lender and/or Collateral Agent to Borrower and except with respect to matters
for which Borrower is not, pursuant to applicable Legal Requirements, permitted
to waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Agent, any Lender and Collateral Agent with respect to
any matter for which this Agreement or the other Loan Documents does not
specifically and expressly provide for the giving of notice by Agent or such
Lender or Collateral Agent to Borrower.
Section 8.13 Failure to Consent. If Borrower shall seek the approval
by or consent of Agent or the Lenders hereunder or under the Note, or any of the
other Loan Documents and Agent or the Lenders shall fail or refuse to give such
consent or approval, then Borrower shall not be entitled to any damages for any
withholding or delay of such approval or consent by Agent or the Lenders, it
being intended that Borrower's sole remedy shall be to bring an action for an
injunction or specific performance.
Page 84
86
Section 8.14 Exhibits Incorporated. The information set forth on the
cover, heading and recitals hereof, and the Exhibits attached hereto, are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.
Section 8.15 Offsets, Counterclaims and Defenses. Any assignee of any
Lender's interest in and to this Agreement and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to this Agreement and the other Loan Documents which Borrower may
otherwise have against any assignor or this Agreement and the other Loan
Documents. No such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee
upon this Agreement or upon any other Loan Document. Any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
Section 8.16 No Joint Venture or Partnership. Borrower, Agent and each
Lender intend that the relationship created hereunder be solely that of borrower
and lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and any Lender
nor to grant any Lender any interest in the Collateral other than that of
secured party, mortgagee or lender.
Section 8.17 Waiver of Marshalling of Assets Defense. To the fullest
extent Borrower may legally do so, Borrower waives all rights to a marshalling
of the assets of Borrower, and others with interests in Borrower, and of the
Collateral, or to a sale in inverse order of alienation in the event of
foreclosure of the interests hereby created, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of any Lender under the Loan Documents to a sale of any Collateral for the
collection of the Indebtedness without any prior or different resort for
collection, or the right of any Lender to the payment of the Indebtedness out of
the Net Proceeds of the Collateral in preference to every other claimant
whatsoever.
Section 8.18 Waiver of Counterclaim. Borrower hereby waives the right
to assert a counterclaim, other than compulsory counterclaim, in any action or
proceeding brought against it by Agent or its agents.
Section 8.19 Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Agreement and the provisions of any of
the other Loan Documents, the provisions of this Agreement shall prevail. The
parties hereto acknowledge that they were represented by counsel in connection
with the negotiation and drafting of the Loan Documents and that the Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same.
Section 8.20 Brokers and Financial Advisors. Borrower and the initial
Lender hereby represent that they have dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement, other than the ▇▇▇▇▇▇-▇▇▇▇ Real
Estate Group LLC. Borrower and initial Lender hereby agree to indemnify and hold
the other and Collateral Agent harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person that such Person acted on behalf of the indemnifying
party in connection with the transactions contemplated herein. The provisions of
this Section 8.20 shall survive the expiration and termination of this Agreement
and the repayment of the Indebtedness.
Page 85
87
Section 8.21 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 8.22 Estoppel Certificates. Agent, Borrower and each Lender
hereby agree at any time and from time to time upon not less than fifteen (15)
days prior written notice by Borrower or such Lender to execute, acknowledge and
deliver to the party specified in such notice, a statement, in writing,
certifying that this Agreement is unmodified and in full force and effect (or if
there have been modifications, that the same, as modified, is in full force and
effect and stating the modifications hereto), and stating whether or not, to the
knowledge of such certifying party, any Default or Event of Default has occurred
and is then continuing, and, if so, specifying each such Default or Event of
Default; provided, however, that it shall be a condition precedent to any
Lender's obligation to deliver the statement pursuant to this Section 8.22, that
such Lender shall have received, together with Borrower's request for such
statement, an Officer's Certificate stating that, to the knowledge of Borrower,
no Default or Event of Default exists as of the date of such certificate (or
specifying such Default or Event of Default).
Section 8.23 Payment of Expenses. Borrower shall pay all Transaction
Costs, which shall include, without limitation, (a) reasonable out-of-pocket
costs and expenses of Agent in connection with (i) the negotiation, preparation,
execution and delivery of the Loan Documents and the documents and instruments
referred to therein; (ii) the creation, perfection or protection of Lenders'
Liens in the Collateral (including, without limitation, fees and expenses for
title and lien searches or amended or replacement Mortgages, UCC Financing
Statements or Collateral Security Instruments, title insurance premiums and
filing and recording fees, third party due diligence expenses for the Mortgaged
Property plus travel expenses, accounting firm fees, costs of the Appraisals,
Environmental Reports (and an environmental consultant), and the Engineering
Reports); (iii) the negotiation, preparation, execution and delivery of any
amendment, waiver or consent relating to any of the Loan Documents and
documentation (and amendments to existing documentation) necessary or
appropriate in connection with any Advance, and (iv) the preservation of rights
under and enforcement of the Loan Documents and the documents and instruments
referred to therein, including any communications or discussions relating to any
action that Borrower shall from time to time request Agent to take, as well as
any restructuring or rescheduling of the Indebtedness, (b) the reasonable fees,
expenses and other charges of counsel to Lender in connection with all of the
foregoing, (c) all reasonable fees and expenses of Collateral Agent and its
counsel and (d) Agent's (or, where reasonably deemed necessary by Agent, any
other Lender's) reasonable out-of-pocket travel expenses in connection with site
visits to the Mortgaged Property or Mortgaged Property. Prior to the retention
of third parties, Agent shall consult with Borrower regarding the services
required, the procurement of good faith investments, and the third parties
selected to ensure that costs will be reasonable in scope and amount.
Section 8.24 Non-Recourse. Anything contained herein, in the Note or
in any other Loan Document to the contrary notwithstanding, no recourse shall be
had for the payment of the principal or interest on the Loan or for any other
Indebtedness, obligation or liability hereunder or under any other Loan Document
or for any claim based hereon or thereon or otherwise in respect hereof or
thereof against (i) any agent, contractor, director, officer, member,
consultant, manager, stockholder, subscriber to capital stock, incorporator,
beneficiary, participant, trustee or advisor of Borrower, or any partner or
member therein; (ii) any legal representative,
Page 86
88
heir, estate, successor or assign of any thereof; (iii) any corporation (or any
officer, director, employee or shareholder thereof), limited liability company
(or member thereof), partnership (or any partner thereof), individual or entity
to which any ownership interest in Borrower shall have been directly or
indirectly transferred; (iv) any purchaser of any asset of Borrower; or (v) any
other Person (except Borrower), for any deficiency or other sum owing with
respect to the Note or any other Indebtedness, obligation or liability or
arising under this Agreement or any Loan Document. It is understood that neither
the Note nor any other Indebtedness, obligation or liability under or with
respect to this Agreement and any other Loan Document may be enforced against
any Person described in clauses (i) through (v) above; provided, however, that
the foregoing provisions of this paragraph shall not:
(1) prevent recourse to Borrower, the assets of Borrower, the
Mortgaged Property or any other instrument or document which is
pledged by Borrower to the Lenders pursuant to the Loan Documents,
including all Collateral;
(2) in the event of any fraud, misappropriation or misapplication
of funds committed by or on behalf of the Borrower, or intentional
misrepresentation, estop the Lenders from instituting or prosecuting a
legal action or proceeding or otherwise making a claim against the
Person or Persons committing such fraud, misappropriating or
misapplying such funds, or making such intentional misrepresentation,
or the recipient or beneficiary of such fraud, misappropriation or
misapplication, or intentional misrepresentation, whether or not such
Person, recipient or beneficiary, is any Person described in clauses
(i) through (v) above for losses relating to or arising from such
fraud, misappropriation or misapplication, or intentional
misrepresentation;
(3) prevent recourse to Borrower or the Guarantor (but not any
other of the Persons described in clauses (i) through (v) above) for
losses arising from the breach of any provision in this Agreement or
the Environmental Indemnity Agreement, concerning Environmental Laws,
Hazardous Substances and any indemnification of Agent or any Lender
with respect thereto contained in either document; or
(4) have any applicability whatsoever to the collateral pledged
pursuant to the Pledge Agreement or the Guaranty of Non-Recourse
Obligations or the liability of the parties thereunder; or
(5) constitute a waiver, release or discharge of any indebtedness
or obligation evidenced by the Note or secured by the Loan Documents,
and the same shall continue until paid or discharged in full; or
(6) prevent recourse to Borrower and the Guarantor and their
respective assets for repayment of the Indebtedness in the event that
any petition for bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law, shall be
filed (A) by Borrower or (B) against Borrower with the consent or
acquiescence of Borrower or the Guarantor; or
(7) prevent recourse to the Borrower or the Guarantor for losses
incurred by Agent in the event that Borrower causes or permits a
Ground Lease Impairment to occur; or
(8) apply with respect to the right of the Lenders to
Page 87
89
recover security deposits received by Borrower or any Person described
in clauses (i) through (v) above (or that Borrower or such Person
received credit for) from tenants and not previously refunded or
turned over.
ARTICLE IX.
THE AGENT
Section 9.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Loan Documents, together
with such other powers as are reasonably incidental thereto. Agent (which term
as used in this sentence and in Section 9.5 and the first sentence of Section
9.6 hereof shall include reference to its Affiliates and its own and its
Affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement and in
the other Loan Documents, and shall not by reason of this Agreement or any other
Loan Document be a trustee for any Lender; (b) shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or in any other Loan Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or any other document referred to or provided for herein or therein or
for any failure by Borrower, or any other Person to perform any of their
obligations hereunder or thereunder; (c) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or under any other
Loan Document; and (d) shall not be responsible for any action taken or omitted
to be taken by it hereunder or under any other Loan Document or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
Section 9.2 Reliance by Agent. Agent shall be entitled to rely upon
any certification, notice or other communication (including, without limitation,
any thereof by telephone, facsimile transmission, telex, electronic mail, or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel, independent accountants and other experts selected by Agent.
As to any matters not expressly provided for by this Agreement or any other Loan
Document, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with the
instructions given by all of the Lenders, and such instructions of such Lenders
and any action taken or failure to act pursuant thereto shall be binding on all
of the Lenders.
Section 9.3 Defaults. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless Agent has
received written notice from a Lender or Borrower specifying such Default and
stating that such notice is a "Notice of Default". In the event that Agent
receives such a notice of the occurrence of a Default or Event of Default, Agent
shall give prompt notice thereof to the Lenders. Agent shall (subject to Section
9.7 hereof) take such action with respect to such Default or Event of Default as
shall be directed by all Lenders, provided that, unless and until Agent shall
have received such directions, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the Lenders
except to the extent
Page 88
90
that this Agreement expressly requires that such action be taken, or not be
taken, only with the consent or upon the authorization of all of the Lenders.
Section 9.4 Rights as a Lender. With respect to the Loan made by it,
Agent in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and my exercise the same as though it were
not acting as Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include Agent in its individual capacity. Agent and
its affiliates may (without having to account therefor to any Lender) lend money
to, make investments in and generally engage in any kind of business with
Borrower or any of their Affiliates as if it were not acting as Agent, and Agent
and its Affiliates may accept fees and other consideration from Borrower or such
Affiliate for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
Section 9.5 Indemnification. The Lenders agree to indemnify Agent (to
the extent not reimbursed by Borrower, but without limiting the obligations of
Borrower under the Loan Documents) ratably in accordance with their respective
interests in the Loan, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against Agent (including by any Lender) arising out of or by reason of
any investigation in or in any way relating to or arising out of this Agreement
or any other Loan Document or any other documents contemplated by or referred to
herein or therein or the Transaction (including, without limitation, the costs
and expenses that Borrower is obligated to pay under the Loan Documents, but
excluding, unless a Default or Event of Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
Section 9.6 Non-Reliance on Agent and Other Lenders. Each Lender
agrees and acknowledges that it has, independently and without reliance on Agent
or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of Borrower and its own
decision to enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
under any other Loan Document. Agent shall not be required to keep itself
informed as to the performance or observance by Borrower of this Agreement or
any of the other Loan Documents or to inspect the properties or books of
Borrower or any of their Affiliates. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
Agent hereunder, Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of Borrower or any of their Affiliates that may come into
the possession of Agent or any of its Affiliates.
Section 9.7 Failure to Act. Except for action expressly required of
Agent hereunder and under the other Loan Documents, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from the Lenders of their
indemnification obligations under Section 9.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
Page 89
91
Section 9.8 Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign upon giving
notice thereof to the Lenders; provided, however, that such resignation shall
not be effective until such time as the successor Agent is in place and shall
deliver written notice of such appointment to the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the 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, that shall be a sophisticated financial institution.
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, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
IX 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 9.9 Agency Fee. Each Lender will pay to Agent an agency fee as
may be agreed upon between such Lender and Agent. Borrower shall not be liable
for the payment of such fee.
Section 9.10 Consents under Loan Documents. Agent may consent to any
modification, supplement or waiver under any of the Loan Documents, provided
that, without the prior consent of each Lender, Agent shall not release any
Collateral or otherwise terminate any Lien under any Loan Document providing for
collateral security, or agree to additional obligations being secured by such
collateral security (unless the Lien for such additional obligations shall be
junior to the Lien in favor of the Obligations), except that no such consent
shall be required, and Agent is hereby authorized, to release any Lien covering
Collateral that is the subject of a disposition permitted hereunder.
Section 9.11 Notices, Reports and Other Communications. Agent shall
provide, at its expense, copies of each notice, report, document, correspondence
or other written communication delivered to Agent by Borrower or any Affiliate
of Borrower pursuant to any Loan Document, to each Lender identified in such
notice, report, document, correspondence or other written communication or
reasonably determined by Agent to be entitled thereto or affected thereby, as
soon as practicable after Agent's receipt thereof.
Page 90
92
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
AGENT AND INITIAL LENDER:
SALOMON BROTHERS REALTY CORP., a
New York corporation
By:
-----------------------------
Name:
----------------------
Title: Authorized Agent
BORROWER:
NORTH VALLEY TECH LLC, a Delaware limited
liability company
By: NVT Corp., a Delaware corporation,
its manager
By:
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
COLLATERAL AGENT:
LASALLE BANK NATIONAL ASSOCIATION,
a nationally chartered bank
(as Collateral Agent for the Lenders only)
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Trust Officer
Page 91