Exhibit 10.5
MEZZANINE LOAN AND SECURITY AGREEMENT
Dated as of September 18, 2002
Between
BRE/PARK PLACE MEZZANINE L.L.C.
as Mezzanine Borrower
and
GERMAN AMERICAN CAPITAL CORPORATION
as Mezzanine Lender
TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1
Section 1.1 Definitions. 1
Section 1.2 Principles of Construction 20
II. GENERAL TERMS 20
Section 2.1 Loan; Disbursement to Mezzanine Borrower 20
Section 2.2 Interest; Loan Payments; Late Payment Charge 21
Section 2.3 Prepayments 22
Section 2.4 Regulatory Change; Taxes 24
Section 2.5 Conditions Precedent to Closing 26
III. CASH MANAGEMENT 32
Section 3.1 Cash Management 32
IV. REPRESENTATIONS AND WARRANTIES 40
Section 4.1 Mezzanine Borrower Representations 40
Section 4.2 Survival of Representations 47
V. MEZZANINE BORROWER COVENANTS 47
Section 5.1 Affirmative Covenants 47
Section 5.2 Negative Covenants 58
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION 62
Section 6.1 Insurance Coverage Requirements 62
Section 6.2 Condemnation 63
Section 6.3 Certificates 63
VII. RESERVED. 64
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS. 64
Section 8.1 Restrictions on Transfers 64
Section 8.2 Deliveries to Mezzanine Lender 64
Section 8.3 Permitted Transfers 65
IX. INTEREST RATE CAP AGREEMENT 66
Section 9.1 Interest Rate Cap Agreement 66
Section 9.2 Pledge 66
Section 9.3 Covenants 66
Section 9.4 Powers of Mezzanine Borrower Prior to an Event of Default 68
Section 9.5 Representations and Warranties 68
Section 9.6 Payments 69
Section 9.7 Remedies 69
Section 9.8 Sales of Interest Rate Cap Collateral 71
Section 9.9 Public Sales Not Possible 72
Section 9.10 Receipt of Sale Proceeds 72
Section 9.11 Replacement Interest Rate Cap Agreement 72
X. RESERVED 72
XI. RESERVED. 72
XII. ENVIRONMENTAL MATTERS 72
Section 12.1 Representations 72
Section 12.2 Covenants 73
Section 12.3 Environmental Reports 74
Section 12.4 Environmental Indemnification 74
Section 12.5 Recourse Nature of Certain Indemnifications 75
XIII. ASSIGNMENTS AND PARTICIPATIONS 75
Section 13.1 Assignment and Acceptance 75
Section 13.2 Effect of Assignment and Acceptance 75
Section 13.3 Content 76
Section 13.4 Register 76
Section 13.5 Substitute Mezzanine Notes 77
Section 13.6 Participations 77
Section 13.7 Disclosure of Information 78
Section 13.8 Security Interest in Favor of Federal Reserve Bank. 78
XIV. RESERVED 78
XV. RESERVED 78
XVI. RESERVED 78
XVII. DEFAULTS. 78
Section 17.1 Event of Default 78
Section 17.2 Remedies 83
Section 17.3 Remedies Cumulative; Waivers 85
Section 17.4 Costs of Collection 85
Section 17.5 Distribution of Collateral Proceeds 85
XVIII. SPECIAL PROVISIONS 86
Section 18.1 Exculpation 86
XIX. MISCELLANEOUS 88
Section 19.1 Survival. 88
Section 19.2 Mezzanine Lender's Discretion. 88
Section 19.3 Governing Law 88
Section 19.4 Modification, Waiver in Writing. 90
Section 19.5 Delay Not a Waiver 90
Section 19.6 Notices 90
Section 19.7 TRIAL BY JURY 92
Section 19.8 Headings 92
Section 19.9 Severability 92
Section 19.10 Preferences 92
Section 19.11 Waiver of Notice 93
Section 19.12 Expenses; Indemnity 93
Section 19.13 Exhibits and Schedules Incorporated 95
Section 19.14 Offsets, Counterclaims and Defenses 95
Section 19.15 Liability of Assignees of Mezzanine Lender. 96
Section 19.16 No Joint Venture or Partnership; No Third Party Beneficiaries 96
Section 19.17 Publicity 97
Section 19.18 Waiver of Marshalling of Assets 97
Section 19.19 Waiver of Counterclaim 97
Section 19.20 Conflict; Construction of Documents; Reliance 97
Section 19.21 Prior Agreements 98
Section 19.22 Brokers 98
Section 19.23 Counterparts 98
SEE INDEX TO EXHIBITS AND SCHEDULES AT END OF DOCUMENT
MEZZANINE LOAN AND SECURITY AGREEMENT
THIS MEZZANINE LOAN AND SECURITY AGREEMENT dated as of September 18,
2002 (as amended, restated, replaced, supplemented or otherwise modified from
time to time, this AGREEMENT), between BRE/PARK PLACE MEZZANINE L.L.C., a
Delaware limited liability company (MEZZANINE BORROWER) having an address c/o
Blackstone Real Estate Acquisitions III L.L.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, and GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation,
having an address at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (together
with its successors and assigns, MEZZANINE LENDER).
WITNESSETH:
WHEREAS, Mezzanine Borrower desires to obtain the Loan (as hereinafter
defined) from Mezzanine Lender;
WHEREAS, Mezzanine Lender is willing to make the Loan to Mezzanine
Borrower, subject to and in accordance with the terms of this Agreement and the
other Loan Documents (Mezzanine) (as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Mezzanine
Lender and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereto hereby covenant, agree, represent and
warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
ACCOUNT AGREEMENT (MEZZANINE) shall mean the Account and Control
Agreement (Mezzanine), dated as of the date hereof, among Mezzanine Lender,
Mezzanine Borrower and Cash Management Bank (Mezzanine).
ACCOUNT AGREEMENT (MORTGAGE) shall mean the Account and Control
Agreement, dated the date hereof, among Mortgage Lender, Mortgage Borrower and
Cash Management Bank (Mortgage).
ACCOUNT COLLATERAL (MEZZANINE) shall have the meaning set forth in
Section 3.1.2
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ACKNOWLEDGMENT shall mean the Acknowledgment, dated on or about the
date hereof made by Counterparty, or as applicable, Approved Counterparty in the
form of EXHIBIT A.
ADDITIONAL NON-CONSOLIDATION OPINION shall have the meaning set forth
in Section 4.1.20(b).
AFFILIATE shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with, or any general partner or managing member in, such
specified Person. An Affiliate of a Person includes, without limitation, (i) any
officer or director of such Person, (ii) any record or beneficial owner of more
than 10% of any class of ownership interests of such Person and (iii) any
Affiliate of the foregoing. 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 interest, by contract or
otherwise; and the terms "controlling" and "controlled" have the meanings
correlative to the foregoing.
AGREEMENT shall mean this Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
AIR SPACE LEASE shall mean that certain Air Space Lease by and between
▇▇▇▇ ▇▇▇▇▇▇▇▇ Operating Partnership, as lessor thereunder, and ▇▇▇▇ ▇▇▇▇▇▇▇▇
Development Limited Partnership, as lessee thereunder, a memorandum of which was
recorded on July 30, 1985, as Instrument No. 85-279769 in the Official Records
of Orange County, California.
AIR SPACE PARCEL shall mean the "Premises" as defined in the Air Rights
Lease.
ALTA shall mean American Land Title Association, or any successor
thereto.
ALTERATIONS shall have the meaning set forth in the Loan Agreement
(Mortgage).
ANNUAL BUDGET shall have the meaning set forth in the Loan Agreement
(Mortgage).
APPROVED BANK shall have the meaning set forth in the Account Agreement
(Mezzanine).
APPROVED COUNTERPARTY shall mean a bank or other financial institution
which (i) as of the date hereof, has a minimum long-term unsecured debt rating
of at least "AA" or its equivalent by each of the Rating Agencies (as
hereinafter defined), or if any such bank or other
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financial institution is not rated by all the Rating Agencies, then a minimum
long-term rating of at least "AA" or its equivalent by two of the Rating
Agencies (one of which must be S&P), it being understood that the "AA" benchmark
rating and other benchmark ratings in this Agreement are intended to be the
ratings, or the equivalent of ratings, issued by S&P and (ii) shall maintain
until the expiration of the applicable Interest Rate Cap Agreement a credit
rating of "AA-" by S&P and the equivalent by ▇▇▇▇▇'▇.
ASSIGNMENT AND ACCEPTANCE shall mean an assignment and acceptance
entered into by Mezzanine Lender and an assignee, and accepted by Mezzanine
Lender in accordance with Article XV and in substantially the form of EXHIBIT B
or such other form customarily used by Mezzanine Lender in connection with the
participation or syndication of mortgage or mezzanine loans at the time of such
assignment.
BANKRUPTCY CODE shall mean Title 11, U.S.C.A., as amended from time to
time and any successor statute thereto.
BUSINESS DAY shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York or in the state in which Servicer
is located are not open for business. When used with respect to an Interest
Determination Date, Business Day shall mean any day on which dealings in
deposits in U.S. Dollars are transacted in the London interbank market.
CAPITAL EXPENDITURES shall mean any amount incurred in respect of
capital items which in accordance with GAAP would not be included in Mortgage
Borrower's annual financial statements for an applicable period as an operating
expense of the Property and is not reasonably expected by Mortgage Borrower to
be a regularly recurring operating expense of the Property.
CASH shall mean the legal tender of the United States of America.
CASH AND CASH EQUIVALENTS shall mean any or a combination of the
following: (i) Cash, and (ii) U.S. Government Obligations.
CASH MANAGEMENT BANK (MEZZANINE) shall mean ▇▇▇▇▇▇ Trust and Savings
Bank or any successor Approved Bank acting as Cash Management Bank (Mezzanine)
under the Account Agreement (Mezzanine), or another financial institution
reasonably approved by the Mezzanine Lender.
CASH MANAGEMENT BANK shall have the meaning set forth in the Loan
Agreement (Mortgage).
CERTIFICATE shall have the meaning set forth in the Pledge.
CLOSING DATE shall mean the date hereof.
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CODE shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
COLLATERAL shall mean collectively (i) all of Pledged Collateral and
all proceeds thereof, (ii) all Receipts, (iii) any stock certificates or other
certificates, membership interest certificates or instruments evidencing any of
the foregoing property described in clauses (i) and (ii) above, (iv) the
Interest Rate Cap
Collateral (Mezzanine), (v) the Account Collateral (Mezzanine) and (vi)
all other rights appurtenant to the property described in clauses (i) through
(v) above.
COLLATERAL ACCOUNTS (MEZZANINE) shall have the meaning set forth in
Section 3.1.1.
CONTROL shall mean (i) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or otherwise
and (ii) the ownership, direct or indirect, of no less than 51% of the voting
securities of such Person, and the terms Controlled, Controlling and Common
Control shall have correlative meanings.
COUNTERPARTY shall mean, with respect to the Interest Rate Cap
Agreement (Mezzanine), SMBC Derivative Products Limited and with respect to any
Replacement Interest Rate Cap Agreement (Mezzanine), any substitute Approved
Counterparty.
COUNTERPARTY OPINION shall have the meaning set forth in Section
9.3(g).
DEBT shall mean, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (excluding trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with GAAP, recorded as capital leases; (c) current
liabilities of such Person in respect of unfunded vested benefits under plans
covered by Title IV of ERISA; (d) obligations issued for, or liabilities
incurred on the account of, such Person; (e) obligations or liabilities of such
Person arising under letters of credit, credit facilities or other acceptance
facilities; (f) obligations of such Person under any guarantees or other
agreement to become secondarily liable for any obligation of any other Person,
endorsements (other than for collection or deposit in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person or otherwise to assure a
creditor against loss; (g) obligations of such Person secured by any Lien on any
property of such Person, whether or not the obligations have been assumed by
such Person; or (h) obligations of such Person under any interest rate or
currency exchange agreement.
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DEBT SERVICE shall mean collectively, Debt Service (Mezzanine) and Debt
Service (Mortgage).
DEBT SERVICE (MEZZANINE) shall mean, with respect to any particular
period of time, scheduled interest payments under the Mezzanine Note.
DEBT SERVICE (MORTGAGE) shall mean, with respect to any particular
period of time, scheduled interest payments under the Mortgage Note.
DEFAULT shall mean the occurrence of any event hereunder or under any
other Loan Document (Mezzanine) which, but for the giving of notice or passage
of time, or both, would be an Event of Default.
DEFAULT RATE shall have the meaning set forth in the Mezzanine Note.
DISTRIBUTIONS shall have the meaning set forth in the Pledge.
ELIGIBLE ACCOUNT has the meaning set forth in the Account Agreement
(Mezzanine).
ENFORCEMENT COSTS shall have the meaning set forth in Section 17.4.
ENVIRONMENTAL CERTIFICATE shall have the meaning set forth in Section
12.2.1.
ENVIRONMENTAL CLAIM shall have the meaning set forth in the Loan
Agreement (Mortgage).
ENVIRONMENTAL EVENT shall have the meaning set forth in Section 12.2.1.
ENVIRONMENTAL INDEMNITY (MEZZANINE) shall mean the Environmental
Indemnity, dated as of the date hereof, made by Mezzanine Borrower in favor of
Mezzanine Lender.
ENVIRONMENTAL INDEMNITY (MORTGAGE) shall mean the Environmental
Indemnity, dated the date hereof, made by Mortgage Borrower in favor of Mortgage
Lender.
ENVIRONMENTAL LAWS shall have the meaning provided in the Environmental
Indemnity.
ENVIRONMENTAL REPORTS shall have the meaning set forth in Section 12.1.
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EXCESS CASH FLOW shall have the meaning set forth in the Loan Agreement
(Mortgage).
EXCESS PROCEEDS shall have the meaning set forth in Section 2.3.1(b).
EXCULPATED PARTIES shall have the meaning set forth in Section 18.1.1.
EXCUSABLE DELAY shall mean a delay solely due to acts of god,
governmental restrictions, stays, judgments, orders, decrees, enemy actions,
civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or
materials or other cases beyond the reasonable control of Mezzanine Borrower or
Mortgage Borrower, but Mezzanine Borrower's or Mortgage Borrower's lack of funds
in and of itself shall not be deemed a cause beyond the control of Mezzanine
Borrower or Mortgage Borrower, as applicable.
ERISA shall have the meaning set forth in the Loan Agreement
(Mortgage).
EVENT OF DEFAULT shall have the meaning set forth in Section 17.1(a).
FISCAL YEAR shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan or
the portion of any such 12-month period falling within the term of the Loan in
the event that such a 12-month period occurs partially before or after, and
partially during, the term of the Loan.
FOREIGN LENDER shall mean any Lender that is organized under the laws
of a jurisdiction other than that in which the Mezzanine Borrower is located.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
GAAP shall mean the generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, to the extent such
principles are applicable to the facts and circumstances on the date of
determination.
GOVERNMENTAL AUTHORITY shall mean any court, board, agency, commission,
office or other authority of any nature whatsoever for any governmental ▇▇▇▇
(▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether now or
hereafter in existence.
GUARANTOR shall mean, collectively, Blackstone Real Partners III L.P.,
Blackstone Real Estate Partners III T.E.1 L.P., Blackstone Real Estate Partners
III T.E.2 L.P., Blackstone
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Real Estate Partners III T.E.3 L.P., Blackstone Real Estate Holdings III L.P.
and Blackstone Real Estate Partners III F.F. L.P., each a Delaware limited
partnership.
HAZARDOUS SUBSTANCE shall have the meaning provided for the term
"Hazardous Materials" in the Environmental Indemnity.
HOLDING ACCOUNT shall mean the "Holding Account" and various
sub-accounts to the Holding Account established pursuant to the Loan Agreement
(Mortgage) as in effect on the date hereof.
IMPOSITIONS shall have the meaning set forth in the Loan Agreement
(Mortgage).
INCREASED COSTS shall have the meaning set forth in Section 2.4.1.
INDEBTEDNESS shall mean, at any given time, the Principal Amount,
together with all accrued and unpaid interest thereon and all other obligations
and liabilities due or to become due to Mezzanine Lender pursuant hereto, under
the Mezzanine Note or in accordance with the other Loan Documents (Mezzanine)
and all other amounts, sums and expenses paid by or payable to Mezzanine Lender
hereunder or pursuant to the Mezzanine Note or the other Loan Documents
(Mezzanine).
INDEMNIFIED PARTIES shall have the meaning set forth in Section
19.12(b).
INDEPENDENT shall mean, when used with respect to any Person, a Person
who: (i) does not have any direct financial interest or any material indirect
financial interest in any Mezzanine Borrower or Mortgage Borrower or in any of
their Affiliates, (ii) is not connected with Mezzanine Borrower or Mortgage
Borrower or any of their Affiliates, as an officer, employee, promoter,
underwriter, trustee, partner, member, manager, creditor, director, supplier,
customer or person performing similar functions, and (iii) is not a member of
the immediate family of a Person defined in (i) or (ii) above.
INDEPENDENT ACCOUNTANT shall mean Deloitte & Touche or another firm of
nationally recognized, certified public accountants which is Independent and
which is selected by Mezzanine Borrower or Mortgage Borrower, as applicable, and
reasonably acceptable to Mezzanine Lender.
INDEPENDENT ARCHITECT shall mean an architect, engineer or construction
consultant selected by Mezzanine Borrower or Mortgage Borrower, as applicable,
which is Independent, licensed to practice in the State and has at least five
(5) years of architectural experience and which is selected by Borrower and
reasonably acceptable to Mezzanine Lender.
INDEPENDENT MANAGER, INDEPENDENT MEMBER OR INDEPENDENT DIRECTOR shall
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mean a Person who is not and will not be while serving and has never been (i) a
member (other than an Independent Member), manager (other than an Independent
Manager), director (other than an Independent Director), employee, attorney, or
counsel of Mezzanine Borrower or Mortgage Borrower or their Affiliates, (ii) is
not a customer, supplier or other Person who derives more than 1% of its
purchases or revenues from its activities with Mezzanine Borrower, Mortgage
Borrower or their Affiliates, or (iii) is not a member of the immediate family
of any member (other than an Independent Member), manager (other than an
Independent Manager), employee, attorney, customer, supplier or other Person
referred to above or (iv) a person Controlling or under the common Control of
anyone listed in (i) through (iii) above. A Person that otherwise satisfies the
foregoing shall not be disqualified from serving as an Independent Manager or
Independent Member if such individual is at the time of initial appointment, or
at any time while serving as an Independent Manager, Independent Member or
Independent Director, as applicable, of a Single Purpose Entity affiliated with
Mezzanine Borrower.
INSURANCE REQUIREMENTS shall have the meaning set forth in the Loan
Agreement (Mortgage).
INSTRUCTION LETTER shall mean that certain direction letter, dated as
of the date hereof, from Mortgage Borrower and Mezzanine Borrower to Mortgage
Lender.
INTERCREDITOR AGREEMENT shall mean an intercreditor agreement between
Mezzanine Lender and Mortgage Lender.
INTEREST DETERMINATION DATE shall have the meaning set forth in the
Mezzanine Note.
INTEREST PERIOD shall have the meaning set forth in the Mezzanine Note.
INTEREST RATE CAP AGREEMENT (MEZZANINE) shall mean the Confirmation and
Agreement (together with the confirmation and schedules relating thereto), dated
on or about the date hereof, between the Counterparty and Mezzanine Borrower,
obtained by Mezzanine Borrower and collaterally assigned to Mezzanine Lender
pursuant to this Agreement. After delivery of a Replacement Interest Rate Cap
Agreement (Mezzanine) to Mezzanine Lender, the term Interest Rate Cap Agreement
(Mezzanine) shall be deemed to mean such Replacement Interest Rate Cap Agreement
(Mezzanine). The Interest Rate Cap Agreement shall contain each of the
following:
(a) NOTIONAL AMOUNT. The notional amount of the Interest Rate Cap
Agreement shall be equal to the Principal Amount;
(b) REMAINING TERM. The remaining term of the Interest Rate Cap
Agreement shall at all times extend through the end of the Interest Period in
which the Maturity
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Date occurs as extended from time to time pursuant to this Agreement and the
Loan Documents;
(c) PARTIES. The Interest Rate Cap Agreement shall be issued by the
Counterparty to Borrower and shall be pledged to Lender by Borrower in
accordance with this Agreement;
(d) PAYMENT STREAM. The Counterparty under the Interest Rate Cap
Agreement shall be obligated to make a stream of payments, directly to the
Mezzanine Account (whether or not an Event of Default has occurred) from time to
time equal to the product of (i) the notional amount of such Interest Rate Cap
Agreement multiplied by (ii) the excess, if any, of the LIBOR over the Strike
Price;
(e) ACKNOWLEDGMENT. The Counterparty under the Interest Rate Cap
Agreement shall execute and deliver the Acknowledgment; and
(f). OTHER. The Interest Rate Cap Agreement shall impose no material
obligation on the beneficiary thereof (after payment of the acquisition cost)
and shall be in all material respects satisfactory in form and substance to
Lender.
INTEREST RATE CAP COLLATERAL shall have the meaning set forth in
Section 9.2.
LAND shall have the meaning set forth in the Security Instrument.
LATE PAYMENT CHARGE shall have the meaning set forth in Section 2.2.3.
LEASE shall have the meaning set forth in the Loan Agreement
(Mortgage).
LEGAL REQUIREMENTS shall have the meaning set forth in the Loan
Agreement (Mortgage).
LIBOR shall have the meaning set forth in the Mezzanine Note.
LIBOR MARGIN shall mean the weighted average of the LIBOR Margins set
forth in each Mezzanine Note.
LIBOR RATE shall have the meaning set forth in the Mezzanine Note.
LICENSE DATE shall mean the date upon which Manager becomes licensed as
a real estate broker under the laws of the State of California.
LIEN shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance or charge
on or affecting Mortgage Borrower, Mezzanine Borrower, the Collateral, the
Property, any portion thereof or any interest
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therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and the
filing of mechanic's, materialmen's and other similar liens and encumbrances.
LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in the
Mezzanine Note.
LOAN shall mean the loan in the amount of Forty One Million Dollars
($41,000,000) made by Mezzanine Lender to Mezzanine Borrower pursuant to this
Agreement.
LOAN (MORTGAGE) shall mean the loan in the amount of One Hundred Twenty
Three Million Dollars ($123,000,000) made by Mortgage Lender to Mortgage
Borrower pursuant to the Loan Agreement (Mortgage).
LOAN AGREEMENT (MORTGAGE) shall mean the Loan and Security Agreement,
dated the date hereof, between Mortgage Borrower, as borrower, and Mortgage
Lender, as lender.
LOAN DOCUMENTS (MEZZANINE) shall mean, collectively, this Agreement,
the Mezzanine Note, the Account Agreement (Mezzanine), the Recourse Guaranty
(Mezzanine), the Environmental Indemnity (Mezzanine), the Manager's Consent
(Mezzanine), the Third-Party Manager's Consent (Mezzanine) and the Pledge and
any and all other agreements, instruments or documents executed by Mezzanine
Borrower (or another Person) evidencing, securing or delivered in connection
with the Loan and the transactions contemplated thereby, including, without
limitation, any certificates or representations delivered by or on behalf of
Mezzanine Borrower, any Affiliate of Mezzanine Borrower, Manager, or any
Affiliate of Manager.
LOAN DOCUMENTS (MORTGAGE) shall mean, collectively, the Loan Agreement
(Mortgage), the Mortgage Note, the Security Instrument, the Assignment of
Leases, the Environmental Indemnity (Mortgage), the Manager's Consent
(Mortgage), the Third-Party Manager's Consent (Mortgage) the Account Agreement
(Mortgage), the Recourse Guaranty (Mortgage) and all other documents executed
and/or delivered by Mortgage Borrower in connection with the Loan (Mortgage)
including any certifications or representations delivered by or on behalf of
Mortgage Borrower, any Affiliate of Mortgage Borrower, the Manager, or any
Affiliate of the Manager.
LOCKOUT RELEASE DATE shall have the meaning set forth in the Mezzanine
Note.
MANAGEMENT AGREEMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
MANAGEMENT FEE shall mean an amount equal to the property management
fee
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payable to the Manager pursuant to the terms of the Management Agreement for
management services.
MANAGER shall mean BREA Property Management of California L.L.C., a
Delaware limited liability company or such other Qualified Manager as may become
manager of the Property in accordance with the provisions hereof.
MANAGER'S CONSENT (MEZZANINE) shall mean that certain Manager's Consent
and Subordination of Management Agreement (Mezzanine), dated as of the date
hereof, among Mezzanine Lender, Mezzanine Borrower and Manager, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
MANAGER'S CONSENT (MORTGAGE) shall mean that certain Manager's Consent
and Subordination of Management Agreement, dated as of the date hereof, among
Mortgage Lender, Mortgage Borrower and Manager, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
MATERIAL ADVERSE EFFECT shall mean any event or condition that has a
material adverse effect on (i) the Property taken as a whole, (ii) the business,
profits, operations or financial condition of Mortgage Borrower or Mezzanine
Borrower, (iii) the ability of Mezzanine Borrower to repay the principal and
interest of the Loan as it becomes due or to satisfy any of Mezzanine Borrower's
obligations under the Loan Documents (Mezzanine), (iv) the ability of Mortgage
Borrower to repay the principal and interest of the Loan (Mortgage) as it
becomes due or to satisfy any of Mortgage Borrower's obligations under the Loan
Documents (Mortgage), (v) the validity or enforceability of any of the Loan
Documents (Mezzanine) against any party thereto, (vi) the Collateral
(Mezzanine), taken as a whole or (vii) the priority of the Liens in favor of
Mezzanine Lender.
MATURITY DATE shall have the meaning set forth in the Mezzanine Note.
MATURITY DATE PAYMENT shall have the meaning set forth in the Mezzanine
Note.
MAXIMUM LEGAL RATE shall mean the maximum non-usurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Mezzanine
Note and as provided for herein or the other Loan Documents (Mezzanine), under
the laws of such state or states whose laws are held by any court of competent
jurisdiction to govern the interest rate provisions of the Loan.
MEMBER POWER shall mean the member power executed by Mezzanine Borrower
and substantially in the form of EXHIBIT L.
MEZZANINE ACCOUNT shall have the meaning set forth in Section 3.1.1.
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MEZZANINE BORROWER shall have the meaning set forth in the first
paragraph of this Agreement.
MEZZANINE BORROWER LLC AGREEMENT shall mean that certain Limited
Liability Company Agreement of BRE/PARK PLACE MEZZANINE L.L.C., dated as of
September 18, 2002, as such may be amended, restated, replaced, supplemented or
otherwise modified from time to time to the extent permitted pursuant to this
Agreement.
MEZZANINE BORROWER'S ACCOUNT shall mean the following account:
Account Name: BRE/Park Place Mezzanine L.L.C. Operating Account
Account Number:▇▇▇-▇▇▇-▇
Bank Name: ▇▇▇▇▇▇ Trust and Savings Bank
ABA Number: ▇▇▇▇▇▇▇▇▇
MEZZANINE DEBT SERVICE RESERVE ACCOUNT shall have the meaning
set forth in Section 3.1.1(a).
MEZZANINE LENDER shall have the meaning set forth in the first
paragraph of this Agreement.
MEZZANINE LENDER'S EXPENSES shall mean all reasonable expenses incurred
in connection with the origination of the Loan, including, without limitation,
preparation of the Loan Documents (Mezzanine) , recording fees, underwriting
costs, search fees, and other fees and out of pocket expenses (including
reasonable attorneys' fees and disbursements and other third party expenses) of
the Mezzanine Lender.
MEZZANINE NOTE shall mean, collectively, those two certain Mezzanine
Notes, dated the date hereof, in the principal amounts of Twenty Six Million
Five Hundred Thousand Dollars ($26,500,000) and Fourteen Million Five Hundred
Thousand Dollars ($14,500,000), respectively, made by Mezzanine Borrower, as
maker, in favor of Mezzanine Lender, as payee, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
MONETARY DEFAULT shall mean a Default (i) that can be cured with the
payment of money or (ii) arising pursuant to Section 17.1(a)(vi) or (vii).
MORTGAGE BORROWER shall mean BRE/PARK PLACE L.L.C., a Delaware limited
liability company, together with its permitted successors and assigns.
MORTGAGE DEFAULT shall have the meaning ascribed to "Default" in the
Loan Agreement (Mortgage).
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MORTGAGE EVENT OF DEFAULT shall have the meaning ascribed to "Event of
Default" in the Loan Agreement (Mortgage).
MORTGAGE NOTE shall have the meaning ascribed to "Note" in the Loan
Agreement (Mortgage).
NET EXCESS CASH FLOW shall have the meaning set forth in Section
3.1.6(a).
NET EXCESS CASH FLOW COMMENCEMENT DATE shall have the meaning set forth
in Section 3.1.6(a).
MOODY'S shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
NET OPERATING INCOME shall mean the amount obtained by subtracting
Operating Expenses from Operating Income.
NOTES shall mean, collectively, the Mortgage Note and the Mezzanine
Note.
OBLIGATIONS shall mean, collectively, the Obligations (Mezzanine) and
the Obligations (Mortgage).
OBLIGATIONS (MEZZANINE) shall mean all indebtedness, obligations and
liabilities of Mezzanine Borrower and Guarantor to Mezzanine Lender, under this
Agreement or any of the other Loan Documents (Mezzanine) or in respect of the
Loan or the Mezzanine Note, or other instruments at any time evidencing any of
the foregoing, whether existing on the date of this Agreement or arising or
incurred hereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
OBLIGATIONS (MORTGAGE) shall have the meaning ascribed to "Obligations"
in the Loan Agreement (Mortgage).
NON-CONSOLIDATION OPINION shall have the meaning provided in Section
2.5.16.
OFFICER'S CERTIFICATE shall mean a certificate executed by an
authorized signatory of Mezzanine Borrower that is familiar with the financial
condition of Mezzanine Borrower, the Mortgage Borrower and the operation of the
Property.
OPERATING EXPENSES shall have the meaning set forth in the Loan
Agreement (Mortgage).
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OPERATING INCOME shall have the meaning set forth in the Loan Agreement
(Mortgage).
OPINION OF COUNSEL shall mean an opinion of counsel of a law firm
selected by Mezzanine Borrower and reasonably acceptable to Mezzanine Lender.
OTHER CHARGES shall mean maintenance charges, impositions other than
Impositions, and any other charges, including, without limitation, vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Property, now or hereafter levied or assessed or imposed against the Property or
any part thereof by any Governmental Authority, other than those required to be
paid by a tenant pursuant to its respective Lease.
OTHER TAXES shall have the meaning set forth in Section 2.4.3.
PAYMENT DATE shall have the meaning set forth in the Mezzanine Note.
PERMITTED DEBT shall have the meaning set forth in the Loan Agreement
(Mortgage).
PERMITTED DEBT (MEZZANINE) shall mean the Mezzanine Note and other
obligations and liabilities specifically provided for in any Loan Document
(Mezzanine) and secured by this Agreement and the Pledge and the other Loan
Documents (Mezzanine).
PERMITTED ENCUMBRANCES shall have the meaning set forth in the Loan
Agreement (Mortgage).
PERMITTED INVESTMENTS shall have the meaning set forth in the Account
Agreement (Mezzanine).
PERMITTED MORTGAGE LOAN AMENDMENT shall have the meaning set forth in
Section 5.1.19(b).
PERSON shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
PHYSICAL CONDITIONS REPORT shall mean the structural engineering report
with respect to the Property (i) prepared by an Independent Architect, (ii)
addressed to Mezzanine Lender or with respect to which Mezzanine Lender shall
have received a reliance letter, (iii) prepared based on a scope of work
determined by Mortgage Lender in Mortgage Lender's reasonable discretion, and
(iv) in form and content acceptable to Mortgage Lender in Mortgage Lender's
reasonable discretion, together with any amendments or supplements thereto.
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PLAN ASSETS shall have the meaning provided in Section 4.1.9(b).
PLEDGE shall mean that certain Pledge and Security Agreement, dated as
of the date hereof, from Mezzanine Borrower to Mezzanine Lender pledging
Mezzanine Borrower's 100% membership (including limited liability company)
interests of the Mortgage Borrower.
PLEDGED COLLATERAL shall have the meaning set forth in the Pledge.
PRINCIPAL AMOUNT shall have the meaning set forth in the Mezzanine
Note.
PRINCIPAL AMOUNT (MORTGAGE) shall have the meaning ascribed to
"Principal Amount" in the Mortgage Note.
PROCEEDS shall have the meaning set forth in Loan Agreement (Mortgage).
PROHIBITED MORTGAGE LOAN AMENDMENT shall have the meaning specified in
Section 5.1.19(b).
PROPERTY shall have the meaning set forth in the Loan Agreement
(Mortgage).
PROTECTIVE ADVANCES shall mean sums advanced by Mezzanine Lender for
the purposes of payment of items reasonably necessary to protect the Collateral.
PURCHASE AGREEMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
QUALIFIED MANAGER shall mean (i) Manager, (ii) Third-Party Manager,
(iii) an Affiliate of Mezzanine Borrower Controlled by or under Common Control
with one or more Guarantors, (iv) a reputable and experienced management
organization which together with its Affiliates manages (excluding the Property)
a minimum of 5,000,000 square feet of Class A office space (or mixed use
buildings having Class A office space as the predominant component) located in
major United States cities, provided that (in the case of this clause (iv) only)
Mezzanine Borrower shall have obtained the prior written consent of Mezzanine
Lender for such Person, which consent shall not be unreasonably withheld or
delayed or (v) any other manager as Mezzanine Lender shall approve in its sole
and absolute discretion.
RATING AGENCIES shall have the meaning set forth in the Loan Agreement
(Mortgage).
RATING AGENCY CONFIRMATION shall have the meaning set forth in the Loan
Agreement (Mortgage).
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REAS shall have the meaning set forth in the Loan Agreement (Mortgage).
REA CHARGES shall mean all amounts payable by Borrower pursuant to the
REAs.
RECEIPTS shall mean with respect to any Person, the declaration or
payment of any cash, cash flow, dividend or distribution on or in respect of any
member's or partner's interest, shares of any class of capital stock or other
beneficial interest of such Person; the purchase, redemption, exchange or other
retirement of any member's or partner's interest, shares of any class of capital
stock or other beneficial interest of such Person, directly or indirectly; the
return of capital by such Person to its members, shareholders or partners as
such; or any other distribution of any nature whatsoever on or in respect of any
member's or partner's interest, shares of any class of capital stock or other
beneficial interest of such Person.
RECOURSE GUARANTY (MORTGAGE) shall mean that certain Guaranty of
Recourse Obligations of Borrower, dated as of the date hereof, by Guarantor in
favor of Mortgage Lender, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
RECOURSE GUARANTY (MEZZANINE) shall mean that certain Guaranty of
Recourse Obligations of Mezzanine Borrower, dated as of the date hereof, by
Guarantor in favor of Mezzanine Lender, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
REGISTER shall have the meaning set forth in Section 13.4.
REGULATORY CHANGE shall mean any change after the date of this
Agreement in federal, state or foreign laws or regulations or the adoption or
the making, after such date, of any written interpretations, directives or
requests applying to Mezzanine Lender, or any Person Controlling Mezzanine
Lender or to a class of banks or companies Controlling banks of or under any
federal, state or foreign laws or regulations (whether or not having the force
of law) by any court or Governmental Authority or monetary authority charged
with the interpretation or administration thereof.
REPLACEMENT INTEREST RATE CAP AGREEMENT (MEZZANINE) shall mean an
interest rate cap agreement from an Approved Counterparty with terms identical
to the Interest Rate Cap Agreement except that the same shall be effective as of
(i) in connection with a replacement following a downgrade, withdrawal or
qualification of the long-term unsecured debt rating of the Counterparty below
"AA-" by S&P or the equivalent thereof by Moody's, the date required in Section
9.3(c) or (ii) in connection with a replacement related to an extension of the
Maturity Date, the date required in Section 5(a)(ii) of the Mezzanine Note;
provided that to the extent any such interest rate cap agreement does not meet
the foregoing requirements, a Replacement
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Interest Rate Cap Agreement shall be such interest rate cap agreement approved
in writing by Lender, and if the Loan or any portion thereof is included in a
Securitization, each of the Rating Agencies with respect thereto.
S&P shall mean Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies.
SECURITY INSTRUMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
SERVICER shall mean such Person designated in writing with an address
for such Person by Mezzanine Lender, in its sole discretion, to act as Mezzanine
Lender's agent hereunder with such powers as are specifically delegated to the
Servicer by Mezzanine Lender, whether pursuant to the terms of this Agreement,
the Account Agreement (Mezzanine) or otherwise, together with such other powers
as are reasonably incidental thereto.
SINGLE PURPOSE ENTITY shall mean a Person, other than an individual,
which (i) is formed or organized solely for the purpose of holding, developing,
using, operating and financing, directly, or, in the case of Mezzanine Borrower,
indirectly, an ownership interest in the Property, (ii) does not engage in any
business unrelated to the Property and the development, use, operation and
financing thereof, (iii) has not and will not have any assets other than those
related to its interest in the Property or the operation, management and
financing thereof or any indebtedness other than the Permitted Debt, (iv)
maintains its own separate books and records and its own accounts, in each case
which are separate and apart from the books and records and accounts of any
other Person, (v) holds itself out as being a Person, separate and apart from
any other Person, (vi) does not and will not commingle its funds or assets with
those of any other Person, (vii) conducts its own business in its own name,
(viii) maintains separate financial statements, (ix) pays its own liabilities
out of its own funds, (x) observes all partnership, corporate or limited
liability company formalities, as applicable, (xi) pays the salaries of its own
employees, if any, and maintains a sufficient number of employees, if any, in
light of its contemplated business operations, (xii) does not guarantee or
otherwise obligate itself with respect to the debts of any other Person or hold
out its credit as being available to satisfy the obligations of any other
Person, (xiii) does not acquire obligations or securities of its partners,
members or shareholders, (xiv) allocates fairly and reasonably shared expenses,
including, without limitation, any overhead for shared office space, if any,
(xv) does not and will not pledge its assets for the benefit of any other Person
or make any loans or advances to any other Person, (xvi) does and will continue
to use commercially reasonable efforts to correct any known misunderstanding
regarding its separate identity, (xvii) maintains adequate capital in light of
its contemplated business operations, and (xviii) has and will continue to have
a partnership or operating agreement, certificate of incorporation, articles of
organization or other organizational document which has been approved by
Mezzanine Lender which approval shall not be unreasonably withheld, conditioned
or delayed. In addition, if such Person is a partnership, (1)
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all general partners of such Person shall be Single Purpose Entities; and (2) if
such Person has more than one general partner, then the organizational documents
shall provide that such Person shall continue (and not dissolve) for so long as
a solvent general partner exists. In addition, if such Person is a corporation,
then, at all times: (a) such Person shall have at least two (2) independent
directors (which independent directors must satisfy the criteria set forth in
the definition of "Independent Manager" herein) and (b) the board of directors
of such Person may not take any action requiring the unanimous affirmative vote
of 100% of the members of the board of directors unless all of the directors,
including the independent directors, shall have participated in such vote. In
addition, if such Person is a limited liability company, (a) such Person shall
have at least two (2) Independent Managers or Independent Members, (b) if such
Person is managed by a board of managers, the board of managers of such Person
may not take any action requiring the unanimous affirmative vote of 100% of the
members of the board of managers unless all of the managers, including the
Independent Managers, shall have participated in such vote, (c) if such Person
is not managed by a board of managers, the members of such Person may not take
any action requiring the affirmative vote of 100% of the members of such Person
unless all of the members, including the Independent Members, shall have
participated in such vote, (d) each managing member shall be a Single Purpose
Entity, (e) its articles of organization, certificate of formation and/or
operating agreement, as applicable, shall provide that until all of the
Indebtedness and Obligations (Mezzanine) are paid in full such entity will not
dissolve. In addition, the organizational documents of such Person shall provide
that such Person (1) without the unanimous consent of all of the partners,
directors or members, as applicable, shall not with respect to itself or to any
other Person in which it has a direct or indirect legal or beneficial interest
(a) seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or other similar official for the benefit of
the creditors of such Person or all or any portion of such Person's properties,
or (b) take any action that may be reasonably likely to cause such Person to
become insolvent, (2) has and will maintain its books, records, resolutions and
agreements as official records, (3) has held and will hold its assets in its own
name, (4) has and will maintain its financial statements, accounting records and
other organizational documents, books and records separate and apart from any
other Person, and (5) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division or part of it.
SPECIAL TAXES shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, or any liabilities with respect
thereto, including those arising after the date hereof as result of the adoption
of or any change in law, treaty, rule, regulation, guideline or determination of
a Governmental Authority or any change in the interpretation or application
thereof by a Governmental Authority but excluding (i) in the case of any
Mezzanine Lender, such taxes (including income taxes, franchise taxes and branch
profit taxes) as are imposed on or measured by Mezzanine Lender's net income by
the United States of America or any Governmental Authority of the jurisdiction
under the laws under which such Mezzanine Lender is organized or maintains its
principal office or a lending office or (ii) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Mezzanine
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Borrower under this Agreement), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Mezzanine Lender becomes
a party to this Agreement (or designates a new lending office).
STATE shall mean the State in which the Property or any part thereof is
located.
STRIKE PRICE shall mean 6.9375% per annum.
SUB-ACCOUNT(S) shall have the meaning set forth in Section 3.1.1.
SURVEY shall have the meaning set forth in the Loan Agreement
(Mortgage).
TAKING shall have the meaning set forth in the Loan Agreement
(Mortgage).
TENANT shall have the meaning set forth in the Loan Agreement
(Mortgage).
THIRD-PARTY MANAGER shall mean CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc.
THIRD-PARTY MANAGEMENT AGREEMENT shall mean that certain management
agreement between Mortgage Borrower and Third-Party Manager dated the date
hereof.
THIRD-PARTY MANAGER'S CONSENT (MEZZANINE) shall mean that certain
Manager's Consent and Subordination of Management Agreement (Mezzanine), dated
as of the date hereof, among Mezzanine Lender, Mezzanine Borrower and Third
Party Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
THIRD-PARTY MANAGER'S CONSENT (MORTGAGE) shall mean that certain
Manager's Consent and Subordination of Management Agreement, dated as of the
date hereof, among Mortgage Lender, Mortgage Borrower and Third-Party Manager,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
TITLE COMPANY shall have the meaning set forth in the Loan Agreement
(Mortgage).
TITLE POLICY (MORTGAGE) shall have the meaning ascribed to "Title
Policy" in the Loan Agreement (Mortgage).
TITLE POLICY shall mean an ALTA owner title insurance policy insuring
Mortgage Borrower's fee interest in the Property (or, if the Property is in a
State which does not permit the issuance of such ALTA policy, such form as shall
be permitted in such State and is acceptable to Mezzanine Lender), together with
a mezzanine loan endorsement to Mezzanine Lender, in form reasonably acceptable
to Mezzanine Lender.
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TRANSFER shall mean, directly or indirectly (other than pursuant to the
Loan Documents (Mortgage) and the Loan Documents (Mezzanine)), to sell, assign,
convey, mortgage, transfer, pledge, hypothecate, encumber, grant a security
interest in, exchange or otherwise dispose of any beneficial interest or grant
any option or warrant with respect to, or where used as a noun, a direct or
indirect sale, assignment, conveyance, transfer, pledge or other disposition of
any beneficial interest by any means whatsoever whether voluntary, involuntary,
by operation of law or otherwise.
UCC OR UNIFORM COMMERCIAL CODE shall mean the Uniform Commercial Code
as in effect in the State.
U.S. GOVERNMENT OBLIGATIONS shall have the meaning set forth in the
Loan Agreement (Mortgage).
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the definitions given them in this
Agreement when used in any other Loan Document (Mezzanine) or in any certificate
or other document made or delivered pursuant thereto. All uses of the word
"including" shall mean including, without limitation unless the context shall
indicate otherwise. Unless otherwise specified, the words hereof, herein and
hereunder and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.
II. GENERAL TERMS
SECTION 2.1 LOAN; DISBURSEMENT TO MEZZANINE BORROWER.
2.1.1 THE LOAN. Subject to and upon the terms and conditions
set forth herein, Mezzanine Lender hereby agrees to make and Mezzanine Borrower
hereby agrees to accept the Loan on the Closing Date.
2.1.2 DISBURSEMENT TO MEZZANINE BORROWER. Mezzanine Borrower
may request and receive only one borrowing hereunder in respect of the Loan and
any amount borrowed and repaid hereunder in respect of the Loan may not be
reborrowed. Mezzanine Borrower acknowledges and agrees that the full proceeds of
the Loan have been disbursed by
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Mezzanine Lender to Mezzanine Borrower on the Closing Date.
2.1.3 THE MEZZANINE NOTE, PLEDGE AND LOAN DOCUMENTS
(MEZZANINE). The Loan shall be evidenced by the Mezzanine Note and secured by
the Pledge, this Agreement, the Member Power and the other Loan Documents
(Mezzanine).
2.1.4 USE OF PROCEEDS. Mezzanine Borrower shall use the
proceeds of the Loan to (a) purchase the 100% equity interest in the Mortgage
Borrower, (b) make deposits into the Sub- Accounts as required hereunder and (c)
distribute the balance, if any, to Mezzanine Borrower.
SECTION 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE.
2.2.1 PAYMENT OF PRINCIPAL AND INTEREST.
(a) Except as set forth in Section 2.2.1(b), interest shall accrue on
the Principal Amount as set forth in the Mezzanine Note.
(b) Upon the occurrence and during the continuance of an Event of
Default and from and after the Maturity Date if the entire then outstanding
balance of the Principal Amount is not repaid on the Maturity Date, interest on
the outstanding principal balance of the Loan and, to the extent permitted by
law, overdue interest and other amounts due in respect of the Loan shall accrue
at the Default Rate calculated from the date such payment was due without regard
to any grace or cure periods contained herein. Interest at the Default Rate
shall be computed from the occurrence (but only during the continuance) of the
Event of Default until the actual receipt and collection of the Indebtedness (or
that portion thereof that is then due). To the extent permitted by applicable
law, interest at the Default Rate shall be added to the Indebtedness, shall
itself accrue interest at the same rate as the Loan and shall be secured by this
Agreement and the Pledge. This paragraph shall not be construed as an agreement
or privilege to extend the date of the payment of the Indebtedness, nor as a
waiver of any other right or remedy accruing to Mezzanine Lender by reason of
the occurrence of any Event of Default; and Mezzanine Lender retains its rights
under the Mezzanine Note to accelerate and to continue to demand payment of the
Indebtedness upon the happening (but only during the continuance) of any Event
of Default.
2.2.2 METHOD AND PLACE OF PAYMENT.
(a) On each Payment Date, Mezzanine Borrower shall pay to Mezzanine
Lender interest accruing pursuant to the Mezzanine Note for the entire Interest
Period during which said Payment Date shall occur.
(b) All amounts advanced by Mezzanine Lender pursuant to the applicable
21
provisions of the Loan Documents (Mezzanine), other than the Principal Amount,
together with any interest at the Default Rate or other charges as provided
therein, shall be due and payable hereunder as provided in the Loan Documents
(Mezzanine). In the event any such advance or charge is not so repaid by
Mezzanine Borrower, Mezzanine Lender may, at its option, first apply any
payments received under the Mezzanine Note to repay such advances, together with
any interest thereon, or other charges as provided in the Loan Documents
(Mezzanine), and the balance, if any, shall be applied in payment of any
installment of interest or principal then due and payable.
(c) The Maturity Date Payment shall be due and payable in full on the
Maturity Date.
2.2.3 LATE PAYMENT CHARGE. If any principal, interest or any
other sums due under the Loan Documents (Mezzanine) (other than the outstanding
Principal Amount due and payable on the Maturity Date) is not paid by Mezzanine
Borrower on the date on which it is due, Mezzanine Borrower shall pay to
Mezzanine Lender upon demand an amount equal to the lesser of five percent (5%)
of such unpaid sum or the Maximum Legal Rate (the LATE PAYMENT CHARGE) in order
to defray the expense incurred by Mezzanine Lender in handling and processing
such delinquent payment and to compensate Mezzanine Lender for the loss of the
use of such delinquent payment. Any such amount shall be secured by this
Agreement, the Pledge and the other Loan Documents (Mezzanine) to the extent
permitted by applicable law.
2.2.4 USURY SAVINGS. This Agreement and the Mezzanine Note are
subject to the express condition that at no time shall Mezzanine Borrower be
obligated or required to pay interest on the principal balance of the Loan at a
rate which could subject Mezzanine Lender to either civil or criminal liability
as a result of being in excess of the Maximum Legal Rate. If, by the terms of
this Agreement or the other Loan Documents (Mezzanine), Mezzanine Borrower is at
any time required or obligated to pay interest on the principal balance due
under the Mezzanine Note at a rate in excess of the Maximum Legal Rate, then the
LIBOR Rate or the Default Rate, as the case may be, shall be deemed to be
immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due under the Note.
All sums paid or agreed to be paid to Mezzanine Lender for the use, forbearance,
or detention of the sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.
SECTION 2.3 PREPAYMENTS. No prepayments of the Indebtedness shall be
permitted prior to the Maturity Date except as set forth in Section 2.3.1 hereof
and Section 4 of the Mezzanine Note.
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2.3.1 MANDATORY PREPAYMENT.
(a) Subject to Article VIII, Mezzanine Borrower shall repay the
Mezzanine Note, in full, together with the Liquidated Damages Amount (if
applicable), in accordance with Section 4(b) and Section 4(d) (if applicable) of
the Mezzanine Note upon the occurrence of any of the following events:
(i) if the Property is Transferred;
(ii) if all or any portion of the Mortgage Borrower's interest
in the Property is Transferred other than as permitted by Section 8.3 of the
Loan Agreement (Mortgage);
(iii) if all or any portion of the Mezzanine Borrower's
interest in the Mortgage Borrower is Transferred other than as permitted by
Section 8.5 of the Loan Agreement (Mortgage);
(iv) if a Transfer or series of Transfers of any direct or
indirect ownership interests in the Mezzanine Borrower shall occur which either
individually or in the aggregate with all such Transfers violates the
requirements of Article VIII; or
(v) if the Loan (Mortgage) is repaid or refinanced.
(b) If there shall occur a casualty or Taking in respect of the
Property and as a result thereof the Loan (Mortgage) is prepaid in whole or in
part, then, to the extent that there shall be excess proceeds or awards
available following the application of the proceeds or awards to reconstruct or
repair the Property or to the payment of all or any portion of the Loan
(Mortgage) pursuant to the terms of the Loan Documents (Mortgage) (EXCESS
PROCEEDS), Mezzanine Borrower shall repay the Mezzanine Note, or a portion
thereof, in the amount of such available Excess Proceeds in accordance with
Section 4(b) of the Mezzanine Note and no Liquidated Damages Amount shall be due
in connection therewith. All Excess Proceeds shall be deposited directly into
the Mezzanine Account.
2.3.2 PREPAYMENTS AFTER EVENT OF DEFAULT. If, following an
Event of Default, Mezzanine Lender shall accelerate the Indebtedness and
Mezzanine Borrower thereafter tenders payment of all or any part of the
Indebtedness, or if all or any portion of the Indebtedness is recovered by
Mezzanine Lender after such Event of Default, (a) such payment may be made only
on the next occurring Payment Date together with all unpaid interest thereon as
calculated through the end of the Interest Period during which such Payment Date
occurs (even if such period extends beyond such Payment Date and calculated as
if the Loan had not been repaid on such Payment Date), and all other fees and
sums payable hereunder or under the Loan
23
Documents (Mezzanine), including without limitation, interest that has accrued
at the Default Rate and any Late Payment Charges), (b) such payment shall be
deemed a voluntary prepayment by Mezzanine Borrower, and (c) Mezzanine Borrower
shall pay, in addition to the Indebtedness, in the event the payment occurs
during the Lockout Period, the Liquidated Damages Amount.
2.3.3 RELEASE OF PROPERTY. Mezzanine Lender shall, upon the
written request and at the expense of Mezzanine Borrower, upon payment in full
of the Principal Amount and interest on the Loan and all other amounts due and
payable under the Loan Documents (Mezzanine) in accordance with the terms and
provisions of the Mezzanine Note and this Agreement, release the Lien of (i)
this Agreement upon the Account Collateral (Mezzanine) and the Interest Rate Cap
Collateral and (ii) the Pledge on the Collateral or assign it, in whole or in
part, to a new lender. In such event, Mezzanine Borrower shall submit to
Mezzanine Lender, not less than ten (10) Business Days prior to the date of such
release or assignment, a release of lien or assignment of lien, as applicable,
for such Collateral for execution by Mezzanine Lender. Such release or
assignment, as applicable, shall be in a form appropriate in each jurisdiction
in which the Property is located and satisfactory to Mezzanine Lender in its
reasonable discretion. In addition, Mezzanine Borrower shall provide all other
documentation Mezzanine Lender reasonably requires to be delivered by Mezzanine
Borrower in connection with such release or assignment, as applicable.
SECTION 2.4 REGULATORY CHANGE; TAXES.
2.4.1 INCREASED COSTS. If as a result of any Regulatory Change
or required compliance of Mezzanine Lender therewith, the basis of taxation of
payments to Mezzanine Lender or any company Controlling Mezzanine Lender of the
principal of or interest on the Loan is changed or Mezzanine Lender or the
company Controlling Mezzanine Lender shall be subject to (i) any tax, duty,
charge or withholding of any kind with respect to this Agreement (excluding
federal taxation of the overall net income of Mezzanine Lender or the company
Controlling Mezzanine Lender and taxes covered by Subsections 2.4.2, 2.4.3 and
2.4.4 below); or (ii) any reserve, special deposit or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities, of Mezzanine Lender or any company Controlling Mezzanine
Lender is imposed, modified or deemed applicable; or (iii) any other condition
affecting loans to borrowers subject to LIBOR-based interest rates is imposed on
Mezzanine Lender or any company Controlling Mezzanine Lender and Mezzanine
Lender determines that, by reason thereof, the cost to Mezzanine Lender or any
company Controlling Mezzanine Lender of making, maintaining or extending the
Loan to Mezzanine Borrower is increased, or any amount receivable by Mezzanine
Lender or any company Controlling Mezzanine Lender hereunder in respect of any
portion of the Loan to Mezzanine Borrower is reduced, in each case by an amount
deemed by Mezzanine Lender in good faith to be material (such increases in cost
and reductions in amounts receivable being herein called INCREASED COSTS), then
Mezzanine Lender shall provide notice thereof to Mezzanine Borrower and
Mezzanine Borrower agrees that it will pay to Mezzanine Lender upon Mezzanine
Lender's
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written request such additional amount or amounts as will compensate Mezzanine
Lender or any company Controlling Mezzanine Lender for such Increased Costs to
the extent Mezzanine Lender determines that such Increased Costs are allocable
to the Loan. If Mezzanine Lender requests compensation under this Section 2.4.1,
Mezzanine Borrower may, by notice to Mezzanine Lender, require that Mezzanine
Lender furnish to Mezzanine Borrower a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof.
2.4.2 SPECIAL TAXES. Mezzanine Borrower shall make all
payments hereunder free and clear of and without deduction for Special Taxes. If
Mezzanine Borrower shall be required by law to deduct any Special Taxes from or
in respect of any sum payable hereunder or under any other Loan Document
(Mezzanine) to Mezzanine Lender, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.4.2) Mezzanine Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Mezzanine Borrower shall make such deductions, and
(iii) Mezzanine Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
2.4.3 OTHER TAXES. In addition, Mezzanine Borrower agrees to
pay any present or future stamp or documentary taxes or other excise or property
taxes, charges, or similar levies which arise from any payment made hereunder,
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the other Loan Documents (Mezzanine), or the Loan
(hereinafter referred to as OTHER TAXES).
2.4.4 INDEMNITY. Mezzanine Borrower shall indemnify Mezzanine
Lender for the full amount of Special Taxes and Other Taxes (including any
Special Taxes or Other Taxes imposed by any Governmental Authority on amounts
payable under this Section 2.4.4) paid by Mezzanine Lender and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Special Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
after the date Mezzanine Lender makes written demand therefor. Mezzanine
Borrower shall not, however, be required to pay any additional amounts under
this Section 2.4 or otherwise indemnify Lender for Special Taxes, other Taxes or
Increased Costs to the extent such indemnification obligations result from a
Foreign Lender's failure to comply with Subsection 2.4.6 below.
2.4.5 CHANGE OF OFFICE. To the extent that changing the
jurisdiction of Mezzanine Lender's applicable office would have the effect of
minimizing Special Taxes, Other Taxes or Increased Costs, Mezzanine Lender shall
use reasonable efforts to make such a change, provided that same would not
otherwise be materially disadvantageous to Mezzanine Lender.
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2.4.6 TAX EXEMPTIONS AND REDUCTIONS. Any Foreign Lender that
is entitled to an exemption from or reduced rate of withholding tax under the
law of the jurisdiction in which Mezzanine Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement, shall deliver to Mezzanine Borrower within 10 days after the Closing
Date (or in the case of an assignee, on or before the date such assignee becomes
a party to this Agreement) such properly completed and executed documentation
prescribed by applicable law or reasonably requested by Borrower as will permit
such payments to be made without withholding or at a reduced rate.
2.4.7 SURVIVAL. Without prejudice to the survival of any other
agreement of Mezzanine Borrower hereunder, the agreements and obligations of
Mezzanine Borrower contained in this Section 2.4 shall survive the payment in
full of principal and interest hereunder, and the termination of this Agreement.
SECTION 2.5 CONDITIONS PRECEDENT TO CLOSING.
The obligation of Mezzanine Lender to make the Loan hereunder is
subject to the fulfillment by, or on behalf of, Mezzanine Borrower or waiver by
Mezzanine Lender of the following conditions precedent no later than the Closing
Date; provided, however, that unless a condition precedent shall expressly
survive the Closing Date pursuant to a separate agreement, by funding the Loan,
Mezzanine Lender shall be deemed to have waived any such conditions not
theretofore fulfilled or satisfied:
2.5.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS.
(a) The representations and warranties of Mezzanine Borrower and
Guarantor contained in this Agreement and the other Loan Documents (Mezzanine)
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as if made on and as of such date, and no Default with
respect to the payment of money or Event of Default shall have occurred and be
continuing; and Mezzanine Borrower shall be in compliance in all material
respects with all terms and conditions set forth in this Agreement and in each
other Loan Document (Mezzanine) on its part to be observed or performed; and
(b) The representations and warranties of Mortgage Borrower and
Guarantor contained in the Loan Agreement (Mortgage) and the other Loan
Documents (Mortgage) shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Mortgage Default with respect to payment of money or Mortgage Event of
Default shall have occurred and be continuing; and Mortgage Borrower and
Guarantor shall be in compliance in all material respects with all terms and
conditions set forth in the Loan Agreement (Mortgage) and in each other Loan
Document (Mortgage) on its part to be observed or performed.
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2.5.2 DELIVERY OF LOAN DOCUMENTS (MEZZANINE); TITLE INSURANCE;
REPORTS; LEASES.
(a) LOAN DOCUMENTS (MEZZANINE). Mezzanine Lender shall have received an
original copy of this Agreement, the Mezzanine Note and all of the other Loan
Documents (Mezzanine), in each case, duly executed (and to the extent required,
acknowledged) and delivered on behalf of Mezzanine Borrower and any other
parties thereto;
(b) CERTIFICATE. Mezzanine Lender shall have received an original of
the Certificate together with a Member Power endorsed in blank;
(c) UCC FINANCING STATEMENTS. Mezzanine Lender shall have received
evidence that the UCC financing statements relating to the Pledge and this
Agreement have been delivered to Mezzanine Lender for filing in the applicable
jurisdictions;
(d) INTEREST RATE CAP AGREEMENT. Mezzanine Lender shall have received
the original Interest Rate Cap Agreement (Mezzanine) which shall be in form and
substance satisfactory to Mezzanine Lender in its sole discretion and an
original counterpart of the Acknowledgment executed and delivered by the
Counterparty;
(e) ACCOUNT AGREEMENT (MEZZANINE). Mezzanine Lender shall have received
the original of the (i) Account Agreement (Mezzanine) executed by each of Cash
Management Bank (Mezzanine) and Mezzanine Borrower and (ii) Instruction Letter,
executed by each of Mortgage Borrower and Mezzanine Borrower;
(f) TITLE INSURANCE.
(i) Mezzanine Lender shall have received a copy of the Title
Policy (Mortgage) (or a marked up and signed commitment having the force and
effect of a title policy, marked paid by an authorized representative of the
Title Company) issued by the Title Company with respect to the Loan (Mortgage)
dated as of the Closing Date in form and substance acceptable to Mezzanine
Lender. Mezzanine Lender also shall have received evidence that all premiums in
respect of the Title Policy (Mortgage) have been paid; and
(ii) Mezzanine Lender shall have received the Title Policy
with a mezzanine loan endorsement in favor of Mezzanine Lender, its successors
and assigns, dated as of the Closing Date. Mezzanine Lender also shall have
received evidence that all premiums in respect of the Title Policy and such
endorsement have been paid;
(iii) Mezzanine Lender shall have received the an "Eagle 9"
title policy in favor of Mezzanine Lender, its successors and assigns, dated as
of the Closing Date. Mezzanine Lender also shall have received evidence that all
premiums in respect of the "Eagle 9"
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title policy have been paid;
(g) SURVEY. Mezzanine Lender shall have received a current Survey for
the Property, containing the survey certification required by the Loan Agreement
(Mortgage);
(h) INSURANCE. Mezzanine Lender shall have received valid certificates
of insurance for the policies of insurance required by the Loan Agreement
(Mortgage) naming Mezzanine Lender as an additional insured and containing a
cross liability/severability endorsement, satisfactory to Mezzanine Lender in
its sole discretion, and evidence of the payment of all insurance premiums
currently due and payable for the existing policy period;
(i) ENVIRONMENTAL REPORTS. Mezzanine Lender shall have received an
Environmental Report in respect of the Property satisfactory to Mezzanine
Lender;
(j) ZONING. Mezzanine Lender shall have received evidence reasonably
acceptable to Mezzanine Lender that the Property complies with applicable zoning
laws and regulations;
(k) ENCUMBRANCES. Mezzanine Borrower shall have taken or caused to be
taken such actions in such a manner so that Mezzanine Lender has a valid and
perfected first Lien as of the Closing Date on the Collateral and Mezzanine
Lender shall have received satisfactory evidence thereof;
(l) RESERVED.
(m) MANAGER'S CONSENT. Mezzanine Lender shall have received the
original of the Manager's Consent (Mezzanine) executed by each of Mezzanine
Borrower and Manager and the original of the Third-Party Manager's Consent
(Mezzanine) executed by each of Mezzanine Borrower and Third- Party Manager;
(n) INDEPENDENT MANAGER CERTIFICATE. Mezzanine Lender shall have
received an executed Independent Manager certificate in the form attached as
EXHIBIT C from each Independent Manager;
(o) LEASES, REAS AND RENT ROLL. Mezzanine Lender shall have received
(i) copies of all Leases and REAs certified as requested by Mezzanine Lender in
accordance with the Loan Agreement (Mortgage); (ii) a current certified rent
roll of the Property; and (iii) copies of all Tenant estoppel certificates and
REA estoppel certificates delivered to Mortgage Lender;
(p) PLEDGOR ACKNOWLEDGMENT. Mezzanine Lender shall have received an
original of the Pledgor Acknowledgment in the form of EXHIBIT D executed by each
of Mortgage Borrower and Mezzanine Borrower and dated as of the Closing Date;
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(q) PURCHASE AGREEMENT. Mezzanine Lender shall have received a
certified copy of the Purchase Agreement and all amendments and modifications
thereto;
(r) RESERVED.
2.5.3 SATISFACTORY COLLATERAL. The Pledge and the other Loan
Documents (Mezzanine) shall constitute a valid and perfected Lien on the
Collateral for the full amount of the Principal Amount, free and clear of all
Liens other than encumbrances specifically approved by Mezzanine Lender, in
writing, in its sole discretion; Mezzanine Lender shall have received such UCC,
tax, lien and judgment searches in respect of the Collateral as it shall have
deemed necessary and the results of such searches shall be acceptable to
Mezzanine Lender in its sole discretion;
2.5.4 COLLATERAL ACCOUNTS. The Collateral Accounts (Mezzanine)
shall have been established with the Cash Management Bank (Mezzanine);
2.5.5 LOAN (MORTGAGE). The Loan (Mortgage) shall have been
made (or shall be made concurrently) to the Mortgage Borrower in accordance with
the terms of the Loan Documents (Mortgage) and no Mortgage Event of Default
shall have occurred and be continuing under and as defined in the Loan Documents
(Mortgage);
2.5.6 BUDGETS. Mezzanine Borrower shall have delivered the
Annual Budget for the current Fiscal Year which Annual Budget shall be
reasonably acceptable to Mezzanine Lender and shall be certified by an Officer's
Certificate;
2.5.7 NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing on such date either before or
after the execution of this Agreement;
2.5.8 CONSENT OF MORTGAGE LENDER. Mortgage Lender shall have
consented in writing to the transactions contemplated by this Agreement and the
other Loan Documents (Mezzanine);
2.5.9 MEZZANINE LENDER'S EXPENSES. Mezzanine Borrower shall
have paid all Mezzanine Lender's Expenses for which bills have been submitted
(or provided for the direct payment of such Mezzanine Lender's Expenses from the
proceeds of the Loan);
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2.5.10 INTERCREDITOR AGREEMENT. Mezzanine Lender and Mortgage
Lender shall have executed the Intercreditor Agreement in form and substance
satisfactory to Mezzanine Lender in its sole discretion;
2.5.11 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 Mezzanine Lender would enjoin, prohibit or restrain, or impose
or result in the imposition of any material adverse condition upon, the
repayment of the Mezzanine Note or the consummation of the transaction
contemplated hereunder;
2.5.12 FINANCIAL INFORMATION. Mezzanine Lender shall have
received or had access to financial information relating to the Property, the
Mezzanine Borrower, the Mortgage Borrower, the Manager and the Guarantor
prepared in accordance with agreed upon procedures satisfactory to Mezzanine
Lender, certified to Mezzanine Lender as true and correct by Mezzanine
Borrower's managing member and otherwise in form and substance satisfactory to
Mezzanine Lender;
2.5.13 RESERVED.
2.5.14 RELATED DOCUMENTS. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Mezzanine Lender shall have received and approved certified copies
thereof;
2.5.15 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the
Closing Date, Mezzanine Borrower shall deliver, or cause to be delivered, to
Mezzanine Lender copies certified by an Officer's Certificate, of all
organizational documentation related to Mortgage Borrower, Mezzanine Borrower,
Guarantor and certain of its Affiliates as have been requested by Mezzanine
Lender and/or the formation, structure, existence, good standing and/or
qualification to do business of Mortgage Borrower, Mezzanine Borrower, Guarantor
and such Affiliates, as Mezzanine Lender may request in its sole discretion,
including, without limitation, good standing certificates, qualifications to do
business in the appropriate jurisdictions, resolutions authorizing the entering
into of the Loan and incumbency certificates as may be requested by Mezzanine
Lender. Each of the organizational documents of any Person that is a Single
Purpose Entity shall contain the language set forth in EXHIBIT E. Each of the
organizational documents of Mortgage Borrower shall contain language
substantially similar to the language set forth in EXHIBIT M;
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2.5.16 OPINIONS OF MEZZANINE BORROWER'S COUNSEL.
(a) Mezzanine Lender shall have received the Non-Consolidation Opinion
in the form of EXHIBIT F (THE NON-CONSOLIDATION OPINION);
(b) Mezzanine Lender shall have received the Opinion of Counsel in the
form attached hereto as EXHIBIT G;
(c) Mezzanine Lender shall have received from Counterparty the
Counterparty Opinion in the form of EXHIBIT H;
2.5.17 COMPLETION OF PROCEEDINGS. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents (Mezzanine) and all
documents incidental thereto shall be satisfactory in form and substance to
Mezzanine Lender, and Mezzanine Lender shall have received all such counterpart
originals or certified copies of such documents as Mezzanine Lender may
reasonably request;
2.5.18 MATERIAL ADVERSE EFFECT. The Operating Income and
Operating Expenses of the Property, the Leases, and all other features of the
transaction shall be as represented to Mezzanine Lender without material adverse
change. None of Mezzanine Borrower, the Mortgage Borrower, the Guarantor nor any
of their constituent Persons (excluding for purposes of this Section 2.5.18 any
limited partners in any Guarantor) shall be the subject of any bankruptcy,
reorganization, or insolvency proceeding.
2.5.19 TAX LOT. Mezzanine Lender shall have received evidence
that the Property constitutes one (1) or more separate tax lots, which evidence
shall be reasonably satisfactory in form and substance to Mezzanine Lender;
2.5.20 PHYSICAL CONDITIONS REPORTS. Mezzanine Lender shall
have received a Physical Conditions Report with respect to the Property, which
report shall be satisfactory in form and substance to Mezzanine Lender;
2.5.21 APPRAISAL. Mezzanine Lender shall have received an
appraisal of the Property, which shall be satisfactory in form and substance to
Mezzanine Lender;
2.5.22 FURTHER DOCUMENTS. Mezzanine Lender or its counsel
shall have received such other and further approvals, opinions, documents and
information as Mezzanine Lender or its counsel may have reasonably requested
including the Loan Documents (Mezzanine) in form and substance satisfactory to
Mezzanine Lender and its counsel.
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III. CASH MANAGEMENT
SECTION 3.1 CASH MANAGEMENT.
3.1.1 ESTABLISHMENT OF ACCOUNT. Mezzanine Borrower hereby
confirms that, simultaneously with the execution of this Agreement, pursuant to
the Account Agreement (Mezzanine), it has established with Cash Management Bank
(Mezzanine), in the name of Mezzanine Lender, as secured party, for Mezzanine
Borrower, one (1) segregated account, the mezzanine account (the MEZZANINE
ACCOUNT), which has been established as a securities account. The Mezzanine
Account and the funds deposited therein and securities and other assets credited
thereto shall serve as additional security for the Loan. Pursuant to the Account
Agreement (Mezzanine), Mezzanine Borrower shall irrevocably instruct and
authorize Cash Management Bank (Mezzanine) to disregard any and all orders for
withdrawal from the Mezzanine Account made by, or at the direction of, Mezzanine
Borrower. Mezzanine Borrower agrees that, prior to the payment in full of the
Indebtedness, the terms and conditions of the Account Agreement (Mezzanine)
shall not be amended or modified without the prior written consent of Mezzanine
Lender (which consent Mezzanine Lender may grant or withhold in its sole
discretion). In recognition of Mezzanine Lender's security interest in the funds
deposited into the Mezzanine Account, Mezzanine Borrower shall identify the
Mezzanine Account with the name of Mezzanine Lender, as secured party. The
Mezzanine Account shall be named as follows: "BRE/PARK PLACE MEZZANINE L.L.C.
f/b/o German American Capital Corporation, as secured party, Mezzanine Account"
(Account Number 181-687-5) Mezzanine Borrower confirms that it has established
with Cash Management Bank (Mezzanine) the following sub- accounts of the
Mezzanine Account (each, a SUB-ACCOUNT and, collectively, the SUB-ACCOUNTS and
together with the Mezzanine Account, the COLLATERAL ACCOUNTS (MEZZANINE)), which
(i) may be ledger or book entry sub-accounts and need not be actual
sub-accounts, (ii) shall each be linked to the Mezzanine Account, (iii) shall
each be a "Securities Account" pursuant to Article 8 of the UCC and (iv) shall
each be an Eligible Account to which certain funds shall be allocated and from
which disbursements shall be made pursuant to the terms of this Agreement:
(a) a sub-account for the retention of Account Collateral (Mezzanine)
in respect of Debt Service (Mezzanine) on the Loan with the account number
▇▇▇-▇▇▇-▇ (the MEZZANINE DEBT SERVICE RESERVE ACCOUNT).
3.1.2 PLEDGE OF ACCOUNT COLLATERAL (MEZZANINE). To secure the
full and punctual payment and performance of the Obligations (Mezzanine),
Mezzanine Borrower hereby collaterally assigns, grants a security interest in
and pledges to Mezzanine Lender, to the extent not prohibited by applicable law,
a first priority continuing security interest in and to the following property
of Mezzanine Borrower, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all of the same, collectively, the
ACCOUNT COLLATERAL (MEZZANINE)):
(a) any and all Excess Cash Flow from time to time available in the
Holding Account and required, by the terms of the Loan Agreement (Mortgage) as
now in effect or amended with the consent of Mezzanine Lender, to be deposited
by the Mortgage Lender or the Cash Management Bank (Mortgage) into the Mezzanine
Account;
(b) the Collateral Accounts (Mezzanine) and all cash, checks, drafts,
securities entitlements, certificates, instruments and other property,
including, without limitation,
32
all deposits and/or wire transfers from time to time deposited or held in,
credited to or made to Collateral Accounts (Mezzanine);
(c) any and all amounts invested in Permitted Investments;
(d) all interest, dividends, cash, instruments, securities entitlements
and other property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing or purchased with
funds from the Collateral Accounts (Mezzanine); and
(e) to the extent not covered by clauses (a), (b), (c) or (d) above,
all proceeds (as defined under the UCC) of any or all of the foregoing.
In addition to the rights and remedies herein set forth, Mezzanine
Lender shall have all of the rights and remedies with respect to the Account
Collateral (Mezzanine) available to a secured party at law or in equity,
including, without limitation, the rights of a secured party under the UCC, as
if such rights and remedies were fully set forth herein.
This Agreement shall constitute a security agreement for purposes of
the UCC other applicable law.
3.1.3 MAINTENANCE OF MEZZANINE ACCOUNT.
(a) Mezzanine Borrower agrees that each of the Mezzanine Account and
the Sub- Accounts is and shall be maintained (i) as a "securities account" (as
such term is defined in Section 8-501(a) of the UCC), (ii) in such a manner that
Mezzanine Lender shall have control (within the meaning of Section 8-106(d)(2)
of the UCC) over the Mezzanine Account and any Sub-Account thereof, (iii) such
that neither Mezzanine Borrower nor Manager shall have any right of withdrawal
from the Mezzanine Account or the Sub-Accounts and, except as provided herein,
no Account Collateral (Mezzanine) shall be released to Mezzanine Borrower from
the Mezzanine Account. Cash Management Bank shall comply with the instructions
of Lender directing depository of funds in their Collection Account without
further consent of Borrower or any other Person, (iv) in such a manner that the
Cash Management Bank (Mezzanine) shall agree to treat all property credited to
the Mezzanine Account or the Sub-Accounts as "financial assets" (within the
meaning of Section 102(a)(9) of the UCC) and (v) such that all securities or
other property underlying any financial assets credited to any of the
Sub-Accounts shall be registered in the name of Cash Management Bank
(Mezzanine), indorsed to Cash Management Bank (Mezzanine) or in blank or
credited to another securities account maintained in the name of Cash Management
Bank (Mezzanine) and in no case will any financial asset credited to the
Collateral Accounts (Mezzanine) be registered in the name of Mezzanine Borrower,
payable to the order of Mezzanine Borrower or specially indorsed to Mezzanine
Borrower except to the extent the foregoing have been specially indorsed to Cash
Management Bank (Mezzanine) or in blank.
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Without limiting Mezzanine Borrower's obligations under the immediately
preceding sentence, Mezzanine Borrower shall only establish and maintain the
Mezzanine Account with a financial institution that has executed an agreement
substantially in the form of the Account Agreement (Mezzanine) or in such other
form acceptable to Mezzanine Lender in its sole discretion. Cash Management Bank
shall comply with "all entitlement orders" (as defined in Section 8-102(a)(8) of
the UCC) and instructions originated by Mezzanine Lender without further consent
by Mezzanine Borrower or any other party.
3.1.4 ELIGIBLE ACCOUNTS. The Collateral Accounts shall be
Eligible Accounts. The Collateral Accounts (Mezzanine) 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 or governmental authority,
as may now or hereafter be in effect. Income and interest accruing on the
Collateral Accounts (Mezzanine) or any investments held in such accounts shall
be periodically added to the principal amount of such account and shall be held,
disbursed and applied in accordance with the provisions of this Agreement and
the Account Agreement (Mezzanine). Mezzanine Borrower shall be the beneficial
owner of the Collateral Accounts (Mezzanine) for federal income tax purposes and
shall report all income on the Collateral Accounts (Mezzanine).
3.1.5 DEPOSITS INTO SUB-ACCOUNTS. On the date hereof,
Mezzanine Borrower has deposited the following amounts into the Sub-Accounts:
(i) $0 into the Mezzanine Debt Service Reserve Account.
3.1.6 MONTHLY FUNDING.
(a) Mezzanine Borrower hereby irrevocably authorizes Mezzanine Lender
to transfer (and, pursuant to the Account Agreement (Mezzanine) shall
irrevocably authorize Cash Management Bank (Mezzanine) to execute any
corresponding instructions of Mezzanine Lender), and Mezzanine Lender shall
transfer, from the Mezzanine Account by 11:00 a.m. New York time commencing on
the tenth (10th) calendar day of each calendar month (and if such day is not a
Business Day then on the immediately preceding Business Day) and on each
Business Day thereafter until the ninth (9th) calendar day of the next
succeeding calendar month (or, if such day is not a Business Day, then the
immediately preceding Business Day), or as soon thereafter as there shall be
sufficient collected funds on deposit in the Mezzanine Account, and from time to
time (but no less frequently than weekly thereafter) funds in an amount equal to
the sum of any Protective Advances which may have been advanced by (and not
previously reimbursed to) the Mezzanine Lender pursuant to the terms of the Loan
Documents (Mezzanine) to cure any Default or Event of Default, any Mortgage
Default or Mortgage Event of Default, or to protect the Collateral together with
any interest payable on such amounts pursuant to the Loan Documents (Mezzanine),
plus (x) the unpaid Debt Service (Mezzanine) for the next occurring Payment
Date, plus (y) an amount equal to such payments for any prior month(s), to the
extent not previously
34
paid, plus (z) an amount equal to the amount sufficient to pay any other amounts
due under the Loan Documents (Mezzanine) (other than any Debt Service
(Mezzanine)). Mezzanine Borrower acknowledges that Mezzanine Lender shall not be
required to make such withdrawal and deposit until such time as Mezzanine Lender
is able to calculate the amount of the Debt Service (Mezzanine) for the next
occurring Payment Date. As used herein, the term NET EXCESS CASH FLOW means the
amount available in the Mezzanine Account after the transfers to the Mezzanine
Debt Service Reserve Account required under this Section 3.1.6 have been made
and the term NET EXCESS CASH FLOW COMMENCEMENT DATE shall mean the date such
amounts have been fully funded or reserved within the Mezzanine Account in any
given calendar month.
(b) If for any reason there will be insufficient amounts in the
Mezzanine Debt Service Reserve Account on any Payment Date to pay the Debt
Service (Mezzanine) due on such Payment Date, Mezzanine Borrower shall
immediately deposit into the Mezzanine Account an amount equal to the shortfall
of available funds in the Mezzanine Debt Service Reserve Account. Any failure by
Mezzanine Borrower to deposit the full amount required by the preceding sentence
shall constitute an Event of Default hereunder. If Mezzanine Lender shall
reasonably determine that there will be insufficient amounts in the Mezzanine
Account to pay any Protective Advances as and when the same are due and payable,
Mezzanine Lender shall provide written notice of same to Mezzanine Borrower
setting forth the basis for such determination. Within five (5) Business Days of
receipt of said notice, Mezzanine Borrower shall deposit into the Mezzanine
Account an amount equal to the shortfall of available funds in the Mezzanine
Account. Any failure by Mezzanine Borrower to deposit the full amount required
by the preceding sentence shall constitute an Event of Default hereunder.
Notwithstanding anything to the contrary contained in this Agreement or in the
other Loan Documents, Mezzanine Borrower shall not be deemed to be in default
hereunder or thereunder in the event funds sufficient for a required transfer
are held in the Mezzanine Account or an appropriate Sub-Account and Mezzanine
Lender or Cash Management Bank fails to timely make any transfer as contemplated
by this Agreement.
(c) Provided that (i) no Event of Default shall have occurred and be
continuing hereunder or under any of the other Loan Documents (Mezzanine), (ii)
no Mortgage Event of Default shall have occurred and be continuing, (iii)
Mezzanine Borrower shall have delivered to Mezzanine Lender an Officer's
Certificate (in substantially the form annexed hereto as EXHIBIT I) (which
Mezzanine Borrower shall not be obligated to deliver more frequently than once
per calendar month) certifying that the signatories know of no Event of Default
or Mortgage Event of Default (as applicable) that has occurred and is then
outstanding hereunder or under any of the other Loan Documents (Mezzanine) or
under any of the Loan Documents (Mortgage), and (iv) Mezzanine Borrower shall
have deposited into the Mezzanine Account all funds then required to have been
so deposited, then Mezzanine Lender shall transfer the Net Excess Cash Flow from
the Mezzanine Account to Mezzanine Borrower's Account within two (2) Business
Days following the Net Excess Cash Flow Commencement Date for each month and on
a daily basis thereafter until the end of the applicable collection period.
Mezzanine Borrower shall, all funds then required to have been so deposited,
then Mezzanine Lender shall transfer the Net Excess Cash Flow from the Mezzanine
Account to Mezzanine Borrower's Account within two (2) Business Days following
the Net Excess Cash Flow Commencement Date for each month and on a daily basis
thereafter until the end of the applicable collection period. Mezzanine Borrower
shall,
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upon request by Mezzanine Lender prior to transferring such Net Excess Cash
Flow, cause the Mortgage Borrower to provide Mezzanine Lender with evidence
reasonably satisfactory to Mezzanine Lender that Mortgage Borrower has paid all
Operating Expenses for the month immediately preceding the month in which such
request is made by Mezzanine Lender. From and after the transfer of such Net
Excess Cash Flow to Mezzanine Borrower, Mezzanine Lender shall have no further
liability or responsibility with respect to the funds so transferred or the
investment thereof, such Net Excess Cash Flow shall be the property of Mezzanine
Borrower and may be further distributed by Mezzanine Borrower and its Affiliates
in accordance with their separate agreements.
3.1.7 CASH MANAGEMENT BANK.
(a) For the purposes of this Agreement, the Cash Management Bank
(Mezzanine) named herein shall be deemed to be an Approved Bank; provided,
however, that the term"Approved Bank" shall be applicable for all other purposes
and shall be applicable to any successor or assign of Cash Management Bank
(Mezzanine). Without cost to Mezzanine Borrower, Mezzanine Lender shall have the
right to replace the Cash Management Bank (Mezzanine) with any other financial
institution reasonably satisfactory to Mezzanine Borrower, which will promptly
execute and deliver to Mezzanine Lender an Account Agreement (Mezzanine) (and
Mezzanine Borrower shall reasonably cooperate with Mezzanine Lender in
connection with such transfer) in the event that (i) the Cash Management Bank
(Mezzanine) fails, in any material respect, to comply with the Account Agreement
(Mezzanine) or (ii) in the event the Cash Management Bank (Mezzanine) named
herein is no longer the Cash Management Bank (Mezzanine), or (iii) in the event
any successor Cash Management Bank (Mezzanine) is no longer an Approved Bank.
(b) During the term of the Loan, so long as no Event of Default shall
have occurred and is continuing, at its sole cost and expense, Mezzanine
Borrower shall have the right to replace the Cash Management Bank (Mezzanine)
with any other financial institution that is an Approved Bank provided such
institution shall execute and deliver to Mezzanine Lender the Account Agreement
(Mezzanine) (and Mezzanine Lender shall reasonably cooperate with Mezzanine
Borrower in connection with such transfer). Upon the occurrence and during the
continuance of an Event of Default, Mezzanine Lender shall have the right to
replace Cash Management Bank (Mezzanine) at any time, upon notice to Mezzanine
Borrower.
3.1.8 MEZZANINE BORROWER'S ACCOUNT REPRESENTATIONS AND
COVENANTS. Mezzanine Borrower represents, warrants and covenants that:
(a) Pursuant to the Instruction Letter delivered by Mezzanine Borrower
to Mortgage Borrower on the Closing Date, Mezzanine Borrower directs Mortgage
Borrower to cause all Excess Cash Flow to be deposited into the Mezzanine
Account;
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(b) Neither Mortgage Borrower nor Mezzanine Borrower nor any other
Person will have any right, title or interest in or to any Excess Cash Flow from
and after the time at which the Mortgage Lender transfers such Excess Cash Flow
to the Mezzanine Account under the Loan Agreement (Mortgage), except any rights
Mezzanine Borrower shall have to allocations of such funds following the
disbursement to Mezzanine Borrower of any Net Excess Cash Flow as provided in
Section 3.1.6;
(c) as of the date hereof, there are no other accounts maintained by
Mortgage Borrower, Mezzanine Borrower or any other Person with respect to the
collection of rents, revenues, proceeds or other income from the Property or for
the collection of Receipts, except for the Collection Account (as defined in the
Loan Agreement (Mortgage)), the Holding Account (as defined in the Loan
Agreement (Mortgage) and the Mezzanine Account (together with all Sub-Accounts
related thereto) and any accounts held by Mezzanine Borrower in which it is
permitted to receive transfers of Net Excess Cash Flow as provided in Section
3.1.6(c);
(d) All Distributions shall be deposited into the Mezzanine Account as
required by the Pledge and this Agreement or any other Loan Document
(Mezzanine), it being agreed that Mezzanine Lender shall not have a security
interest in any Distributions after the making of such Distributions to Persons
entitled thereto in accordance with the terms of the Loan Documents (Mezzanine);
and
(e) so long as any of the Obligations (Mezzanine) shall be outstanding,
neither Mortgage Borrower, Mezzanine Borrower nor any other Person shall open
any accounts other than those referenced above in this Section 3.1.8 with
respect to the collection of rents, revenues, proceeds or other income from the
Property or for the collection of Receipts.
3.1.9 ACCOUNT COLLATERAL (MEZZANINE) AND REMEDIES.
(a) Upon the occurrence and during the continuance of an Event of
Default, without additional notice from Mezzanine Lender to Mezzanine Borrower,
(i) Mezzanine Lender may, in addition to and not in limitation of Mezzanine
Lender's other rights, make any and all withdrawals from, and transfers between
and among, the Collateral Account (Mezzanine) as Mezzanine Lender shall
determine in its sole and absolute discretion to pay any Obligations, Operating
Expenses and/or capital expenditures for the Property; (ii) all Excess Cash Flow
shall be delivered to and retained in the Mezzanine Account or applicable
Sub-Accounts, and (iii) all transfers to the Mezzanine Borrower's Account
pursuant to Section 3.1.6 shall immediately cease, and (iv) Lender may liquidate
and transfer any amounts then invested in Permitted Investments to the
Collateral Accounts (Mezzanine) to which they relate or reinvest such amounts in
other Permitted Investments as Mezzanine Lender may reasonably determine is
necessary to perfect or protect any security interest granted or purported to be
granted hereby or to enable Mezzanine Lender to exercise and enforce Mezzanine
Lender's rights and remedies hereunder with respect to any Account Collateral
(Mezzanine) or to preserve the value of the
37
Account Collateral (Mezzanine).
(b) Upon the occurrence and during the continuance of an Event of
Default, Mezzanine Borrower hereby irrevocably constitutes and appoints
Mezzanine Lender as Mezzanine Borrower's true and lawful attorney-in-fact, with
full power of substitution, to execute, acknowledge and deliver any instruments
and to exercise and enforce every right, power, remedy, option and privilege of
Mezzanine Borrower with respect to the Account Collateral (Mezzanine), and do in
the name, place and stead of Mezzanine Borrower, all such acts, things and deeds
for and on behalf of and in the name of Mezzanine Borrower, which Mezzanine
Borrower could or might do or which Mezzanine Lender may deem necessary or
desirable to more fully vest in Mezzanine Lender the rights and remedies
provided for herein and to accomplish the purposes of this Agreement. The
foregoing powers of attorney are irrevocable and coupled with an interest. Upon
the occurrence and during the continuance of an Event of Default, Mezzanine
Lender may perform or cause performance of any such agreement, and any
reasonable expenses of Mezzanine Lender incurred in connection therewith shall
be paid by Mezzanine Borrower as provided in Section 5.1.13.
(c) Mezzanine Borrower hereby expressly waives, to the fullest extent
permitted by law, presentment, demand, protest or any notice of any kind in
connection with this Agreement or the Account Collateral (Mezzanine). Mezzanine
Borrower acknowledges and agrees that ten (10) days' prior written notice of the
time and place of any public sale of the Account Collateral (Mezzanine) or any
other intended disposition thereof shall be reasonable and sufficient notice to
Mezzanine Borrower within the meaning of the UCC.
3.1.10 TRANSFERS AND OTHER LIENS. Mezzanine Borrower agrees
that it will not (i) sell or otherwise dispose of any of the Account Collateral
(Mezzanine) or (ii) create or permit to exist any Lien upon or with respect to
all or any of the Account Collateral (Mezzanine), except for the Lien granted to
Mezzanine Lender, under this Agreement.
3.1.11 REASONABLE CARE. Beyond the exercise of reasonable care
in the custody thereof, Mezzanine Lender shall have no duty as to any Account
Collateral (Mezzanine) in its possession or control as agent therefor or bailee
thereof or any income thereon or the preservation of rights against any person
or otherwise with respect thereto. Mezzanine Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Account
Collateral (Mezzanine) in its possession if the Account Collateral (Mezzanine)
is accorded treatment substantially equal to that which Mezzanine Lender accords
its own property, it being understood that Mezzanine Lender shall not be liable
or responsible for any loss or damage to any of the Account Collateral
(Mezzanine), or for any diminution in value thereof, by reason of the act or
omission of Mezzanine Lender, its Affiliates, agents, employees or bailees,
except to the extent that such loss or damage results from Mezzanine Lender's or
its Affiliate's, agent's, employee's or bailee's gross negligence or willful
misconduct. In no event shall Mezzanine Lender be liable either directly or
indirectly for losses or delays resulting from any event which
38
may be the basis of an Excusable Delay, computer malfunctions, interruption of
communication facilities, labor difficulties or other causes beyond Mezzanine
Lender's reasonable control or for indirect, special or consequential damages
except to the extent of Lender's or its Affiliate's, agent's, employee's or
bailee's gross negligence or willful misconduct. Notwithstanding the foregoing,
Mezzanine Borrower acknowledges and agrees that (i) Mezzanine Lender does not
have custody of the Account Collateral (Mezzanine), (ii) Cash Management Bank
(Mezzanine) has custody of the Account Collateral (Mezzanine), (iii) Cash
Management Bank (Mezzanine) was chosen by Mezzanine Borrower and (iv) Mezzanine
Lender has no obligation or duty to supervise Cash Management Bank (Mezzanine)
or to see to the safe custody of the Account Collateral (Mezzanine).
3.1.12 MEZZANINE LENDER'S LIABILITY.
(a) Mezzanine Lender shall be responsible for the performance only of
such duties with respect to the Account Collateral (Mezzanine) as are
specifically set forth in this Section 3.1 or elsewhere in the Loan Documents
(Mezzanine), and no other duty shall be implied from any provision hereof.
Mezzanine Lender shall not be under any obligation or duty to perform any act
with respect to the Account Collateral (Mezzanine) which would cause it to incur
any expense or liability or to institute or defend any suit in respect hereof,
or to advance any of its own monies. Mezzanine Borrower shall indemnify and hold
Mezzanine Lender, its employees and officers harmless from and against any loss,
cost or damage (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by Mezzanine Lender in connection with the transactions
contemplated hereby with respect to the Account Collateral (Mezzanine) except as
such may be caused by the gross negligence or willful misconduct of Mezzanine
Lender, its employees, officers or agents, Affiliates or bailees.
(b) Mezzanine Lender shall be protected in acting upon any notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
paper, document or signature believed by it in good faith to be genuine, and, in
so acting, it may be assumed that any person purporting to give any of the
foregoing in connection with the provisions hereof has been duly authorized to
do so. Mezzanine Lender may consult with counsel, and the opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by it hereunder and in good faith in accordance
therewith.
3.1.13 CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Account Collateral (Mezzanine) and
shall remain in full force and effect until payment in full of the Indebtedness.
Upon payment in full of the Indebtedness, this security interest shall
automatically terminate without further notice from any party and Mezzanine
Borrower shall be entitled to the return, upon its request, of such of the
Account Collateral (Mezzanine) as shall not have been sold or otherwise applied
pursuant to the terms hereof and Mezzanine Lender shall execute such instruments
and documents as may be reasonably requested by Mezzanine Borrower to evidence
such termination and the release of the
39
Account Collateral (Mezzanine).
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 MEZZANINE BORROWER REPRESENTATIONS.
Mezzanine Borrower represents and warrants as of the Closing Date that:
4.1.1 ORGANIZATION. Each of Mezzanine Borrower, Manager, and
Guarantor has been duly organized and is validly existing and in good standing
pursuant to the laws of the state of Delaware with requisite power and authority
to own its properties and to transact the businesses in which it is now engaged.
Each of Mezzanine Borrower, Manager, and Guarantor has duly qualified to do
business and is in good standing in each jurisdiction where it is required to be
so qualified in connection with its properties, businesses and operations. Each
of Mezzanine Borrower, Manager and Guarantor possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged
(except that Manager has not yet obtained a real estate brokerage license in
California), and the sole business of Mezzanine Borrower is being the sole
member of the Mortgage Borrower in connection with management and operation of
the Property. The organizational structure of Mortgage Borrower, Guarantor and
Mezzanine Borrower is accurately depicted by the schematic diagram attached
hereto as EXHIBIT J. Mezzanine Borrower shall not itself, and shall not permit
Mortgage Borrower to, change its name, identity, corporate structure or
jurisdiction of organization unless it shall have given Mezzanine Lender 30 days
prior written notice of any such change and shall have taken all steps
reasonably requested by Mezzanine Lender to grant, perfect, protect and/or
preserve the security interest granted hereunder to Mezzanine Lender.
4.1.2 PROCEEDINGS. Each of Mezzanine Borrower, Manager and
Guarantor has taken all necessary action to authorize the execution, delivery
and performance of this Agreement and the other Loan Documents (Mezzanine) to
which it is a party. This Agreement and the other Loan Documents (Mezzanine)
have been duly executed and delivered by, or on behalf of, Mezzanine Borrower,
Manager and Guarantor, as applicable, and constitute legal, valid and binding
obligations of Mezzanine Borrower, Manager and Guarantor, enforceable against
Mezzanine Borrower, Manager and Guarantor, as applicable, in accordance with
their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
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4.1.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents (Mezzanine) by Mezzanine Borrower,
Manager and Guarantor, as applicable, will not result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance (other than pursuant to the
Loan Documents (Mezzanine)) upon any of the property or assets of Mezzanine
Borrower, Manager or Guarantor pursuant to the terms of any indenture, mortgage,
deed of trust, loan agreement, partnership agreement or other agreement or
instrument to which such Person is a party or by which any of such Person's
property or assets is subject (unless consents from all applicable parties
thereto have been obtained), nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Mezzanine Borrower,
Manager, or Guarantor or any of Mezzanine Borrower's, Manager's or Guarantor's
properties or assets, and any consent, approval, authorization, order,
registration or qualification of or with any court or any such regulatory
authority or other governmental agency or body required for the execution,
delivery and performance by Mezzanine Borrower, Manager or Guarantor of this
Agreement or any other Loan Documents (Mezzanine) has been obtained and is in
full force and effect.
4.1.4 LITIGATION. Except as set forth on SCHEDULE I attached
hereto, there are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending or, to the best of
Mezzanine Borrower's knowledge, threatened in writing against or affecting
Mezzanine Borrower, Manager, Guarantor, Mortgage Borrower or the Property. The
actions, suits or proceedings identified on SCHEDULE I, if determined against
Mezzanine Borrower, Manager, Guarantor, Mortgage Borrower or the Property, would
not reasonably be likely to materially and adversely affect the condition
(financial or otherwise) or business of Mezzanine Borrower, Mortgage Borrower,
Manager, Guarantor or the condition or operation of the Property.
4.1.5 AGREEMENTS. Mezzanine Borrower is not a party to any
agreement or instrument or subject to any restriction which is reasonably likely
to materially and adversely affect Borrower or Borrower's business, properties
or assets, operations or condition, financial or otherwise. Mezzanine Borrower
is not in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which Mezzanine Borrower or
the Property is bound. Mezzanine Borrower has no material financial obligation
(contingent or otherwise) under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Mezzanine Borrower is a
party or by which Mezzanine Borrower or the Property is otherwise bound, other
than (a) obligations incurred in the ordinary course of the operation of the
Property and (b) obligations under the Loan Documents (Mezzanine).
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4.1.6 TITLE TO PROPERTIES. Mezzanine Borrower owns all of the
assets reflected in the pro forma balance sheet of Mezzanine Borrower as of the
date of such pro forma balance sheet, subject to no rights of others, including
any mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances, except for the Permitted Encumbrances.
4.1.7 NO BANKRUPTCY FILING. None of Mezzanine Borrower,
Mortgage Borrower, Manager or Guarantor is contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of such entity's assets or property, and
Mezzanine Borrower has no knowledge of any Person contemplating the filing of
any such petition against it or against Mortgage Borrower, Manager or Guarantor.
4.1.8 TAX STATUS. Each of Mezzanine Borrower, Mortgage
Borrower, Guarantor and Manager (a) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, as the filing periods may have been
extended, (b) has paid all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (c) has
set aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. Except as provided in the foregoing sentence, there are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of such Person know of no basis for any such
claim.
4.1.9 NO PLAN ASSETS.
(a) Mezzanine Borrower does not maintain an employee benefit plan as
defined by Section 3(3) of ERISA, which is subject to Title IV of ERISA; and
(b) None of Mortgage Borrower, Guarantor or Mezzanine Borrower is an
employee benefit plan, as defined in Section 3(3) of ERISA. Subject to Title I
of ERISA, none of the assets of Mezzanine Borrower, Mortgage Borrower or
Guarantor constitutes or will during any period when the Loan remains
outstanding constitute plan assets of one or more such plans (within the meaning
of 29 C.F.R. Section 2510.3-101 (PLAN ASSETS) and none of Mortgage Borrower,
Guarantor or Mezzanine Borrower are a "governmental plan" within the meaning of
Section 3(32) of ERISA) nor are Mezzanine Borrower, Mortgage Borrower or
Guarantor subject to state statutes and fiduciary obligations that are similar
to the provisions of Section 406 of ERISA or Section 4975 of the Code currently
in effect which prohibit or otherwise restrict the transactions contemplated by
this Agreement.
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4.1.10 COMPLIANCE. Mezzanine Borrower, Mortgage Borrower and
the Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes. To the best of Mezzanine Borrower's knowledge, none
of Mezzanine Borrower or Mortgage Borrower is in default or in violation of any
order, writ, injunction, decree or demand of any Governmental Authority. To the
best of Mezzanine Borrower's knowledge, there has not been committed by
Mezzanine Borrower or Mortgage Borrower any act or omission affording the
federal government or any other Governmental Authority the right of forfeiture
as against the Property, the Collateral or any part thereof or any monies paid
in performance of Mezzanine Borrower's or Guarantor's obligations under any of
the Loan Documents (Mezzanine).
4.1.11 FINANCIAL INFORMATION. All financial data of Mezzanine
Borrower, Guarantor and Mortgage Borrower, including, without limitation, the
statements of cash flow and income and operating expense, that have been
delivered to Mezzanine Lender in respect of the Property, (i) are true, complete
and correct in all material respects, (ii) fairly represent the financial
condition of the Property and the Mezzanine Borrower, Guarantor and Mortgage
Borrower as of the date of such reports, and (iii) to the extent prepared or
audited by an independent certified public accounting firm, have been prepared
in accordance with GAAP throughout the periods covered, except as disclosed
therein. None of Mezzanine Borrower, Guarantor or Mortgage Borrower has any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Mezzanine Borrower and likely to have a Material Adverse
Effect. Since the date of such financial statements, there has been no
materially adverse change in the financial condition, operations or business of
Mezzanine Borrower, Guarantor or Mortgage Borrower from that set forth in said
financial statements.
4.1.12 ABSENCE OF U.C.C. FINANCING STATEMENTS, ETC. Except
with respect to the Permitted Encumbrances, the Loan Documents (Mortgage) and
the Loan Documents (Mezzanine), there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future lien
on, or security interest or security title in the interest in the Property or
any of the Collateral.
4.1.13 FEDERAL RESERVE REGULATIONS. None of the proceeds of
the Loan will be used for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation U, Regulation X or Regulation T or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry "margin stock" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U or Regulation X. As of the Closing Date, Mezzanine Borrower does not own any
"margin stock."
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4.1.14 SETOFF, ETC. The Collateral and the rights of Mezzanine
Lender with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses.
4.1.15 NOT A FOREIGN PERSON. None of Mezzanine Borrower,
Guarantor, or Mortgage Borrower is a foreign person within the meaning of
Section 1445(f)(3) of the Code.
4.1.16 ENFORCEABILITY. The Loan Documents (Mezzanine) are not
subject to any existing right of rescission, set-off, counterclaim or defense by
Mezzanine Borrower, or Guarantor, as applicable, including the defense of usury,
nor would the operation of any of the terms of the Loan Documents (Mezzanine),
or the exercise of any right thereunder, render the Loan Documents (Mezzanine)
unenforceable, and neither Mezzanine Borrower nor Guarantor has asserted any
right of rescission, set-off, counterclaim or defense with respect thereto.
4.1.17 INSURANCE. Mezzanine Borrower has obtained and has
delivered to Mezzanine Lender certified copies or originals of all insurance
Policies reflecting the insurance coverages, amounts and other requirements set
forth in this Agreement. Mezzanine Borrower has not, and to the best of
Mezzanine Borrower's knowledge, no Person has, done by act or omission anything
which would impair the coverage of any such Policy.
4.1.18 PHYSICAL CONDITION. To the best of Mezzanine Borrower's
knowledge and except as expressly disclosed in the Physical Conditions Report,
the Property, including, without limitation, all buildings, Improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects; to
the best of Mezzanine Borrower's knowledge and except as disclosed in the
Physical Conditions Report, there exists no structural or other material defects
or damages in the Property, whether latent or otherwise, and Mezzanine Borrower
has not received any written notice from any insurance company or bonding
company of any defects or inadequacies in the Property, or any part thereof,
which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
4.1.19 LEASES. The Property is not subject to any Leases other
than the Leases described in the certified rent roll delivered in connection
with the origination of the Loan and the Air Rights Lease. Such certified rent
roll is true, complete and correct in all material respects as of the date set
forth therein. No Person has any possessory interest in the Property or right to
occupy the same except under and pursuant to the provisions of the Leases or the
REAs. The current Leases are in full force and effect and to Mezzanine
Borrower's knowledge, there are no material defaults thereunder by either party
(other than as expressly disclosed in the Loan Agreement (Mortgage), on the
certified rent roll delivered to Mezzanine Lender or the Tenant estoppel
certificates delivered to Mezzanine Lender in connection with the closing of the
Loan) and there are no conditions that, with the passage of time or the giving
of notice, or both, would constitute material defaults thereunder. No Rent has
been paid more than one (1) month in advance of its due date, except as
disclosed in the Tenant estoppel certificates delivered to Mezzanine Lender in
connection with the closing of the Loan and as otherwise set forth in the Loan
Agreement (Mortgage). There has been no prior sale, transfer or assignment,
hypothecation or pledge by Mezzanine Borrower of any Lease or of the Rents
received therein, which will be outstanding following the funding of the Loan,
other than those being assigned to Mezzanine Lender concurrently herewith. Other
than the right to purchase the Air Rights Parcel as contained in the Air Rights
Lease, no Tenant under any Lease has a right or option pursuant to
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such Lease or otherwise to purchase all or any part of the property of which the
leased premises are a part.
4.1.20 SINGLE PURPOSE ENTITY/SEPARATENESS.
(a) Until the Indebtedness has been paid in full, Mezzanine Borrower
hereby represents, warrants and covenants that Mezzanine Borrower and Mortgage
Borrower are, shall be, and shall continue to be, a Single Purpose Entities.
(b) All of the assumptions made in the Non-Consolidation Opinion,
including, but not limited to, any exhibits attached thereto, are true and
correct in all material respects and any assumptions made in any subsequent
non-consolidation opinion delivered in connection with the Loan Documents
(Mezzanine) (an ADDITIONAL NON-CONSOLIDATION OPINION), including, but not
limited to, any exhibits attached thereto, will have been and shall be true and
correct in all respects. Mezzanine Borrower and Mortgage Borrower have complied
and will comply in all material respects with all of the assumptions made with
respect to it in the Non-Consolidation Opinion. Mezzanine Borrower and Mortgage
Borrower will have complied and will comply in all material respects with all of
the assumptions made with respect to it in any Additional Non-Consolidation
Opinion. Each entity other than Mezzanine Borrower and Mortgage Borrower with
respect to which an assumption shall be made in any Additional Non-Consolidation
Opinion will have complied and will comply in all material respects with all of
the assumptions made with respect to it in any Additional Non-Consolidation
Opinion.
4.1.21 MANAGEMENT AGREEMENT. The Management Agreement is in
full force and effect and there is no default thereunder by any party thereto
and no event has occurred that, with the passage of time and/or the giving of
notice would constitute a default thereunder. The Manager is an Affiliate of
Mortgage Borrower or Mezzanine Borrower.
4.1.22 SUBSIDIARIES. Mezzanine Borrower does not have any
subsidiaries other than the Mortgage Borrower.
4.1.23 SOLVENCY/FRAUDULENT CONVEYANCE. Mezzanine Borrower (a)
has not entered into the transaction contemplated by this Agreement or any Loan
Document (Mezzanine) with the actual intent to hinder, delay, or defraud any
creditor and (b) has received reasonably equivalent value in exchange for its
obligations under the Loan Documents (Mezzanine). After giving effect to the
Loan, the fair saleable value of Mezzanine Borrower's assets exceeds and will,
immediately following the making of the Loan, exceed Mezzanine Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of Mezzanine Borrower's
assets is and will, immediately following the making of the Loan, be greater
than Mezzanine Borrower's probable liabilities, including the maximum amount of
its contingent liabilities on its Debts as such Debts become absolute and
matured, Mezzanine Borrower's assets do not and, immediately following
45
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Mezzanine Borrower
does not intend to, and does not believe that it will, incur Debt and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such Debt and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Mezzanine Borrower and the amounts
to be payable on or in respect of obligations of Mezzanine Borrower).
4.1.24 INVESTMENT COMPANY ACT. Mezzanine Borrower is not (a)
an investment company or a company Controlled by an investment company, within
the meaning of the Investment Company Act of 1940, as amended; (b) a holding
company or a subsidiary company of a holding company or an affiliate of either a
holding company or a subsidiary company within the mean of the Public Utility
Holding Company Act of 1935, as amended; or (c) subject to any other federal or
state law or regulation which purports to restrict or regulate its ability to
borrow money.
4.1.25 INTEREST RATE AGREEMENT. A complete and correct copy of
the Interest Rate Cap Agreement is attached hereto as EXHIBIT K. The Interest
Rate Cap Agreement is in full force and effect and enforceable against Borrower
in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws generally affecting the enforcement of creditors' rights.
4.1.26 NO OTHER DEBT. Mezzanine Borrower has not borrowed or
received Debt that has not been heretofore repaid in full, other than the
Permitted Debt.
4.1.27 TAXPAYER IDENTIFICATION NUMBER. Mezzanine Borrower's
Federal taxpayer identification number is ▇▇-▇▇▇▇▇▇▇.
4.1.28 INTENTIONALLY DELETED.
4.1.29 REPRESENTATIONS AND WARRANTIES IN THE LOAN DOCUMENTS
(MEZZANINE). Mezzanine Borrower hereby represents and warrants that each of the
representations and warranties contained in the Loan Documents (Mezzanine)
(which are hereby incorporated by reference as if fully set forth herein) is
true and correct in all material respects, as of the Closing Date and to the
best of its knowledge, after reasonable inquiry, there is no Mortgage Event of
Default thereunder.
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SECTION 4.2 SURVIVAL OF REPRESENTATIONS. Mezzanine Borrower
agrees that all of the representations and warranties of Mezzanine Borrower set
forth in Section 4.1 and elsewhere in this Agreement and in the other Loan
Documents (Mezzanine) shall be deemed given and made as of the date of the
funding of the Loan and survive for so long as any amount remains owing to
Mezzanine Lender under this Agreement or any of the other Loan Documents
(Mezzanine) by Mezzanine Borrower or Guarantor unless a longer survival period
is expressly stated in a Loan Document (Mezzanine) with respect to a specific
representation or warranty, in which case, for such longer period. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents (Mezzanine) by Mezzanine Borrower shall be deemed to
have been relied upon by Mezzanine Lender notwithstanding any investigation
heretofore or hereafter made by Mezzanine Lender or on its behalf.
V. MEZZANINE BORROWER COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS.
From the Closing Date and until payment and performance in full of all
obligations of Mezzanine Borrower under the Loan Documents (Mezzanine),
Mezzanine Borrower hereby covenants and agrees with Mezzanine Lender that:
5.1.1 PERFORMANCE BY MEZZANINE BORROWER.
(a) Mezzanine Borrower shall in a timely manner observe, perform and
fulfill each and every covenant, term and provision of each Loan Document
(Mezzanine) executed and delivered by, or applicable to, Mezzanine Borrower.
Except to the extent permitted pursuant to any intercreditor agreement between
Mortgage Lender and Mezzanine Lender, Mezzanine Borrower shall not enter into or
otherwise suffer or permit any amendment, waiver, supplement, termination or
other modification of any Loan Document (Mezzanine) executed and delivered by
Mezzanine Borrower without the prior written consent of Mezzanine Lender.
(b) Every covenant, term and provision of each Loan Document (Mortgage)
executed and delivered by, or applicable to, Mortgage Borrower shall be
observed, performed and fulfilled in accordance with the Loan Documents
(Mortgage). Except to the extent permitted pursuant to any intercreditor
agreement between Mortgage Lender and Mezzanine Lender, no amendment, waiver,
supplement, termination or other modification of any Loan Document (Mortgage)
(other than a Permitted Mortgage Loan Amendment) shall be executed and delivered
without the prior written consent of Mezzanine Lender.
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5.1.2 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS;
INSURANCE. Subject to Mortgage Borrower's right of contest pursuant to Section
7.3 of the Loan Agreement (Mortgage), Mezzanine Borrower shall at all times
comply in all material respects and cause the Mortgage Borrower and the Property
to be in compliance in all material respects with all Legal Requirements
applicable to the Mezzanine Borrower, Mortgage Borrower and the Property and the
uses permitted upon the Property. Mezzanine Borrower shall do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its existence, rights, licenses, permits and franchises necessary to comply with
all Legal Requirements applicable to it and the Property. There shall never be
committed by Mezzanine Borrower, and Mezzanine Borrower shall not knowingly
permit Mortgage Borrower or any other Person in occupancy of or involved with
the operation or use of the Property to commit, any act or omission affording
the federal government or any state or local government the right of forfeiture
as against the Property or any part thereof or any monies paid in performance of
Mezzanine Borrower's obligations under any of the Loan Documents (Mezzanine).
Mezzanine Borrower hereby covenants and agrees not to commit, knowingly permit
or suffer to exist any act or omission affording such right of forfeiture. All
franchises, trade names and other property used in the conduct of the business
of Mezzanine Borrower, Mortgage Borrower and/or the Property shall be
maintained, preserved and protected. The Property shall be maintained, preserved
and protected in good working order and repair. All reasonably necessary
repairs, renewals, replacements, betterments and improvements thereto as
required by the Loan Agreement (Mortgage) shall be made and performed. The
Property shall be insured at all times to such extent and against such risks and
insurance shall be maintained as is required in this Agreement and the Loan
Agreement (Mortgage).
5.1.3 LITIGATION. Mezzanine Borrower shall give prompt written
notice to Mezzanine Lender of any litigation or governmental proceedings pending
or threatened in writing against Mezzanine Borrower, the Mortgage Borrower, the
Collateral or the Property which, if determined adversely to Mezzanine Borrower,
the Mortgage Borrower, the Collateral or the Property, would reasonably be
likely to have a Material Adverse Effect.
5.1.4 SINGLE PURPOSE ENTITY.
(a) Each of Mezzanine Borrower and Mortgage Borrower have been since
the date of their formation, and shall remain Single Purpose Entities.
(b) Each of Mezzanine Borrower and Mortgage Borrower shall continue to
maintain its own deposit account or accounts, separate from those of any
Affiliate, with commercial banking institutions. None of the funds of Mezzanine
Borrower or Mortgage Borrower will be diverted to any other Person or for other
than business uses of Mezzanine Borrower or Mortgage Borrower, as applicable,
nor will such funds be commingled with the funds of any other Affiliate;
provided, however, so long as no Event of Default has occurred and is
continuing, this clause shall not prohibit any distributions to or for the
benefit of any of Mezzanine Borrower's partners or members or its or their
Affiliates.
(c) To the extent that Mezzanine Borrower or Mortgage Borrower shares
the same officers or other employees as any of Mezzanine Borrower or Mortgage
Borrower or Affiliates, the salaries of and the expenses related to providing
benefits to such officers and other employees shall be fairly allocated among
such entities, and each such entity shall bear its fair share of the salary and
benefit costs associated with all such common officers and employees.
(d) To the extent that Mezzanine Borrower or Mortgage Borrower jointly
contracts with any of Mezzanine Borrower or Mortgage Borrower or any of their
Affiliates, as applicable, to do business with vendors or service providers or
to share overhead expenses, the
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costs incurred in so doing shall be allocated fairly among such entities, and
each such entity shall bear its fair share of such costs. To the extent that
either Mezzanine Borrower or Mortgage Borrower contracts or does business with
vendors or service providers where the goods and services provided are partially
for the benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods and
services are provided, and each such entity shall bear its fair share of such
costs. All material transactions between (or among) Mezzanine Borrower or
Mortgage Borrower and any of their respective Affiliates shall be conducted on
substantially the same terms (or on more favorable terms for Mezzanine Borrower
or Mortgage Borrower, as applicable) as would be conducted with third parties.
(e) To the extent that Mezzanine Borrower or Mortgage Borrower or any
of their Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.
(f) Mezzanine Borrower or Mortgage Borrower shall conduct its affairs
strictly in accordance with its organizational documents, and observe all
necessary, appropriate and customary corporate, limited liability company or
partnership formalities, as applicable, including, but not limited to, obtaining
any and all members' consents necessary to authorize actions taken or to be
taken, and maintaining accurate and separate books, records and accounts,
including, without limitation, payroll and intercompany transaction accounts.
(g) In addition, Mezzanine Borrower or Mortgage Borrower shall each:
(a) maintain books and records separate from those of any other Person; (b)
maintain its assets in such a manner that it is not more costly or difficult to
segregate, identify or ascertain such assets; (c) hold regular meetings of its
board of directors, shareholders, partners or members, as the case may be, and
observe all other corporate, partnership or limited liability company, as the
case may be, formalities; (d) hold itself out to creditors and the public as a
legal entity separate and distinct from any other entity; (e) prepare separate
tax returns and financial statements, or if part of a consolidated group, then
it will be shown as a separate member of such group; (f) transact all business
with Affiliates on an arm's-length basis and pursuant to enforceable agreements;
(g) conduct business in its name and use separate stationery, invoices and
checks; (h) not commingle its assets or funds with those of any other Person;
and (i) not assume, guarantee or pay the debts or obligations of any other
Person.
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5.1.5 CONSENTS. If Mezzanine Borrower or Mortgage Borrower is
a corporation, the board of directors of such Person may not take any action
requiring the unanimous affirmative vote of 100% of the members of the board of
directors unless all of the directors, including the independent directors,
shall have participated in such vote. If Mezzanine Borrower or Mortgage Borrower
is a limited liability company, (a) if such Person is managed by a board of
managers, the board of managers of such Person may not take any action requiring
the unanimous affirmative vote of 100% of the members of the board of managers
unless all of the managers, including the Independent Managers, shall have
participated in such vote, (b) if such Person is not managed by a board of
managers, the members of such Person may not take any action requiring the
affirmative vote of 100% of the members of such Person unless all of the
members, including the Independent Members, shall have participated in such
vote. An affirmative vote of 100% of the directors, board of managers or
members, as applicable, of Mezzanine Borrower or Mortgage Borrower shall be
required to (i) file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings or to authorize Mezzanine Borrower or Mortgage Borrower
to do so or, (ii) file an involuntary bankruptcy petition against any Affiliate,
Manager, or any Affiliate of Manager. Furthermore, Mezzanine Borrower's and
Mortgage Borrower's formation documents shall expressly state that for so long
as the Loan is outstanding, none of Mezzanine Borrower or Mortgage Borrower
shall be permitted to (i) dissolve, liquidate, consolidate, merge or sell all or
substantially all of Mezzanine Borrower's or Mortgage Borrower assets other than
in connection with the repayment of the Loan or (ii) engage in any other
business activity and such restrictions shall not be modified or violated for so
long as the Loan is outstanding.
5.1.6 ACCESS TO PROPERTY. Agents, representatives and
employees of Mezzanine Lender shall have the right to inspect the Property or
any part thereof during Business Days, upon reasonable advance notice, subject
in all instances to the REAs and the rights of Tenants, and provided that
neither Mezzanine Lender nor any such Persons shall unreasonably interfere with
the operation of business on the Property.
5.1.7 NOTICE OF DEFAULT. Mezzanine Borrower shall promptly
advise Mezzanine Lender (a) of any event or condition that has or is reasonably
likely to have a Material Adverse Effect and (b) of the occurrence of any
Default, Event of Default, Mortgage Default or Mortgage Event of Default of
which Mezzanine Borrower has knowledge.
5.1.8 COOPERATE IN LEGAL PROCEEDINGS. Mezzanine Borrower and
Mortgage Borrower shall cooperate fully with Mezzanine Lender with respect to
any proceedings before any court, board or other Governmental Authority which
may in any way affect the rights of Mezzanine Lender hereunder or under any of
the other Loan Documents (Mezzanine) and, in connection therewith, permit
Mezzanine Lender, at its election, to participate in any such proceedings which
is reasonably likely to have a Material Adverse Effect.
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5.1.9 PERFORM LOAN DOCUMENTS (MEZZANINE). Mezzanine Borrower
shall observe, perform and satisfy all the terms, provisions, covenants and
conditions of, and shall pay when due all costs, fees and expenses to the extent
required, under the Loan Documents (Mezzanine) executed and delivered by, or
applicable to, Mezzanine Borrower.
5.1.10 FURTHER ASSURANCES; SEPARATE NOTES.
(a) Mezzanine Borrower shall execute and acknowledge (or cause to be
executed and acknowledged) and deliver to Mezzanine Lender all documents, and
take all actions, reasonably required by Mezzanine Lender from time to time to
confirm the rights created or intended to be created under this Agreement and
the other Loan Documents (Mezzanine) and any security interest created or
purported to be created thereunder, to protect and further the validity,
priority and enforceability of this Agreement and the other Loan Documents
(Mezzanine), to subject to the Loan Documents (Mezzanine) any property of
Mezzanine Borrower intended by the terms of any one or more of the Loan
Documents (Mezzanine) to be encumbered by the Loan Documents (Mezzanine), or
otherwise carry out the purposes of the Loan Documents (Mezzanine) and the
transactions contemplated thereunder. Mezzanine Borrower agrees that it shall,
upon request, reasonably cooperate with Mezzanine Lender in connection with any
request by Mezzanine Lender to sever the Mezzanine Note into two (2) or more
separate substitute notes in an aggregate principal amount equal to the then
outstanding Principal Amount and to reapportion the Loan among such separate
substitute notes, including, without limitation, by executing and delivering to
Mezzanine Lender new substitute notes to replace the Mezzanine Note, amendments
to or replacements of existing Loan Documents (Mezzanine) to reflect such
severance and/or Opinions of Counsel with respect to such substitute notes,
amendments and/or replacements, provided that Mezzanine Borrower shall bear no
costs or expenses in connection therewith (other than administrative nominal
costs and expenses of Mezzanine Borrower). Any such substitute notes, amendments
or replacements may have varying principal amounts, maturity dates and economic
terms, provided, however, that (i) the maturity date of any such substitute note
shall be the same as the scheduled Maturity Date of the Mezzanine Note
immediately prior to the issuance of such substitute notes, (ii) the weighted
average LIBOR Margin for the term of the substitute notes shall not exceed the
LIBOR Margin under the Mezzanine Note immediately prior to the issuance of such
substitute notes; (iii) the economics of the Loan, taken as a whole, shall not
change in a manner which is adverse to Mezzanine Borrower and (iv) Mezzanine
Borrower's rights and obligations under the Loan Documents (Mezzanine) in effect
immediately prior to the issuance of such substitute notes, amendments or
replacements shall not change in any manner adverse to Mezzanine Borrower.
(b) Mezzanine Borrower further agrees that if, in connection with the
Securitization, it is determined by the Rating Agencies that a portion of the
Securitization would not receive an "investment grade" rating unless the
principal amount of the Loan were to be decreased and, as a result, the
principal amount of the Loan is decreased, then (i) the Mezzanine Borrower shall
take all actions provided for in the documentation for the Loan as are
reasonably necessary to effect the "resizing" of the Mezzanine Loan and the
Loan, (ii) the Mezzanine Borrower shall exercise commercially reasonable efforts
to cause the Mortgage Borrower to comply with its agreements to effect a
"resizing", and (iii) Mezzanine Lender shall on the date of the "resizing" of
the Loan lend to the Mezzanine Borrower (by way of a reallocation of the
principal amount of the Loan and the Mezzanine Loan) such additional amount as
shall be required by the Loan documentation in connection with the "resizing"
provided that Mortgage Borrower and Mezzanine Borrower execute and deliver any
and all necessary amendments or modifications to the Loan Documents and the Loan
Documents (Mezzanine). In addition,
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Mezzanine Borrower and Mezzanine Lender agree that if, in connection with the
Securitization, it is determined by the Rating Agencies that, if the principal
amount of the Mezzanine Loan were to be decreased and, as a result the principal
amount of the Loan were increased, more "investment grade" rated securities
could be issued, then (i) if "resizing" to decrease the size of the Mezzanine
Loan and increase the size of the Loan is provided for in the Mezzanine Loan
Documents, each of them shall take all actions provided for in the documentation
for the Loan as are reasonably necessary to effect the "resizing" of the
Mezzanine Loan and the Loan, (ii) Mezzanine Borrower shall exercise commercially
reasonable efforts to cause the Mortgage Borrower to comply with its agreements
to effect a "resizing" and (iii) Mezzanine Lender shall on the date of the
"resizing" of the Loan lend to the Mezzanine Borrower (by way of a reallocation
of the principal amount of the Loan and the Mezzanine Loan) such additional
amount as shall be required by the Loan documentation in connection with the
"resizing", provided that Mortgage Borrower and Mezzanine Borrower execute and
deliver any and all necessary modifications to the Loan Documents and Mezzanine
Loan Documents. In connection with the foregoing, at Mezzanine Lender's sole
cost and expense, Mezzanine Borrower agrees to execute and deliver such
documents and other agreements reasonably required by Mortgage Lender and/or
Mezzanine Lender to "re-size" the Loans, including, without limitation, an
amendment to this Agreement, the Note, the Security Instrument and the other
Loan Documents and an endorsement to the Title Policy reflecting an increase in
the insured amount thereunder. Mezzanine Lender agrees to reimburse Mezzanine
Borrower for all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Mezzanine Lender in connection with
any "resizing" of the Loan. Notwithstanding the foregoing, Mezzanine Lender
agrees that any "resizing" of the Loan and the Mezzanine Loan shall not change
the economics of the Loan and the Mezzanine Loan each taken as a whole in a
manner which is adverse to Mezzanine Borrower or otherwise alter the rights and
obligations of Borrower under the Loan Documents or Mezzanine Borrower under the
Mezzanine Loan Documents in a manner adverse to Borrower or Mezzanine Borrower,
as applicable.
(c) In addition, Mezzanine Borrower shall, at Mezzanine Borrower's sole
cost and expense:
(i) furnish to Mezzanine Lender, to the extent not otherwise
already furnished to Mezzanine Lender and reasonably acceptable to Mezzanine
Lender, all instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished by Mortgage
Borrower pursuant to the terms of the Loan Documents (Mortgage);
(ii) execute and deliver, from time to time, such further
instruments as may be reasonably requested by Mezzanine Lender to confirm the
lien of the Pledge and this Agreement on any Collateral;
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(iii) execute and deliver to Mezzanine Lender 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 obligations of Mezzanine Borrower under the
Loan Documents (Mezzanine), as Mezzanine Lender may reasonably require; and
(d) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the carrying out of the terms and conditions of
this Agreement and the other Loan Documents (Mezzanine), as Mezzanine Lender
shall reasonably require from time to time.
5.1.11 BUSINESS AND OPERATIONS. Mezzanine Borrower and
Mortgage Borrower shall continue to engage in the businesses presently conducted
by each of them as and to the extent the same are necessary for the ownership,
maintenance, management and operation of the Property and the Collateral, as
applicable. Each of Mezzanine Borrower and Mortgage Borrower shall continue to
qualify to do business and will remain in good standing under the laws of the
State of California and the State of Delaware.
5.1.12 TITLE TO THE COLLATERAL. Mezzanine Borrower will
warrant and defend (a) the title to the Collateral and every part thereof and
(b) the validity and priority of the Lien of the Pledge and this Agreement on
the Collateral, in each case against the claims of all Persons whomsoever.
Mezzanine Borrower shall reimburse Mezzanine Lender for any losses, costs,
damages or expenses (including reasonable attorneys' fees and court costs)
incurred by Mezzanine Lender if an interest in the Collateral is claimed by
another Person.
5.1.13 COSTS OF ENFORCEMENT. In the event (a) that this
Agreement or the Pledge is foreclosed in whole or in part or that this Agreement
or the Pledge is put into the hands of an attorney for collection, suit, action
or foreclosure, (b) of the foreclosure of any security agreement prior to or
subsequent to this Agreement or the Pledge in which proceeding Mezzanine Lender
is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other
similar proceeding in respect of Mezzanine Borrower or any of its constituent
Persons or an assignment by Mezzanine Borrower or any of its constituent Persons
for the benefit of its creditors, Mezzanine Borrower, its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys' fees and costs, incurred by Mezzanine Lender or
Mezzanine Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.
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5.1.14 ESTOPPEL STATEMENT.
(a) Mezzanine Borrower and Mezzanine Lender shall each from time to
time, upon thirty (30) days' prior written request from the other, execute,
acknowledge and deliver to the requesting party, an Officer's Certificate (or in
the case of Mezzanine Lender a certificate signed by an authorized officer),
stating that (i) this Agreement and the other Loan Documents (Mezzanine) and the
Loan Documents (Mortgage) are unmodified and in full force and effect (or, if
there have been modifications, that this Agreement and the other Loan Documents
(Mezzanine) or, as applicable, Loan Documents (Mortgage) are in full force and
effect as modified and setting forth such modifications); (ii) the amount of
accrued and unpaid interest and the outstanding principal amount of the
Mezzanine Note and the Mortgage Note; and (iii) such other information with
respect to the Mezzanine Borrower, Guarantor, Mortgage Borrower, the Property,
the Loan and the Loan (Mortgage) as the requesting party shall reasonably
request. The estoppel certificate shall also state either that to requesting
party's knowledge no Event of Default or Mortgage Event of Default exists
hereunder or thereunder or, if any Event of Default or Mortgage Event of Default
shall exist hereunder or thereunder, specify such Event of Default or Mortgage
Event of Default and, in the case of Mezzanine Borrower's estoppel, the steps
being taken to cure such Event of Default or Mortgage Event of Default.
(b) Mezzanine Borrower shall request and make commercially reasonable
efforts to deliver to Mezzanine Lender within twenty (20) Business Days of
receipt of Mezzanine Lender's written request, tenant estoppel certificates from
each commercial tenant leasing space at the Property in form and substance
required under the Loan Agreement (Mortgage), provided that, except after the
occurrence and during the continuance of an Event of Default, Mezzanine Borrower
shall not be required to request or make commercially reasonable efforts to
deliver such certificates with respect to any particular Tenant more frequently
than one time in any calendar year.
Notwithstanding the foregoing, nothing contained in this Section 5.1.14
shall require Mezzanine Borrower to issue or threaten to issue any notice of
default to any Tenant in connection with obtaining such certificates or
otherwise interfere with or disturb the use and occupancy of the Property by any
Tenant.
5.1.15 LOAN PROCEEDS. Mezzanine Borrower shall use the
proceeds of the Loan received by it on the Closing Date only for the purposes
set forth in Section 2.1.4.
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5.1.16 NO JOINT ASSESSMENT. Mezzanine Borrower shall not
suffer, permit or initiate the joint assessment of the Property (a) with any
other real property constituting a tax lot separate from the Property, and (b)
which constitutes real property with any portion of the Property which may be
deemed to constitute personal property, or any other procedure whereby the lien
of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of the Property.
5.1.17 NO FURTHER ENCUMBRANCES. Mezzanine Borrower shall do,
or cause to be done, all things necessary to keep and protect the Property and
the Collateral and all portions thereof unencumbered from any Liens, easements
or agreements granting rights in or restricting the use or development of the
Property, except for (a) with respect to the Property, Permitted Encumbrances,
(b) Liens created or permitted pursuant to the Loan Documents (Mezzanine) or the
Loan Documents (Mortgage), (c) Liens for Impositions prior to the imposition of
any interest, charges or expenses for the non-payment thereof, (d) Liens
permitted pursuant to Leases, and (e) any Transfers permitted by Section 8.3
herein.
5.1.18 LEASES AND REAS. Copies of any notice received by
Mortgage Borrower or Mezzanine Borrower with respect to the REAs and the Leases
claiming any default in the performance or observance of any of the material
terms, covenants or conditions of any of the REAs or the Leases by either
Mortgage Borrower or Mezzanine Borrower shall be promptly delivered to Mezzanine
Lender.
5.1.19 LOAN (MORTGAGE) COVENANTS.
(a) Mezzanine Borrower hereby covenants that it shall fully keep,
perform and comply with (or cause to be kept, performed and complied with) each
of the covenants set forth in the Loan Agreement (Mortgage) and the Security
Instrument, which are hereby incorporated by reference as if fully set forth
herein, notwithstanding any waiver or future amendment of such covenants by
Mortgage Lender (other than a Permitted Mortgage Loan Amendment). Mezzanine
Borrower acknowledges that the obligation to comply with such covenants is
separate from, and may be enforced independently from, the obligations of the
Mortgage Borrower under the Loan Documents (Mortgage).
(b) No modification or amendment (by operation of law or otherwise) of
the Loan Documents (Mortgage) in effect as of the Closing Date that would be a
Prohibited Mortgage Loan Amendment (as hereinafter defined) shall be made or
entered into, except for those amendments or modifications (PERMITTED MORTGAGE
LOAN AMENDMENTS) that are (i) required under the Loan Documents (Mortgage) or
that Mortgage Borrower is required to consent to thereunder pursuant to the
express terms of the Loan Documents (Mortgage), (ii) which do not constitute a
Prohibited Mortgage Loan Amendment, or (iii) are otherwise consented to by
Mezzanine Lender. As used herein, a PROHIBITED MORTGAGE LOAN AMENDMENT shall
mean an amendment or modification to the Loan Documents (Mortgage) that (A) is
reasonably likely to have a Material Adverse Effect, or (B) which (1) increases
the principal amount of the Loan (Mortgage) (exclusive of protective advances),
(2) increases the interest rate payable under the Loan (Mortgage), (3) provides
for the payment of any additional interest, additional fees, increases the
amount of or adds additional reserve payments or increases the amount of or adds
additional escrows, or otherwise increases the amount payable under the Loan
(Mortgage), (4) increases the frequency or payment amount of the periodic
installments under the Loan (Mortgage), (5) modifies the recourse carveout
obligations under the Loan Documents (Mortgage) in a manner which increases or
expands recourse liability, (6) modifies the due-on-sale, due-on-encumbrance, or
collateral release provisions of the Loan Documents (Mortgage), (7) modifies the
provisions governing replacement of the Independent Managers
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under the Loan Documents (Mortgage) in a manner materially adverse to Mezzanine
Lender, (8) adds material additional obligations, liabilities or indemnities on
the part of Mortgage Borrower, Guarantor, Manager or Mezzanine Borrower, (9)
shortens any default cure periods or adds any additional defaults under the Loan
Documents (Mortgage), (10) extends the maturity date of the Loan (Mortgage)
beyond the initially scheduled maturity date (except (i) in connection with any
work-out or other surrender, compromise, release, renewal, or indulgence
relating to the Loan (Mortgage) and (ii) in connection with any extension
provided for in the Loan Documents (Mortgage)), (11) modifies any provisions
related to the Management Agreement, (12) waives or modifies any provisions
related to the use of proceeds under the Loan Documents (Mortgage), (13)
modifies any provisions of the Loan Documents (Mortgage) related to the funding
of escrows or cash management or any provision of the Account Agreement
(Mortgage) or (14) decreases or materially modifies any insurance requirements
under the Loan Documents (Mortgage). Any amendment or modification to the Loan
Documents (Mortgage) in violation of this Section shall be ineffective as
between Mezzanine Borrower and Mezzanine Lender, and, if not cured by Mezzanine
Borrower within thirty (30) days after written notice from Mezzanine Lender
shall constitute an Event of Default hereunder, unless Mezzanine Lender consents
thereto in writing in its sole discretion.
(c) In the event the Loan (Mortgage) shall at any time be repaid, or
the Liens securing the Loan (Mortgage) at any time be released in full, then
unless and until the Mezzanine Note shall have been repaid in full and all
obligations of Mezzanine Borrower to Mezzanine Lender hereunder and under the
other Loan Documents (Mezzanine) shall have been satisfied, then Mezzanine
Borrower and Manager shall nevertheless comply or cause the Mortgage Borrower to
comply with each of the terms and provisions of the Loan Documents (Mortgage)
(other than payment of principal, interest and premium (if any)) and the Loan
Documents (Mortgage) shall nevertheless be deemed to remain in full force and
effect as between Mezzanine Borrower and Mezzanine Lender with Mezzanine Lender
being deemed in such context to possess exclusively all of the rights and
remedies of the Mortgage Lender thereunder including without limitation, all
rights of consent and approval, rights to receive and control the disposition of
casualty insurance proceeds and condemnation awards, and the right to collect
rents through a lockbox and make waterfall distributions (but expressly
excluding any rights and remedies relating to payment of the indebtedness under
the Loan Documents (Mortgage) and evidenced by the Mortgage Note and Mezzanine
Borrower shall nevertheless comply or cause the Mortgage Borrower to comply with
each of the terms and provisions of the Loan Documents (Mortgage) (and any
Permitted Mortgage Loan Amendments or amendment or modification consented to in
writing by Mezzanine Lender) (other than the payment of principal, interest and
premium, if any). All documents reasonably requested by Mezzanine Lender for the
implementation or furtherance of the foregoing shall be executed and delivered
to Mezzanine Lender, provided that the same shall be at Mezzanine Lender's sole
cost and expense. Mezzanine Borrower shall deliver to Mezzanine Lender copies of
any and all modifications to the Loan Documents (Mortgage) within five (5)
Business Days after execution thereof.
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(d) All financial information delivered or required to be delivered to
Mortgage Lender pursuant to the terms of the Loan Documents (Mortgage) shall be
contemporaneously delivered to Mezzanine Lender.
5.1.20 PLAN ASSETS, ETC. Mezzanine Borrower will do, or cause
to be done, all things necessary to ensure that it will not be deemed to hold
"plan assets" (within the meaning of U.S. Department of Labor Regulation Section
2510.3-101) at any time during the term the Loan is outstanding.
5.1.21 IMPOSITIONS. All Impositions, claims for labor,
material or supplies that if unpaid or unbonded might by law become a lien or
charge upon any of its property (including the Property) shall be timely paid
and the Property shall be kept free from any Lien (other than the lien of the
Loan Documents (Mortgage) and the Permitted Encumbrances). All Liens imposed
upon the Property or any portion thereof shall be promptly, fully and
unconditionally discharged within thirty (30) days after receipt of written
notice (whether from Mezzanine Lender, the lienholder or any other Person) of
the filing thereof; subject in each case to Mortgage Borrower's right to contest
the same as permitted in but subject to the conditions set forth in the Loan
Agreement (Mortgage) so long as no Event of Default has occurred. In the event
that Mortgage Borrower elects to commence any contest or similar proceeding with
respect to any such Imposition, Lien or other claim described herein, Mezzanine
Borrower shall provide prompt written notice thereof to Mezzanine Lender
together with such evidence as Mezzanine Lender may reasonably require showing
Mortgage Borrower's satisfaction of the requirements set forth in Section 7.3 of
the Loan Agreement (Mortgage) to Mortgage Borrower conducting such contest.
Notwithstanding the foregoing, any contested Imposition, Lien or claim shall be
paid, and the payment thereof shall not be deferred, if Mezzanine Lender,
Mezzanine Borrower or Mortgage Borrower may be subject to civil or criminal
damages as a result thereof. If such action or proceeding is terminated or
discontinued adversely to Mortgage Borrower, then reasonable evidence of payment
of such contested Imposition or Lien shall be promptly delivered to Mezzanine
Lender.
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5.1.22 ARTICLE 8 "OPT IN" LANGUAGE. Mezzanine Borrower shall
cause each organizational document of Mortgage Borrower to include the language
set forth on EXHIBIT M and such language shall remain in each organizational
document for so long as the Obligations are outstanding.
SECTION 5.2 NEGATIVE COVENANTS.
From the Closing Date until payment and performance in full of all
obligations of Mezzanine Borrower under the Loan Documents (Mezzanine) or the
earlier release of the Lien of this Agreement or the Pledge in accordance with
the terms of this Agreement and the other Loan Documents (Mezzanine), Mezzanine
Borrower covenants and agrees with Mezzanine Lender that Mezzanine Borrower will
not do, directly or indirectly, any of the following without Lender's prior
written consent:
5.2.1 DEBT. Without the prior written consent of Mezzanine
Lender, such consent to be made in Mezzanine Lender's sole determination, incur,
create, assume or be liable with respect to any additional Debt (including, but
not limited to, any secondary or junior financing, or any preferred equity
investment, but excluding Permitted Debt), or create or permit to be created or
to remain, any Lien on, or conditional sale or other title retention agreement
with respect to the Collateral or any part thereof or income therefrom, other
than the Loan Documents (Mezzanine) and ordinary course trade payables and
equipment leases expressly permitted by the Loan Agreement (Mortgage). Mezzanine
Borrower shall not cause or permit the Mortgage Borrower to (i) incur, create,
assume or be liable with respect to any additional Debt (including, but not
limited to, any secondary or junior financing or preferred equity investment,
but excluding Permitted Debt) other than the Loan (Mortgage) (and ordinary
course trade payables and equipment leases expressly permitted by the Loan
Agreement (Mortgage)), regardless of whether same has been repaid in whole or in
part, or (ii) create or permit to be created or to remain, any Lien on, or
conditional sale or other title retention agreement, with respect to the
Property other than the Loan (Mortgage) (it being acknowledged and agreed that
any refinancing of such Debt in connection with an assignment and restatement of
the Loan Documents (Mortgage) shall be in violation of this Section 5.2.1).
5.2.2 ENCUMBRANCES. Other than in connection with and as
expressly permitted under the Loan Documents (Mezzanine) and the Loan Documents
(Mortgage),none of Mezzanine Borrower, Mortgage Borrower, Managing Member or
Guarantor will (a) create or incur or suffer to be created or incurred or to
exist any lien, security title, encumbrance, mortgage, pledge, negative pledge,
charge, restriction or other security interest of any kind upon any of its
property or assets of any character whether now owned or hereafter acquired, or
upon the income or profits therefrom; (b) transfer any of its property or assets
or the income or profits therefrom for the purpose of subjecting the same to the
payment of Debt or performance of any other obligation in priority to payment of
its general creditors; (c) acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; (d) suffer to exist for a
period of more than 30 days after the same shall have been incurred any Debt or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; (e) sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles, chattel paper or instruments, with or without
recourse; or (f) incur or maintain any obligation to any holder of Debt which
prohibits the creation or maintenance of any lien securing the Obligations
(Mezzanine).
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5.2.3 ENGAGE IN DIFFERENT BUSINESS. Engage, directly or
indirectly, in any business other than that of entering into this Agreement and
the other Loan Documents (Mezzanine) to which Mezzanine Borrower is a party and
the use, ownership, management, leasing, renovation, financing, development,
operation and maintenance of the Property and activities related thereto;
5.2.4 MAKE ADVANCES. Make advances or make loans to any
Person, or hold any investments, except as expressly permitted pursuant to the
terms of this Agreement or any other Loan Document (Mezzanine);
5.2.5 PARTITION. Permit Mortgage Borrower to partition the
Property;
5.2.6 COMMINGLE. Commingle its assets with the assets of any
of its Affiliates;
5.2.7 GUARANTEE OBLIGATIONS. Guarantee any obligations of any
Person;
5.2.8 TRANSFER ASSETS. Transfer any asset other than in the
ordinary course of business or Transfer any interest in the Property except as
may be permitted hereby or in the other Loan Documents (Mezzanine);
5.2.9 AMEND ORGANIZATIONAL DOCUMENTS. Amend or modify any of
its organizational documents without Mezzanine Lender's consent (which consent
shall not be unreasonably withheld, conditioned or delayed), other than to
reflect any change in capital accounts, contribution, distributions, allocations
or other provisions that do not and could not reasonably be anticipated to have
a Material Adverse Effect and provided that Mezzanine Borrower and Mortgage
Borrower each remain a Single Purpose Entity;
5.2.10 DISSOLVE. Dissolve, wind-up, terminate, liquidate,
merge with or consolidate into another Person, except as expressly permitted
pursuant to this Agreement;
5.2.11 BANKRUPTCY. (i) file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings with respect to itself,
(ii) dissolve, liquidate, consolidate, merge or sell all or substantially all of
Mezzanine Borrower's assets other than in connection with the repayment of the
Loan or (iii) file or solicit the filing of an involuntary bankruptcy petition
against Mezzanine Borrower, Mortgage Borrower, or any Affiliate of such Persons,
without obtaining the prior consent of each of the members of Mezzanine
Borrower, including, without limitation, the Independent Managers;
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5.2.12 ERISA. Engage in any activity that would cause
Mezzanine Borrower's assets to constitute Plan Assets;
5.2.13 DISTRIBUTIONS. From and after the occurrence and during
the continuance of an Event of Default, make any distributions to or for the
benefit of any of its partners or members or its or their Affiliates;
5.2.14 MANAGER.
(a) Mezzanine Borrower shall not, without the prior written consent of
Mezzanine Lender, which consent shall not be unreasonably withheld or delayed,
permit Mortgage Borrower to: (i) materially modify, change, supplement, alter or
amend the Management Agreement or waive or release any of its right and remedies
under the Management Agreement that would reasonably be likely to have a
Material Adverse Effect or (ii) replace the Manager with other than a Qualified
Manager;
(b) Mezzanine Lender shall be notified in writing, together with a copy
of the proposed management agreement, of any entity proposed to be designated as
a Qualified Manager of the Property not less than thirty (30) days before such
Qualified Manager, begins to manage the Property;
(c) If (a) an Event of Default has occurred and is continuing or (b)
the Manager shall become insolvent, Mezzanine Borrower shall, at the request of
Mezzanine Lender and provided Mortgage Lender consents, terminate the Management
Agreement and replace the Manager with a Qualified Manager in accordance with
this Section 5.2.14 and shall deliver (1) an acceptable Non-Consolidation
Opinion covering such replacement Manager if such Person (i) is not covered by
the Non-Consolidation Opinion or an Additional Non-Consolidation Opinion, and
(ii) is an Affiliate of Mezzanine Borrower and (2) an Assignment of Management
Agreement executed by the Mortgage Borrower and the Qualified Manager;
(d) Upon the retention of a Qualified Manager, Mezzanine Lender shall
have the right to approve (which approval shall not be unreasonably withheld or
delayed) any new management agreement with such Qualified Manager; and
(e) In no event shall the Manager's obligations under the Management
Agreement which require a real estate brokerage license under the State of
California commence unless and until Mezzanine Lender has received evidence that
(i) the License Date has occurred and (ii) the Third-Party Management Agreement
has been validly terminated.
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5.2.15 RESERVED.
5.2.16 MODIFY REAS. Without the prior consent of Mezzanine
Lender, which shall not be unreasonably withheld, delayed or conditioned and
provided such consent request shall be in writing and conspicuously state that
failure by Mezzanine Lender to disapprove in writing to such consent request
within ten (10) Business Days shall be deemed consent on behalf of the Mezzanine
Lender, execute modifications to the REAs; provided, however, failure by
Mezzanine Lender to disapprove in writing to Mezzanine Borrower's consent
request pursuant to this Section 5.2.16 within ten (10) Business Days shall be
deemed consent on behalf of Mezzanine Lender;
5.2.17 MODIFY ACCOUNT AGREEMENT (MEZZANINE). Without the prior
consent of Mezzanine Lender, which shall not be unreasonably withheld, delayed
or conditioned, Mezzanine Borrower will not execute any modification to the
Account Agreement (Mezzanine);
5.2.18 ZONING RECLASSIFICATION. Without the prior written
consent of Mezzanine Lender, initiate or consent to (a) any zoning
reclassification of any portion of the Property, (b) seek any variance under any
existing zoning ordinance that could result in the use of the Property becoming
a non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, or (c) allowing any portion of the Property to be used
in any manner that could result in the use of the Property becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation;
5.2.19 CHANGE OF PRINCIPAL PLACE OF BUSINESS. Change its
principal place of business and chief executive office set forth on the first
page of this Agreement without first giving Mezzanine Lender thirty (30) days'
prior written notice (but in any event, within the period required pursuant to
the UCC) and there shall have been taken such action, reasonably satisfactory to
Mezzanine Lender, as may be necessary to maintain fully the effect, perfection
and priority of the security interest of Mezzanine Lender hereunder in the
Account Collateral (Mezzanine) and the Interest Rate Cap Collateral at all
times;
5.2.20 DEBT CANCELLATION. Cancel or otherwise forgive or
release any material claim or debt owed to it by any Person, except for adequate
consideration or in the ordinary course of its business;
5.2.21 MISAPPLICATION OF FUNDS. (i) Distribute any revenue
from the Property or any Proceeds in violation of the provisions of this
Agreement, (ii) fail to remit amounts to the Mezzanine Account, as required by
Section 3.1 or (iii) the Pledge, misappropriate any security deposit or portion
thereof or misapply the proceeds of the Loan; or
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5.2.22 SINGLE-PURPOSE ENTITY. Fail to be a Single-Purpose
Entity or take or suffer any action or inaction the result of which would cause
it or Mortgage Borrower to cease to be a Single-Purpose Entity.
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
SECTION 6.1 INSURANCE COVERAGE REQUIREMENTS.
(a) Each of the insurance policies required by the Loan Documents
(Mortgage) shall be procured and maintained. Each commercial general liability
or umbrella liability policy with respect to the Property shall name Mezzanine
Lender as an additional insured and shall contain a cross liability/severability
endorsement in form and substance acceptable to Mezzanine Lender.
(b) In the event of any loss or damage to the Property, Mezzanine
Borrower shall give prompt written notice to the insurance carrier and Mezzanine
Lender. Mezzanine Lender acknowledges that Mortgage Borrower's rights to any
insurance proceeds are subject to the terms of the Loan Agreement (Mortgage). No
claims under any insurance policies maintained pursuant to this Agreement or the
Loan Documents (Mezzanine) shall be settled, adjusted or compromised without the
prior written consent of Mezzanine Lender, which shall not be unreasonably
withheld, delayed or conditioned; provided, that proof of loss may be made,
adjusted and compromised under casualty insurance policies for claims in an
amount less than $5,000,000 so long as no Event of Default has occurred. Any
proceeds of such claim which are not used to reconstruct or repair the Property,
or applied to the balance of the loan evidenced by the Loan Documents
(Mortgage), shall be deposited into the accounts established pursuant to the
Loan Agreement (Mortgage) to the extent required thereby, or if such deposit is
not required thereunder, then such proceeds shall be paid to Mezzanine Lender
and applied to the payment of the Obligations (Mezzanine) whether or not then
due.
(c) In the event that Mortgage Borrower is permitted pursuant to the
terms of the Loan Agreement (Mortgage) to reconstruct, restore or repair the
Property following a casualty to any portion of the Property, the Property shall
be promptly and diligently repaired and restored in the manner and within the
time periods required by the Loan Agreement (Mortgage), the Leases and any other
agreements affecting the Property. In the event that Mortgage Borrower is
permitted pursuant to terms of the Loan Agreement (Mortgage) to elect to not
reconstruct, restore or repair the Property following a casualty to any portion
of the Property, the Property shall not be reconstructed, restored or repaired
without the prior written consent of Mezzanine Lender, not to be unreasonably
withheld, delayed or conditioned.
(d) Mezzanine Borrower shall comply with all Insurance Requirements and
shall not bring or keep or permit to be brought or kept any article upon any of
the Property or cause or permit any condition to exist thereon which would be
prohibited by any Insurance Requirement, or would invalidate insurance coverage
required to be maintained by Mortgage Borrower on or with respect to any part of
the Property pursuant to Section 6.1 of the Loan Agreement (Mortgage).
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SECTION 6.2 CONDEMNATION. In the event that all or any portion
of the Property shall be damaged or taken through condemnation (which term shall
include any damage or taking by any governmental authority, quasi-governmental
authority, any party having the power of condemnation, or any transfer by
private sale in lieu thereof), or any such condemnation shall be threatened in
writing, Mezzanine Borrower shall give prompt written notice to Mezzanine
Lender. Mezzanine Lender acknowledges that Mortgage Borrower's rights to any
condemnation award is subject to the terms of the Loan Agreement (Mortgage).
Notwithstanding the foregoing, Mezzanine Borrower may not and shall not permit
Mortgage Borrower to settle or compromise any claim, action or proceeding
relating to such damage or condemnation without the prior written consent of
Mezzanine Lender, which shall not be unreasonably withheld, delayed or
conditioned; provided, further, that Mortgage Borrower may settle, adjust and
compromise any such claim, action or proceeding which is of an amount less than
$5,000,000 long as no Default or Event of Default has occurred. Any Excess
Proceeds shall be paid to Mezzanine Lender and applied to the payment of the
Obligations (Mezzanine) whether or not then due pursuant to Section 2.3.1(b). In
the event that Mortgage Borrower is permitted pursuant to the terms of the Loan
Agreement (Mortgage) to reconstruct, restore or repair the Property following a
condemnation of any portion of the Property, the Property shall be promptly and
diligently repaired and restored in the manner and within the time periods
required by the Loan Agreement (Mortgage), the Leases and any other agreements
affecting the Property. In the event that Mortgage Borrower is permitted
pursuant to the terms of the Loan Agreement (Mortgage) to elect not to
reconstruct, restore or repair the Property following a condemnation of any
portion of the Property, the Property shall not be reconstructed, restored or
repaired without the prior written consent of Mezzanine Lender, not to be
unreasonably withheld, delayed or conditioned.
SECTION 6.3 CERTIFICATES. Concurrently with the renewal of the
insurance policies required hereunder, a certificate from Mezzanine Borrower's
and Mortgage Borrower's insurance agent stating that the insurance policies are
maintained with insurers who comply with the terms of Section 6.1.9 of the Loan
Agreement (Mortgage), setting forth a schedule describing all premiums required
to be paid by Mezzanine Borrower or Mortgage Borrower, as applicable, and
stating that either Mezzanine Borrower or Mortgage Borrower, as applicable, has
paid such premiums shall be delivered to Mezzanine Lender. Certificates of
insurance with respect to all replacement policies shall be delivered to
Mezzanine Lender not less than fifteen (15) Business Days prior to the
expiration date of any of the insurance policies required to be maintained
hereunder which certificates shall bear notations evidencing payment of
applicable premiums. Originals (or certified copies) of such replacement
insurance policies shall be delivered to Mezzanine Lender within thirty (30)
days after the effective date thereof (including the insurance certificates
delivered pursuant to Section 2.5.2(h)). If Mezzanine Borrower fails to (i)
maintain or to deliver to Mezzanine Lender the certificates of insurance
required by this Agreement or (ii) maintain and deliver originals (or certified
copies) such insurance policies within thirty (30) days after the effective date
thereof, upon five (5) Business Days' prior notice to Mezzanine Borrower,
Mezzanine Lender may procure such insurance, and all costs thereof (and interest
thereon at the Default Rate) shall be added to the Indebtedness. Mezzanine
Lender shall not, by the fact of approving, disapproving, accepting, preventing,
obtaining or failing to obtain any insurance, incur any liability for or with
respect to the amount of insurance carried, the form or legal sufficiency of
insurance contracts, solvency of insurance companies, or payment or defense of
lawsuits, and Mezzanine Borrower hereby expressly assumes full responsibility
therefor and all liability, if any, with respect thereto.
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VII. RESERVED.
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS.
SECTION 8.1 RESTRICTIONS ON TRANSFERS. Unless such action is permitted
by the provisions of this Article VIII or Article VIII of the Loan Agreement
Mortgage, Mezzanine Borrower shall not, and shall not permit any other Person
to, except with the prior written consent of Mezzanine Lender in each instance,
directly or indirectly: (i) Transfer all or any part of the Property, or the
Collateral or any part thereof, or any income or profits from the Property or
the Collateral, or any other accounts, contract rights, general intangibles,
instruments, chattel paper or other assets or claims, whether now owned or
hereafter acquired except Excess Cash Flow released to Mortgage Borrower or
Mezzanine Borrower, as the case may be; or (ii) except as may be further
permitted by Article V, create or suffer to be created or to exist any lien,
encumbrance, security interest, mortgage, pledge, restriction, attachment or
other charge of any kind upon, or any levy, seizure, attachment or foreclosure
of, the Property or the Collateral or any part thereof, or any part thereof or
interest therein, or any income or profit therefrom, or any other accounts,
contract rights, general intangibles, instruments, chattel paper or other assets
or claims, whether now owned or hereafter acquired, except for Permitted
Encumbrances. For the purposes of this Section, the Transfer of all or any
portion of the direct or indirect ownership interests in Mortgage Borrower or
Mezzanine Borrower at any level or tier, including, without limitation, the
interest of (a) Mezzanine Borrower in Mortgage Borrower or (b) Guarantor in
Mezzanine Borrower, or the creation or addition of a new member or other owner
of any interest in Mortgage Borrower, Mezzanine Borrower, Managing Member, as
the case may be, shall be deemed to be a Transfer of an interest in the
Property.
SECTION 8.2 DELIVERIES TO MEZZANINE LENDER. Not less than thirty (30)
days prior to the closing of any transaction subject to the provisions of this
Article VIII (other than a Transfer pursuant to Section 8.3(b)), Mezzanine
Borrower shall deliver to Mezzanine Lender an Officer's Certificate describing
the proposed transaction and stating that such transaction is permitted by this
Article VIII, together with any appraisal or other documents upon which such
Officer's Certificate is based. In addition, Mezzanine Borrower shall provide
Mezzanine Lender with copies of executed transfer instruments or other similar
closing documents within ten (10) Business Days after such closing.
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SECTION 8.3 PERMITTED TRANSFERS.
(a) A Transfer (but not a pledge or encumbrance) of a direct or
indirect beneficial interest in Mezzanine Borrower or Mortgage Borrower shall be
permitted without Mezzanine Lender's consent (unless noted otherwise below)
provided each of the following conditions is satisfied:
(i) Mezzanine Lender receives thirty (30) days prior written
notice thereof,
(ii) immediately prior to such Transfer, no Event of Default shall
have occurred and be continuing,
(ii) no more than 49% of the direct or indirect ownership interests in
Mezzanine Borrower is being Transferred (in the aggregate of all such
Transfers) unless a Nonconsolidation Opinion and Mezzanine Lender's prior
written consent is obtained,
(iii) no such Transfer or Transfers shall, either individually or in
the aggregate of all Transfers result in a Person or a group of Affiliates
acquiring, directly or indirectly, more than a 49% interest in Mezzanine
Borrower or shall result in any Transfer of the managing member interest in
Mezzanine Borrower or any direct or indirect Transfer of any beneficial
ownership of the managing member of Mezzanine Borrower unless a
Nonconsolidation Opinion and Mezzanine Lender's prior written consent is
obtained,
(iv) Mezzanine Borrower continues to be a Single Purpose Entity after
such Transfer,
(v) no such Transfer or Transfers shall result in a change in the
Control of Mezzanine Borrower or its managing member, unless a
Nonconsolidation Opinion and Mezzanine Lender's prior written consent is
obtained,
(vi) a Qualified Manager acceptable to Mezzanine Lender shall manage
the Property, provided that Manager unless previously removed, shall be
deemed acceptable; and
(vii) Mezzanine Borrower pays to Mezzanine Lender, on the date of such
Transfer, all of Mezzanine Lender's costs and expenses, including without
limitation, reasonable attorney's fees and disbursements, incurred or to be
incurred by Mezzanine Lender in connection with such Transfer.
(b) Notwithstanding anything to the contrary contained in the Article
VIII, the Transfer (including any pledge or encumbrance), in one or a series of
transactions of indirect equity interests in the Mezzanine Borrower shall not be
deemed a Transfer if, after giving effect to such transfers, (i) Guarantor shall
beneficially own not less than an unencumbered fifty one percent (51%) of the
direct and indirect equity interests in the Mezzanine Borrower and the Mortgage
Borrower and shall control the Mezzanine Borrower and the Mortgage Borrower.
(c) Determination. The determination of whether Mezzanine Borrower has
satisfied the conditions for Transfer set forth in this Section 8.3 shall be
made by Mezzanine Lender in its reasonable discretion.
IX. INTEREST RATE CAP AGREEMENT.
SECTION 9.1 INTEREST RATE CAP AGREEMENT. Prior to or contemporaneously
with the Closing Date, Mezzanine Borrower shall have obtained, and thereafter
maintain in effect, the Interest Rate Cap Agreement, which shall be coterminous
with the Loan and have a notional amount which shall not at any time be less
than the Principal Amount. The Interest Rate Cap Agreement shall have a strike
rate no greater than the Strike Price. The notional amount of the Interest Rate
Cap Agreement may be reduced from time to time in amounts equal to any
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mandatory prepayment of the principal of the Loan in accordance with Section
5(b) of the Note.
SECTION 9.2 PLEDGE. As security for the full and punctual payment and
performance of the Obligations (Mezzanine) when due (whether upon stated
maturity, by acceleration, early termination or otherwise), Mezzanine Borrower,
as pledgor, hereby pledges, assigns, hypothecates, transfers and delivers to
Mezzanine Lender and hereby grants to Mezzanine Lender a continuing first
priority lien on and security interest in, to and under all of the following
whether now owned or hereafter acquired and whether now existing or hereafter
arising (the INTEREST RATE CAP COLLATERAL): all of the right, title and interest
of Mezzanine Borrower in and to (i) the Interest Rate Cap Agreement; (ii) all
payments due or to become due to Mezzanine Borrower in respect of the Interest
Rate Cap Agreement or arising out of the Interest Rate Cap Agreement, whether as
contractual obligations, damages or otherwise; and (iii) all of Mezzanine
Borrower's claims, rights, powers, privileges, authority, options, security
interests, liens and remedies, if any, under or arising out of the Interest Rate
Cap Agreement, in each case including all accessions and additions to,
substitutions for and replacements, products and proceeds of any of the
foregoing.
SECTION 9.3 COVENANTS.
(a) Mezzanine Borrower shall comply with all of its obligations under
the terms and provisions of the Interest Rate Cap Agreement. All amounts paid by
the Counterparty under the Interest Rate Cap Agreement to Mezzanine Borrower or
Mezzanine Lender shall be deposited immediately into the Mezzanine Account
pursuant to Section 3.1. Subject to terms hereof, provided no Event of Default
has occurred and is continuing, Mezzanine Borrower shall be entitled to exercise
all rights, powers and privileges of Mezzanine Borrower under, and to control
the prosecution of all claims with respect to, the Interest Rate Cap Agreement
and the other Interest Rate Cap Collateral. Mezzanine Borrower shall take all
actions reasonably requested by Mezzanine Lender to enforce Mezzanine Lender's
rights under the Interest Rate Cap Agreement in the event of a default by the
Counterparty and shall not waive, amend or otherwise modify any of its rights
thereunder.
(b) Mezzanine Borrower will defend Mezzanine Lender's right, title and
interest in and to the Interest Rate Cap Collateral pledged by Mezzanine
Borrower pursuant hereto or in which it has granted a security interest pursuant
hereto against the claims and demands of all other Persons.
(c) In the event of any downgrade, withdrawal or qualification of the
rating of the Counterparty below AA- by S&P and Aa3 by ▇▇▇▇▇'▇, Mezzanine
Borrower shall replace the Interest Rate Cap Agreement with a Replacement
Interest Rate Cap Agreement not later than ten (10) Business Days following
receipt of notice from Lender or Servicer of such downgrade, withdrawal or
qualification.
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(d) In the event that Mezzanine Borrower fails to purchase and deliver
to Mezzanine Lender the Interest Rate Cap Agreement as and when required
hereunder, Mezzanine Lender may purchase the Interest Rate Cap Agreement and the
cost incurred by Mezzanine Lender in purchasing the Interest Rate Cap Agreement
shall be paid by Mezzanine Borrower to Mezzanine Lender with interest thereon at
the Default Rate from the date such cost was incurred by Mezzanine Lender until
such cost is paid by Mezzanine Borrower to Mezzanine Lender.
(e) Mezzanine Borrower will not sell, assign, or otherwise dispose of,
or mortgage, pledge or grant a security interest in, any of the Interest Rate
Cap Collateral or any interest therein, and any sale, assignment, mortgage,
pledge or security interest whatsoever made in violation of this covenant shall
be a nullity and of no force and effect, and upon demand of Mezzanine Lender,
shall forthwith be cancelled or satisfied by an appropriate instrument in
writing.
(f) Mezzanine Borrower will not (i) without the prior written consent
of Mezzanine Lender (which consent shall not be unreasonably withheld,
conditioned or delayed), materially modify, amend or supplement the terms of the
Interest Rate Cap Agreement, (ii) without the prior written consent of Mezzanine
Lender, except in accordance with the terms of the Interest Rate Cap Agreement,
cause the termination of the Interest Rate Cap Agreement prior to its stated
maturity date, (iii) without the prior written consent of Mezzanine Lender
(which consent shall not be unreasonably withheld, conditioned or delayed),
except as aforesaid, waive or release any obligation of the Counterparty (or any
successor or substitute party to the Interest Rate Cap Agreement) under the
Interest Rate Cap Agreement, (iv) without the prior written consent of Mezzanine
Lender (which consent shall not be unreasonably withheld, conditioned or
delayed), consent or agree to any act or omission to act on the part of the
Counterparty (or any successor or substitute party to the Interest Rate Cap
Agreement), which, without such consent or agreement, would constitute a default
under the Interest Rate Cap Agreement, (v) fail to exercise promptly and
diligently each and every material right which it may have under the Interest
Rate Cap Agreement, (vi) take or intentionally omit to take any action or
intentionally suffer or permit any action to be omitted or taken, the taking or
omission of which would result in any right of offset against sums payable under
the Interest Rate Cap Agreement or any defense by the Counterparty (or any
successor or substitute party to the Interest Rate Cap Agreement), to payment,
and (vii) fail to give prompt notice to Mezzanine Lender of any notice of
default given by or to Mezzanine Borrower under or with respect to the Interest
Rate Cap Agreement, together with a complete copy of such notice.
(g) In connection with an Interest Rate Cap Agreement, Mezzanine
Borrower shall obtain and deliver to Mezzanine Lender an Opinion of Counsel from
counsel (which counsel may be in-house counsel for the Counterparty) for the
Counterparty upon which Mezzanine Lender and its successors and assigns may rely
(the COUNTERPARTY OPINION) which shall provide the opinions provided in
EXHIBIT H attached hereto.
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SECTION 9.4 POWERS OF MEZZANINE BORROWER PRIOR TO AN EVENT OF DEFAULT.
Subject to the provisions of Section 9.3(a), provided no Event of Default has
occurred and is continuing, Mezzanine Borrower shall be entitled to exercise all
rights, powers and privileges of Mezzanine Borrower under, and to control the
prosecution of all claims with respect to, the Interest Rate Cap Agreement and
the other Interest Rate Cap Collateral.
SECTION 9.5 REPRESENTATIONS AND WARRANTIES. Mezzanine Borrower hereby
represents and warrants to, Mezzanine Lender as of the date hereof as follows:
(a) The Interest Rate Cap Agreement constitutes the legal, valid and
binding obligation of Mezzanine Borrower, enforceable against Mezzanine Borrower
in accordance with its terms.
(b) The Interest Rate Cap Collateral is free and clear of all claims or
security interests of every nature whatsoever, except such as are created
pursuant to this Agreement and the other Loan Documents (Mezzanine), and
Mezzanine Borrower has the right to pledge and grant a security interest in the
same as herein provided without the consent of any other Person other than any
such consent that has been obtained and is in full force and effect.
(c) The Interest Rate Cap Collateral has been duly and validly pledged
hereunder. All consents and approvals required to be obtained by Borrower for
the consummation of the transactions contemplated by this Agreement have been
obtained.
(d) Giving effect to the aforesaid grant and assignment to Mezzanine
Lender, Mezzanine Lender has, as of the date of this Agreement, and as to
Interest Rate Cap Collateral acquired from time to time after such date, shall
have, a valid, and upon proper filing, perfected and continuing first priority
lien upon and security interest in the Interest Rate Cap Collateral; provided
that no representation or warranty is made with respect to the perfected status
of the security interest of Mezzanine Lender in the proceeds of Interest Rate
Cap Collateral consisting of "cash proceeds" or "non-cash proceeds" as defined
in the UCC except if, and to the extent, the provisions of Section 9-306 of the
UCC shall be complied with.
(e) Except for financing statements filed or to be filed in favor of
Mezzanine Lender as secured party, there are no financing statements under the
UCC covering any or all of the Interest Rate Cap Collateral and Mezzanine
Borrower will not, without the prior written consent of Mezzanine Lender, until
payment in full of all of the Obligations (Mezzanine), execute and file in any
public office, any enforceable financing statement or statements covering any or
all of the Interest Rate Cap Collateral, except financing statements filed or to
be filed in favor of Mezzanine Lender as secured party.
SECTION 9.6 PAYMENTS. If Mezzanine Borrower at any time shall be
entitled to receive any payments with respect to the Interest Rate Cap
Agreement, such amounts shall,
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immediately upon becoming payable to Mezzanine Borrower, be deposited by
Counterparty into the Mezzanine Account.
SECTION 9.7 REMEDIES. Subject to the provisions of the Interest Rate
Cap Agreement, if an Event of Default shall occur and then be continuing:
(a) Mezzanine Lender, without obligation to resort to any other
security, right or remedy granted under any other agreement or instrument, shall
have the right to, in addition to all rights, powers and remedies of a secured
party pursuant to the UCC, at any time and from time to time, sell, resell,
assign and deliver, in its sole discretion, any or all of the Interest Rate Cap
Collateral (in one or more parcels and at the same or different times) and all
right, title and interest, claim and demand therein and right of redemption
thereof, at public or private sale, for cash, upon credit or for future
delivery, and in connection therewith Mezzanine Lender may grant options and may
impose reasonable conditions such as requiring any purchaser to represent that
any "securities" constituting any part of the Interest Rate Cap Collateral are
being purchased for investment only, Mezzanine Borrower hereby waiving and
releasing any and all equity or right of redemption to the fullest extent
permitted by the UCC or applicable law. If all or any of the Interest Rate Cap
Collateral is sold by Mezzanine Lender upon credit or for future delivery,
Mezzanine Lender shall not be liable for the failure of the purchaser to
purchase or pay for the same and, in the event of any such failure, Mezzanine
Lender may resell such Interest Rate Cap Collateral. It is expressly agreed that
Mezzanine Lender may exercise its rights with respect to less than all of the
Interest Rate Cap Collateral, leaving unexercised its rights with respect to the
remainder of the Interest Rate Cap Collateral, provided, however, that such
partial exercise shall in no way restrict or jeopardize Mezzanine Lender's right
to exercise its rights with respect to all or any other portion of the Interest
Rate Cap Collateral at a later time or times.
(b) Mezzanine Lender may exercise, either by itself or by its nominee
or designee, in the name of Mezzanine Borrower, all of Mezzanine Lender's
rights, powers and remedies in respect of the Interest Rate Cap Collateral,
hereunder and under law.
(c) Mezzanine Borrower hereby irrevocably, in the name of Mezzanine
Borrower or otherwise, authorizes and empowers Mezzanine Lender and assigns and
transfers unto Mezzanine Lender, and constitutes and appoints Mezzanine Lender
its true and lawful attorney-in-fact, and as its agent, irrevocably, with full
power of substitution for Mezzanine Borrower and in the name of Mezzanine
Borrower, (i) to exercise and enforce every right, power, remedy, authority,
option and privilege of Mezzanine Borrower under the Interest Rate Cap
Agreement, including any power to subordinate or modify the Interest Rate Cap
Agreement (but not, unless an Event of Default exists and is continuing, the
right to terminate or cancel the Interest Rate Cap Agreement), or to give any
notices, or to take any action resulting in such subordination, termination,
cancellation or modification and (ii) in order to more fully vest in Mezzanine
Lender the rights and remedies provided for herein, to exercise all of the
rights, remedies and powers granted to Mezzanine Lender in this Agreement, and
Mezzanine Borrower
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further authorizes and empowers Mezzanine Lender, as Mezzanine Borrower's
attorney-in-fact, and as its agent, irrevocably, with full power of substitution
for Mezzanine Borrower and in the name of Mezzanine Borrower, to give any
authorization, to furnish any information, to make any demands, to execute any
instruments and to take any and all other action on behalf of and in the name of
Mezzanine Borrower which in the opinion of Mezzanine Lender may be necessary or
appropriate to be given, furnished, made, exercised or taken under the Interest
Rate Cap Agreement, in order to comply therewith, to perform the conditions
thereof or to prevent or remedy any default by Mezzanine Borrower thereunder or
to enforce any of the rights of Mezzanine Borrower thereunder. These
powers-of-attorney are irrevocable and coupled with an interest, and any similar
or dissimilar powers heretofore given by Mezzanine Borrower in respect of the
Interest Rate Cap Collateral to any other Person are hereby revoked.
(d) Mezzanine Lender may, without notice to, or assent by, Mezzanine
Borrower or any other Person (to the extent permitted by law), but without
affecting any of the Obligations (Mezzanine), in the name of Mezzanine Borrower
or in the name of Mezzanine Lender, notify the Counterparty, or if applicable,
any other party to the Interest Rate Cap Agreement, to make payment and
performance directly to Mezzanine Lender; extend the time of payment and
performance of, compromise or settle for cash, credit or otherwise, and upon any
terms and conditions, any obligations owing to Mezzanine Borrower, or claims of
Mezzanine Borrower, under the Interest Rate Cap Agreement; file any claims,
commence, maintain or discontinue any actions, suits or other proceedings deemed
by Mezzanine Lender necessary or advisable for the purpose of collecting upon or
enforcing the Interest Rate Cap Agreement; and execute any instrument and do all
other things deemed necessary and proper by Mezzanine Lender to protect and
preserve and realize upon the Interest Rate Cap Collateral and the other rights
contemplated hereby.
(e) Pursuant to the powers-of-attorney provided for above, Mezzanine
Lender may take any action and exercise and execute any instrument which it may
deem necessary or advisable to accomplish the purposes hereof; provided,
however, that Mezzanine Lender shall not be permitted to take any action
pursuant to said power-of-attorney that would conflict with any limitation on
Mezzanine Lender's rights with respect to the Interest Rate Cap Collateral.
Without limiting the generality of the foregoing, Mezzanine Lender, after the
occurrence of an Event of Default, shall have the right and power to receive,
endorse and collect all checks and other orders for the payment of money made
payable to Mezzanine Borrower representing: (i) any payment of obligations owed
pursuant to the Interest Rate Cap Agreement, (ii) interest accruing on any of
the Interest Rate Cap Collateral or (iii) any other payment or distribution
payable in respect of the Interest Rate Cap Collateral or any part thereof, and
for and in the name, place and stead of Mezzanine Borrower, to execute
endorsements, assignments or other instruments of conveyance or transfer in
respect of any property which is or may become a part of the Interest Rate Cap
Collateral hereunder.
(f) Mezzanine Lender may exercise all of the rights and remedies of a
secured
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party under the UCC.
(g) Without limiting any other provision of this Agreement or any of
Mezzanine Borrower's rights hereunder, and without waiving or releasing
Mezzanine Borrower from any obligation or default hereunder, Mezzanine Lender
shall have the right, but not the obligation, to perform any act or take any
appropriate action, as it, in its reasonable judgment, may deem necessary to
cure such Event of Default or cause any term, covenant, condition or obligation
required under this Agreement or the Interest Rate Cap Agreement to be performed
or observed by Mezzanine Borrower to be promptly performed or observed on behalf
of Mezzanine Borrower or to protect the security of this Agreement. All amounts
advanced by, or on behalf of, Mezzanine Lender in exercising its rights under
this Section 9.7(g) (including, but not limited to, reasonable legal expenses
and disbursements incurred in connection therewith), together with interest
thereon at the Default Rate from the date of each such advance, shall be payable
by Mezzanine Borrower to Mezzanine Lender upon demand and shall be secured by
this Agreement.
SECTION 9.8 SALES OF INTEREST RATE CAP COLLATERAL. No demand,
advertisement or notice, all of which are, to the fullest extent permitted by
law, hereby expressly waived by Mezzanine Borrower, shall be required in
connection with any sale or other disposition of all or any part of the Interest
Rate Cap Collateral, except that Mezzanine Lender shall give Mezzanine Borrower
at least thirty (30) Business Days' prior written notice of the time and place
of any public sale or of the time and the place where any private sale or other
disposition is to be made, which notice Mezzanine Borrower hereby agrees is
reasonable, all other demands, advertisements and notices being hereby waived.
To the extent permitted by law, Mezzanine Lender shall not be obligated to make
any sale of the Interest Rate Cap Collateral if it shall determine not to do so,
regardless of the fact that notice of sale may have been given, and Mezzanine
Lender may without notice or publication adjourn any public or private sale, and
such sale may, without further notice, be made at the time and place to which
the same was so adjourned. Upon each private sale of the Interest Rate Cap
Collateral of a type customarily sold in a recognized market and upon each
public sale, unless prohibited by any applicable statute which cannot be waived,
Mezzanine Lender (or its nominee or designee) may purchase any or all of the
Interest Rate Cap Collateral being sold, free and discharged from any trusts,
claims, equity or right of redemption of Mezzanine Borrower, all of which are
hereby waived and released to the extent permitted by law, and may make payment
therefor by credit against any of the Obligations (Mezzanine) in lieu of cash or
any other obligations. In the case of all sales of the Interest Rate Cap
Collateral, public or private, Mezzanine Borrower will pay all reasonable costs
and expenses of every kind for sale or delivery, including brokers' and
attorneys' fees and disbursements and any tax imposed thereon. However, the
proceeds of sale of Interest Rate Cap Collateral shall be available to cover
such costs and expenses, and, after deducting such costs and expenses from the
proceeds of sale, Mezzanine Lender shall apply any residue to the payment of the
Obligations (Mezzanine) in the order of priority as set forth in Section 17.5.
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SECTION 9.9 PUBLIC SALES NOT POSSIBLE. Mezzanine Borrower acknowledges
that the terms of the Interest Rate Cap Agreement may prohibit public sales,
that the Interest Rate Cap Collateral may not be of the type appropriately sold
at public sales, and that such sales may be prohibited by law. In light of these
considerations, Mezzanine Borrower agrees that private sales of the Interest
Rate Cap Collateral shall not be deemed to have been made in a commercially
unreasonably manner by mere virtue of having been made privately.
SECTION 9.10 RECEIPT OF SALE PROCEEDS. Upon any sale of the Interest
Rate Cap Collateral by Mezzanine Lender hereunder (whether by virtue of the
power of sale herein granted, pursuant to judicial process or otherwise), the
receipt by Mezzanine Lender or the officer making the sale or the proceeds of
such sale shall be a sufficient discharge to the purchaser or purchasers of the
Interest Rate Cap Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to Mezzanine Lender or such officer or be answerable in any way for the
misapplication or non-application thereof.
SECTION 9.11 REPLACEMENT INTEREST RATE CAP AGREEMENT. If, in connection
with Mezzanine Borrower's exercise of the Extension Option pursuant to Section 5
of the Mezzanine Note, Mezzanine Borrower delivers a Replacement Interest Rate
Cap Agreement, all the provisions of this Article IX applicable to the Interest
Rate Cap Agreement delivered on the Closing Date shall be applicable to the
Replacement Interest Rate Cap Agreement as of the date that was the Initial
Maturity Date.
X. RESERVED.
XI. RESERVED.
XII. ENVIRONMENTAL MATTERS.
SECTION 12.1 REPRESENTATIONS. Mezzanine Borrower hereby represents and
warrants that except as set forth in the environmental reports and studies
delivered to Mezzanine Lender (the ENVIRONMENTAL REPORTS), (i) neither Mezzanine
Borrower nor Mortgage Borrower has engaged in or knowingly permitted any
operations or activities upon, or any use or occupancy of the Property, or any
portion thereof, for the purpose of or in any way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Substances on, under, in or about the
Property, or transported any Hazardous Substances to, from or across the
Property, except in all cases in material compliance with Environmental Laws and
only in the course of legitimate business operations at the Property; (ii) to
Mezzanine Borrower's knowledge, no tenant, occupant or user of the Property, nor
any other person, has engaged in or permitted any operations or activities upon,
or any use or occupancy of the Property, or any portion thereof, for the purpose
of or in any material way involving the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal of
any Hazardous Substances on, in or about the Property, or
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transported any Hazardous Substances to, from or across the Property, except in
all cases in material compliance with Environmental Laws and only in the course
of legitimate business operations at the Property; (iii) to Mezzanine Borrower's
knowledge, no Hazardous Substances are presently constructed, deposited, stored,
or otherwise located on, under, in or about the Property except in material
compliance with Environmental Laws; (iv) to Mezzanine Borrower's knowledge, no
Hazardous Substances have migrated from the Property upon or beneath other
properties which would reasonably be expected to result in material liability
for Mezzanine Borrower or Mortgage Borrower; and (v) no Hazardous Substances
have migrated or threaten to migrate from other properties upon, about or
beneath the Property which would reasonably be expected to result in material
liability for Mezzanine Borrower or Mortgage Borrower.
SECTION 12.2 COVENANTS.
12.2.1 COMPLIANCE WITH ENVIRONMENTAL LAWS. Subject to Mortgage
Borrower's right to contest under Section 7.3 of the Loan Agreement (Mortgage),
Mezzanine Borrower and Mortgage Borrower shall comply in all material respects
with all applicable Environmental Laws. If at any time prior to the repayment in
full of the Obligations (Mezzanine), a Governmental Authority having
jurisdiction over the Property requires remedial action to correct the presence
of Hazardous Materials in, around, or under the Property (an ENVIRONMENTAL
EVENT), Mezzanine Borrower shall deliver prompt notice of the occurrence of such
Environmental Event to Mezzanine Lender. Within thirty (30) days after Mezzanine
Borrower has knowledge of the occurrence of an Environmental Event, Mezzanine
Borrower shall deliver to Mezzanine Lender an Officer's Certificate (an
ENVIRONMENTAL CERTIFICATE) explaining the Environmental Event in reasonable
detail and setting forth the proposed remedial action, if any. Mezzanine
Borrower shall promptly provide Mezzanine Lender with copies of all notices
which allege or identify any actual or potential violation or noncompliance
received by or prepared by or for Mezzanine Borrower in connection with any
Environmental Law. For purposes of this paragraph, the term "notice" shall mean
any summons, citation, directive, order, claim, pleading, letter, application,
filing, report, findings, declarations or other materials pertinent to
compliance of the Property and Mezzanine Borrower with such Environmental Laws.
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SECTION 12.3 ENVIRONMENTAL REPORTS. Upon the occurrence of an
Environmental Event with respect to the Property or during the continuance of
any Event of Default, Mezzanine Lender shall have the right to have its
consultants perform a comprehensive environmental audit of the Property. Such
audit shall be conducted by an environmental consultant chosen by Mezzanine
Lender and may include a visual survey, a record review, an area reconnaissance
assessing the presence of hazardous or toxic waste or substances, PCBs or
storage tanks at the Property, an asbestos survey of the Property, which may
include random sampling of the improvements and air quality testing, and such
further site assessments as Mezzanine Lender may reasonably require due to the
results obtained from the foregoing. Mezzanine Lender, its agents, consultants
and contractors shall have the right to enter the Property as reasonable or
appropriate for the circumstances for the purposes of performing such studies
and the reasonable cost of such studies shall be due and payable by Mezzanine
Borrower to Mezzanine Lender upon demand and shall be secured by the Lien of
this Agreement and the Pledge. Mezzanine Lender shall not unreasonably interfere
with, and shall direct the environmental consultant to use its commercially
reasonable efforts not to hinder, Mortgage Borrower's or any Tenant's, other
occupant's or Manager's operations upon the Property when conducting such audit,
sampling or inspections. By undertaking any of the measures identified in and
pursuant to this Section 12.3, Mezzanine Lender shall not be deemed to be
exercising any control over the operations of Mezzanine Borrower or Mortgage
Borrower or the handling of any environmental matter or hazardous wastes or
substances of Mezzanine Borrower or Mortgage Borrower for purposes of incurring
or being subject to liability therefor.
SECTION 12.4 ENVIRONMENTAL INDEMNIFICATION. Mezzanine Borrower shall
protect, indemnify, save, defend, and hold harmless the Indemnified Parties from
and against any and all liability, loss, damage, actions, causes of action,
costs or expenses whatsoever (including reasonable attorneys' fees and expenses)
and any and all claims, suits and judgments which any Indemnified Party may
suffer, as a result of or with respect to: (a) any Environmental Claim relating
to or arising from the Property; (b) the violation of any Environmental Law in
connection with the Property; (c) any release, spill, or the presence of any
Hazardous Substances affecting the Property; and (d) the presence at, in, on or
under, or the release, escape, seepage, leakage, discharge or migration at or
from, the Property of any Hazardous Substances, whether or not such condition
was known or unknown to Mezzanine Borrower; provided that, in each case,
Mezzanine Borrower shall be relieved of its obligation under this subsection if
any of the matters referred to in clauses (a) through (d) above did not occur
(but need not have been discovered) prior to the foreclosure of the Pledge. If
any such action or other proceeding shall be brought against Mezzanine Lender,
upon written notice from Mezzanine Borrower to Mezzanine Lender (given
reasonably promptly following Mezzanine Lender's notice to Mezzanine Borrower of
such action or proceeding), Mezzanine Borrower shall be entitled to assume the
defense thereof, at Mezzanine Borrower's expense, with counsel reasonably
acceptable to Mezzanine Lender; provided, however, Mezzanine Lender may, at its
own expense, retain separate counsel to participate in such defense, but such
participation shall not be deemed to give Mezzanine Lender a right to control
such defense, which right Mezzanine Borrower expressly retains. Notwithstanding
the foregoing, each Indemnified Party shall have the right to employ separate
counsel at Mezzanine Borrower's reasonable expense if, in the reasonable opinion
of legal counsel, a conflict or potential conflict exists between the
Indemnified Party and Mezzanine Borrower that would make such separate
representation advisable. Notwithstanding anything set forth herein, Mezzanine
Borrower shall have no obligation to indemnify an Indemnified Party for damage
or loss resulting from such Indemnified Party's gross negligence or willful
misconduct.
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SECTION 12.5 RECOURSE NATURE OF CERTAIN INDEMNIFICATIONS.
Notwithstanding anything to the contrary provided in this Agreement or in any
other Loan Document (Mezzanine), the indemnification provided in Section 12.4
shall be fully recourse to Mezzanine Borrower and shall be independent of, and
shall survive: (i) the discharge of the Indebtedness, the release of the Liens
created by this Agreement and the Pledge, and/or (ii) the conveyance of title to
the Collateral to Mezzanine Lender or any purchaser or designee in connection
with a foreclosure of this Agreement and the Pledge or conveyance in lieu of
foreclosure.
XIII. ASSIGNMENTS AND PARTICIPATIONS.
SECTION 13.1 ASSIGNMENT AND ACCEPTANCE. Mezzanine Lender may assign to
one or more Persons all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (Mezzanine) (including, without
limitation, all or a portion of the Mezzanine Note); provided that the parties
to each such assignment shall execute and deliver to Mezzanine Lender, for its
acceptance and recording in the Register (as hereinafter defined), an Assignment
and Acceptance. In addition, Mezzanine Lender may participate to one or more
Persons all or any portion of its rights and obligations under this Agreement
and the other Loan Documents (Mezzanine) (including without limitation, all or a
portion of the Mezzanine Note) utilizing such documentation to evidence such
participation and the parties' respective rights thereunder as Mezzanine Lender,
in its sole discretion, shall elect. Notwithstanding anything to the contrary in
this Article XIII, Mezzanine Borrower shall not be required to indemnify any
assignee or participant (with respect to circumstances existing as of the date
of the assignment or participation) for Special Taxes or Other Taxes in excess
of amounts that would be payable to Mezzanine Lender under this Agreement or any
Loan Document (Mezzanine).
SECTION 13.2 EFFECT OF ASSIGNMENT AND ACCEPTANCE. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (i) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of Mezzanine Lender, as the case may be, hereunder and such assignee
shall be deemed to have assumed such rights and obligations, and (ii) Mezzanine
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement and the other Loan
Documents (Mezzanine) (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of Mezzanine Lender's rights and obligations under
this Agreement and the other Loan Documents (Mezzanine), Mezzanine Lender shall
cease to be a party hereto) accruing from and after the effective date of the
Assignment and Acceptance, except with respect to (A) any payments made by
Mezzanine Borrower to Mezzanine Lender pursuant to the terms of the Loan
Documents (Mezzanine) after the effective date of the Assignment and Acceptance
and (B) any letter of credit, cash deposit or other deposits or security (other
than the Liens of this Agreement and the Pledge) and the other Loan Documents
(Mezzanine)) delivered to or for the benefit of or deposited with German
American Capital Corporation, as Mezzanine Lender, for which German American
Capital Corporation, as Mezzanine Lender, shall remain responsible for the
proper disposition thereof until such items are delivered to a party who is
qualified as an Approved Bank and agrees to hold the same in accordance with the
terms and provisions of the agreement
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pursuant to which such items were deposited.
SECTION 13.3 CONTENT. By executing and delivering an Assignment and
Acceptance, Mezzanine Lender and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, Mezzanine Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Documents (Mezzanine) or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, this Agreement or any other Loan
Documents (Mezzanine) or any other instrument or document furnished pursuant
hereto or thereto; (ii) Mezzanine Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Mezzanine
Borrower or the performance or observance by Mezzanine Borrower of any of its
obligations under any Loan Documents (Mezzanine) or any other instrument or
document furnished pursuant thereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon Mezzanine Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents (Mezzanine); (v) such assignee appoints
and authorizes Mezzanine Lender to take such action as agent on its behalf and
to exercise such powers and discretion under the Loan Documents (Mezzanine) as
are delegated to Mezzanine Lender by the terms hereof together with such powers
and discretion as are reasonably incidental thereto; and (vi) such assignee
agrees that it will perform, in accordance with their terms, all of the
obligations which by the terms of this Agreement and the other Loan Documents
(Mezzanine) are required to be performed by Mezzanine Lender.
SECTION 13.4 REGISTER. Mezzanine Lender shall maintain a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of Mezzanine Lender and each assignee
pursuant to this Article XIII and the principal amount of the Loan owing to each
such assignee from time to time (the REGISTER). The entries in the Register
shall, with respect to such assignees, be conclusive and binding for all
purposes, absent manifest error. The Register shall be available for inspection
by Mezzanine Borrower or any assignee pursuant to this Article XIII at any
reasonable time and from time to time upon reasonable prior written notice.
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SECTION 13.5 SUBSTITUTE MEZZANINE NOTES. Upon its receipt of an
Assignment and Acceptance executed by an assignee, together with any Mezzanine
Note or Mezzanine Notes subject to such assignment, Mezzanine Lender shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of EXHIBIT B hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register, and (iii) give prompt written
notice thereof to Mezzanine Borrower. Within five (5) Business Days after its
receipt of such notice, Mezzanine Borrower, at Mezzanine Lender's own expense,
shall execute and deliver to Mezzanine Lender in exchange and substitution for
the surrendered Mezzanine Note or Mezzanine Notes a new Mezzanine Note to the
order of such assignee in an amount equal to the portion of the Loan assigned to
it and a new Mezzanine Note to the order of Mezzanine Lender in an amount equal
to the portion of the Loan retained by it hereunder. Such new Mezzanine Note or
Mezzanine Notes shall be in an aggregate principal amount equal to the aggregate
then outstanding principal amount of such surrendered Mezzanine Note or
Mezzanine Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the Mezzanine
Note (modified, however, to the extent necessary so as not to impose duplicative
or increased obligations on Mezzanine Borrower and to delete obligations
previously satisfied by Mezzanine Borrower). Notwithstanding the provisions of
this Article XIII, Mezzanine Borrower shall not be responsible or liable for any
additional taxes, reserves, adjustments or other costs and expenses that are
related to, or arise as a result of, any transfer of the Loan or any interest or
participation therein that arise solely and exclusively from the transfer of the
Loan or any interest or participation therein or from the execution of the new
Mezzanine Note contemplated by this Section 13.5, including, without limitation,
any mortgage tax. Mezzanine Lender and/or the assignees, as the case may be,
shall from time to time designate one agent through which Mezzanine Borrower
shall request all approvals and consents required or contemplated by this
Agreement and on whose statements Mezzanine Borrower may rely.
SECTION 13.6 PARTICIPATIONS. Each assignee pursuant to this Article
XIII may sell participations to one or more Persons (other than Mezzanine
Borrower or any of its Affiliates) in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (Mezzanine)
(including, without limitation, all or a portion of the Mezzanine Note held by
it); provided, however, that (i) such assignee's obligations under this
Agreement and the other Loan Documents (Mezzanine) shall remain unchanged, (ii)
such assignee shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such assignee shall remain the holder
of any such Mezzanine Note for all purposes of this Agreement and the other Loan
Documents (Mezzanine) and (iv) Mezzanine Borrower, Mezzanine Lender and the
assignees pursuant to this Article XIII shall continue to deal solely and
directly with such assignee in connection with such assignee's rights and
obligations under this Agreement and the other Loan Documents (Mezzanine). In
the event that more than one (1) party comprises Mezzanine Lender, Mezzanine
Lender shall designate one party to act on the behalf of all parties comprising
Mezzanine Lender in providing approvals and all other necessary consents under
the Loan Documents (Mezzanine) and on whose statements Mezzanine Borrower may
rely.
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SECTION 13.7 DISCLOSURE OF INFORMATION. Any assignee pursuant to this
Article XIII may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Article XIII, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to Mezzanine Borrower furnished to such assignee by or on behalf of
Mezzanine Borrower; provided, however, that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree in
writing for the benefit of Mezzanine Borrower to preserve the confidentiality of
any confidential information received by it.
SECTION 13.8 SECURITY INTEREST IN FAVOR OF FEDERAL RESERVE BANK.
Notwithstanding any other provision set forth in this Agreement or any other
Loan Document (Mezzanine), any assignee pursuant to this Article XIII may at any
time create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents (Mezzanine) (including, without
limitation, the amounts owing to it and the Mezzanine Note or Mezzanine Notes
held by it) in favor of any Federal Reserve Bank in accordance with Regulation A
of the Board of Governors of the Federal Reserve System.
XIV. RESERVED.
XV. RESERVED.
XVI. RESERVED.
XVII. DEFAULTS.
SECTION 17.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of default
hereunder (an EVENT OF DEFAULT):
(i) subject to the last sentence of Section 3.1.6(b), if (A)
the Indebtedness is not paid in full on the Maturity Date, (B) any regularly
scheduled monthly payment of interest due under the Mezzanine Note is not paid
in full on the applicable Payment Date, (C) any prepayment of principal due
under this Agreement or the Mezzanine Note is not paid when due, (D) the
Liquidated Damages Amount is not paid when due, (E) any deposit to the Mezzanine
Account is not made on the required deposit date therefor; or (F) except as to
any amount included in (A), (B), (C), (D) and/or (E) of this clause (i), any
other amount payable pursuant to this Agreement, the Mezzanine Note or any other
Loan Document (Mezzanine)is not paid in full when due and payable in accordance
with the provisions of the applicable Loan Document (Mezzanine), with such
failure continuing for ten (10) Business Days after Mezzanine Lender delivers
written notice thereof to Mezzanine Borrower;
(ii) subject to the last sentence of Section 3.1.6(b) of the
Loan Agreement (Mortgage) and subject to Mortgage Borrower's right to contest as
set forth in Section 7.3 of the Loan Agreement (Mortgage), if any of the
Impositions or Other Charges are not paid prior to the imposition of any
interest, penalty, charge or expense for the non-payment thereof;
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(iii) if the insurance policies required by Section 6.1(a)
hereof or Section 3(c) of the Security Instrument are not kept in full force and
effect, or if certificates of insurance or certified copies of any of such
insurance policies are not delivered to Mezzanine Lender within the time frames
set forth in Section 6.1.11 of the Loan Agreement (Mortgage) with such failure
to deliver continuing for ten (10) days after Mezzanine Lender delivers notice
thereof to Mezzanine Borrower;
(iv) if any transfer is made in violation of Article VIII or a
declaration of condominium is filed with respect to the Property;
(v) if any representation or warranty made by Mezzanine
Borrower herein or by Mezzanine Borrower, Guarantor or any Affiliate of
Mezzanine Borrower in any other Loan Document (Mezzanine), or in any report,
certificate, financial statement or other instrument, agreement or document
furnished to Mezzanine Lender on or prior to the date hereof shall have been
false or misleading in any material respect as of the date the representation or
warranty was made;
(vi) if Mezzanine Borrower or Mortgage Borrower or any
Guarantor shall make an assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed
for Mezzanine Borrower, Mortgage Borrower or any Guarantor or if Mezzanine
Borrower, Mortgage Borrower or any Guarantor shall be adjudicated a bankrupt or
insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state law, shall
be filed by or against, consented to, or acquiesced in by, Mezzanine Borrower,
Mortgage Borrower or any Guarantor, or if any proceeding for the dissolution or
liquidation of Mezzanine Borrower, Mortgage Borrower or any Guarantor shall be
instituted; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Mezzanine Borrower, Mortgage
Borrower or any Guarantor upon the same not being discharged, stayed or
dismissed within ninety (90) days;
(viii) if Mezzanine Borrower or any Guarantor, as applicable,
attempts to assign its rights under this Agreement or any of the other Loan
Documents (Mezzanine) or any interest herein or therein in contravention of the
Loan Documents (Mezzanine);
(ix) the occurrence of a Mortgage Event of Default (without
regard to any cure thereof by Mezzanine Lender or Junior Tier Mezzanine Lender);
(x) with respect to any term, covenant or provision set forth
herein or in any other Loan Document which specifically contains a notice
requirement or grace period (other than the other subsections of this Section
17.1 and the provisions referenced therein), if
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Mezzanine Borrower or any Guarantor shall be in default under such term,
covenant or condition after the giving of such notice or the expiration of such
grace period, with such failure continuing for ten (10) Business Days after
Mezzanine Lender delivers written notice thereof to Mezzanine Borrower;
(xi) if any of the assumptions contained in the
Non-Consolidation Opinion, in any Additional Non-Consolidation Opinion or in any
other non-consolidation opinion delivered to Mezzanine Lender in connection with
the Loan, or in any other non-consolidation delivered subsequent to the closing
of the Loan, is or shall become untrue in any material respect;
(xii) if Mezzanine Borrower, having notified Mezzanine Lender
of its election to extend the Maturity Date as set forth in Section 5(a) of the
Mezzanine Note, fails to deliver the Replacement Interest Rate Cap Agreement to
Mezzanine Lender not later than one (1) Business Day prior to the first day of
the extended term of the Loan and Mezzanine Borrower has not prepaid the Loan
pursuant to the terms of the Mezzanine Note prior to such first day of the
extended term;
(xiii) Reserved.
(xiv) if Mezzanine Borrower shall fail to comply with any
covenants set forth in Article V with such failure continuing for ten (10)
Business Days after Mezzanine Lender delivers written notice thereof to
Mezzanine Borrower; provided, however, that if such breach is not a Monetary
Default and is susceptible of cure but cannot reasonably be cured within such
fifteen (15) Business Day period and provided further that Mezzanine Borrower
shall have commenced to cure such breach within such fifteen (15) Business Day
period and thereafter diligently proceeds to cure the same, such fifteen (15)
Business Day period shall be extended for such time as is reasonably necessary
for Mezzanine Borrower in the exercise of due diligence to cure such breach,
such additional period not to exceed thirty (30) days;
(xv) if Mezzanine Borrower shall fail to comply with any
covenants set forth in Article XI with such failure continuing for ten (10)
Business Days after Mezzanine Lender delivers written notice thereof to
Mezzanine Borrower; provided, however, that if such breach is not a Monetary
Default and is susceptible of cure but cannot reasonably be cured within such
fifteen (15) Business Day period and provided further that Mezzanine Borrower
shall have commenced to cure such breach within such fifteen (15) Business Day
period and thereafter diligently proceeds to cure the same, such fifteen (15)
Business Day period shall be extended for such time as is reasonably necessary
for Mezzanine Borrower in the exercise of due diligence to cure such breach,
such additional period not to exceed thirty (30) days;
(xvi) Mezzanine Borrower shall fail to deposit the full amount
required to be deposited in the Mezzanine Account pursuant to Section 3.1.5
within the time periods (if
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any) required by Section 3.1.5(i);
(xvii) if this Agreement or any other Loan Document
(Mezzanine) or any Lien granted hereunder or thereunder, in whole or in part,
shall cease to be effective or shall cease to be a legally valid, binding and
enforceable obligation of Mezzanine Borrower or any Guarantor, or any Lien
securing the Indebtedness shall, in whole or in part, cease to be a perfected
first priority Lien (except in any of the foregoing cases by reason of any
affirmative act of Mezzanine Lender);
(xviii) if Guarantor denies in writing that Guarantor has any
liability or obligations under the Guaranty (other than in connection with a
good faith defense), or shall notify Mezzanine Lender in writing of Guarantor's
intention to attempt to cancel or terminate the Guaranty, or shall fail to
observe or comply with any term, covenant, condition or agreement under the
Guaranty (after the expiration of any applicable notice and cure period);
(xix) if Mezzanine Borrower allows the Mortgage Borrower to
enter into a Prohibited Mortgage Loan Amendment without the prior written
consent of Mezzanine Lender;
(xx) if Mezzanine Borrower or Guarantor shall continue to be
in Default under any of the other terms, covenants or conditions of this
Agreement or any Loan Documents (Mezzanine) not specified in subsections (i) to
(xix) above, for thirty (30) days after notice from Mezzanine Lender; provided,
however, that if such Default is susceptible of cure but cannot reasonably be
cured within such thirty (30) day period and provided further that Mezzanine
Borrower or Guarantor shall have commenced to cure such Default within such
thirty (30) day period and thereafter diligently proceeds to cure the same, such
thirty (30) day period shall be extended for such time as is reasonably
necessary for Mezzanine Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed 90 days;
(xxi) if the Interest Rate Cap Agreement is terminated for any
reason prior to the Maturity Date and a Replacement Interest Rate Cap Agreement
is not delivered to Mezzanine Lender within ten (10) Business Days after the
date of such termination, together with an acceptable Acknowledgment in the form
of EXHIBIT L and a Counterparty Opinion;
(xxii) if (A) there shall occur any default by Mortgage
Borrower under the REAs in the observance or performance of any material term,
covenant or condition of the REAs, and said default is not cured prior to the
expiration of any applicable grace or cure period therein provided the default
of which shall have a Material Adverse Effect, (B) any one or more of the events
referred to in the REAs shall occur which would give any party to the REAs the
right to terminate any REA, (C) the REAs or the easements granted pursuant to
the REAs shall be surrendered, (D) the REAs shall be lawfully terminated or
canceled for any reason or under any circumstances whatsoever, or (E) except as
otherwise provided in this Agreement, any of the terms, covenants or conditions
of the REAs shall in any manner be modified, changed,
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supplemented, altered or amended without the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed.
(b) unless waived in writing by Mezzanine Lender, upon the occurrence
and during the continuance of an Event of Default and at any time thereafter
Mezzanine Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents (Mezzanine) or at law
or in equity, Mezzanine Lender may take such action, without notice or demand,
that Mezzanine Lender deems advisable to protect and enforce its rights against
Mezzanine Borrower and in the Collateral, including, without limitation, (i)
declaring immediately due and payable the entire Principal Amount together with
interest thereon and all other sums due by Mezzanine Borrower under the Loan
Documents (Mezzanine), (ii) collecting interest on the Principal Amount at the
Default Rate whether or not Mezzanine Lender elects to accelerate the Mezzanine
Note and (iii) enforcing or availing itself of any or all rights or remedies set
forth in the Loan Documents (Mezzanine) against Mezzanine Borrower and the
Collateral, including, without limitation, all rights or remedies available at
law or in equity; and upon any Event of Default described in Section 17.1(a)(vi)
or (a)(vii) above, the Indebtedness and all other obligations of Mezzanine
Borrower hereunder and under the other Loan Documents (Mezzanine) shall
immediately and automatically become due and payable, without notice or demand,
and Mezzanine Borrower hereby expressly waives any such notice or demand,
anything contained herein or in any other Loan Document (Mezzanine) to the
contrary notwithstanding. The foregoing provisions shall not be construed as a
waiver by Mezzanine Lender of its right to pursue any other remedies available
to it under this Agreement, the Pledge or any other Loan Document (Mezzanine).
Any payment hereunder may be enforced and recovered in whole or in part at such
time by one or more of the remedies provided to Mezzanine Lender in the Loan
Documents (Mezzanine).
(c) Upon the occurrence of an Event of Default pursuant to Section
17.1(a)(ix), within five (5) Business Days after the first to occur of (a)
receipt by Mortgage Borrower of notice from Mortgage Lender of such Mortgage
Default or Mortgage Event of Default from Mortgage Lender or (b) the date
Mortgage Borrower obtains actual knowledge of the occurrence of such Mortgage
Event of Default, a detailed description of the actions to be taken by Mortgage
Borrower and Mezzanine Borrower to cure such Mortgage Event of Default and the
dates by which each such action shall occur shall be delivered to Mezzanine
Lender. Such schedule shall be subject to the approval of Mezzanine Lender. All
such actions as are necessary to cure such Mortgage Event of Default by the date
approved by Mezzanine Lender shall be taken by Mortgage Borrower and Mezzanine
Borrower and not less frequently than weekly thereafter written updates
concerning the status of Mortgage Borrower's efforts to cure such Mortgage Event
of Default shall be delivered to Mezzanine Lender. Mezzanine Lender shall have
the right, but not the obligation, to pay any sums or to take any action which
Mezzanine Lender deems necessary or advisable to cure any default or alleged
default under the Loan Documents (Mortgage) (whether or not Mortgage Borrower is
undertaking efforts to cure such default), and such payment or such action is
hereby authorized by Mezzanine Borrower, and
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any sum so paid and any expense incurred by Mezzanine Lender in taking any such
action shall be evidenced by this Agreement and secured by this Agreement and
the Pledge and shall be immediately due and payable by Mezzanine Borrower to
Mezzanine Lender with interest at the Default Rate until paid. Mezzanine Lender
shall be permitted to enter upon the Property for the purpose of curing any
default or alleged default under the Loan Documents (Mortgage) or hereunder.
Subject to the rights of the Mortgage Lender under the Loan Agreement
(Mortgage), Mezzanine Borrower hereby transfers and assigns any excess proceeds
arising from any foreclosure or sale under power pursuant to the Loan Documents
(Mortgage) or any instrument evidencing the indebtedness secured thereby, and
Mezzanine Borrower hereby authorizes and directs the holder or holders of the
Loan Documents (Mortgage) to pay such excess proceeds directly to Mezzanine
Lender up to the amount of the Obligations (Mezzanine).
SECTION 17.2 REMEDIES.
(a) Unless waived in writing by Mezzanine Lender, upon the occurrence
and during the continuance of an Event of Default, all or any one or more of the
rights, powers, privileges and other remedies available to Mezzanine Lender
against Mezzanine Borrower under this Agreement or any of the other Loan
Documents (Mezzanine) executed and delivered by, or applicable to, Mezzanine
Borrower or at law or in equity may be exercised by Mezzanine Lender at any time
and from time to time, whether or not all or any of the Indebtedness shall be
declared due and payable, and whether or not Mezzanine Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents (Mezzanine) with respect to
the Collateral. Any such actions taken by Mezzanine Lender shall be cumulative
and concurrent and may be pursued independently, singly, successively, together
or otherwise, at such time and in such order as Mezzanine Lender may determine
in its sole discretion, to the fullest extent permitted by law, without
impairing or otherwise affecting the other rights and remedies of Mezzanine
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents (Mezzanine). Without limiting the generality of the
foregoing, Mezzanine Borrower agrees that if an Event of Default is continuing
(i) Mezzanine Lender is not subject to any one action or election of remedies
law or rule, and (ii) all liens and other rights, remedies or privileges
provided to Mezzanine Lender shall remain in full force and effect until
Mezzanine Lender has exhausted all of its remedies against the Collateral and
this Agreement and the Pledge have been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Indebtedness or the Indebtedness has been
paid in full.
(b) Upon the occurrence and during the continuance of any Event of
Default, Mezzanine Lender may, but without any obligation to do so and without
notice to or demand on Mezzanine Borrower and without releasing Mezzanine
Borrower from any obligation hereunder, take any action to cure such Event of
Default. Upon the occurrence and during the continuance of an Event of Default,
Mezzanine Lender may appear in, defend, or bring any action or proceeding to
protect its interests in the Collateral or to foreclose its security interest
under this Agreement and the Pledge or under any of the other Loan Documents
(Mezzanine) or collect the
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Indebtedness.
(c) Upon the occurrence and during the continuance of an Event of
Default, with respect to the Account Collateral (Mezzanine), the Mezzanine
Lender may:
(i) without notice to Mezzanine Borrower, except as required
by law, and at any time or from time to time, charge, set-off and otherwise
apply all or any part of the Account Collateral (Mezzanine) against the
Obligations (Mezzanine), Operating Expenses and/or capital expenditures for the
Property or any part thereof;
(ii) in Mezzanine Lender's sole discretion, at any time and
from time to time, exercise any and all rights and remedies available to it
under this Agreement, and/or as a secured party under the UCC;
(iii) demand, collect, take possession of or receipt for,
settle, compromise, adjust, ▇▇▇ for, foreclose or realize upon the Account
Collateral (Mezzanine) (or any portion thereof) as Mezzanine Lender may
determine in its sole discretion; and
(iv) take all other actions provided in, or contemplated by,
this Agreement.
(d) With respect to Mezzanine Borrower, the Account Collateral
(Mezzanine), the Interest Rate Cap Collateral and the Collateral, nothing
contained herein or in any other Loan Document (Mezzanine)shall be construed as
requiring Mezzanine Lender to resort to the Collateral for the satisfaction of
any of the Indebtedness, and Mezzanine Lender may seek satisfaction out of the
Collateral or any part thereof, in its absolute discretion in respect of the
Indebtedness. In addition, Mezzanine Lender shall have the right from time to
time to partially foreclose this Agreement and the Pledge in any manner and for
any amounts secured by this Agreement or the Pledge then due and payable as
determined by Mezzanine Lender in its sole discretion including, without
limitation, the following circumstances: (i) in the event Mezzanine Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Mezzanine Lender may foreclose
this Agreement and the Pledge to recover such delinquent payments, or (ii) in
the event Mezzanine Lender elects to accelerate less than the entire outstanding
principal balance of the Loan, Mezzanine Lender may foreclose this Agreement and
the Pledge to recover so much of the principal balance of the Loan as Mezzanine
Lender may accelerate and such other sums secured by this Agreement or the
Pledge as Mezzanine Lender may elect. Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to this Agreement and the
Pledge to secure payment of sums secured by this Agreement and the Pledge and
not previously recovered.
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SECTION 17.3 REMEDIES CUMULATIVE; WAIVERS.
The rights, powers and remedies of Mezzanine Lender under this
Agreement and the Loan Documents (Mezzanine) shall be cumulative and not
exclusive of any other right, power or remedy which Mezzanine Lender may have
against Mezzanine Borrower pursuant to this Agreement or the other Loan
Documents (Mezzanine), or existing at law or in equity or otherwise. Mezzanine
Lender's rights, powers and remedies may be pursued singly, concurrently or
otherwise, at such time and in such order as Mezzanine Lender may determine in
Mezzanine Lender's sole discretion. No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy,
right or power or shall be construed as a waiver thereof, but any such remedy,
right or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Mezzanine
Borrower or any Guarantor shall not be construed to be a waiver of any
subsequent Default or Event of Default by Mezzanine Borrower or any Guarantor or
to impair any remedy, right or power consequent thereon.
SECTION 17.4 COSTS OF COLLECTION. In the event that after an Event of
Default: (i) the Mezzanine Note or any of the Loan Documents (Mezzanine) is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding; (ii) an attorney is retained to
represent Mezzanine Lender in any bankruptcy, reorganization, receivership, or
other proceedings affecting creditors' rights and involving a claim under this
Agreement, the Mezzanine Note or any of the Loan Documents (Mezzanine); or (iii)
an attorney is retained to protect or enforce the lien or any of the terms of
this Agreement, the Pledge or any of the Loan Documents (Mezzanine); then
Mezzanine Borrower shall pay to Mezzanine Lender all reasonable attorney's fees,
costs and expenses actually incurred in connection therewith, including costs of
appeal, together with interest on any judgment obtained by Mezzanine Lender in
respect of such fees, costs and expenses at the Default Rate (collectively,
ENFORCEMENT COSTS).
SECTION 17.5 DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that,
following the occurrence and during the continuance of any Event of Default, any
monies are received in connection with the enforcement of any of the Loan
Documents (Mezzanine), or otherwise with respect to the realization upon any of
the Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the reimbursement
of, Mezzanine Lender for or in respect of all reasonable costs, expenses,
disbursements and actual losses which shall have been incurred or sustained by
Mezzanine Lender to protect or preserve the Collateral or in connection with the
collection of such monies by Mezzanine Lender (including without limitation,
Enforcement Costs), for the exercise, protection or enforcement by Mezzanine
Lender of all or any of the rights, remedies, powers and privileges of Mezzanine
Lender under this Agreement or any of the other Loan Documents (Mezzanine) or in
respect of the Collateral or in support of any provision of adequate indemnity
to Mezzanine Lender against any taxes or liens which by law shall have, or may
have, priority over the rights of Mezzanine Lender to such monies;
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(b) Second, to all other Obligations (Mezzanine) in such order or
preference as Mezzanine Lender shall determine in its sole and absolute
discretion;
(c) Third, the excess, if any, shall be returned to Mezzanine Borrower
or to such other Persons as are entitled thereto.
XVIII. SPECIAL PROVISIONS
SECTION 18.1 EXCULPATION.
18.1.1 EXCULPATED PARTIES. Except as set forth in this Section
18.1, the Recourse Guaranty and the Environmental Indemnity, no personal
liability shall be asserted, sought or obtained by Mezzanine Lender or
enforceable against (i) Mezzanine Borrower, (ii) any Affiliate of Mezzanine
Borrower, (iii) any Person owning, directly or indirectly, any legal or
beneficial interest in Mezzanine Borrower or any Affiliate of Mezzanine Borrower
or (iv) any direct or indirect partner, member, principal, officer, Controlling
Person, beneficiary, trustee, advisor, shareholder, employee, manager, agent,
Affiliate or director of any Persons described in clauses (i) through (iii)
above (collectively, the EXCULPATED PARTIES) and none of the Exculpated Parties
shall have any personal liability (whether by suit, deficiency judgment or
otherwise) in respect of the Obligations (Mezzanine), this Agreement, the
Pledge, the Mezzanine Note, the Collateral or any other Loan Document
(Mezzanine), or the making, issuance or transfer thereof, all such liability, if
any, being expressly waived by Mezzanine Lender and each successive holder of
the Mezzanine Note and any other Loan Documents (Mezzanine). The foregoing
limitation shall not in any way limit or affect Mezzanine Lender's right to any
of the following and Mezzanine Lender shall not be deemed to have waived any of
the following:
(a) Foreclosure of the lien of this Agreement and the Pledge in
accordance with the terms and provisions set forth herein and in the Pledge;
(b) Action against any other security at any time given to secure the
payment of the Mezzanine Note and under the other Loan Documents (Mezzanine);
(c) Exercise of any other remedy set forth in the Agreement or in any
other Loan Document (Mezzanine)which is not inconsistent with the terms of this
Section 18.1;
(d) Any right which Mezzanine Lender may have under Sections 506(a),
506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim
for the full amount of the Indebtedness secured by this Agreement and the Pledge
or to require that all collateral shall continue to secure all of the
Indebtedness owing to Mezzanine Lender in accordance with the Loan Documents
(Mezzanine); and
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(e) The liability of any given Exculpated Party with respect to any
separate written guaranty or agreement given by any such Exculpated Party in
connection with the Loan (including, without limitation, the Recourse Guaranty
and the Environmental Indemnity).
18.1.2 CARVEOUTS FROM NON-RECOURSE LIMITATIONS.
Notwithstanding the foregoing or anything in this Agreement or any of the Loan
Documents (Mezzanine) to the contrary, there shall at no time be any limitation
on Mezzanine Borrower's or any Guarantor's liability for the payment, in
accordance with the terms of this Agreement, the Mezzanine Note, the Pledge and
the other Loan Documents (Mezzanine), to Mezzanine Lender of:
(a) any loss, damage, cost or expense incurred by Mezzanine Lender by
reason of the fraudulent acts of Mezzanine Borrower, Mortgage Borrower or
Guarantor;
(b) Proceeds which Mortgage Borrower, Mezzanine Borrower or Guarantor
has received and to which Mezzanine Lender is entitled pursuant to the terms of
this Agreement or any of the Loan Documents (Mezzanine) to the extent the same
have not been applied toward payment of the Indebtedness, or used for the repair
or replacement of the Property in a manner permitted by the Loan Agreement
(Mortgage) or the other Loan Documents (Mortgage);
(c) all loss, damage, cost or expense as incurred by Mezzanine Lender
and arising from any intentional misrepresentation of Mortgage Borrower,
Mezzanine Borrower or Guarantor;
(d) any knowing misappropriation of Rents or security deposits by
Mortgage Borrower, any Affiliate of Mortgage Borrower, Mezzanine Borrower or any
Affiliate of Mezzanine Borrower;
(e) any loss, damage, cost or expense incurred by Mezzanine Lender by
reason of all or any part of the Collateral being encumbered by a Lien (other
than this Agreement or the Pledge) intentionally granted by Mezzanine Borrower
in violation of the Loan Documents (Mezzanine) through the execution of an
instrument or agreement;
(f) after an Event of Default by Mezzanine Borrower hereunder or under
any other Loan Document (Mezzanine), any Rents, issues, profits and/or income
collected by Mortgage Borrower, Mezzanine Borrower or Guarantor (other than the
Rent sent to the Collection Account or paid directly to Mortgage Lender pursuant
to any notice of direction delivered to tenants of the Property) and not applied
to payment of the Obligations or used to pay normal and verifiable Operating
Expenses of the Property or otherwise applied in a manner permitted under the
Loan Documents (Mortgage) and Loan Documents (Mezzanine);
(g) physical damage to the Property from intentional waste committed by
Mortgage Borrower, Mezzanine Borrower or Guarantor; and
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(h) reasonable attorney's fees and expenses incurred by Mezzanine
Lender in connection with any successful suit filed on account of any of the
foregoing clauses (a) through (g).
XIX. MISCELLANEOUS
SECTION 19.1 SURVIVAL. This Agreement and all covenants,
indemnifications, agreements, representations and warranties made herein and in
the certificates delivered pursuant hereto shall survive the making by Mezzanine
Lender of the Loan and the execution and delivery to Mezzanine Lender of the
Mezzanine Note, and shall continue in full force and effect so long as all or
any of the Indebtedness is outstanding and unpaid unless a longer period is
expressly set forth herein or in the other Loan Documents (Mezzanine); provided
however that this sentence shall not mean that any representations or warranties
set forth in the Agreement shall be deemed made on any date other than the date
hereof unless otherwise specifically provided herein. 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, by or on behalf of Mezzanine Borrower, shall inure
to the benefit of the successors and assigns of Mezzanine Lender.
SECTION 19.2 MEZZANINE LENDER'S DISCRETION. Whenever pursuant to this
Agreement, Mezzanine Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Mezzanine
Lender, the decision of Mezzanine Lender to approve or disapprove or to decide
whether arrangements or terms are satisfactory or not satisfactory shall (except
as is otherwise specifically herein provided) be in the sole discretion of
Mezzanine Lender and shall be final and conclusive.
SECTION 19.3 GOVERNING LAW.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN
WAS MADE BY MEZZANINE LENDER AND ACCEPTED BY MEZZANINE BORROWER IN THE STATE OF
NEW YORK WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
(MEZZANINE) 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.
TO THE FULLEST EXTENT PERMITTED BY LAW, MEZZANINE BORROWER HEREBY
UNCONDITIONALLY AND
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IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND THE MEZZANINE NOTE AND THE OTHER LOAN DOCUMENTS
(MEZZANINE), AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST MEZZANINE LENDER OR
MEZZANINE BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S
OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND MEZZANINE BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND MEZZANINE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. MEZZANINE
BORROWER DOES HEREBY DESIGNATE AND APPOINT:
BLACKSTONE REAL ESTATE
ACQUISITIONS III L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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 AGREE THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO MEZZANINE 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. MEZZANINE BORROWER (I)
SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED
AGENT HEREUNDER, (II) HEREBY DESIGNATES
CORPORATION SERVICE COMPANY
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
AS A SUBSTITUTE IF ITS INITIAL AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW
YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
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SUCCESSOR AND (III) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT
AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR.
SECTION 19.4 MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Mezzanine Note, or of any other Loan Document (Mezzanine),
nor consent to any departure by Mezzanine 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, Mezzanine
Borrower shall entitle Mezzanine Borrower to any other or future notice or
demand in the same, similar or other circumstances.
SECTION 19.5 DELAY NOT A WAIVER. Neither any failure nor any delay on
the part of Mezzanine Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Mezzanine Note or under any other Loan
Document (Mezzanine), 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 Mezzanine Note or any other Loan Document (Mezzanine),
Mezzanine 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
Mezzanine Note or the other Loan Documents (Mezzanine), or to declare a default
for failure to effect prompt payment of any such other amount.
SECTION 19.6 NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document (Mezzanine)
shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) certified or registered United States mail, postage
prepaid, return receipt requested or (b) expedited prepaid delivery service,
either commercial or United States Postal Service, with proof of attempted
delivery, or (c) by telecopier (with answer back acknowledged), addressed as
follows (or at such other address and Person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section:
If to Mezzanine Lender: German American Capital Corporation
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
90
New York New York 10019
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇ and General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ORIX Real Estate Capital Markets
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Mezzanine Borrower: BRE/Park Place Mezzanine L.L.C.
c/o Blackstone Real Estate Acquisitions III
L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
All notices, elections, requests and demands under this Agreement shall be
effective and deemed received upon the earliest of (i) the actual receipt of the
same by personal delivery or otherwise, (ii) one (1) Business Day after being
deposited with a nationally recognized overnight courier service as required
above, (iii) three (3) Business Days after being deposited in the United States
mail as required above or (iv) on the day sent if sent by facsimile with
confirmation on or before 5:00 p.m. New York time on any Business Day or on the
next Business Day if so delivered after 5:00 p.m. New York time or on any day
other than a Business Day. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as
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herein required shall be deemed to be receipt of the notice, election, request,
or demand sent.
SECTION 19.7 TRIAL BY JURY. MEZZANINE BORROWER AND ALL PERSONS CLAIMING
BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, THE PLEDGE, THE MEZZANINE NOTE
OR ANY OTHER LOAN DOCUMENT (MEZZANINE), INCLUDING, WITHOUT LIMITATION, ANY
PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT, THE PLEDGE, THE MEZZANINE NOTE OR ANY OTHER LOAN
DOCUMENT (MEZZANINE) (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND MEZZANINE BORROWER HEREBY AGREES
AND CONSENTS THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY
RIGHT TO TRIAL BY JURY. MEZZANINE BORROWER ACKNOWLEDGES THAT IT HAS CONSULTED
WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT
THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER
SHALL SURVIVE THE REPAYMENT OF THE LOAN.
SECTION 19.8 HEADINGS. The Article and/or Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
SECTION 19.9 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 19.10 PREFERENCES. To the extent Mezzanine Borrower makes a
payment or payments to Mezzanine Lender, which payment or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds received, the obligations
hereunder or part thereof intended to be satisfied shall be revived and continue
in full
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force and effect, as if such payment or proceeds had not been received by
Mezzanine Lender.
SECTION 19.11 WAIVER OF NOTICE. Mezzanine Borrower shall not be
entitled to any notices of any nature whatsoever from Mezzanine Lender except
with respect to matters for which this Agreement or the other Loan Documents
(Mezzanine) specifically and expressly provide for the giving of notice by
Mezzanine Lender to Mezzanine Borrower and except with respect to matters for
which Mezzanine Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Mezzanine Borrower hereby expressly
waives the right to receive any notice from Mezzanine Lender with respect to any
matter for which this Agreement or the other Loan Documents (Mezzanine) do not
specifically and expressly provide for the giving of notice by Mezzanine Lender
to Mezzanine Borrower.
SECTION 19.12 EXPENSES; INDEMNITY.
(a) Mezzanine Borrower covenants and agrees to pay or, if Mezzanine
Borrower fails to pay, to reimburse, Mezzanine Lender upon receipt of written
notice from Mezzanine Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Mezzanine Lender in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents (Mezzanine) and the consummation of the
transactions contemplated hereby and thereby and all the costs of furnishing all
opinions by counsel for Mezzanine Borrower (including without limitation any
opinions requested by Mezzanine Lender pursuant to this Agreement); (ii)
Mezzanine Lender's ongoing performance and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents (Mezzanine)
on its part to be performed or complied with after the Closing Date; (iii) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents (Mezzanine) requested by Mezzanine Borrower and any other
documents or matters as required herein or under the other Loan Documents
(Mezzanine); (iv) securing Mezzanine Borrower's compliance with any requests
made pursuant to the provisions of this Agreement; (v) the filing and recording
fees and expenses, mortgage recording taxes, title insurance and reasonable fees
and expenses of counsel for providing to Mezzanine Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Lien in favor of Mezzanine Lender pursuant to this Agreement and the other Loan
Documents (Mezzanine); (vi) enforcing or preserving any rights, in response to
third party claims or the prosecuting or defending of any action or proceeding
or other litigation, in each case against, under or affecting Mezzanine
Borrower, this Agreement, the other Loan Documents (Mezzanine), the Property, or
any other security given for the Loan; (vii) enforcing any obligations of or
collecting any payments due from Mezzanine Borrower under this Agreement, the
other Loan Documents (Mezzanine) or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a work-out or of any insolvency
or bankruptcy proceedings and (viii) procuring insurance policies pursuant to
Section 6; provided, however, that Mezzanine Borrower shall not
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be liable for the payment of any such costs and expenses to the extent the same
arise (A) by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Mezzanine Lender or (B) in connection with a Securitization, other
than the Mezzanine Borrower's internal administrative costs and up to $5,000 for
Mezzanine Borrower's external legal costs. Any cost and expenses due and payable
to Mezzanine Lender may be paid from any amounts in the Mezzanine Account.
(b) Subject to the non-recourse provisions of Section 18.1 , Mezzanine
Borrower will protect, indemnify and save harmless Mezzanine Lender, and all
officers, directors, stockholders, members, partners, employees, agents,
successors and assigns thereof (collectively, the Indemnified Parties) from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including all reasonable attorneys' fees and
expenses actually incurred) imposed upon or incurred by or asserted against the
Indemnified Parties, the Collateral or the Property or any part of its interest
therein, by reason of the occurrence or existence of any of the following (to
the extent Proceeds payable on account of the following shall be inadequate; it
being understood that in no event will the Indemnified Parties be required to
actually pay or incur any costs or expenses as a condition to the effectiveness
of the foregoing indemnity) prior to (i) the acceptance by Mezzanine Lender or
its designee of a deed-in-lieu of foreclosure with respect to the Collateral,
(ii) an Indemnified Party or its designee Parties taking possession or control
of the Property, or (iii) the foreclosure of the Pledge, except to the extent
caused by the fraud, illegal acts, willful misconduct or gross negligence of the
Indemnified Parties (other than such fraud, illegal acts, willful misconduct or
gross negligence imputed to the Indemnified Parties because of their interest in
the Property): (1) ownership of Mezzanine Borrower's interest in the Property,
or any interest therein, or receipt of any Rents or other sum therefrom, (2) any
accident, injury to or death of any persons or loss of or damage to property
occurring on or about the Property or any Appurtenances thereto, (3) any design,
construction, operation, repair, maintenance, use, non-use or condition of the
Property or Appurtenances thereto, including claims or penalties arising from
violation of any Legal Requirement or Insurance Requirement, as well as any
claim based on any patent or latent defect, whether or not discoverable by
Mezzanine Lender, any claim the insurance as to which is inadequate, and any
Environmental Claim, (4) any Default under this Agreement or any of the other
Loan Documents (Mezzanine) or any failure of Mezzanine Borrower or Mortgage
Borrower to perform or comply with any of the terms of any Lease or REA within
the applicable notice or grace periods, (5) any performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property or any part thereof, (6) any negligence or tortious act or omission on
the part of Mezzanine Borrower or any of its agents, contractors, servants,
employees, sublessees, licensees or invitees, (7) any contest referred to in
Section 7.3 of the Loan Agreement (Mortgage), (8) any obligation or undertaking
relating to the performance or discharge of any of the terms, covenants and
conditions of the landlord contained in the Leases, (9) the presence at, in or
under the Property or the Improvements of any Hazardous Substances in violation
of any Environmental Law or (10) Lender's disclosure of the terms of the
settlement agreement referenced in Schedule IV to the Loan Agreement (Mortgage)
to
94
prospective purchasers of interests in the Loan (Mezzanine). Any amounts the
Indemnified Parties are legally entitled to receive under this Section 19.12(b)
which are not paid within fifteen (15) Business Days after written demand
therefor by the Indemnified Parties or Mezzanine Lender, setting forth in
reasonable detail the amount of such demand and the basis therefor, shall bear
interest from the date of demand at the Default Rate, and shall, together with
such interest, be part of the Indebtedness and secured by this Agreement and the
Pledge. In case any action, suit or proceeding is brought against the
Indemnified Parties by reason of any such occurrence, Mezzanine Borrower shall
at Mezzanine Borrower's reasonable expense resist and defend such action, suit
or proceeding or will cause the same to be resisted and defended by counsel at
Mezzanine Borrower's reasonable expense for the insurer of the liability or by
counsel designated by Mezzanine Borrower (unless reasonably disapproved by
Mezzanine Lender promptly after Mezzanine Lender has been notified of such
counsel); provided, however, that nothing herein shall compromise the right of
Mezzanine Lender (or any Indemnified Party) to appoint its own counsel at
Mezzanine Borrower's reasonable expense for its defense with respect to any
action which in its reasonable opinion presents a conflict or potential conflict
between Mezzanine Lender and Mezzanine Borrower that would make such separate
representation advisable; provided further that if Mezzanine Lender shall have
appointed separate counsel pursuant to the foregoing, Mezzanine Borrower shall
not be responsible for the expense of additional separate counsel of any
Indemnified Party unless in the reasonable opinion of Mezzanine Lender a
conflict or potential conflict exists between such Indemnified Party and
Mezzanine Lender. So long as Mezzanine Borrower is resisting and defending such
action, suit or proceeding as provided above in a prudent and commercially
reasonable manner, Mezzanine Lender and the Indemnified Parties shall not be
entitled to settle such action, suit or proceeding without Mezzanine Borrower's
consent which shall not be unreasonably withheld or delayed, and claim the
benefit of this Section 19.12(b) with respect to such action, suit or proceeding
and Mezzanine Lender agrees that it will not settle any such action, suit or
proceeding without the consent of Mezzanine Borrower; provided, however, that if
Mezzanine Borrower is not diligently defending such action, suit or proceeding
in a prudent and commercially reasonable manner as provided above, and Mezzanine
Lender has provided Mezzanine Borrower with thirty (30) days' prior written
notice, or shorter period if mandated by the requirements of applicable law, and
opportunity to correct such determination, Mezzanine Lender may settle such
action, suit or proceeding and claim the benefit of this Section 19.12(b) with
respect to settlement of such action, suit or proceeding. Any Indemnified Party
will give Mezzanine Borrower prompt notice after such Indemnified Party obtains
actual knowledge of any potential claim by such Indemnified Party for
indemnification hereunder. The Indemnified Parties shall not settle or
compromise any action, proceeding or claim as to which it is indemnified
hereunder without notice to Mezzanine Borrower.
SECTION 19.13 EXHIBITS AND SCHEDULES INCORPORATED. The Exhibits and
Schedules annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.
SECTION 19.14 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of
Mezzanine Lender's interest in and to this Agreement, the Mezzanine Note and the
other Loan Documents (Mezzanine) shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to such documents which
Mezzanine Borrower may otherwise have against any assignor of such documents,
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and no such unrelated counterclaim or defense shall be interposed or asserted by
Mezzanine Borrower or in any action or proceeding brought by any such assignee
upon such documents and to the extent permitted by controlling law 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 Mezzanine
Borrower .
SECTION 19.15 LIABILITY OF ASSIGNEES OF MEZZANINE LENDER. No assignee
of Mezzanine Lender shall have any personal liability, directly or indirectly,
under or in connection with this Agreement or any other Loan Document
(Mezzanine)or any amendment or amendments hereto made at any time or times,
heretofore or hereafter, any different than the liability of Mezzanine Lender
hereunder. In addition, no assignee shall have at any time or times hereafter
any personal liability, directly or indirectly, under or in connection with or
secured by any agreement, lease, instrument, encumbrance, claim or right
affecting or relating to the Property or to which the Property is now or
hereafter subject any different than the liability of Mezzanine Lender
hereunder. The limitation of liability provided in this Section 19.15 is (i) in
addition to, and not in limitation of, any limitation of liability applicable to
the assignee provided by law or by any other contract, agreement or instrument,
and (ii) shall not apply to any assignee's gross negligence or willful
misconduct.
SECTION 19.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Mezzanine Borrower and Mezzanine Lender intend that the
relationships created hereunder and under the other Loan Documents (Mezzanine)
be solely that of mezzanine borrower and mezzanine lender. Nothing herein or
therein is intended to create a joint venture, partnership, tenancy-in-common,
or joint tenancy relationship between Mezzanine Borrower and Mezzanine Lender
nor to grant Mezzanine Lender any interest in the Property other than that of
mezzanine lender.
(b) This Agreement and the other Loan Documents (Mezzanine) are solely
for the benefit of Mezzanine Lender and Mezzanine Borrower and nothing contained
in this Agreement or the other Loan Documents (Mezzanine) shall be deemed to
confer upon anyone other than Mezzanine Lender or Mezzanine Borrower any right
to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Mezzanine Lender to make the Loan hereunder are imposed solely and exclusively
for the benefit of Mezzanine Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Mezzanine Lender will refuse to make the Loan in the
absence of strict compliance with any
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or all thereof and no other Person shall under any circumstances be deemed to be
a beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by Mezzanine Lender if, in Mezzanine Lender's sole discretion,
Mezzanine Lender deems it advisable or desirable to do so.
SECTION 19.17 PUBLICITY. All news releases, publicity or advertising by
Mezzanine Borrower, Lender or their Affiliates through any media intended to
reach the general public which refers to the Loan Documents (Mezzanine) or the
financing evidenced by the Loan Documents (Mezzanine), shall be subject to the
reasonable prior written approval of Mezzanine Lender and Mezzanine Borrower
which approval shall not be unreasonably withheld or delayed or conditioned.
SECTION 19.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest extent
permitted by law, Mezzanine Borrower, for itself and its successors and assigns,
waives all rights to a marshalling of the assets of Mezzanine Borrower,
Mezzanine Borrower's members and others with interests in Mezzanine Borrower and
of the Collateral, 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 Mezzanine Lender under the
Loan Documents (Mezzanine) to a sale of the Collateral for the collection of the
Indebtedness without any prior or different resort for collection or of the
right of Mezzanine Lender to the payment of the Indebtedness out of the net
proceeds of the Collateral in preference to every other claimant whatsoever.
SECTION 19.19 WAIVER OF COUNTERCLAIM AND OTHER ACTIONS. Mezzanine
Borrower hereby expressly and unconditionally waives, in connection with any
suit, action or proceeding brought by Mezzanine Lender on this Agreement, the
Mezzanine Note, the Pledge or any Loan Document (Mezzanine), any and every right
it may have to (i) interpose any counterclaim therein (other than a counterclaim
which can only be asserted in the suit, action or proceeding brought by
Mezzanine Lender on this Agreement, the Mezzanine Note, the Pledge or any Loan
Document (Mezzanine) and cannot be maintained in a separate action) and (ii)
have any such suit, action or proceeding consolidated with any other or separate
suit, action or proceeding.
SECTION 19.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE. In the
event of any conflict between the provisions of this Agreement and any of the
other Loan Documents (Mezzanine), the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents (Mezzanine) and that such Loan Documents (Mezzanine) shall not be
subject to the principle of construing their meaning against the party which
drafted same. Mezzanine Borrower acknowledges that, with respect to the Loan,
Mezzanine Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any
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manner on any statements, representations or recommendations of Mezzanine Lender
or any parent, subsidiary or Affiliate of Mezzanine Lender. Mezzanine Lender
shall not be subject to any limitation whatsoever in the exercise of any rights
or remedies available to it under any of the Loan Documents (Mezzanine) or any
other agreements or instruments which govern the Loan by virtue of the ownership
by it or any parent, subsidiary or Affiliate of Mezzanine Lender of any equity
interest any of them may acquire in Mezzanine Borrower, and Mezzanine Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Mezzanine Lender's exercise of any
such rights or remedies. Mezzanine Borrower acknowledges that Mezzanine Lender
engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Mezzanine Borrower or their Affiliates.
SECTION 19.21 PRIOR AGREEMENTS. This Agreement and the other Loan
Documents (Mezzanine) contain the entire agreement of the parties hereto and
thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Loan Documents
(Mezzanine) and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of any and all such prior
agreements do not survive execution of this Agreement.
SECTION 19.22 BROKERS. Neither Lender nor Mezzanine Borrower has dealt
with any broker or finder with respect to the transactions contemplated by the
Loan Documents (Mezzanine) and neither Lender nor Mezzanine Borrower has done
any acts, had any negotiations or conversations, or made any agreements or
promises which will in any way create or give rise to any obligation or
liability for the payment by either party of any brokerage fee, charge,
commission or other compensation to any Person with respect to the transactions
contemplated by the Loan Documents (Mezzanine). Mezzanine Borrower and Mezzanine
Lender shall each indemnify and hold harmless the other from and against any
loss, liability, cost or expense, including any judgments, attorneys' fees, or
costs of appeal, incurred by the other party and arising out of or relating to
any breach or default by the indemnifying party of its representations,
warranties and/or agreements set forth in this subsection.
SECTION 19.23 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.
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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.
MEZZANINE BORROWER:
BRE/PARK PLACE MEZZANINE L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[Mezzanine Lender's signature appears on following page]
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MEZZANINE LENDER:
GERMAN AMERICAN CAPITAL CORPORATION,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Authorized Signatory
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