Exhibit 99.1
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LOAN AGREEMENT
Dated as of July 20, 2005
Between
BEHRINGER HARVARD WESTERN PORTFOLIO LP,
as Borrower
and
JPMORGAN CHASE BANK, N.A.,
as Lender
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TABLE OF CONTENTS
PAGE
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS..............................................................1
SECTION 1.2 PRINCIPLES OF CONSTRUCTION..............................................23
II. GENERAL TERMS
SECTION 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER...............................23
SECTION 2.2 INTEREST RATE...........................................................23
SECTION 2.3 LOAN PAYMENT............................................................24
SECTION 2.4 PREPAYMENTS.............................................................25
SECTION 2.5 DEFEASANCE..............................................................26
SECTION 2.6 RELEASE OF PROPERTY.....................................................28
III. CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT TO CLOSING.........................................32
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 BORROWER REPRESENTATIONS................................................36
SECTION 4.2 SURVIVAL OF REPRESENTATIONS.............................................44
V. BORROWER COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS...................................................44
SECTION 5.2 NEGATIVE COVENANTS......................................................54
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
SECTION 6.1 INSURANCE...............................................................60
SECTION 6.2 CASUALTY................................................................64
SECTION 6.3 CONDEMNATION............................................................64
SECTION 6.4 RESTORATION.............................................................64
VII. RESERVE FUNDS
SECTION 7.1 REQUIRED REPAIRS........................................................69
SECTION 7.2 TAX AND INSURANCE ESCROW FUND...........................................69
SECTION 7.3 REPLACEMENTS AND REPLACEMENT RESERVE....................................70
SECTION 7.4 ROLLOVER RESERVE........................................................75
SECTION 7.5 RESERVE FUNDS, GENERALLY......................ERROR! BOOKMARK NOT DEFINED.
VIII. DEFAULTS
SECTION 8.1 EVENT OF DEFAULT........................................................78
SECTION 8.2 REMEDIES................................................................80
SECTION 8.3 REMEDIES CUMULATIVE; WAIVERS.............................................81
IX. SPECIAL PROVISIONS
SECTION 9.1 SECURITIZATION...........................................................81
SECTION 9.2 SECURITIZATION INDEMNIFICATION.................ERROR! BOOKMARK NOT DEFINED.
SECTION 9.3 EXCULPATION..............................................................84
SECTION 9.4 MATTERS CONCERNING PROPERTY MANAGER......................................85
SECTION 9.5 SERVICER.................................................................86
X. MISCELLANEOUS
SECTION 10.1 SURVIVAL.................................................................86
SECTION 10.2 LENDER'S DISCRETION......................................................86
SECTION 10.3 GOVERNING LAW............................................................86
SECTION 10.4 MODIFICATION, WAIVER IN WRITING..........................................88
SECTION 10.5 DELAY NOT A WAIVER.......................................................88
SECTION 10.6 NOTICES..................................................................88
SECTION 10.7 TRIAL BY JURY............................................................89
SECTION 10.8 HEADINGS.................................................................89
SECTION 10.9 SEVERABILITY.............................................................89
SECTION 10.10 PREFERENCES..............................................................89
SECTION 10.11 WAIVER OF NOTICE.........................................................90
SECTION 10.12 REMEDIES OF BORROWER.....................................................90
SECTION 10.13 EXPENSES; INDEMNITY......................................................90
SECTION 10.14 SCHEDULES INCORPORATED...................................................91
SECTION 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES......................................91
SECTION 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES............91
SECTION 10.17 PUBLICITY................................................................92
SECTION 10.18 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF MARSHALLING .OF ASSETS.92
SECTION 10.19 WAIVER OF COUNTERCLAIM...................................................93
SECTION 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE............................93
SECTION 10.21 BROKERS AND FINANCIAL ADVISORS...........................................93
SECTION 10.22 PRIOR AGREEMENTS.........................................................93
SECTION 10.23 JOINT AND SEVERAL LIABILITY..............................................94
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SCHEDULES
Schedule I - Properties - Allocated Loan Amounts
Schedule II - Rent Roll
Schedule III - Required Repairs - Deadlines for Completion
Schedule IV - Organizational Chart of Borrower
Schedule V - Exceptions to Representations
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 20th day of July, 2005 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between JPMORGAN CHASE BANK, N.A., a banking
association chartered under the laws of the United States of America, having an
address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("LENDER") and BEHRINGER
HARVARD WESTERN PORTFOLIO LP, a Delaware limited partnership, having its
principal place of business c/o Behringer Harvard Funds, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("BORROWER").
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined)
from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and
in accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS. For all purposes of this Agreement, except
as otherwise expressly required or unless the context clearly indicates a
contrary intent:
"ADDITIONAL INSOLVENCY OPINION" shall have the meaning set forth in
SECTION 4.1.30(C) hereof.
"ADJUSTED RELEASE AMOUNT" shall mean, for each Individual Property, the
sum of (a) the Release Amount for such Individual Property and (b) fifteen
percent (15%) of the Release Amount for such Individual Property.
"ADS ACCOUNT" shall have the meaning set forth in the Cash Management
Agreement.
"ADS LEASE" shall mean that certain Lease dated January 29, 1998 between
ADS Alliance Data Systems, Inc., as tenant, and Borrower, as successor in
interest to Opus South Corporation, as landlord.
"AFFILIATE" shall mean, as to any Person, any other Person that,
directly or indirectly, is in Control of, is Controlled by or is under common
Control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"AFFILIATED LOANS" shall mean a loan made by Lender to an Affiliate of
Borrower, Principal or Guarantor.
"AFFILIATED MANAGER" shall mean any Property Manager in which Borrower,
Principal, or Guarantor has, directly or indirectly, any legal, beneficial or
economic interest.
"AGREEMENT" shall mean this Loan Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ANNUAL BUDGET" shall mean the operating budget, including all planned
Capital Expenditures, for the Properties prepared by Borrower in accordance with
SECTION 5.1.11.(D) hereof for the applicable Fiscal Year or other period.
"APPROVED ANNUAL BUDGET" shall have the meaning set forth in SECTION
5.1.11(D) hereof.
"ASSIGNMENT OF LEASES" shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from Borrower, as assignor, to Lender, as assignee,
assigning to Lender all of Borrower's interest in and to the Leases and Rents of
such Individual Property as security for the Loan, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean, with respect to each
Individual Property, that certain Assignment of Management Agreement and
Subordination of Management Fees, dated as of the Closing Date, among Lender,
Borrower and Property Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"AWARD" shall mean any compensation paid by any Governmental Authority
in connection with a Condemnation in respect of all or any part of any
Individual Property.
"BANKRUPTCY ACTION" shall mean with respect to any Person (a) such
Person filing a voluntary petition under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law; (b) the filing of an involuntary
petition against such Person under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, in which such Person colludes with, or
otherwise assists such Person, or cause to be solicited petitioning creditors
for any involuntary petition against such Person; (c) such Person filing an
answer consenting to or otherwise acquiescing in or joining in any involuntary
petition filed against it, by any other Person under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law; (d) such Person consenting
to or acquiescing in or joining in an application for the appointment of a
custodian, receiver, trustee, or examiner for such person or any portion of any
Individual Property; (e) such Person making an assignment for the benefit of
creditors, or admitting, in writing or in any legal proceeding, its insolvency
or inability to pay its debts as they become due.
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"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, 11
U.S.C. ss.101, ET SEQ., as the same may be amended from time to time, and any
successor statute or statutes and all rules and regulations from time to time
promulgated thereunder, and any comparable foreign laws relating to bankruptcy,
insolvency or creditors' rights or any other Federal or state bankruptcy or
insolvency law.
"BASIC CARRYING COSTS" shall mean, with respect to each Individual
Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii)
Insurance Premiums.
"BEHRINGER HOLDINGS" shall mean Behringer Harvard Holdings, a Delaware
limited liability company.
"BEHRINGER HARVARD FUNDS" shall mean, individually or collectively,
Behringer Holdings, Behringer Harvard Short-Term Opportunity Fund I LP, a Texas
limited partnership, Behringer Harvard Mid-Term Value Enhancement Fund I LP, a
Texas limited partnership, Behringer Harvard Operating Partnership I LP, a Texas
limited partnership, Behringer Harvard REIT I, Inc., a Maryland corporation,
Behringer Harvard Opportunity REIT I, Inc., a Maryland corporation, and/or
Behringer Harvard Strategic Opportunity Fund I LP, a Texas limited partnership.
"BORROWER" shall mean Behringer Harvard Western Portfolio LP, a Delaware
limited partnership, together with its permitted successors and assigns.
"BORROWER'S KNOWLEDGE" shall mean the actual knowledge attributable to
those principals, employees and officers of Borrower who have given substantive
attention to the Properties, the Loan Documents and related matters, without any
implied duty to conduct any inquiry or investigation.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, New York are not open for
business.
"CAPITAL EXPENDITURES" shall mean, for any period, the amount expended
for items capitalized under GAAP or other accounting principles reasonably
acceptable to Lender, consistently applied (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
"CASH MANAGEMENT ACCOUNT" shall have the meaning set forth in SECTION
2.7.2 hereof.
"CASH MANAGEMENT AGREEMENT" shall mean that certain Cash Management
Agreement, dated as of the date hereof, by and among Borrower, Property Manager
and Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"CASH SWEEP PERIOD" shall have the meaning set forth in the Cash
Management Agreement.
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"CASUALTY" shall have the meaning set forth in SECTION 6.2 hereof.
"CASUALTY CONSULTANT" shall have the meaning set forth in SECTION
6.4(B)(III) hereof.
"CASUALTY RETAINAGE" shall have the meaning set forth in SECTION
6.4(B)(IV) hereof.
"CASUALTY/CONDEMNATION PREPAYMENT" shall have the meaning set forth in
SECTION 6.4(E) hereof.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in SECTION
6.4(B).
"CONSUMER PRICE INDEX" or "CPI" shall mean the Consumer Price Index for
All Urban Consumers published by the Bureau of Labor Statistics of the United
States Department of Labor, All Items; 1982-84 = 100. If the Bureau of Labor
Statistics substantially revises the manner in which the CPI is determined, an
adjustment shall be made by Lender in the revised index which would produce
results equivalent, as nearly as possible, to those which would be obtained if
the CPI had not been so revised.
"CONTROL" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of management, policies or activities of
a Person, whether through ownership of voting securities, by contract or
otherwise. "CONTROLLED" and "CONTROLLING" shall have correlative meanings.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums (including the Defeasance Payment Amount and
any Yield Maintenance Premium) due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgages or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled principal and interest payments due under this Agreement and the
Note.
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"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the applicable
period (and, as the context requires, the applicable Individual Property or
Properties) in which:
(a) the numerator is the Net Operating Income (excluding interest on
credit accounts and using annualized operating expenses for any
recurring expenses not paid monthly (e.g., Taxes and Insurance
Premiums)) for such period as set forth in the statements
required hereunder, without deduction for (i) actual management
fees incurred in connection with the operation of the
Properties, or (ii) amounts paid to the Reserve Funds, less (A)
management fees equal to the greater of (1) assumed management
fees of four percent (4%) of Gross Income from Operations or (2)
the actual management fees incurred, and (B) Replacement Reserve
Fund contributions equal to $0.20 per square foot of gross
leasable area at the Properties, (C) Rollover Reserve Fund
contributions equal to $1.00 per square foot of gross leasable
area at the Properties (adjusted proportionately for any period
other than one year); and
(b) the denominator is the aggregate amount of principal and
interest due and payable on the Note or the Undefeased Note, for
such applicable period.
"DEFAULT" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the Maximum Legal Rate or (b) the greater of (i) five
percent (5%) above the Interest Rate or (ii) five percent (5%) above the Prime
Rate in effect at the time of the occurrence of the Event of Default.
"DEFEASANCE DATE" shall have the meaning set forth in SECTION
2.5.1(A)(I) hereof.
"DEFEASANCE DEPOSIT" shall mean an amount equal to the remaining
principal amount of the Note or the Defeased Note, as applicable, the Defeasance
Payment Amount, any costs and expenses incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled Defeasance Payments
and any revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with the transfer of the Note or the Defeased Note, as
applicable, the creation of the Defeased Note and the Undefeased Note, if
applicable, or otherwise required to accomplish the agreements of SECTIONS 2.4
and 2.5 hereof (including, without limitation, any fees and expenses of
accountants, attorneys and the Rating Agencies incurred in connection
therewith).
"DEFEASANCE EVENT" shall have the meaning set forth in SECTION 2.5.1(A)
hereof.
"DEFEASANCE EXPIRATION DATE" shall mean the date that is two (2) years
from the "startup day" within the meaning of Section 860G(a)(9) of the Code for
the REMIC Trust.
"DEFEASANCE PAYMENT AMOUNT" shall mean the amount (if any) which, when
added to the remaining principal amount of the Note, or the principal amount of
a Defeased
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Note, as applicable, will be sufficient to purchase U.S. Obligations providing
the required Scheduled Defeasance Payments.
"DEFEASED NOTE" shall have the meaning set forth in SECTION 2.5.1(A)(V)
hereof.
"DISCLOSURE DOCUMENT" shall mean a prospectus, prospectus supplement,
private placement memorandum, or similar offering memorandum or offering
circular, or such other information reasonably requested by Lender, in each case
in preliminary or final form, used to offer Securities in connection with a
Securitization.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from
all other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.
ss.9.10(b), having iN either case a combined capital and surplus of at least
Fifty Million and 00/100 Dollars ($50,000,000.00) and subject to supervision or
examination by federal and state authority. An Eligible Account will not be
evidenced by a certificate of deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution or trust
company, the short term unsecured debt obligations or commercial paper of which
are rated at least "A-1+" by S&P, "P-1" by ▇▇▇▇▇'▇ and "F-1+" by Fitch in the
case of accounts in which funds are held for thirty (30) days or less (or, in
the case of (a) accounts in which funds are held for more than thirty (30) days,
the long-term unsecured debt obligations of which are rated at least "AA" by
Fitch and S&P and "Aa2" by ▇▇▇▇▇'▇ or (b) any Letter of Credit, the long-term
unsecured debt obligations of which are rated at least "A" by Fitch and S&P and
"A2" by ▇▇▇▇▇'▇).
"EMBARGOED PERSON" shall have the meaning set forth in SECTION 5.1.24
hereof.
"ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental
Indemnity Agreement, dated as of the date hereof, executed by Borrower in
connection with the Loan for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 8.1(A)
hereof.
"EXTRAORDINARY EXPENSE" shall have the meaning set forth in SECTION
5.1.11(E) hereof.
"FISCAL YEAR" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"FITCH" shall mean Fitch, Inc.
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"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental unit (foreign, federal, state, county, district, municipal, city or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean for any period, all income,
computed in accordance with GAAP or other accounting principles reasonably
acceptable to Lender, derived from the ownership and operation of the Properties
(or, as the context requires, the related Individual Property or Properties)
from whatever source during such period, including, but not limited to, Rents
from tenants in occupancy, open for business (except that tenants with ratings
of BBB or better from the Rating Agencies need not be in occupancy or open for
business) and paying full contractual rent without right of offset or credit,
utility charges, escalations, forfeited security deposits, interest on credit
accounts, service fees or charges, license fees, parking fees, rent concessions
or credits, business interruption or other loss of income or rental insurance
proceeds or other required pass-throughs and interest on Reserve Accounts, if
any, but excluding Rents which in the aggregate exceed 5% of the total Rents
that are from month-to-month tenants or tenants that are included in any
Bankruptcy Action (unless such tenant's Lease has been affirmed in the related
Bankruptcy Action), sales, use and occupancy or other taxes on receipts required
to be accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Insurance
Proceeds (other than business interruption or other loss of income or rental
insurance), Awards, unforfeited security deposits, utility and other similar
deposits and any disbursements to Borrower from the Reserve Funds, if any. Gross
income shall not be diminished as a result of the Mortgages or the creation of
any intervening estate or interest in the Properties or any part thereof.
"GUARANTOR" shall mean Behringer Harvard REIT I, Inc., a Maryland
corporation.
"GUARANTY" shall mean that certain Guaranty Agreement, dated as of the
date hereof, executed and delivered by Guarantor in connection with the Loan to
and for the benefit of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause
of the related Mortgage with respect to each Individual Property.
"INDEBTEDNESS" of a Person, at a particular date, means the sum (without
duplication) at such date of (a) indebtedness or liability for borrowed money;
(b) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under letters of credit;
(e) obligations under acceptance facilities; (f) all guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds, to invest in any Person or
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entity, or otherwise to assure a creditor against loss; and (g) obligations
secured by any Liens, whether or not the obligations have been assumed.
"INDEMNIFYING PERSON" shall mean each of Borrower, Principal and
Guarantor.
"INDEPENDENT DIRECTOR" shall mean a natural person serving as director
of a corporation or manager of a limited liability company who is not at the
time of initial appointment, or at any time while serving in such capacity, and
has not been at any time during the preceding five (5) years: (a) a stockholder,
director, member, manager (with the exception of serving as the Independent
Director of Borrower or Principal), trustee, officer, employee, partner,
attorney or counsel of the Borrower or Principal or any Affiliate of either of
them; (b) a creditor, customer, supplier or other Person who derives any of its
purchases or revenues (other than fees for services as an Independent Director
and for providing services incidental thereto) from its activities with the
Borrower or Principal or any Affiliate of either of them; (c) a Person or other
entity Controlling or under common Control with any Person excluded from serving
as Independent Director under subparagraph (a) or (b); or (d) a member of the
immediate family of any Person excluded from serving as Independent Director
under subparagraph (a) or (b).
"INDIVIDUAL PROPERTY" shall mean each parcel of real property, the
Improvements thereon and all personal property owned by Borrower and encumbered
by a Mortgage, together with all rights pertaining to such property and
Improvements, as more particularly described in the Granting Clauses of each
Mortgage and referred to therein as the "Property".
"INSOLVENCY OPINION" shall mean that certain non-consolidation opinion
letter dated the date hereof delivered by ▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇ & Scripps LLP
in connection with the Loan.
"INSURANCE PREMIUMS" shall have the meaning set forth in SECTION 6.1(B)
hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in SECTION 6.4(B)
hereof.
"INTEREST RATE" shall mean a rate of 5.0765% per annum.
"JPM" shall mean JPMorgan Chase Bank, N.A., a banking association
chartered under the laws of the United States of America, and its successors in
interest.
"LEASE" shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in any
Individual Property, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.
"LEASE TERMINATION FEE" shall mean any payment, fee or penalty paid by a
Tenant in connection with the cancellation or termination of such Tenant's
Lease, whether by reason of such Tenant's default or pursuant to the terms of
such Lease.
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"LEGAL REQUIREMENTS" shall mean, with respect to each Individual
Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities affecting such Individual Property or any part
thereof, or the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting such Individual
Property or any part thereof, including, without limitation, any which may (a)
require repairs, modifications or alterations in or to such Individual Property
or any part thereof, or (b) in any way limit the use and enjoyment thereof.
"LENDER" shall mean JPMorgan Chase Bank, N.A., together with its
successors and assigns.
"LETTER OF CREDIT" shall mean a clean, irrevocable, unconditional,
transferable (with all transfer fees for the account of the applicant
thereunder), evergreen letter of credit acceptable to Lender (a) with respect to
which Borrower has no reimbursement obligations, (b) entitling the Lender to
draw thereon in a location approved by Lender, and (c) issued by an Eligible
Institution.
"LICENSES" shall have the meaning set forth in SECTION 4.1.22 hereof.
"LIEN" shall mean, with respect to each Individual Property, any
mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation,
assignment (for security), security interest, or any other encumbrance, charge
or transfer (for security) of, on or affecting Borrower, the related Individual
Property, any portion thereof or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic's, materialmen's
and other similar liens and encumbrances.
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement and evidenced by the Note.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Mortgages, the Assignments of Leases, the Environmental Indemnity, the
Assignment of Management Agreement, the Guaranty, the Cash Management Agreement,
the Lockbox Agreement and all other documents pursuant to which any Person
incurs, has incurred or assumes any obligation to or for the benefit of Lender
in connection with the Loan.
"LOAN TO VALUE RATIO" shall mean the ratio obtained by dividing (i) the
outstanding principal balance of the Loan, by (ii) the value of the Properties
as set forth in an appraisal satisfactory to Lender obtained by Lender at
Borrower's expense, which appraisal shall be dated no more than one (1) year
prior to the date of determination.
"LOCKBOX ACCOUNT" shall have the meaning set forth in SECTION 2.7.1
hereof.
"LOCKBOX AGREEMENT" shall mean that certain Clearing Account Agreement
dated the date hereof among Borrower, Lender and Lockbox Bank, as the same may
be amended,
-9-
restated, replaced, supplemented or otherwise modified from time to time,
relating to funds deposited in the Lockbox Account.
"LOCKBOX BANK" shall mean JPMorgan Chase Bank, N.A., or any successor or
permitted assigns thereof.
"MATERIAL ACTION" means, with respect to any Person, to file any
insolvency or reorganization case or proceeding, to institute proceedings to
have such Person be adjudicated bankrupt or insolvent, to institute proceedings
under any applicable insolvency law, to seek any relief under any law relating
to relief from debts or the protection of debtors, to consent to the filing or
institution of bankruptcy or insolvency proceedings against such Person, to file
a petition seeking, or consent to, reorganization or relief with respect to such
Person under any applicable federal or state law relating to bankruptcy or
insolvency, to seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian, or any similar official of or for
such Person or a substantial part of its property, to make any assignment for
the benefit of creditors of such Person, to admit in writing such Person's
inability to pay its debts generally as they become due, or to affirmatively
take action in furtherance of any of the foregoing.
"MATURITY DATE" shall mean August 1, 2015, or such other date on which
the final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean (a) an amount equal to
interest only on the outstanding principal balance of the Loan, calculated in
accordance with the terms hereof, for each Payment Date commencing on the
Payment Date occurring in September, 2005 through and including the Payment Date
occurring in August, 2010 and (b) a constant monthly payment of $383,115.98 with
respect to each Payment Date thereafter
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE" shall mean, with respect to each Individual Property, that
certain first priority Mortgage (or Deed of Trust or Deed to Secure Debt) and
Security Agreement, dated the date hereof, executed and delivered by Borrower to
Lender as security for the Loan and encumbering such Individual Property, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"NET CASH FLOW" shall mean, for any period, the amount obtained by
subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
-10-
"NET CASH FLOW SCHEDULE" shall have the meaning set forth in SECTION
5.1.11(B) hereof.
"NET OPERATING INCOME" shall mean the amount obtained by subtracting
Operating Expenses from Gross Income from Operations.
"NET PROCEEDS" shall have the meaning set forth in SECTION 6.4(B)
hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in SECTION
6.4(B)(VI) hereof.
"NET PROCEEDS PREPAYMENT" shall have the meaning set forth in SECTION
6.4(E) hereof.
"NOTE" shall mean that certain Promissory Note of even date herewith, in
the principal amount of Seventy Million Seven Hundred Fifty Thousand and No/100
Dollars ($70,750,000), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, including, except where the context otherwise requires or as otherwise
specified, any Defeased Note and Undefeased Note that may exist from time to
time.
"OFFERING DOCUMENT DATE" shall have the meaning set forth in SECTION
5.1.11(F)(IV) hereof.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender by
Borrower which is signed by an authorized officer of the general partner or
managing member of Borrower.
"OPERATING EXPENSES" shall mean the total of all expenditures, computed
in accordance with GAAP or other accounting principles reasonably acceptable to
Lender, of whatever kind relating to the operation, maintenance and management
of the Properties that are incurred on a regular monthly or other periodic
basis, including without limitation, utilities, ordinary repairs and
maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related taxes, computer
processing charges, operational equipment or other lease payments, and other
similar costs, but excluding depreciation, Debt Service, Capital Expenditures
and contributions to the Reserve Funds.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Individual Property, now or hereafter levied or
assessed or imposed against such Individual Property or any part thereof, but
shall exclude charges for utilities payable directly by a Tenant.
"OTHER OBLIGATIONS" shall have the meaning as set forth in the
Mortgages.
"PAYMENT DATE" shall mean the first (1st) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately preceding Business Day.
-11-
"PERMITTED ENCUMBRANCES" shall mean, with respect to an Individual
Property, collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Individual Property or any part thereof, (c)
Liens, if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, and (d) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender's reasonable discretion, which
Permitted Encumbrances in the aggregate do not materially adversely affect the
value or use of such Individual Property or Borrower's ability to repay the
Loan.
"PERMITTED RELEASE DATE" shall mean the date that is the fourth (4th)
anniversary of the first Payment Date.
"PERMITTED USE" shall mean office and other appurtenant and related uses
and, with respect to the Individual Property know as Gateway 12, engineering
purposes.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage with respect to each Individual Property.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to each Individual
Property, a report prepared by a company satisfactory to Lender regarding the
physical condition of such Individual Property, satisfactory in form and
substance to Lender in its sole discretion, which report shall, among other
things, (a) confirm that such Individual Property and its use complies, in all
material respects, with all applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws) and (b) to the extent
available, include a copy of a final certificate of occupancy with respect to
all Improvements on such Individual Property.
"POLICIES" shall have the meaning specified in SECTION 6.1(B) hereof.
"POLICY" shall have the meaning specified in SECTION 6.1(B) hereof.
"PREPAYMENT RATE" shall mean the yield calculated by the linear
interpolation of the yields, as reported in Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading "U.S. Government
Securities/Treasury Constant Maturities" for the week ending prior to the date
the payment or such proceeds are received, of U.S. Treasury constant maturities
with maturity dates (one longer and one shorter) most nearly approximating the
Maturity Date. (In the event Release H.15 is no longer published, Lender shall
select a comparable publication to determine the Treasury Rate).
"PRIME RATE" shall mean the prime rate reported in the Money Rates
section of The Wall Street Journal. In the event that The Wall Street Journal
should cease or temporarily interrupt publication, the term "Prime Rate" shall
mean the daily average prime rate published in another business newspaper, or
business section of a newspaper, of national standing and general circulation
chosen by Lender. In the event that a prime rate is no longer generally
published or is
-12-
limited, regulated or administered by a governmental or quasi-governmental body,
then Lender shall select a comparable interest rate index which is readily
available and verifiable to Borrower but is beyond Lender's control.
"PRINCIPAL" shall mean the Special Purpose Entity that is the general
partner of Borrower, if Borrower is a limited partnership, or managing member of
Borrower, if Borrower is a limited liability company.
"PROPERTIES" shall mean, collectively, each and every Individual
Property which is subject to the terms of this Agreement.
"PROPERTY MANAGEMENT AGREEMENT" shall mean, with respect to each
Individual Property, the management agreement entered into by and between
Borrower and Property Manager, pursuant to which Property Manager is to provide
management and other services with respect to such Individual Property, or, if
the context requires, the Replacement Management Agreement.
"PROPERTY MANAGER" shall mean HPT Management Services LP, a Texas
limited partnership, or, if the context requires, a Qualifying Property Manager
who is managing the Properties in accordance with the terms and provisions of
this Agreement pursuant to a Replacement Management Agreement.
"PROVIDED INFORMATION" shall mean any and all financial and other
information provided at any time by, or on behalf of, any Indemnifying Person
with respect to any Property, Borrower, Principal, Guarantor and/or Manager.
"QUALIFYING PROPERTY MANAGER" shall mean either (a) Property Manager; or
(b) a reputable and experienced management organization reasonably satisfactory
to Lender, which organization or its principals possess at least ten (10) years
experience in managing properties similar in size, scope, use and value as the
Properties, PROVIDED, that Borrower shall have obtained (i) prior written
confirmation from the applicable Rating Agencies that management of the
Properties by such Person will not cause a downgrade, withdrawal or
qualification of the then current ratings of the Securities or any class thereof
and (ii) if such Person is an Affiliate of Borrower, an Additional Insolvency
Opinion. Lender acknowledges that, notwithstanding anything herein to the
contrary, HPT Management Services LP shall be deemed to be a Qualified Property
Manager.
"RATING AGENCIES" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any
other nationally recognized statistical rating agency which has been approved by
Lender.
"RELATED ENTITIES" shall have the meaning set forth in SECTION 5.2.10(E)
hereof.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code that holds the Note.
"RELEASE AMOUNT" shall mean for an Individual Property the amount set
forth on SCHEDULE I hereto.
-13-
"RELEVANT LEASING THRESHOLD" shall mean any Lease for an amount of
leaseable square footage equal to or greater than 10,000 square feet.
"RELEVANT RESTORATION THRESHOLD" shall mean Six Hundred Thousand and
No/100 dollars ($600,000).
"RENTS" shall mean, with respect to each Individual Property, all rents
(including percentage rents), rent equivalents, moneys payable as damages or in
lieu of rent or rent equivalents, royalties (including, without limitation, all
oil and gas or other mineral royalties and bonuses), income, receivables,
receipts, revenues, deposits (including, without limitation, security, utility
and other deposits), accounts, cash, issues, profits, charges for services
rendered, all other amounts payable as rent under any Lease or other agreement
relating to the Properties, including, without limitation, charges for
electricity, oil, gas, water, steam, heat, ventilation, air-conditioning and any
other energy, telecommunication, telephone, utility or similar items or time use
charges, HVAC equipment charges, sprinkler charges, escalation charges, license
fees, maintenance fees, charges for Taxes, Operating Expenses or other
reimbursables payable to Borrower (or to the Property Manager for the account of
Borrower) under any Lease, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of Borrower or its
agents or employees (but excluding amounts paid by Borrower to its agents or
employees) from any and all sources arising from or attributable to the
Individual Property, and proceeds, if any, from business interruption or other
loss of income insurance.
"REPLACEMENT MANAGEMENT AGREEMENT" shall mean, collectively, (a) either
(i) a management agreement with a Qualifying Property Manager substantially in
the same form and substance as the Property Management Agreement, or (ii) a
management agreement with a Qualifying Property Manager, which management
agreement shall be reasonably acceptable to Lender in form and substance,
PROVIDED, with respect to this subclause (ii), Lender, at its option, may
require that Borrower shall have obtained prior written confirmation from the
applicable Rating Agencies that such management agreement will not cause a
downgrade, withdrawal or qualification of the then current rating of the
Securities or any class thereof and (b) an assignment of management agreement
and subordination of management fees substantially in the form then used by
Lender (or of such other form and substance reasonably acceptable to Lender),
executed and delivered to Lender by Borrower and such Qualifying Property
Manager at Borrower's expense.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in
SECTION 7.3.1 hereof.
"REPLACEMENT RESERVE FUND" shall have the meaning set forth in SECTION
7.3.1 hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth
in Section 7.3.1 hereof. "REPLACEMENTS" shall have the meaning set forth in
SECTION 7.3.1(A) hereof.
"REQUIRED AMOUNT" shall mean, at any time, an amount equal to the sum of
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) multiplied by a
fraction, the
-14-
numerator of which shall be the CPI level on the then most current anniversary
of the Closing Date and the denominator of which shall be the CPI level on the
Closing Date; provided that in no event shall the Required Amount be less than
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00). The Required
Amount, as adjusted by the CPI on each anniversary of the Closing Date, shall
apply only to the next succeeding renewal of any insurance policy required under
SECTION 6.1.1(A)(IX).
"REQUIRED REPAIRS" shall have the meaning set forth in SECTION 7.1
hereof.
"RESERVE FUNDS" shall mean, collectively, the Tax and Insurance Escrow
Fund, the Replacement Reserve Fund, the Rollover Reserve Fund and any other
escrow fund established by the Loan Documents.
"RESIZING EVENT" shall have the meaning set forth in SECTION 9.1.2
hereof.
"RESTORATION" shall mean the repair and restoration of an Individual
Property after a Casualty or Condemnation as nearly as possible to the condition
the Individual Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"RESTRICTED PARTY" shall mean collectively, (a) Borrower, Principal, any
Guarantor, and any Affiliated Manager and (b) any shareholder, partner, member,
non-member manager, any direct or indirect legal or beneficial owner of,
Borrower, Principal, any Guarantor, any Affiliated Manager or any non-member
manager.
"ROLLOVER RESERVE ACCOUNT" shall have the meaning set forth in SECTION
7.4.1 hereof.
"ROLLOVER RESERVE FUND" shall have the meaning set forth in SECTION
7.4.1 hereof.
"S&P" shall mean Standard & Poor's Ratings Group, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies.
"SALE OR PLEDGE" shall mean a voluntary or involuntary sale, conveyance,
assignment, transfer, encumbrance, pledge, grant of option or other transfer or
disposal of a legal or beneficial interest, whether direct or indirect.
"SCHEDULED DEFEASANCE PAYMENTS" shall have the meaning set forth in
SECTION 2.5.1(B) hereof.
"SECURITIES" shall have the meaning set forth in SECTION 9.1 hereof.
"SECURITIZATION" shall have the meaning set forth in SECTION 9.1 hereof.
"SECURITY AGREEMENT" shall have the meaning set forth in SECTION
2.5.1(A)(VI) hereof.
-15-
"SERVICER" shall have the meaning set forth in SECTION 9.5 hereof.
"SERVICING AGREEMENT" shall have the meaning set forth in SECTION 9.5
hereof.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in SECTION
8.2(C) hereof.
"SPECIAL PURPOSE ENTITY" shall mean a corporation, limited partnership
or limited liability company that, since the date of its formation and at all
times on and after the date thereof, has complied with and shall at all times
comply with the following requirements unless it has received either prior
consent to do otherwise from Lender or a permitted administrative agent thereof,
or, while the Loan is securitized, confirmation from each of the applicable
Rating Agencies requiring such review that such noncompliance would not result
in the requalification, withdrawal, or downgrade of the ratings of any
Securities or any class thereof:
(i) is and shall be organized solely for the purpose of (A)
in the case of Borrower, acquiring, developing, owning, holding,
selling, leasing, transferring, exchanging, managing and operating the
Properties, entering into and performing its obligations under the Loan
Documents with Lender, refinancing the Properties in connection with a
permitted repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing; or (B)
in the case of a Principal, acting as a general partner of the limited
partnership that owns the Properties or as member of the limited
liability company that owns the Properties and transacting lawful
business that is incident, necessary and appropriate to accomplish the
foregoing;
(ii) has not engaged and shall not engage in any business
unrelated to (A) the acquisition, development, ownership, management,
operation or sale of the Properties, or (B) in the case of a Principal,
acting as general partner of the limited partnership that owns the
Properties or acting as a member of the limited liability company that
owns the Properties, as applicable;
(iii) has not owned and shall not own any real property other
than, in the case of Borrower, the Properties;
(iv) does not have, shall not have and at no time had any
assets other than (A) in the case of Borrower, the Properties and
personal property necessary or incidental to its ownership and operation
of the Properties or (B) in the case of a Principal, its partnership
interest in the limited partnership or the member interest in the
limited liability company that owns the Properties and personal property
necessary or incidental to its ownership of such interests;
(v) has not engaged in, sought, consented or permitted to
and shall not engage in, seek, consent to or permit (A) any dissolution,
winding up, liquidation, consolidation or merger, (B) any sale or other
transfer of all or substantially all of its assets or any sale of assets
outside the ordinary course of its business, except as permitted by the
Loan Documents, or (C) in the case of a Principal, any transfer of its
partnership or membership interests;
-16-
(vi) shall not cause, consent to or permit any amendment of
its limited partnership agreement, articles of incorporation, articles
of organization, certificate of formation, operating agreement or other
formation document or organizational document (as applicable) with
respect to the matters set forth in this definition;
(vii) if such entity is a limited partnership, has and shall
have at least one general partner and has and shall have, as its only
general partners, Special Purpose Entities each of which (A) is a
corporation or single-member Delaware limited liability company, (B) has
one Independent Director (provided, however, if any Rating Agency
requires two (2) Independent Directors, Borrower shall appoint, or cause
the appointment of, a second Independent Director), and (C) holds a
direct interest as general partner in the limited partnership of not
less than 0.5% (or 0.1%, if the limited partnership is a Delaware
entity);
(viii) if such entity is a corporation, has and shall have at
least one (1) Independent Director (provided, however, if any Rating
Agency requires two (2) Independent Directors, Borrower shall appoint,
or cause the appointment of, a second Independent Director), and shall
not cause or permit the board of directors of such entity to take any
Material Action either with respect to itself or, if the corporation is
a Principal, with respect to Borrower or any action requiring the
unanimous affirmative vote of one hundred percent (100%) of the members
of its board of directors unless each Independent Director shall have
participated in such vote and shall have voted in favor of such action;
(ix) if such entity is a limited liability company (other
than a limited liability company meeting all of the requirements
applicable to a single-member limited liability company set forth in
this definition of "SPECIAL PURPOSE ENTITY"), has and shall have at
least one (1) member that is a Special Purpose Entity, that is a
corporation, that has at least one (1) Independent Director (provided,
however, if any Rating Agency requires two (2) Independent Directors,
Borrower shall appoint, or cause the appointment of, a second
Independent Director) and that directly owns at least one-half-of-one
percent (0.5%) of the equity of the limited liability company (or 0.1%
if the limited liability company is a Delaware entity);
(x) if such entity is a single-member limited liability
company, (A) is and shall be a Delaware limited liability company, (B)
has and shall have at least one (1) Independent Director (provided,
however, if any Rating Agency requires two (2) Independent Directors,
Borrower shall appoint, or cause the appointment of, a second
Independent Director) serving as manager of such company, (C) shall not
take any Material Action and shall not cause or permit the members or
managers of such entity to take any Material Action, either with respect
to itself or, if the company is a Principal, with respect to Borrower,
in each case unless the required number of Independent Directors then
serving as managers of the company shall have participated and consented
in writing to such action, and (D) has and shall have either (1) a
member which owns no economic interest in the
-17-
company, has signed the company's limited liability company agreement
and has no obligation to make capital contributions to the company, or
(2) a natural person or entity that is not a member of the company, that
has signed its limited liability company agreement and that, under the
terms of such limited liability company agreement becomes a member of
the company immediately prior to the withdrawal or dissolution of the
last remaining member of the company;
(xi) has not and shall not (and, if such entity is (a) a
limited liability company, has and shall have a limited liability
agreement or an operating agreement, as applicable, (b) a limited
partnership, has a limited partnership agreement, or (c) a corporation,
has a certificate of incorporation or articles that, in each case,
provide that such entity shall not) (1) dissolve, merge, liquidate,
consolidate; (2) sell all or substantially all of its assets; (3) to the
extent permitted by applicable law, amend its organizational documents
with respect to the matters set forth in this definition without the
consent of Lender; or (4) without the affirmative vote of each
Independent Director of itself or the consent of a Principal that is a
member or general partner in it: (A) file or consent to the filing of
any bankruptcy, insolvency or reorganization case or proceeding,
institute any proceedings under any applicable insolvency law or
otherwise seek relief under any laws relating to the relief from debts
or the protection of debtors generally, file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings; (B) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for the entity or a
substantial portion of its property; (C) make an assignment for the
benefit of the creditors of the entity; or (D) affirmatively take any
action in furtherance of any of the foregoing;
(xii) has at all times been and shall at all times remain
solvent and has paid and shall pay its debts and liabilities (including,
a fairly-allocated portion of any personnel and overhead expenses that
it shares with any Affiliate) from its assets as the same shall become
due, and has maintained and shall maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(xiii) has not failed and shall not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(xiv) has maintained and shall maintain its bank accounts,
books of account, books and records separate from those of any other
Person and, to the extent that it is not a disregarded entity for tax
purposes and is required to file tax returns under applicable law, has
filed and shall file its own tax returns, except to the extent that it
is required by law to file consolidated tax returns and, if it is a
corporation, has not filed and shall not file a consolidated federal
income tax return with any other corporation, except to the extent that
it is required by law to file consolidated tax returns;
-18-
(xv) has maintained and shall maintain its own resolutions
and agreements;
(xvi) has not commingled and shall not commingle its funds or
assets with those of any other Person and has not participated and shall
not participate in any cash management system with any other Person,
except with respect to a custodial account maintained by the Property
Manager on behalf of Affiliates of Borrower and, with respect to funds
in such custodial account, has separately accounted, and will continue
to separately account for, each item of income and expense applicable to
the Properties and Borrower'
(xvii) has held and shall hold its assets in its own name;
(xviii) [intentionally omitted];
(xix) (A) has maintained and shall maintain its financial
statements, accounting records and other entity documents separate from
those of any other Person; (B) has shown and shall show, in its
financial statements, its asset and liabilities separate and apart from
those of any other Person; and (C) has not permitted and shall not
permit its assets to be listed as assets on the financial statement of
any of its Affiliates except as required by GAAP; provided, however,
that any such consolidated financial statement contains a note
indicating that the Special Purpose Entity's separate assets and credit
are not available to pay the debts of such Affiliate and that the
Special Purpose Entity's liabilities do not constitute obligations of
the consolidated entity;
(xx) has paid and shall pay its own liabilities and expenses,
including the salaries of its own employees, out of its own funds and
assets, and has maintained and shall maintain a sufficient number of
employees in light of its contemplated business operations, which may be
none;
(xxi) has observed and shall observe all partnership,
corporate or limited liability company formalities, as applicable;
(xxii) [intentionally omitted]
(xxiii) shall have no Indebtedness other than (i) the Loan, (ii)
liabilities incurred in the ordinary course of business relating to the
ownership and operation of the Properties and the routine administration
of Borrower, in amounts not to exceed $2,800,000 (other than management
fees and commissions and liabilities that are reserved for) and, in the
case of a general partner or managing member of a Person, liabilities
arising by reason of its status as a general partner or managing member,
which liabilities are paid not more than sixty (60) days after the later
of the date incurred or invoiced (unless disputed in good faith with
adequate reserves established therefor), are not evidenced by a note,
and which amounts are normal and reasonable under the circumstances, and
(iii) such other liabilities that are permitted pursuant to the Loan
Documents;
-19-
(xxiv) has not assumed, guaranteed or become obligated and
shall not assume or guarantee or become obligated for the debts of any
other Person, has not held out and shall not hold out its credit as
being available to satisfy the obligations of any other Person or has
not pledged and shall not pledge its assets for the benefit of any other
Person, in each case except as permitted pursuant to this Agreement;
(xxv) has not acquired and shall not acquire obligations or
securities of its partners, members or shareholders or any other owner
or Affiliate;
(xxvi) has allocated and shall allocate fairly and reasonably
any overhead expenses that are shared with any of its Affiliates,
constituents, or owners, or any guarantors of any of their respective
obligations, or any Affiliate of any of the foregoing, including, but
not limited to, paying for shared office space and for services
performed by any employee of an Affiliate;
(xxvii) has maintained and used and shall maintain and use
separate stationery, invoices and checks bearing its name and not
bearing the name of any other entity unless such entity is clearly
designated as being the Special Purpose Entity's agent, provided,
however, that Property Manager, on behalf of such Person, may maintain
and use invoices and checks bearing Property Manager's name;
(xxviii) [intentionally omitted];
(xxix) has held itself out and identified itself and shall hold
itself out and identify itself as a separate and distinct entity under
its own name or in a name franchised or licensed to it by an entity
other than an Affiliate of Borrower and not as a division or part of any
other Person, except for services rendered by Property Manager under the
Property Management Agreement, so long as Property Manager holds itself
out as an agent of Borrower
(xxx) has maintained and shall maintain its assets in such a
manner that it shall not be costly or difficult to segregate, ascertain
or identify its individual assets from those of any other Person;
(xxxi) has not made and shall not make loans to any Person and
has not held and shall not hold evidence of indebtedness issued by any
other Person or entity (other than cash and investment-grade securities
issued by an entity that is not an Affiliate of or subject to common
ownership with such entity);
(xxxii) has not identified and shall not identify its partners,
members or shareholders, or any Affiliate of any of them, as a division
or part of it;
(xxxiii) other than capital contributions and distributions
permitted under the terms of its organizational documents, has not
entered into or been a party to, and shall not enter into or be a party
to, any transaction with any of its partners, members, shareholders or
Affiliates except in the ordinary course of its business
-20-
and on terms which are commercially reasonable terms comparable to those
of an arm's-length transaction with an unrelated third party;
(xxxiv) has not had and shall not have any obligation to, and
has not indemnified and shall not indemnify its partners, officers,
directors or members, as the case may be, in each case unless such an
obligation or indemnification is fully subordinated to the Debt and
shall not constitute a claim against it in the event that its cash flow
is insufficient to pay the Debt;
(xxxv) if such entity is a corporation, to the extent permitted
under applicable corporate law, has considered and shall consider the
interests of its creditors in connection with all corporate actions that
could reasonably be expected to affect such creditors;
(xxxvi) has not had and shall not have any of its obligations
guaranteed by any Affiliate except as otherwise required in the Loan
Documents;
(xxxvii) has not formed, acquired or held and shall not form,
acquire or hold any subsidiary, except that a Principal may acquire and
hold its interest in Borrower;
(xxxviii) has complied and shall comply with all of the terms
and provisions contained in its organizational documents.
(xxxix) has conducted and shall conduct its business so that
each of the assumptions made about it and each of the facts stated about
it in the Insolvency Opinion are true;
(xl) has not permitted and shall not permit any Affiliate or
constituent party independent access to its bank accounts;
(xli) is, has always been and shall continue to be duly
formed, validly existing, and in good standing in the state of its
incorporation or formation and in all other jurisdictions where it is
required to be qualified to do business; and
(xlii) has no material contingent or actual obligations not
related to the Properties.
"STATE" shall mean, with respect to an Individual Property, the State or
Commonwealth in which such Individual Property or any part thereof is located.
"SUCCESSOR BORROWER" shall have the meaning set forth in SECTION 2.5.3
hereof.
"SURVEY" shall mean a survey of the Individual Property in question
prepared by a surveyor licensed in the State and satisfactory to Lender and the
company or companies issuing the Title Insurance Policies, and containing a
certification of such surveyor satisfactory to Lender.
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"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in
SECTION 7.2 hereof regardless of whether the funds held therein are held by
Lender for the payment of Taxes or Insurance Premiums or both.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any Individual Property or part thereof.
"THRESHOLD AMOUNT" shall have the meaning set forth in SECTION 5.1.21
hereof.
"TENANT" shall mean any person or entity with a possessory right to all
or any part of any Individual Property pursuant to a Lease or other written
agreement.
"TENANT DIRECTION LETTERS" shall mean notices signed by Borrower, which
shall be irrevocable by Borrower and otherwise in form acceptable to Lender in
its reasonable discretion, directing each Tenant to pay Rent and other sums due
to Borrower pursuant to its Lease directly to the Lockbox Bank.
"TITLE INSURANCE POLICIES" shall mean, with respect to each Individual
Property, an ALTA mortgagee title insurance policy in the form acceptable to
Lender (or, if an Individual Property is in a State which does not permit the
issuance of such ALTA policy, such form as shall be permitted in such State and
acceptable to Lender) issued with respect to such Individual Property and
insuring the lien of the Mortgage encumbering such Individual Property.
"TRANSFER" shall have the meaning set forth in SECTION 5.2.10(B) hereof.
"TRANSFEREE" shall have the meaning set forth in SECTION 5.2.10(E)(III)
hereof.
"TRANSFEREE'S PRINCIPALS" shall mean collectively, (A) Transferee's
managing members, general partners or principal shareholders and (B) such other
members, partners or shareholders which directly or indirectly shall own a
fifty-one percent (51%) or greater economic and voting interest in Transferee.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the applicable State in which an Individual Property is
located.
"UNDEFEASED NOTE" shall have the meaning set forth in SECTION
2.5.1(A)(V) hereof.
"U.S. OBLIGATIONS" shall mean non-redeemable securities evidencing an
obligation to timely pay principal and/or interest in a full and timely manner
that are (a) direct obligations of the United States of America for the payment
of which its full faith and credit is pledged, or (b) to the extent acceptable
to the Rating Agencies, other "government securities" within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as amended.
"YIELD MAINTENANCE PREMIUM" shall mean an amount equal to the greater of
(a) one percent (1%) of the outstanding principal of the Loan to be prepaid or
satisfied and (b) the excess, if any, of (i) the sum of the present values of
all then-scheduled payments of principal and interest under the Note assuming
that all outstanding principal and interest on the Loan is
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paid on the Maturity Date (with each such payment and assumed payment discounted
to its present value at the date of prepayment at the rate which, when
compounded monthly, is equivalent to the Prepayment Rate when compounded
semi-annually and deducting from the sum of such present values any short-term
interest paid from the date of prepayment to the next succeeding Payment Date in
the event such payment is not made on a Payment Date), over (ii) the principal
amount being prepaid.
SECTION 1.2 PRINCIPLES OF CONSTRUCTION. All references to sections
and schedules are to sections and schedules in or to this Agreement unless
otherwise specified. All uses of the word "including" shall mean "including,
without limitation" unless the context shall indicate otherwise. Unless
otherwise specified, the words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so defined.
II. GENERAL TERMS
SECTION 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
2.1.1 AGREEMENT TO LEND AND BORROW. Subject to and upon the terms and
conditions set forth herein, Lender hereby agrees to make and Borrower hereby
agrees to accept the Loan on the Closing Date.
2.1.2 SINGLE DISBURSEMENT TO BORROWER. Borrower may request and
receive only one (1) borrowing hereunder in respect of the Loan and any amount
borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 THE NOTE, MORTGAGE AND LOAN DOCUMENTS. The Loan shall be
evidenced by the Note and secured by the Mortgage, the Assignment of Leases and
the other Loan Documents.
2.1.4 USE OF PROCEEDS. Borrower shall use the proceeds of the Loan to
(a) acquire the Properties or repay and discharge any existing loans relating to
the Properties, (b) pay all past-due Basic Carrying Costs, if any, in respect of
the Properties, (c) make deposits into the Reserve Funds on the Closing Date in
the amounts provided herein, (d) pay costs and expenses incurred in connection
with the closing of the Loan, as approved by Lender, (e) fund any working
capital requirements of the Properties and (f) distribute the balance, if any,
to Borrower.
SECTION 2.2 INTEREST RATE.
2.2.1 INTEREST RATE. Interest on the outstanding principal balance of
the Loan shall accrue from (and include) the Closing Date to but excluding the
Maturity Date at the Interest Rate (unless the Default Rate shall be in effect).
2.2.2 INTEREST CALCULATION. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for
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which the calculation is being made by (b) a daily rate based on a three hundred
sixty (360) day year by (c) the outstanding principal balance.
2.2.3 DEFAULT RATE. In the event that, and for so long as, any Event
of Default shall have occurred and be continuing, the outstanding principal
balance of the Loan and, to the extent permitted by law, all accrued and unpaid
interest in respect of the Loan and any other amounts due pursuant to the Loan
Documents, shall accrue interest at the Default Rate, calculated from the date
such payment was due without regard to any grace or cure periods contained
herein.
2.2.4 USURY SAVINGS. This Agreement, the Note and the other Loan
Documents are subject to the express condition that at no time shall Borrower be
obligated or required to pay interest on the principal balance of the Loan at a
rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate. If, by the terms of this
Agreement or the other Loan Documents, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of the Maximum Legal Rate, the Interest Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate
and all previous payments in excess of the Maximum Legal Rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
SECTION 2.3 LOAN PAYMENT.
2.3.1 MONTHLY DEBT SERVICE PAYMENTS. Borrower shall pay to Lender (a)
on the Closing Date, an amount equal to interest only on the outstanding
principal balance of the Loan from the Closing Date up to and including July 31,
2005 and (b) on each Payment Date thereafter up to and including the Maturity
Date, Borrower shall make a payment to Lender of principal and/or interest, as
applicable, in an amount equal to the Monthly Debt Service Payment Amount, which
payments shall be applied first to accrued and unpaid interest and the balance
to principal.
2.3.2 PAYMENTS GENERALLY. The first (1st) interest accrual period
hereunder shall commence on and include the Closing Date and shall end on and
include July 31, 2005. Each interest accrual period thereafter shall commence on
the first (1st) day of each calendar month during the term of this Agreement and
shall end on and include the final calendar date of such calendar month. For
purposes of making payments hereunder, but not for purposes of calculating
interest accrual periods, if the day on which such payment is due is not a
Business Day, then amounts due on such date shall be due on the immediately
preceding Business Day and with respect to payments of principal due on the
Maturity Date, interest shall be payable at the Interest Rate or the Default
Rate, as the case may be, through and including the day immediately preceding
such Maturity Date. All amounts due under this Agreement and the other
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Loan Documents shall be payable without setoff, counterclaim, defense or any
other deduction whatsoever.
2.3.3 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgages and the other Loan Documents.
2.3.4 LATE PAYMENT CHARGE. If any principal, interest or any other
sums due under the Loan Documents (excluding principal due on the Maturity Date)
are not paid by Borrower on or prior to the date on which it is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of five percent
(5%) of such unpaid sum or the Maximum Legal Rate in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Mortgages and the other Loan Documents to the
extent permitted by applicable law.
2.3.5 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments and prepayments under this Agreement and the Note
shall be made to Lender not later than 11:00 A.M., New York City time, on the
date when due and shall be made in lawful money of the United States of America
in immediately available funds at Lender's office or as otherwise directed by
Lender, and any funds received by Lender after such time shall, for all purposes
hereof, be deemed to have been paid on the next succeeding Business Day.
SECTION 2.4 PREPAYMENTS.
2.4.1 VOLUNTARY PREPAYMENTS. Except as otherwise provided in SECTION
2.4.2, Borrower shall not have the right to prepay the Loan in whole or in part
prior to the Maturity Date; provided that on the Payment Date three (3) months
prior to the Maturity Date, or on any Payment Date thereafter (or on any date
thereafter provided that interest is paid through the next Payment Date),
Borrower may, at its option and upon thirty (30) days prior written notice to
Lender (a) prepay the Debt in whole without payment of the Yield Maintenance
Premium and/or (b) obtain the release of an Individual Property and prepay the
Debt in an amount equal to the related Adjusted Release Amount without payment
of the Yield Maintenance Premium provided that the conditions set forth in
SECTION 2.6.2(B), (C), (D) and (E) have been satisfied. If for any reason
Borrower prepays the Loan on a date other than a Payment Date, Borrower shall
pay Lender, in addition to the Debt, all interest which would have accrued on
the amount of the Loan through and including the Payment Date next occurring
following the date of such prepayment.
2.4.2 MANDATORY PREPAYMENTS. On the next occurring Payment Date
following the date on which Lender actually receives any Net Proceeds, if Lender
is not obligated or does not elect to make such Net Proceeds available to
Borrower for the Restoration of any Individual Property or otherwise remit such
Net Proceeds to Borrower pursuant to SECTION 6.4 hereof, Borrower shall prepay
or authorize Lender to apply such Net Proceeds as a prepayment of all or a
portion of the outstanding principal balance of the Loan together with accrued
interest and any other sums due hereunder in an amount equal to one hundred
percent (100%) of such Net Proceeds; PROVIDED, HOWEVER, if an Event of Default
has occurred and is continuing, Lender may
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apply such Net Proceeds to the Debt (until paid in full) in any order or
priority in its sole discretion. Other than during the continuance of an Event
of Default, no Yield Maintenance Premium shall be due in connection with any
prepayment made pursuant to this SECTION 2.4.2.
2.4.3 PREPAYMENTS AFTER DEFAULT. If during the continuance of an Event
of Default, payment of all or any part of the Debt is tendered by Borrower or
otherwise recovered by Lender, such tender or recovery shall be (a) made on the
next occurring Payment Date together with the Monthly Debt Service Payment and
(b) deemed a voluntary prepayment by Borrower in violation of the prohibition
against prepayment set forth in SECTION 2.4.1 hereof and Borrower shall pay, in
addition to the Debt, an amount equal to the Yield Maintenance Premium.
SECTION 2.5 DEFEASANCE.
2.5.1 VOLUNTARY DEFEASANCE. (a) Provided no Event of Default shall
then exist, Borrower shall have the right at any time after the earlier to occur
of the Defeasance Expiration Date and the Permitted Release Date and prior to
the date voluntarily prepayments are permitted under SECTION 2.4.1 hereof to
voluntarily defease the Loan in full (or in part in connection with the release
of an Individual Property pursuant to SECTION 2.6.2) by and upon satisfaction of
the following conditions (such event being a "DEFEASANCE EVENT"):
(i) Borrower shall provide not less than thirty (30) days
prior written notice to Lender specifying the Payment Date (the
"DEFEASANCE DATE") on which the Defeasance Event is to occur;
(ii) [Intentionally Omitted];
(iii) Borrower shall pay to Lender all other sums, not
including scheduled interest or principal payments, then due under the
Note, this Agreement, the Mortgage and the other Loan Documents;
(iv) Borrower shall pay to Lender the required Defeasance
Deposit for the Defeasance Event;
(v) In the event only a portion of the Loan is the subject
of the Defeasance Event in connection with a release of an Individual
Property, Borrower shall prepare all necessary documents to modify this
Agreement and to amend and restate the Note and issue two substitute
notes, one note having a principal balance equal to the defeased portion
of the original Note and a maturity date equal to Maturity Date (the
"DEFEASED NOTE") and the other note having a principal balance equal to
the undefeased portion of the Note (the "UNDEFEASED NOTE"). The Defeased
Note and Undefeased Note shall otherwise have terms identical to the
Note, except that a Defeased Note cannot be the subject of any further
Defeasance Event and the Defeased Note shall be modified to make changes
necessary to reflect the defeasance (e.g. that it is secured by the
Security Agreement);
(vi) Borrower shall execute and deliver a pledge and security
agreement, in form and substance that would be reasonably satisfactory
to a prudent lender
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creating a first priority lien on the Defeasance Deposit and the U.S.
Obligations purchased with the Defeasance Deposit in accordance with the
provisions of this SECTION 2.5 (the "SECURITY AGREEMENT");
(vii) Borrower shall deliver an opinion of counsel for
Borrower that is standard in commercial lending transactions and subject
only to customary qualifications, assumptions and exceptions opining,
among other things, that Borrower has legally and validly transferred
and assigned the U.S. Obligations and all obligations, rights and duties
under and to the Note or the Defeased Note (as applicable) to the
Successor Borrower, that Lender has a perfected first priority security
interest in the Defeasance Deposit and the U.S. Obligations delivered by
Borrower and that any REMIC Trust formed pursuant to a Securitization
will not fail to maintain its status as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the Code as a
result of such Defeasance Event;
(viii) If required pursuant to the applicable pooling and
servicing agreement or by the Rating Agencies, Borrower shall deliver
confirmation in writing from each of the applicable Rating Agencies to
the effect that such release will not result in a downgrade, withdrawal
or qualification of the respective ratings in effect immediately prior
to such Defeasance Event for the Securities issued in connection with
the Securitization which are then outstanding. If required by the
applicable Rating Agencies, Borrower shall also deliver or cause to be
delivered an Additional Insolvency Opinion with respect to the Successor
Borrower in form and substance satisfactory to Lender and the applicable
Rating Agencies;
(ix) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this SECTION 2.5.1(A) have
been satisfied;
(x) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the U.S.
Obligations purchased with the Defeasance Deposit generate monthly
amounts equal to or greater than the Scheduled Defeasance Payments;
(xi) Borrower shall deliver such other certificates,
documents or instruments as Lender may reasonably request; and
(xii) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Defeasance Event, including (A) any
costs and expenses associated with a release of the Lien of the Mortgage
as provided in SECTION 2.6 hereof, (B) reasonable attorneys' fees and
expenses incurred in connection with the Defeasance Event, (C) the costs
and expenses of the Rating Agencies, (D) any revenue, documentary stamp
or intangible taxes or any other tax or charge due in connection with
the transfer of the Note, or otherwise required to accomplish the
defeasance and (E) the costs and expenses of Servicer and any trustee,
including reasonable attorneys' fees.
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(b) In connection with each Defeasance Event, Borrower shall use the
Defeasance Deposit to purchase U.S. Obligations which provide payments on or
prior to, but as close as possible to, all successive scheduled Payment Dates
after the Defeasance Date upon which interest and principal payments are
required under this Agreement and the Note, and in amounts equal to the
scheduled payments due on such Payment Dates under this Agreement and the Note
or the Defeased Note (as applicable) (including, without limitation, scheduled
payments of principal, interest, servicing fees (if any), and any other amounts
due under the Loan Documents on such dates) and assuming the Note or the
Defeased Note (as applicable) is prepaid in full on the Anticipated Repayment
Date (the "SCHEDULED DEFEASANCE PAYMENTS"). Borrower, pursuant to the Security
Agreement or other appropriate document, shall authorize and direct that the
payments received from the U.S. Obligations may be made directly to the Lockbox
Account (unless otherwise directed by Lender) and applied to satisfy the Debt
Service obligations of Borrower under this Agreement and the Note or the
Defeased Note (as applicable). Any portion of the Defeasance Deposit in excess
of the amount necessary to purchase the U.S. Obligations required by this
SECTION 2.5 and satisfy Borrower's other obligations under this SECTION 2.5 and
SECTION 2.6 shall be remitted to Borrower.
2.5.2 COLLATERAL. Each of the U.S. Obligations that are part of the
defeasance collateral shall be duly endorsed by the holder thereof as directed
by Lender or accompanied by a written instrument of transfer in form and
substance that would be satisfactory to a prudent lender (including, without
limitation, such instruments as may be required by the depository institution
holding such securities or by the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the book-entry facilities of
such institution) in order to perfect upon the delivery of the defeasance
collateral a first priority security interest therein in favor of Lender in
conformity with all applicable state and federal laws governing the granting of
such security interests.
2.5.3 SUCCESSOR BORROWER. In connection with any Defeasance Event,
Borrower may at its option, or if so required by the applicable Rating Agencies
shall, establish or designate a successor entity (the "SUCCESSOR BORROWER")
acceptable to Lender, which shall be a Special Purpose Entity, and Borrower
shall transfer and assign all obligations, rights and duties under and to the
Note or the Defeased Note (as applicable), together with the pledged U.S.
Obligations to such Successor Borrower. Such Successor Borrower shall assume the
obligations under the Note or the Defeased Note (as applicable) and the Security
Agreement and Borrower shall be relieved of its obligations under such
documents. Borrower shall pay One Thousand and 00/100 Dollars ($1,000) to any
such Successor Borrower as consideration for assuming the obligations under the
Note or the Defeased Note (as applicable) and the Security Agreement.
Notwithstanding anything in this Agreement to the contrary, no other assumption
fee shall be payable upon a transfer of the Note or the Defeased Note (as
applicable) in accordance with this SECTION 2.5.3, but Borrower shall pay all
costs and expenses incurred by Lender, including Lender's attorneys' fees and
expenses and any fees and expenses of any Rating Agencies, incurred in
connection therewith.
SECTION 2.6 RELEASE OF PROPERTY. Except as set forth in this
Section 2.6 or a prepayment of the entire Loan pursuant to Section 2.4.2, no
repayment, prepayment or defeasance of all or any portion of the Loan shall
cause, give rise to a right to require, or otherwise result in, the release of
any Lien of any Mortgage on any Individual Property. If the
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entire Loan has been prepaid pursuant to Section 2.4.2, or after the
requirements of Section 2.6.1 have been satisfied, each Individual Property
shall be released from the lien of the respective Mortgage.
2.6.1 RELEASE OF PROPERTY.
(a) If Borrower has elected to defease the entire Loan and the
requirements of SECTION 2.5 and this SECTION 2.6 have been satisfied, all of the
Properties shall be released from the Liens of their respective Mortgages.
(b) In connection with the release of the Mortgages, Borrower shall
submit to Lender, not less than thirty (30) days prior to the Defeasance Date, a
release of Lien (and related Loan Documents) for each Individual Property for
execution by Lender. Such release shall be in a form appropriate in each
jurisdiction in which an Individual Property is located and that would be
satisfactory to a prudent lender and contains standard provisions, if any,
protecting the rights of the releasing lender. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer's Certificate
certifying that such documentation (i) is in compliance with all Legal
Requirements, and (ii) will effect such releases in accordance with the terms of
this Agreement.
2.6.2 RELEASE OF INDIVIDUAL PROPERTY. If Borrower has elected to
defease a portion of the Loan and the requirements of SECTION 2.5 and this
SECTION 2.6 have been satisfied, and provided that no Event of Default has
occurred and is continuing, Borrower may obtain the release of an Individual
Property from the Lien of the Mortgage thereon (and related Loan Documents) and
the release of Borrower's obligations under the Loan Documents with respect to
such Individual Property (other than those expressly stated to survive), upon
the satisfaction of each of the following conditions:
(a) The amount of the outstanding principal balance of the Loan to
be defeased shall equal or exceed the Adjusted Release Amount for the applicable
Individual Property; provided, however, that Borrower may defease an amount
equal to the Release Amount if it simultaneously deposits with Lender a Letter
of Credit in an amount equal to fifteen percent (15%) of the Release Amount;
(b) Borrower shall submit to Lender, not less than thirty (30) days
prior to the Payment Date on which the prepayment will be made (or such later
date as Lender or Servicer may agree), a release of Lien (and related Loan
Documents) for such Individual Property for execution by Lender. Such release
shall be in a form appropriate in the jurisdiction in which the Individual
Property is located and that would be satisfactory to a prudent lender and
contain standard provisions, if any, protecting the rights of the releasing
lender. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release,
together with an Officer's Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, (ii) will effect such release in
accordance with the terms of this Agreement, and (iii) will not impair or
otherwise adversely affect the Liens, security interests and other rights of
Lender under the Loan Documents not being released (or as to the parties to the
Loan Documents and Properties subject to the Loan Documents not being released);
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(c) After giving effect to such release (including the amount
defeased in SECTION 2.6.2(A) above), the Debt Service Coverage Ratio for the
Properties then remaining subject to the Liens of the Mortgages on a trailing
twelve (12) month basis shall not be less than 1.25 to 1.0;
(d) After giving effect to such release (including the amount
defeased in SECTION 2.6.2(A) above), the Loan to Value Ratio for the Properties
then remaining subject to the Liens of the Mortgages shall not exceed seventy
percent (70%); and
(e) The Individual Property to be released shall be conveyed to a
Person other than a Borrower.
2.6.3 RELEASE ON PAYMENT IN FULL. Lender shall, upon payment in full
of all principal and interest due on the Loan and all other amounts due and
payable under the Loan Documents in accordance with the terms and provisions of
the Note and this Agreement, release the Lien of the Mortgages on the
Properties. Borrower shall pay to Lender all reasonable administrative and legal
costs incurred in connection with such release.
SECTION 2.7 LOCKBOX ACCOUNT/CASH MANAGEMENT.2.7.1 LOCKBOX ACCOUNT.
(a) During the term of the Loan, Borrower shall establish and
maintain an account (the "Lockbox Account") with Lockbox Bank in trust for the
benefit of Lender, which Lockbox Account shall be under the sole dominion and
control of Lender. The Lockbox Account shall be entitled "Behringer Harvard
Western Portfolio LP, as Borrower, and JPMorgan Chase Bank, N.A., as Lender,
pursuant to Loan Agreement dated as of July 20, 2005 - Lockbox Account".
Borrower hereby grants to Lender a first-priority security interest in the
Lockbox Account and all deposits at any time contained therein and the proceeds
thereof and will take all actions necessary to maintain in favor of Lender a
perfected first priority security interest in the Lockbox Account, including,
without limitation, executing and filing UCC-1 Financing Statements and
continuations thereof. Lender and Servicer shall have the sole right to make
withdrawals from the Lockbox Account and all costs and expenses for establishing
and maintaining the Lockbox Account shall be paid by Borrower. All monies now or
hereafter deposited into the Lockbox Account shall be deemed additional security
for the Debt.
(b) Borrower shall, or shall cause Property Manager to, deliver
irrevocable written instructions to all tenants under Leases to deliver all
Rents payable thereunder directly to the Lockbox Account. Borrower shall, and
shall cause Property Manager to, deposit all amounts received by Borrower or
Property Manager constituting Rents into the Lockbox Account within one (1)
Business Day after receipt thereof.
(c) Borrower shall obtain from Lockbox Bank its agreement to
transfer to the Cash Management Account in immediately available funds by
federal wire transfer all amounts on deposit in the Lockbox Account once every
Business Day during the continuance of a Cash Sweep Period throughout the term
of the Loan.
(d) Upon the occurrence of an Event of Default, Lender may, in
addition to any and all other rights and remedies available to Lender, apply any
sums then present in the Lockbox Account to the payment of the Debt in any order
in its sole discretion.
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(e) The Lockbox Account shall be an Eligible Account and shall not
be commingled with other monies held by Borrower or Lockbox Bank.
(f) Borrower shall not further pledge, assign or grant any security
interest in the Lockbox Account or the monies deposited therein or permit any
lien or encumbrance to attach thereto, or any levy to be made thereon, or any
UCC-1 Financing Statements, except those naming Lender as the secured party, to
be filed with respect thereto, and except for the rights of the Lockbox Bank
under the Lockbox Agreement.
(g) Borrower shall indemnify Lender and hold Lender harmless from
and against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with the Lockbox Account and/or the Lockbox Agreement (unless arising from the
gross negligence or willful misconduct of Lender) or the performance of the
obligations for which the Lockbox Account was established.
2.7.2 CASH MANAGEMENT ACCOUNT.
(a) Pursuant to the Cash Management Agreement, Lender has
established an account (the "CASH MANAGEMENT ACCOUNT") with a financial
institution chosen by Lender in its discretion, which Cash Management Account
shall be under the sole dominion and control of Lender. Borrower hereby grants
to Lender a first priority security interest in the Cash Management Account and
all deposits at any time contained therein and the proceeds thereof and will
take all actions necessary to maintain in favor of Lender a perfected first
priority security interest in the Cash Management Account, including, without
limitation, executing and filing UCC-1 Financing Statements and continuations
thereof. Lender and Servicer shall have the sole right to make withdrawals from
the Cash Management Account and all costs and expenses for establishing and
maintaining the Cash Management Account shall be paid by Borrower.
(b) The insufficiency of funds on deposit in the Cash Management
Account shall not relieve Borrower from the obligation to make any payments, as
and when due pursuant to this Agreement and the other Loan Documents, and such
obligations shall be separate and independent, and not conditioned on any event
or circumstance whatsoever.
(c) All funds on deposit in the Cash Management Account following
the occurrence of an Event of Default may be applied by Lender in such order and
priority as Lender shall determine.
(d) Borrower hereby agrees that Lender may modify the Cash
Management Agreement for the purpose of establishing additional sub-accounts in
connection with any payments otherwise required under this Agreement and the
other Loan Documents and Lender shall provide notice thereof to Borrower.
2.7.3 PAYMENTS RECEIVED UNDER THE CASH MANAGEMENT AGREEMENT.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the payment of the Monthly
Debt Service Payment Amount and amounts required to be deposited into the
Reserve Funds, if any, shall be deemed satisfied to the
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extent sufficient amounts are deposited in the Cash Management Account to
satisfy such obligations pursuant to the Cash Management Agreement on the dates
each such payment is required, regardless of whether any of such amounts are so
applied by Lender.
III. CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of
Lender to make the Loan hereunder is subject to the fulfillment by Borrower or
waiver by Lender of the following conditions precedent no later than the Closing
Date:
3.1.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH CONDITIONS. The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Default or an Event of Default shall have occurred and be continuing; and
Borrower shall be in compliance in all material respects with all terms and
conditions set forth in this Agreement and in each other Loan Document on its
part to be observed or performed.
3.1.2 LOAN AGREEMENT AND NOTE. Lender shall have received a copy of
this Agreement and the Note, in each case, duly executed and delivered on behalf
of Borrower.
3.1.3 DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES,
ETC.
(a) Mortgages, Assignments of Leases. Lender shall have received
from Borrower fully executed and acknowledged counterparts of the Mortgages and
the Assignments of Leases and evidence that counterparts of the Mortgages and
Assignments of Leases have been delivered to the title company for recording, in
the reasonable judgment of Lender, so as to effectively create upon such
recording valid and enforceable first priority Liens upon each Individual
Property, in favor of Lender (or such other trustee as may be required under
local law), subject only to the Permitted Encumbrances and such other Liens as
are permitted pursuant to the Loan Documents. Lender shall have also received
from Borrower fully executed counterparts of the other Loan Documents.
(b) Title Insurance. Lender shall have received a binding commitment
to issue Title Insurance Policies issued by a title company acceptable to Lender
and dated as of the Closing Date. To the extent permitted by applicable Legal
Requirements, such Title Insurance Policies shall (i) provide coverage an amount
equal to the principal amount of the Loan together with, if applicable, a
"tie-in" or similar endorsement, (ii) insure Lender that the relevant Mortgage
creates a valid first priority lien on the Individual Property encumbered
thereby, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (iii) contain such endorsements and
affirmative coverages as Lender may reasonably request, and (iv) name Lender or
Lender's nominee, its successors and assigns, as the insured. Lender also shall
have received evidence that all premiums in respect of such Title Insurance
Policies have been paid.
(c) Survey. Lender shall have received a current title survey for
each Individual Property, certified to the title company and Lender and their
successors and assigns, in
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form and content satisfactory to Lender and prepared by a professional and
properly licensed land surveyor satisfactory to Lender in accordance with the
most recent Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys. The following additional items from the list of "Optional Survey
Responsibilities and Specifications" (Table A) should be added to each survey:
2, 3, 4, 6, 8, 9, 10, 11 and 13. Each such survey shall reflect the same legal
description contained in the Title Insurance Policies relating to such
Individual Property referred to in clause (b) above and shall include, among
other things, a legal description of the real property comprising part of such
Individual Property reasonably satisfactory to Lender. The surveyor's seal shall
be affixed to each survey and the surveyor shall provide a certification for
each survey in form and substance acceptable to Lender.
(d) Insurance. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.
(e) Environmental Reports. Lender shall have received a Phase I
environmental report (and, if recommended by the Phase I environmental report, a
Phase II environmental report) in respect of each Individual Property, in each
case satisfactory in form and substance reasonably satisfactory to Lender.
(f) Zoning. With respect to each Individual Property, Lender shall
have received, at Lender's option, (i) letters or other evidence with respect to
each Individual Property from the appropriate municipal authorities (or other
Persons) concerning applicable zoning and building laws, and (ii) either (A) an
ALTA 3.1 zoning endorsement for the applicable Title Insurance Policy or (B)
other evidence of zoning compliance, in each case in substance reasonably
satisfactory to Lender.
(g) ENCUMBRANCES. Borrower shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected first
Lien as of the Closing Date with respect to each Mortgage on the applicable
Individual Property, subject only to applicable Permitted Encumbrances and such
other Liens as are permitted pursuant to the Loan Documents, and Lender shall
have received satisfactory evidence thereof.
3.1.4 RELATED DOCUMENTS. Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
have been duly authorized, executed and delivered by all parties thereto and
Lender shall have received and approved certified copies thereof.
3.1.5 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the Closing
Date, Borrower shall deliver or cause to be delivered to Lender copies certified
by Borrower of all organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or qualification to do
business, as Lender may request in its sole discretion, including, without
limitation, good standing certificates, qualifications to do business in the
State, resolutions authorizing the entering into of the Loan and incumbency
certificates as may be requested by Lender.
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3.1.6 OPINIONS OF BORROWER'S COUNSEL. Lender shall have received
opinions from Borrower's counsel (a) the Insolvency Opinion, and (b) an opinion
with respect to due execution, authority, enforceability of the Loan Documents
and such other matters as Lender may reasonably require, all such opinions in
form, scope and substance reasonably satisfactory to Lender and Lender's counsel
in their reasonable discretion.
3.1.7 BUDGETS. Borrower shall have delivered the Annual Budget for the
current Fiscal Year.
3.1.8 BASIC CARRYING COSTS. Borrower shall have paid or reserved for
all Basic Carrying Costs relating to the Properties which are in arrears,
including without limitation, (a) accrued but unpaid Insurance Premiums due
pursuant to the Policies, (b) currently due and payable Taxes (including any in
arrears) relating to the Properties, and (c) currently due Other Charges
relating to the Properties, which amounts shall be funded with proceeds of the
Loan.
3.1.9 COMPLETION OF PROCEEDINGS. All organizational proceedings taken
or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents and all documents incidental thereto shall be
reasonably satisfactory in form and substance to Lender, and Lender shall have
received all such counterpart originals or certified copies of such documents as
Lender may reasonably request.
3.1.10 PAYMENTS. All payments, deposits or escrows required to be made
or established by Borrower under this Agreement, the Note and the other Loan
Documents on or before the Closing Date shall have been paid.
3.1.11 TENANT ESTOPPELS. Lender shall have received an executed tenant
estoppel letter, which shall be in form and substance satisfactory to Lender,
from (a) each tenant occupying ten percent (10%) of more of the gross leasable
area of any Individual Property, (b) each tenant leasing an entire building at
any Individual Property, (c) each tenant paying base rent in an amount equal to
or exceeding five percent (5%) of the Gross Income from Operations from the
applicable Individual Property occupied by such tenant and (d) including the
area leased by those described in clauses (a), (b) and (c), lessees of not less
than seventy-five percent (75%) of the gross leasable area of each Individual
Property.
3.1.12 TRANSACTION COSTS. Borrower shall have paid or reimbursed Lender
for all title insurance premiums, recording and filing fees or taxes, costs of
environmental reports, Physical Conditions Reports, appraisals and other
reports, the fees and costs of Lender's counsel and all other third party
out-of-pocket expenses incurred in connection with the origination of the Loan.
3.1.13 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the financial condition or business condition of Borrower,
Principal, Guarantor or the Properties since the date of the most recent
financial statements delivered to Lender. The income and expenses of the
Properties, the occupancy thereof, and all other features of the transaction
shall be as represented to Lender without material adverse change. Neither
Borrower, Principal, Guarantor nor any of their respective constituent Persons
shall be the subject of any bankruptcy, reorganization, or insolvency
proceeding.
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3.1.14 LEASES AND RENT ROLL. Lender shall have received copies of all
tenant leases, certified copies of any tenant leases as requested by Lender and
certified copies of all ground leases affecting the Properties, if any. Lender
shall have received a current certified rent roll of the Properties, reasonably
satisfactory in form and substance to Lender.
3.1.15 SUBORDINATION AND ATTORNMENT. Lender shall have received
appropriate instruments acceptable to Lender in its commercially reasonable
discretion subordinating any Leases of Record prior to such Mortgage and
including an agreement by such Tenants to attorn to Lender in the event of a
foreclosure or delivery of a deed in lieu thereof.
3.1.16 TAX LOT. Lender shall have received evidence that each
Individual Property constitutes one (1) or more separate tax lots, which
evidence shall be reasonably satisfactory in form and substance to Lender.
3.1.17 PHYSICAL CONDITIONS REPORT. Lender shall have received Physical
Conditions Reports with respect to each Individual Property, which reports shall
be reasonably satisfactory in form and substance to Lender.
3.1.18 PROPERTY MANAGEMENT AGREEMENT. Lender shall have received a
certified copy of the Property Management Agreement with respect to the
Properties which shall be satisfactory in form and substance to Lender.
3.1.19 APPRAISAL. Lender shall have received an appraisal of each
Individual Property which shall be satisfactory in form and substance to Lender.
3.1.20 FINANCIAL STATEMENTS. Lender shall have received (a) a balance
sheet with respect to each Individual Property for the two (2) most recent
Fiscal Years and statements of income and statements of cash flows with respect
to each Individual Property for the three (3) most recent Fiscal Years, each in
form and substance reasonably satisfactory to Lender or (b) such other financial
statements relating to the operation of each Individual Property, in form and
substance reasonably satisfactory to Lender.
3.1.21 FURTHER DOCUMENTS. Lender or its counsel shall have received
such other documents and further approvals, opinions, documents and information
as Lender or its counsel may have reasonably requested including the Loan
Documents in form and substance reasonably satisfactory to Lender and its
counsel.
3.1.22 LOCKBOX ESTABLISHMENT
. Borrower shall have established the Lockbox Account at a Lockbox Bank
approved by Lender, and shall have executed and delivered a lockbox agreement
acceptable to Lender in its reasonable discretion.
3.1.23 TENANT DIRECTION LETTER
. Borrower shall deliver Tenant Direction Letters for each existing
Tenant.
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IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 BORROWER REPRESENTATIONS. Borrower represents and
warrants as of the date hereof and as of the Closing Date that, except as set
forth on Schedule V:
4.1.1 ORGANIZATION. Borrower has been duly organized and is validly
existing and in good standing with requisite power and authority to own the
Properties and to transact the businesses in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with the Properties,
businesses and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own the
Properties and to transact the businesses in which it is now engaged, and the
sole business of Borrower is the ownership, management, operation and sale of
the Properties.
4.1.2 PROCEEDINGS. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.1.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement, or other agreement or instrument
to which Borrower is a party or by which any of Borrower's property or assets is
subject, nor to Borrower's Knowledge will such action result in any violation of
the provisions of any statute or any order, rule or regulation of any
Governmental Authority having jurisdiction over Borrower or any of Borrower's
properties or assets, and any consent, approval, authorization, order,
registration or qualification of or with any court or any such Governmental
Authority required for the execution, delivery and performance by Borrower of
this Agreement or any other Loan Documents has been obtained and is in full
force and effect.
4.1.4 LITIGATION. To Borrower's Knowledge, there are no actions, suits
or proceedings at law or in equity by or before any Governmental Authority or
other agency now pending or threatened against or affecting Borrower, Guarantor,
Principal or any Individual Property, which actions, suits or proceedings, if
determined against Borrower, Guarantor, Principal or any Individual Property,
might materially adversely affect the condition (financial or otherwise) or
business of Borrower, Guarantor, Principal or the condition or ownership of any
Individual Property.
4.1.5 AGREEMENTS. Except such instruments and agreements set forth as
Permitted Exceptions in the Title Insurance Policy, Borrower is not a party to
any agreement or
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instrument or subject to any restriction which might materially and adversely
affect Borrower or any Individual Property, or Borrower's business, properties
or assets, operations or condition, financial or otherwise. To Borrower's
knowledge, Borrower is not in default in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party or by
which Borrower or any of the Properties is bound. Borrower has no material
financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Borrower is a party or by
which Borrower or the Properties are otherwise bound, other than (a) obligations
incurred in the ordinary course of the operation of the Properties as permitted
pursuant to clause (xxiii) of the definition of "Special Purpose Entity" set
forth in SECTION 1.1 hereof and (b) obligations under the Loan Documents.
4.1.6 TITLE. Borrower has good and indefeasible fee simple title to
the real property comprising part of each Individual Property and good title to
the balance of such Individual Property, free and clear of all Liens whatsoever
except the Permitted Encumbrances, such other Liens as are permitted pursuant to
the Loan Documents and the Liens created by the Loan Documents. The Permitted
Encumbrances in the aggregate do not materially and adversely affect the value,
operation or use of the applicable Individual Property (as currently used) or
Borrower's ability to repay the Loan. To Borrower's Knowledge, there are no
claims for payment for work, labor or materials affecting the Properties which
are due and unpaid under the contracts pursuant to which work or labor was
performed or materials provided which are or may become a Lien prior to, or of
equal priority with, the Liens created by the Loan Documents.
4.1.7 SOLVENCY; NO BANKRUPTCY FILING. Borrower (a) has not entered
into the transaction or executed the Note, this Agreement or any other Loan
Documents with the actual intent to hinder, delay or defraud any creditor and
(b) received reasonably equivalent value in exchange for its obligations under
such Loan Documents. Giving effect to the Loan, the fair saleable value of
Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debt and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations of Borrower). Except as expressly disclosed to Lender
in writing, no petition in bankruptcy has been filed against Borrower, or to
Borrower's Knowledge, or any constituent Person in the last seven (7) years, and
neither Borrower nor, to Borrower's Knowledge, any constituent Person in the
last seven (7) years has ever made an assignment for the benefit of creditors or
taken advantage of any insolvency act for the benefit of debtors. Neither
Borrower nor any of its constituent Persons are contemplating either the filing
of a petition by it under any state or federal bankruptcy or insolvency laws or
the liquidation of all or a major portion of Borrower's assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it or such constituent Persons.
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4.1.8 FULL AND ACCURATE DISCLOSURE. To Borrower's Knowledge, no
statement of fact made by Borrower in this Agreement or in any of the other Loan
Documents contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
misleading. There is no material fact presently known to Borrower which has not
been disclosed to Lender which adversely affects any Individual Property or the
business, operations or condition (financial or otherwise) of Borrower.
4.1.9 NO PLAN ASSETS. Borrower does not sponsor, is not obligated to
contribute to, and is not itself an "employee benefit plan," as defined in
Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of the Code,
and none of the assets of Borrower constitutes or will constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In
addition, (a) Borrower is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (b) transactions by or with Borrower are not subject
to any state or other statute, regulation or other restriction regulating
investments of, or fiduciary obligations with respect to, governmental plans
within the meaning of Section 3(32) of ERISA which is similar to the provisions
of Section 406 of ERISA or Section 4975 of the Code and which prohibit or
otherwise restrict the transactions contemplated by this Agreement, including,
but not limited to the exercise by Lender of any of its rights under the Loan
Documents.
4.1.10 COMPLIANCE. To Borrower's Knowledge, Borrower and the Properties
and the use thereof comply in all material respects with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes. To Borrower's Knowledge, Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority. To
Borrower's Knowledge, there has not been committed by Borrower or, to Borrower's
Knowledge, any other Person in occupancy of or involved with the operation or
use of the Properties any act or omission affording the federal government or
any other Governmental Authority the right of forfeiture as against any
Individual Property or any part thereof or any monies paid in performance of
Borrower's obligations under any of the Loan Documents.
4.1.11 FINANCIAL INFORMATION. To Borrower's Knowledge, all financial
data, including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Lender in respect of the
Properties (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of Borrower and the Properties, as
applicable, 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 accounting principles reasonably acceptable to Lender,
consistently applied throughout the periods covered, except as disclosed
therein. Borrower does not have any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that are known to Borrower and
reasonably likely to have a materially adverse effect on any Individual Property
or the operation thereof for the related Permitted Use, except as referred to or
reflected in said financial statements. Since the date of such financial
statements, there has been no materially adverse change in the financial
condition, operations or business of Borrower from that set forth in said
financial statements.
4.1.12 CONDEMNATION. No Condemnation or other proceeding has been
commenced or, to Borrower's Knowledge, is contemplated with respect to all or
any portion of
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any Individual Property or for the relocation of roadways providing access to
any Individual Property.
4.1.13 FEDERAL RESERVE REGULATIONS. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
4.1.14 UTILITIES AND PUBLIC ACCESS. Each Individual Property has rights
of access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service such Individual Property for its respective
intended uses. To Borrower's Knowledge, all public utilities necessary or
convenient to the full use and enjoyment of each Individual Property are located
either in the public right-of-way abutting such Individual Property (which are
connected so as to serve such Individual Property without passing over other
property) or in recorded easements serving such Individual Property and such
easements are set forth in and insured by the Title Insurance Policies. All
roads necessary for the use of each Individual Property for their current
respective purposes have been completed and dedicated to public use and accepted
by all Governmental Authorities.
4.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign person" within
the meaning of ss.1445(f)(3) of the Code.
4.1.16 SEPARATE LOTS. Each Individual Property is comprised of one (1)
or more parcels which constitute a separate tax lot or lots and does not
constitute a portion of any other tax lot not a part of such Individual
Property.
4.1.17 ASSESSMENTS. There are no pending, or to Borrower's Knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any Individual Property, nor are there any contemplated improvements
to any Individual Property that may result in such special or other assessments.
4.1.18 ENFORCEABILITY. The Loan Documents are not subject to any right
of rescission, set-off, counterclaim or defense by Borrower or Guarantor,
including the defense of usury, nor would the operation of any of the terms of
the Loan Documents, or the exercise of any right thereunder exercised by Lender
in accordance with applicable law, render the Loan Documents unenforceable, and
neither Borrower nor Guarantor has asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
4.1.19 NO PRIOR ASSIGNMENT. There is no prior assignment of the Leases
or any portion of the Rents by Borrower or any of its predecessors in interest,
given as collateral security which will be outstanding upon application of the
proceeds of the Loan.
4.1.20 INSURANCE. Borrower has obtained and has delivered to Lender (a)
certified copies of the Policies reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement or (b) other evidence of such
matters acceptable to Lender. To Borrower's Knowledge, no claims have been made
or are currently pending,
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outstanding or otherwise remain unsatisfied under any such Policy, and neither
Borrower nor any other Person, has done, by act or omission, anything which
would impair the coverage of any such Policy.
4.1.21 USE OF PROPERTY. Each Individual Property is used exclusively
for the related Permitted Use.
4.1.22 CERTIFICATE OF OCCUPANCY; LICENSES. To Borrower's Knowledge, all
certifications, permits, licenses and approvals, including without limitation,
certificates of completion and occupancy permits required to be obtained by
Borrower for the legal use, occupancy and operation of each Individual Property
for the related Permitted Use have been obtained and are in full force and
effect, and to Borrower's Knowledge, all certifications, permits, licenses and
approvals, including without limitation, certificates of completion and
occupancy permits required to be obtained by any Person other than Borrower for
the legal use, occupancy and operation of each Individual Property the related
Permitted Use, have been obtained and are in full force and effect (all of the
foregoing certifications, permits, licenses and approvals are collectively
referred to as the "LICENSES"). Borrower shall and shall cause all other Persons
to, keep and maintain all licenses necessary for the operation of each
Individual Property for the related Permitted Use. To Borrower's Knowledge, the
use being made of each Individual Property is in conformity with all
certificates of occupancy issued for such Individual Property.
4.1.23 FLOOD ZONE. To Borrower's Knowledge, no Improvements on any
Individual Property are located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards and, if so located,
the flood insurance required pursuant to SECTION 6.1(A)(I) is in full force and
effect with respect to each such Individual Property.
4.1.24 PHYSICAL CONDITION. Except as disclosed in the Physical
Conditions Reports delivered to Lender in connecting with this Loan, to
Borrower's Knowledge, the Properties, 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; there exists no structural or other
material defects or damages in any Individual Property and Borrower has not
received notice from any insurance company or bonding company of any defects or
inadequacies in any Individual Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
4.1.25 BOUNDARIES. To Borrower's Knowledge, all of the improvements
which were included in determining the appraised value of each Individual
Property lie wholly within the boundaries and building restriction lines of such
Individual Property, and no improvements on adjoining properties encroach upon
any Individual Property, and no easements or other encumbrances upon any
Individual Property encroach upon any of the Improvements, so as to affect the
value or marketability of applicable Individual Property except those which are
insured against by the applicable Title Insurance Policy.
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4.1.26 LEASES. To Borrower's Knowledge, the Properties are not subject
to any leases other than the Leases described on the Rent Roll attached as
SCHEDULE II hereto and made a part hereof. Borrower is the owner and lessor of
landlord's interest in the Leases. No Person has any possessory interest in any
Individual Property or right to occupy the same except under and pursuant to the
provisions of the Leases. The current Leases are in full force and effect and,
to Borrower's Knowledge, there are no defaults thereunder by either party and
there are no conditions that, with the passage of time or the giving of notice,
or both, would constitute defaults thereunder. No Rent (including security
deposits) has been paid more than one (1) month in advance of its due date. All
work to be performed by Borrower under each Lease has been performed as required
and has been accepted by the applicable tenant, and any payments, free rent,
partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by Borrower to any tenant has already been
received by such tenant. There has been no prior sale, transfer or assignment,
hypothecation or pledge of any Lease or of the Rents received therein which is
outstanding. To Borrower's Knowledge, except as set forth on SCHEDULE II, no
tenant listed on SCHEDULE II has assigned its Lease or sublet all or any portion
of the premises demised thereby, no such tenant holds its leased premises under
assignment or sublease, nor does anyone except such tenant and its employees
occupy such leased premises. No tenant under any Lease has a right or option
pursuant to such Lease or otherwise to purchase all or any part of the leased
premises or the building of which the leased premises are a part. Except as set
forth in SCHEDULE II, no tenant under any Lease has any right or option for
additional space in the Improvements. To Borrower's actual knowledge based on
the Environmental Report delivered to Lender in connection herewith, no
hazardous wastes or toxic substances, as defined by applicable federal, state or
local statutes, rules and regulations, have been disposed, stored or treated by
any tenant under any Lease on or about the leased premises nor does Borrower
have any knowledge of any tenant's intention to use its leased premises for any
activity which, directly or indirectly, involves the use, generation, treatment,
storage, disposal or transportation of any petroleum product or any toxic or
hazardous chemical, material, substance or waste, except in either event, in
compliance with applicable federal, state or local statues, rules and
regulations.
4.1.27 SURVEY. To Borrower's Knowledge, no Survey for any Individual
Property delivered to Lender in connection with this Agreement fails to reflect
any material matter affecting such Individual Property or the title thereto.
4.1.28 INVENTORY. Borrower is the owner of all of the Equipment,
Fixtures and Personal Property (as such terms are defined in the Mortgages)
located on or at each Individual Property and shall not lease any Equipment,
Fixtures or Personal Property other than as permitted hereunder. All of the
Equipment, Fixtures and Personal Property are sufficient to operate the
Properties in the manner required hereunder and in the manner in which they are
currently operated.
4.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the acquisition of the Properties to Borrower have been paid or
are simultaneously being paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution,
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delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgages, have been
paid, and, under current Legal Requirements, each of the Mortgages are
enforceable in accordance with their respective terms by Lender (or any
subsequent holder thereof).
4.1.30 SPECIAL PURPOSE ENTITY/SEPARATENESS. (a) Until the Debt has been
paid in full, Borrower hereby represents, warrants and covenants that (i)
Borrower is, shall be and shall continue to be a Special Purpose Entity and (ii)
Principal is, shall be and shall continue to be a Special Purpose Entity (Lender
acknowledges that the single purpose provisions contained in the organizational
documents of Borrower and Principal satisfy the requirements of a Special
Purpose Entity).
(b) The representations, warranties and covenants set forth in
SECTION 4.1.30(A) shall survive for so long as any amount remains payable to
Lender under this Agreement or any other Loan Document.
(c) All of the facts stated and all of the assumptions made in the
Insolvency Opinion, including, but not limited to, in any exhibits attached
thereto, are true and correct in all respects. Borrower has complied and will
comply with, and Principal has complied and Borrower will cause Principal to
comply with, all of the assumptions made with respect to Borrower and Principal
in the Insolvency Opinion. Borrower will comply with all of the assumptions made
with respect to Borrower and Principal in any subsequent non-consolidation
opinion required to be delivered in connection with the Loan Documents (an
"ADDITIONAL INSOLVENCY OPINION"). Each Affiliate of Borrower and Principal with
respect to which an assumption shall be made in any Additional Insolvency
Opinion will comply with all of the assumptions made with respect to it in any
Additional Insolvency Opinion.
4.1.31 PROPERTY MANAGEMENT AGREEMENT. The Property Management Agreement
is in full force and effect and, to Borrower's Knowledge, there are no defaults
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.
4.1.32 ILLEGAL ACTIVITY. To Borrower's Knowledge, no portion of any
Individual Property has been or will be purchased with proceeds of any illegal
activity.
4.1.33 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All information
submitted by Borrower to Lender and in all financial statements, rent rolls
(including the rent roll attached hereto as SCHEDULE II), reports, certificates
and other documents submitted in connection with the Loan or in satisfaction of
the terms thereof and all statements of fact made by Borrower in this Agreement
or in any other Loan Document, are accurate, complete and correct in all
material respects, provided, however, that if such information was provided to
Borrower by non-affiliated third parties, Borrower represents that such
information is, to Borrower's Knowledge, accurate, complete and correct in all
material respects. To Borrower's Knowledge, there has been no material adverse
change in any condition, fact, circumstance or event that would make any such
information inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects or might materially
and adversely affect the Properties or the business operations or the financial
condition of Borrower. To Borrower's
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Knowledge, Borrower has disclosed to Lender all material facts and has not
failed to disclose any material fact that could cause any Provided Information
or representation or warranty made herein to be materially misleading.
4.1.34 INVESTMENT COMPANY ACT. Borrower is not (a) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (b) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
4.1.35 EMBARGOED PERSON. As of the Closing Date, to Borrower's
Knowledge, (a) none of the funds or other assets of Borrower constitute property
of, or are beneficially owned, directly or indirectly, by any Embargoed Person;
(b) no Embargoed Person has any interest of any nature whatsoever in Borrower
with the result that the investment in Borrower (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of Borrower have been derived from any unlawful activity with
the result that the investment in Borrower (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.
4.1.36 PRINCIPAL PLACE OF BUSINESS; STATE OF ORGANIZATION. Borrower's
principal place of business as of the date hereof is the address set forth in
the introductory paragraph of this Agreement. The Borrower is organized under
the laws of the State of Delaware.
4.1.37 LOAN TO VALUE. The maximum principal amount of the Loan does not
exceed one hundred twenty-five percent (125%) of the fair market value of the
Properties as set forth on the appraisal of the Properties.
4.1.38 MORTGAGE TAXES. As of the date hereof, Borrower represents that
it has paid or has deposited with the title company issuing the Title Insurance
Policies funds sufficient to pay all state, county and municipal recording and
all other taxes imposed upon the execution and recordation of the Mortgages.
4.1.39 CASH MANAGEMENT ACCOUNT. Borrower hereby represents and warrants
to Lender that:
(a) This Agreement, together with the other Loan Documents, create a
valid and continuing security interest (as defined in the Uniform Commercial
Code of the State of Delaware) in the Lockbox Account and Cash Management
Account in favor of Lender, which security interest is prior to all other Liens,
other than Permitted Encumbrances, and is enforceable as such against creditors
of and purchasers from Borrower. Other than in connection with the Loan
Documents and except for Permitted Encumbrances, Borrower has not sold, pledged,
transferred or otherwise conveyed the Lockbox Account and Cash Management
Account;
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(b) Each of the Lockbox Account and Cash Management Account
constitute "deposit accounts" and/or "securities accounts" within the meaning of
the Uniform Commercial Code of the State of Delaware); and
(c) The Lockbox Account is not in the name of any Person other than
Borrower, as pledgor, or Lender, as pledgee. Borrower has not consented to the
Lockbox Bank complying with instructions with respect to the Lockbox Account
from any Person other than Lender or another Person designated by Lender.
SECTION 4.2 SURVIVAL OF REPRESENTATIONS. Borrower agrees that all
of the representations and warranties of Borrower set forth in SECTION 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
V. BORROWER COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS. From the Closing Date and until
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Liens of the Mortgages encumbering the
Properties (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees
with Lender that:
5.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE.
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, licenses, permits and
franchises and comply with all Legal Requirements applicable to it and the
Properties. Borrower shall not commit, nor shall Borrower permit any other
Person in occupancy of or involved with the operation or use of the Properties
to commit any act or omission affording the federal government or any state or
local government the right of forfeiture as against any Individual Property or
any part thereof or any monies paid in performance of Borrower's obligations
under any of the Loan Documents. Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall at all times maintain, preserve and protect all its
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Properties in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgages. Borrower
shall keep the Properties insured at all times by financially sound and
reputable insurers, to such extent and against such risks, and maintain
liability and such other insurance, as is more fully provided in this Agreement.
After prior written notice to Lender, Borrower, at its own expense, may contest
by appropriate legal proceeding promptly initiated and conducted in good faith
and with due diligence, the validity of any Legal Requirement, the applicability
of any Legal Requirement to Borrower or any Individual Property or any alleged
violation of any Legal Requirement, provided that (i) no Default or Event of
Default has occurred and remains uncured; (ii) intentionally omitted; (iii) such
proceeding shall be permitted under and be conducted in
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accordance with the provisions of any instrument to which Borrower is subject
and shall not constitute a default thereunder and such proceeding shall be
conducted in accordance with all applicable statutes, laws and ordinances; (iv)
no Individual Property nor any part thereof or interest therein will not be in
immediate danger of being sold, forfeited, terminated, cancelled or lost; (v)
Borrower shall promptly upon final determination thereof comply with any such
Legal Requirement determined to be valid or applicable or cure any violation of
any Legal Requirement; (vi) such proceeding shall suspend the enforcement of the
contested Legal Requirement against Borrower or any Individual Property; and
(vii) Borrower shall furnish such security as may be required in the proceeding,
or as may be requested by Lender, to insure compliance with such Legal
Requirement, together with all interest and penalties payable in connection
therewith. Lender may apply any such security, as necessary to cause compliance
with such Legal Requirement at any time when, in the reasonable judgment of
Lender, the validity, applicability or violation of such Legal Requirement is
finally established or any Individual Property (or any part thereof or interest
therein) shall be in danger of being sold, forfeited, terminated, cancelled or
lost. Provided no Event of Default then exists, any security deposited with
Lender pursuant to this Section 5.1.1 may be used to satisfy compliance with the
related Legal Requirement with any excess after the satisfaction of same to be
returned to Borrower.
5.1.2 TAXES AND OTHER CHARGES. Borrower shall pay or cause to be paid
all Taxes and Other Charges now or hereafter levied or assessed or imposed
against the Properties or any part thereof as the same become due and payable;
provided, however, Borrower's obligation to directly pay to the appropriate
taxing authority Taxes shall be suspended for so long as Borrower complies with
the terms and provisions of SECTION 7.2 hereof. Borrower will deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes and
Other Charges have been so paid or are not then delinquent no later than ten
(10) days prior to the date on which the Taxes and/or Other Charges would
otherwise be delinquent if not paid (provided, however, that Borrower is not
required to furnish such receipts for payment of Taxes in the event that such
Taxes have been paid by Lender pursuant to SECTION 7.2 hereof). If Borrower pays
or causes to be paid all Taxes and Other Charges and provides a copy of the
receipt evidencing the payment thereof to Lender, then Lender shall reimburse
Borrower, provided that there are then sufficient proceeds in the Tax and
Insurance Escrow Fund and provided that the Taxes are being paid pursuant to
Section 7.2. Upon written request of Borrower, if Lender has paid such Taxes
pursuant to Section 7.2 hereof, Lender shall provide Borrower with evidence that
such Taxes have been paid. Borrower shall not suffer and shall promptly cause to
be paid and discharged any Lien or charge whatsoever which may be or become a
Lien or charge against the Properties, and shall promptly pay for all utility
services provided to the Properties. After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any Taxes or Other
Charges, provided that (i) Borrower is permitted to do so under the provisions
of any mortgage or deed of trust superior in lien to the applicable Mortgage;
(ii) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Borrower is subject and
shall not constitute a default thereunder and such proceeding shall be conducted
in accordance with all applicable statutes, laws and ordinances; (iii) no
Individual Property nor any part thereof or interest therein will be in
immediate danger of being sold, forfeited, terminated, cancelled or lost; (iv)
Borrower shall promptly upon final determination thereof pay the amount of any
such Taxes
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or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the applicable
Individual Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or as may be reasonably requested by Lender, to
insure the payment of any such Taxes or Other Charges, together with all
interest and penalties thereon. Lender may pay over any such cash deposit or
part thereof held by Lender to the claimant entitled thereto at any time when,
in the reasonable judgment of Lender, the entitlement of such claimant is
established or any Individual Property (or part thereof or interest therein)
shall be in imminent danger of being sold, forfeited, terminated, cancelled or
lost or there shall be any danger of the Lien of any Mortgage being primed by
any related Lien other than a Lien in respect of Taxes being contested in
accordance with the provisions of this Section 5.1.2. Provided no Event of
Default then exists, any security deposited with Lender pursuant to this Section
5.1.2 may be used to satisfy the related Taxes or Other Charges with any excess
after the satisfaction of same to be returned to Borrower.
5.1.3 LITIGATION. Borrower shall give prompt written notice to Lender
upon obtaining information of any litigation or governmental proceedings pending
or threatened against Borrower and/or Guarantor which might materially adversely
affect Borrower's or Guarantor's condition (financial or otherwise) or business
or any Individual Property.
5.1.4 ACCESS TO PROPERTIES. Borrower shall permit agents,
representatives and employees of Lender to inspect the Properties or any part
thereof at reasonable hours upon reasonable advance notice, subject to the
rights of Tenants under their respective Leases.
5.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender of the
occurrence of any Default or Event of Default of which Borrower has knowledge.
5.1.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate fully
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
5.1.7 PERFORM LOAN DOCUMENTS. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
5.1.8 AWARD AND INSURANCE BENEFITS. Borrower shall cooperate with
Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds
lawfully or equitably payable in connection with any Individual Property, and
Lender shall be reimbursed for any expenses incurred in connection therewith
(including reasonable attorneys' fees and disbursements, and the payment by
Borrower of the expense of an appraisal on behalf of Lender in case of Casualty
or Condemnation affecting any Individual Property or any part thereof) out of
such Insurance Proceeds.
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5.1.9 FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost and
expense:
(a) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
(c) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
5.1.10 PRINCIPAL PLACE OF BUSINESS, STATE OF ORGANIZATION. Borrower
will not cause or permit any change to be made in its name, identity (including
its trade name or names), place of organization or formation (as set forth in
Section 4.1.36 hereof) or Borrower's corporate, partnership or other structure
unless Borrower shall have first notified Lender in writing of such change at
least thirty (30) days prior to the effective date of such change, and shall
have first taken all action required by Lender for the purpose of perfecting or
protecting the lien and security interests of Lender pursuant to this Agreement,
the Cash Management Agreement and the other Loan Documents and, in the case of a
change in Borrower's structure, without first obtaining the prior consent of
Lender. Upon Lender's request, Borrower shall execute and deliver additional
financing statements, security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender's security interest in the
Properties as a result of such change of principal place of business or place of
organization. Borrower's principal place of business and chief executive office,
and the place where Borrower keeps its books and records, including recorded
data of any kind or nature, regardless of the medium or recording, including
software, writings, plans, specifications and schematics, has been for the
preceding four months (or, if less, the entire period of the existence of
Borrower) and will continue to be the address of Borrower set forth at the
introductory paragraph of this Agreement (unless Borrower notifies Lender in
writing at least thirty (30) days prior to the date of such change). Borrower's
organizational identification number, if any, assigned by the state of
incorporation or organization is correctly set forth in the introductory
paragraph of this Agreement. Borrower shall promptly notify Lender of any change
in its organizational identification number. If Borrower does not now have an
organizational identification number and later obtains one, Borrower promptly
shall notify Lender of such organizational identification number.
5.1.11 FINANCIAL REPORTING. (a) Borrower will keep and maintain or will
cause to be kept and maintained on a Fiscal Year basis, in accordance with GAAP
(or such other accounting basis reasonably acceptable to Lender), records and
accounts reflecting all of the
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financial affairs of Borrower and all items of income and expense in connection
with the operation on an individual basis of the Properties. Lender shall have
the right from time to time at all times during normal business hours upon
reasonable notice to examine such books, records and accounts at the office of
Borrower or other Person maintaining such books, records and accounts and to
make such copies or extracts thereof as Lender shall desire. After the
occurrence and during the continuance of an Event of Default, Borrower shall pay
any costs and expenses incurred by Lender to examine Borrower's accounting
records with respect to the Properties, as Lender shall reasonably determine to
be necessary or appropriate in the protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within one hundred
twenty (120) days following the end of each Fiscal Year of Borrower, certified
annual financial statements prepared in accordance with GAAP (or such other
accounting basis reasonably acceptable to Lender) covering the Properties on a
combined basis as well as each Individual Property for such Fiscal Year and
containing statements of profit and loss for Borrower and the Properties and a
balance sheet for Borrower. Such statements shall set forth the financial
condition and the results of operations for the Properties for such Fiscal Year,
and shall include, but not be limited to, amounts representing annual Net Cash
Flow, Net Operating Income, Gross Income from Operations and Operating Expenses.
Such annual financial statements shall be accompanied by (i) a comparison of the
budgeted income and expenses and the actual income and expenses for the prior
Fiscal Year, (ii) an Officer's Certificate stating that each such annual
financial statement presents fairly the financial condition and the results of
operations of Borrower and the Properties being reported upon and has been
prepared in accordance with GAAP (or such other accounting basis reasonably
acceptable to Lender), (iii) a list of tenants, if any, occupying more than
twenty percent (20%) of the total floor area of the Improvements, (iv) a
breakdown showing the year in which each Lease then in effect expires and the
percentage of total floor area of the Improvements and the percentage of base
rent with respect to which Leases shall expire in each such year, each such
percentage to be expressed on both a per year and cumulative basis, and (v) a
schedule reconciling Net Operating Income to Net Cash Flow (the "NET CASH FLOW
SCHEDULE"), which shall itemize all material adjustments made to Net Operating
Income to arrive at Net Cash Flow. Together with Borrower's annual financial
statements, Borrower shall furnish to Lender an Officer's Certificate certifying
to its knowledge as of the date thereof whether there exists an event or
circumstance which constitutes a Default or Event of Default under the Loan
Documents executed and delivered by, or applicable to, Borrower, and if such
Default or Event of Default exists, the nature thereof, the period of time it
has existed and the action then being taken to remedy the same.
(c) Borrower will furnish, or cause to be furnished, to Lender on or
before twenty (20) days after the end of each calendar quarter the following
items, accompanied by an Officer's Certificate stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Properties on a combined basis as
well as each Individual Property (subject to normal year-end adjustments) as
applicable: (i) quarterly and year-to-date operating statements (including
Capital Expenditures) prepared for each calendar quarter, noting Net Operating
Income, Gross Income from Operations, and Operating Expenses (not including any
contributions to the Replacement Reserve Fund), and other information necessary
and sufficient to fairly represent the financial position and results of
operation of the Properties during such calendar quarter, and containing a
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comparison of budgeted income and expenses and the actual income and expenses
together with a detailed explanation of any variances of five percent (5%) or
more between budgeted and actual amounts for such periods, all in form
satisfactory to Lender; (ii) a calculation reflecting the annual Debt Service
Coverage Ratio for the immediately preceding twelve (12) month period as of the
last day of such quarter accompanied by an Officers' Certificate with respect
thereto; and (iii) a Net Cash Flow Schedule. Prior to a Securitization, Borrower
shall provide the items required pursuant to this SECTION 5.1.11(C) on a monthly
basis.
(d) For the partial year period commencing on the Closing Date, and
for each Fiscal Year thereafter, Borrower shall submit to Lender an Annual
Budget not later than thirty (30) days after the commencement of such period or
Fiscal Year in form reasonably satisfactory to Lender. The Annual Budget shall
be subject to Lender's written approval if a Cash Sweep Period exists (each such
Annual Budget, an "APPROVED ANNUAL BUDGET"). In the event that Lender objects to
a proposed Annual Budget submitted by Borrower during a Cash Sweep Period,
Lender shall advise Borrower of such objections within fifteen (15) days after
receipt thereof (and deliver to Borrower a reasonably detailed description of
such objections) and Borrower shall promptly revise such Annual Budget and
resubmit the same to Lender. Lender shall advise Borrower of any objections to
such revised Annual Budget within ten (10) days after receipt thereof (and
deliver to Borrower a reasonably detailed description of such objections) and
Borrower shall promptly revise the same in accordance with the process described
in this subsection until Lender approves the Annual Budget. Until such time that
Lender approves a proposed Annual Budget, the most recently Approved Annual
Budget shall apply; provided that, such Approved Annual Budget shall be adjusted
to reflect actual increases in Taxes, Insurance Premiums and Other Charges.
(e) In the event that a Cash Sweep Period Exists and Borrower must
incur an extraordinary operating expense or capital expense not set forth in the
Approved Annual Budget (each an "EXTRAORDINARY EXPENSE"), then Borrower shall
promptly deliver to Lender a reasonably detailed explanation of such proposed
Extraordinary Expense for Lender's approval.
(f) Any reports, statements or other information required to be
delivered under this Agreement shall be delivered (i) in paper form, (ii) on a
diskette, and (iii) if requested by Lender and within the capabilities of
Borrower's data systems without change or modification thereto, in electronic
form and prepared using Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and saved as word
processing files). Borrower agrees that Lender may disclose information
regarding the Properties and Borrower that is provided to Lender pursuant to
this SECTION 5.1.11(F) in connection with the Securitization to such parties
requesting such information in connection with such Securitization.
5.1.12 BUSINESS AND OPERATIONS. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Properties.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Properties. Borrower
shall at all times during the term of the Loan, continue to own all of the
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Equipment, Fixtures and Personal Property which are necessary to operate the
Properties in the manner required hereunder and in the manner in which it is
currently operated.
5.1.13 TITLE TO THE PROPERTIES. Borrower will warrant and defend (a)
the title to each Individual Property and every part thereof, subject only to
Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Mortgages and the Assignments of
Leases on the Properties, subject only to Liens permitted hereunder (including
Permitted Encumbrances), in each case against the claims of all Persons
whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in any Individual Property, other than as permitted
hereunder, is claimed by another Person.
5.1.14 COSTS OF ENFORCEMENT. In the event (a) that any Mortgage
encumbering any Individual Property is foreclosed in whole or in part or that
any such Mortgage is put into the hands of an attorney for collection, suit,
action or foreclosure, (b) of the foreclosure of any mortgage prior to or
subsequent to any Mortgage encumbering any Individual Property in which
proceeding Lender is made a party, or (c) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of Borrower or any of its
constituent Persons or an assignment by Borrower or any of its constituent
Persons for the benefit of its creditors, Borrower, its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys' fees and costs, incurred by Lender or Borrower
in connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, together with all required service or use
taxes.
5.1.15 ESTOPPEL STATEMENT. (a) After request by Lender, Borrower shall
furnish to Lender within ten (10) days a statement, duly acknowledged and
certified, setting forth (i) the amount of the original principal amount of the
Note, (ii) the unpaid principal amount of the Note, (iii) the Interest Rate of
the Note, (iv) the date installments of interest and/or principal were last
paid, (v) any known offsets or defenses to the payment of the Debt, if any, and
(vi) that the Note, this Agreement, the Mortgages and the other Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification.
(b) Borrower shall use commercially reasonable efforts to deliver to
Lender upon request, tenant estoppel certificates from each commercial tenant
leasing space at the Properties in form and substance reasonably satisfactory to
Lender provided that Borrower shall not be required to deliver such certificates
more frequently than one (1) time in any calendar year.
(c) Within thirty (30) days of request by Borrower, Lender shall
deliver to Borrower a statement setting forth the items described at (a)(i),
(ii), (iii) and (iv) of this Section 5.1.15.
5.1.16 LOAN PROCEEDS. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in SECTION
2.1.4.
5.1.17 PERFORMANCE BY BORROWER. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document
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executed and delivered by, or applicable to, Borrower, and shall not enter into
or otherwise suffer or permit any amendment, waiver, supplement, termination or
other modification of any Loan Document executed and delivered by, or applicable
to, Borrower without the prior written consent of Lender.
5.1.18 CONFIRMATION OF REPRESENTATIONS. Borrower shall deliver, in
connection with any Securitization, (a) one (1) or more Officer's Certificates
certifying as to the accuracy (or disclosing any inaccuracies, as applicable) of
all representations made by Borrower in the Loan Documents as of the date of the
closing of such Securitization, and (b) certificates of the relevant
Governmental Authorities in all relevant jurisdictions indicating the good
standing and qualification of Borrower, Principal and Guarantor as of the date
of the Securitization.
5.1.19 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of any Individual Property (a) with any other real
property constituting a tax lot separate from such Individual Property, and (b)
which constitutes real property with any portion of such Individual Property
which may be deemed to constitute personal property, or any other procedure
whereby the lien of any taxes which may be levied against such personal property
shall be assessed or levied or charged to such real property portion of the
Individual Property.
5.1.20 LEASING MATTERS. Any Leases with respect to an Individual
Property written after the Closing Date, for more than the Relevant Leasing
Threshold square footage shall be subject to the prior written approval of
Lender, which approval may be given or withheld in the sole discretion of
Lender. Lender shall approve or disapprove any such Lease within ten (10)
Business Days of Lender's receipt of a final execution draft of such Lease
(including all exhibits, schedules, supplements, addenda or other agreements
relating thereto) and a written notice from Borrower requesting Lender's
approval to such Lease, and such Lease shall be deemed approved, if Lender does
not disapprove such Lease within said ten (10) Business Day period provided such
written notice conspicuously states, in large bold type, that "PURSUANT TO
SECTION 5.1.20 OF THE LOAN AGREEMENT, THE LEASE SHALL BE DEEMED APPROVED IF
LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF
LENDER'S RECEIPT OF SUCH LEASE AND WRITTEN NOTICE". Borrower shall furnish
Lender with executed copies of all Leases. All renewals of Leases and all
proposed Leases shall provide for rental rates comparable to existing local
market rates (unless such rental rates are otherwise set forth in the Leases
executed prior to the Closing Date. All proposed Leases shall be on commercially
reasonable terms and shall not contain any terms which would materially impair
Lender's rights under the Loan Documents. All Leases executed after the Closing
Date shall provide that they are subordinate to the Mortgage encumbering the
applicable Individual Property and that the tenant thereunder agrees to attorn
to Lender or any purchaser at a sale by foreclosure or power of sale. Borrower
(i) shall observe and perform the obligations imposed upon the lessor under the
Leases in a commercially reasonable manner; (ii) shall enforce the terms,
covenants and conditions contained in the Leases upon the part of the tenant
thereunder to be observed or performed in a commercially reasonable manner and
in a manner not to impair the value of the Individual Property involved except
that no termination by Borrower or acceptance of surrender by a tenant of any
Lease shall be permitted unless by reason of a tenant default and then only in a
commercially reasonable manner to preserve and protect the Individual Property;
provided, however, that no such termination or surrender of any Lease covering
more than the Relevant Leasing Threshold will be permitted
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without the written consent of Lender which consent may be withheld in the
reasonable discretion of Lender; (iii) shall not collect any of the rents more
than one (1) month in advance (other than security deposits); (iv) shall not
execute any other assignment of lessor's interest in the Leases or the Rents
(except as contemplated by the Loan Documents); (v) shall not alter, modify or
change the terms of the Leases in a manner inconsistent with the provisions of
the Loan Documents without the prior written consent of Lender, which consent
may be withheld in the sole discretion of Lender; and (vi) shall execute and
deliver at the request of Lender all such further assurances, confirmations and
assignments in connection with the Leases as Lender shall from time to time
reasonably require. Notwithstanding anything to the contrary contained herein,
Borrower shall not enter into a lease of all or substantially all of any
Individual Property without Lender's prior written consent. Notwithstanding the
foregoing, Borrower may, without the prior written consent of Lender, terminate
any Lease which demises less than the Relevant Leasing Threshold under any of
the following circumstances: (i) the tenant under said Lease is in default
beyond any applicable grace and cure period, and Borrower has the right to
terminate such Lease; (ii) such termination is permitted by the terms of the
Lease in question and Borrower has secured an obligation from a third party to
lease the space under the Lease to be terminated at a rental equal to or higher
than the rental due under the Lease to be terminated; and (iii) if the tenant
under the Lease to be terminated, has executed a right under said Lease to
terminate its lease upon payment of a termination fee to Borrower, and has in
fact terminated its lease and paid said fee, Borrower may accept said
termination.
5.1.21 ALTERATIONS. Subject to the rights of tenants to make
alterations pursuant to the terms of their respective leases, Borrower shall
obtain Lender's prior written consent to any alterations to any Improvements,
which consent shall not be unreasonably withheld or delayed except with respect
to alterations that may have a material adverse effect on Borrower's financial
condition, the value of the applicable Individual Property or the Net Operating
Income. Notwithstanding the foregoing, Lender's consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower's financial condition, the value of the applicable Individual Property
or the Net Operating Income, provided that such alterations are made in
connection with (a) tenant improvement work performed pursuant to the terms of
any Lease executed on or before the Closing Date, (b) tenant improvement work
performed pursuant to the terms and provisions of a Lease and not adversely
affecting any structural component of any Improvements, any utility or HVAC
system contained in any Improvements or the exterior of any building
constituting a part of any Improvements, (c) alterations performed in connection
with the Restoration of an Individual Property after the occurrence of a
Casualty or Condemnation in accordance with the terms and provisions of this
Agreement or (d) any structural alteration which costs less than $500,000.00 in
the aggregate for all components thereof which constitute such alteration or any
non-structural alteration which costs less than $600,000.00 in the aggregate for
all components thereof which constitute such alteration. If the total unpaid
amounts due and payable with respect to alterations to the Improvements at any
Individual Property (other than such amounts to be paid or reimbursed by tenants
under the Leases) shall at any time equal or exceed $600,000.00 (and such amount
is not being paid from any Reserve Funds) (the "THRESHOLD Amount"), Borrower,
upon Lender's request, shall promptly deliver to Lender as security for the
payment of such amounts and as additional security for Borrower's obligations
under the Loan Documents any of the following: (A) cash, (B) U.S. Obligations,
(C) other securities having a rating acceptable to Lender and that the
applicable Rating Agencies have confirmed in writing will not, in and of itself,
result in a
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downgrade, withdrawal or qualification of the then current ratings assigned to
any Securities or any class thereof in connection with any Securitization or (D)
a completion and performance bond or an irrevocable letter of credit (payable on
sight draft only) issued by a financial institution having a rating by S&P of
not less than "A-1+" if the term of such bond or letter of credit is no longer
than three (3) months or, if such term is in excess of three (3) months, issued
by a financial institution having a rating that is acceptable to Lender and that
the applicable Rating Agencies have confirmed in writing will not, in and of
itself, result in a downgrade, withdrawal or qualification of the then current
ratings assigned to any Securities or class thereof in connection with any
Securitization. Such security shall be in an amount equal to the excess of the
total unpaid amounts with respect to alterations to the Improvements on the
applicable Individual Property (other than such amounts to be paid or reimbursed
by tenants under the Leases) over the Threshold Amount and, if cash, U.S.
Obligations or other securities, may be applied from time to time, at the option
of Borrower to pay for such alterations. At the option of Lender, following the
occurrence and during the continuance of an Event of Default, Lender may
terminate any of the alterations and use the deposit to restore any Individual
Property to the extent necessary to prevent any material adverse effect on the
value of such Individual Property.
5.1.22 OPERATION OF PROPERTY. (a) Borrower shall cause the Properties
to be operated, in all material respects, in accordance with the Property
Management Agreement (or Replacement Management Agreement) as applicable. In the
event that the Property Management Agreement expires or is terminated (without
limiting any obligation of Borrower to obtain Lender's consent to any
termination or modification of the Property Management Agreement in accordance
with the terms and provisions of this Agreement), Borrower shall promptly enter
into a Replacement Management Agreement with Property Manager or another
Qualifying Property Manager, as applicable.
(b) Borrower shall: (i) promptly perform and/or observe, in all
material respects, all of the covenants and agreements required to be performed
and observed by it under the Property Management Agreement and do all things
necessary to preserve and to keep unimpaired its material rights thereunder;
(ii) promptly notify Lender of any material default under the Property
Management Agreement of which it is aware; and (iii) enforce the performance and
observance of all of the covenants and agreements required to be performed
and/or observed by Property Manager under the Property Management Agreement, in
a commercially reasonable manner.
5.1.23 SUPPLEMENTAL MORTGAGE AFFIDAVITS. As of the date hereof,
Borrower represents that it has paid or has deposited with the title company
issuing the Title Insurance Policies funds sufficient to pay all state, county
and municipal recording and all other taxes imposed upon the execution and
recordation of the Mortgages. If at any time Lender determines, based on
applicable law, that Lender is not being afforded the maximum amount of security
available from any one or more of the Properties as a direct or indirect result
of applicable taxes not having been paid with respect to any Individual
Property, Borrower agrees that Borrower will execute, acknowledge and deliver to
Lender, within fifteen (15) days of Lender's request, supplemental affidavits
increasing the amount of the Debt attributable to any such Individual Property
(as set forth as the Release Amount on SCHEDULE I annexed hereto) for which all
applicable taxes have been paid to an amount determined by Lender to be equal to
the lesser of (a) the greater of the fair market value of the applicable
Individual Property (i) as of the date
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hereof and (ii) as of the date such supplemental affidavits are to be delivered
to Lender, and (b) the amount of the Debt attributable to any such Individual
Property (as set forth as the Release Amount on SCHEDULE I annexed hereto), and
Borrower shall, on demand, pay any additional taxes.
SECTION 5.2 NEGATIVE COVENANTS. From the Closing Date until payment
and performance in full of all obligations of Borrower under the Loan Documents
or the earlier release of the Liens of the Mortgages encumbering the Properties
in accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that it will not do, directly or
indirectly, any of the following:
5.2.1 OPERATION OF PROPERTY . Borrower shall not, without Lender's
prior written consent (which consent shall not be unreasonably withheld): (i)
surrender, terminate or cancel the Property Management Agreement; provided, that
Borrower may, without Lender's consent, replace the Property Manager so long as
the replacement manager is a Qualifying Property Manager pursuant to a
Replacement Management Agreement; (ii) reduce or consent to the reduction of the
term of the Property Management Agreement; (iii) increase or consent to the
increase of the amount of any charges under the Property Management Agreement;
or (iv) otherwise modify, change, supplement, alter or amend, or waive or
release any of its rights and remedies under, the Property Management Agreement
in any material respect. Lender agrees that its consent pursuant to this SECTION
5.2.1(A) will not be unreasonably withheld, delayed or conditioned provided that
in connection with any replacement of the Property Manager the Person chosen by
Borrower as the replacement Property Manager is a Qualifying Property Manager,
and further agrees that any such written request for consent that includes
evidence that the replacement Property Manager is a Qualifying Property Manager,
shall be approved or disapproved within ten (10) Business Days of Lender's
receipt, provided such written request from Borrower shall conspicuously state,
in large bold type, that "PURSUANT TO SECTION 5.2.1 OF THE LOAN AGREEMENT, A
RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF LENDER'S RECEIPT OF THIS
WRITTEN NOTICE". If Lender fails to disapprove any such matter within such
period, Borrower shall provide a second written notice requesting approval,
which written notice shall conspicuously state, in large bold type, that
"PURSUANT TO SECTION 5.2.1 OF THE LOAN AGREEMENT, THE MATTER DESCRIBED HEREIN
SHALL BE DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN FIVE
(5) BUSINESS DAYS OF LENDER'S RECEIPT OF THIS WRITTEN NOTICE". Thereafter, if
Lender does not disapprove such matter within said five (5) Business Day period
such matter shall be deemed approved.
5.2.2 LIENS. Borrower shall not, without the prior written consent of
Lender, create, incur, assume or suffer to exist any Lien on any portion of any
Individual Property or permit any such action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan
Documents; and
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(iii) Liens for Taxes or Other Charges not yet delinquent (or
that Borrower is contesting in accordance with the terms of Section
5.1.2 hereof).
5.2.3 DISSOLUTION. Borrower shall not (a) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(b) engage in any business activity not related to the ownership and operation
of the Properties, (c) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan
Documents, (d) modify, amend, waive or terminate its organizational documents or
its qualification and good standing in any jurisdiction in which it is organized
or any Individual Property is located (unless each related Individual Property
in such jurisdiction has been released in accordance with the terms hereof) or
(e) cause the Principal to (i) dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which the Principal would be
dissolved, wound up or liquidated in whole or in part, or (ii) amend, modify,
waive or terminate the certificate of formation or operating agreement of the
Principal, in each case, without obtaining the prior written consent of Lender
or Lender's designee.
5.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any line of
business other than the ownership and operation of the Properties, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business. Nothing contained in this SECTION 5.2.4 is intended to
expand the rights of Borrower contained in SECTION 5.2.10(D) hereof.
5.2.5 DEBT CANCELLATION. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
5.2.6 ZONING. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
any Individual Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
5.2.7 INTENTIONALLY OMITTED .
5.2.8 INTENTIONALLY OMITTED .
5.2.9 ERISA. (a) Borrower shall not engage in any transaction which
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Agreement or the
other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(32) of ERISA; (B) Borrower is not subject
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to any state statute regulating investment of, or fiduciary obligations with
respect to governmental plans; and (C) one or more of the following
circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
ss.2510.3-101(c) or (e).
5.2.10 TRANSFERS. (a) Borrower acknowledges that Lender has examined
and relied on the experience of Borrower and its stockholders, general partners,
members, principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Properties in agreeing to make the Loan, and
will continue to rely on Borrower's ownership of the Properties as a means of
maintaining the value of the Properties as security for repayment of the Debt
and the performance of the Other Obligations. Borrower acknowledges that Lender
has a valid interest in maintaining the value of the Properties so as to ensure
that, should Borrower default in the repayment of the Debt or the performance of
the Other Obligations, Lender can recover the Debt by a sale of the Properties.
(b) Without the prior written consent of Lender, and except to the
extent otherwise set forth in this SECTION 5.2.10, Borrower shall not, and shall
not permit any Restricted Party do any of the following (collectively, a
"TRANSFER"): (i) sell, convey, mortgage, grant, bargain, encumber, pledge,
assign, grant options with respect to, or otherwise transfer or dispose of
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) the Properties or
any part thereof or any legal or beneficial interest therein or (ii) permit a
Sale or Pledge of an interest in any Restricted Party, other than pursuant to
Leases of space in the Improvements to tenants in accordance with the provisions
of SECTION 5.1.20.
(c) A Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell the Properties or
any part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of any Individual Property for other
than actual occupancy by a space tenant thereunder or a sale, assignment or
other transfer of, or the grant of a security interest in, Borrower's right,
title and interest in and to any Leases or any Rents; (iii) if a Restricted
Party is a corporation, any merger, consolidation or Sale or Pledge of such
corporation's stock or the creation or issuance of new stock; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
partner or any profits or proceeds relating to such partnership interest, or the
Sale or Pledge of limited partnership interests or any profits or proceeds
relating to such limited partnership interest or the creation or issuance of new
limited partnership interests; (v) if a Restricted Party is a limited liability
company, any merger or consolidation or the change, removal, resignation or
addition of a managing member or
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non-member manager (or if no managing member, any member) or the Sale or Pledge
of the membership interest of a managing member (or if no managing member, any
member) or any profits or proceeds relating to such membership interest, or the
Sale or Pledge of non-managing membership interests or the creation or issuance
of new non-managing membership interests; (vi) if a Restricted Party is a trust
or nominee trust, any merger, consolidation or the Sale or Pledge of the legal
or beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests; or (vii) the removal or the resignation of the
managing agent (including, without limitation, an Affiliated Manager) other than
in accordance with SECTION 5.1.22 hereof.
(d) Notwithstanding the provisions of this SECTION 5.2.10, Lender's
consent shall not be required in connection with (i) one or a series of
Transfers, of up to forty-nine percent (49%) of the stock in a Restricted Party,
the limited partnership interests or non-managing membership interests (as the
case may be) in a Restricted Party (ii) any transfer to Behringer Harvard Funds
or an Affiliate of Behringer Harvard Funds or (iii) any transfer of an equity
interest in Behringer Harvard Funds or any Affiliate thereof or the issuance of
additional equity interests in Behringer Harvard or any Affiliate thereof;
PROVIDED, HOWEVER, no such Transfer shall result in the change of Control in
Borrower, Guarantor or Property Manager. If after giving effect to any such
Transfer, more than forty-nine percent (49%) in the aggregate of direct or
indirect interests in a Restricted Party are owned by any Person and its
Affiliates that owned less than forty-nine percent (49%) direct or indirect
interest in such Restricted Party as of the Closing Date, Borrower shall, no
less than thirty (30) days prior to the effective date of any such Transfer,
deliver to Lender an Additional Insolvency Opinion acceptable to Lender and the
Rating Agencies. In addition, as a condition to any Transfer pursuant to this
SECTION 5.2.10(D), at all times, Guarantor must continue to Control Borrower and
own, directly or indirectly, at least a 51% legal and beneficial interest in
Borrower.
(e) No consent to any assumption of the Loan shall occur on or
before the first (1st) anniversary of the first (1st) Payment Date. Thereafter,
Lender's consent to a one (1) time Transfer of the Properties shall not be
unreasonably withheld provided that Lender receives sixty (60) days prior
written notice of such Transfer and no Event of Default has occurred and is
continuing, and further provided that the following additional requirements are
satisfied:
(i) Borrower shall pay Lender a transfer fee equal to one
percent (1%) of the outstanding principal balance of the Loan at the
time of such transfer;
(ii) Borrower shall pay any and all reasonable out-of-pocket
costs incurred in connection with such Transfer (including, without
limitation, Lender's counsel fees and disbursements and all recording
fees, title insurance premiums and mortgage and intangible taxes and the
fees and expenses of the Rating Agencies pursuant to clause (x) below);
(iii) The proposed transferee (the "TRANSFEREE") or
Transferee's Principals must have demonstrated expertise in owning and
operating properties similar in location, size, class and operation to
the Properties, which expertise shall be reasonably determined by
Lender;
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(iv) Transferee and Transferee's Principals shall, as of the
date of such transfer, have an aggregate net worth and liquidity
reasonably acceptable to Lender;
(v) Transferee, Transferee's Principals and all other
entities which may be owned or Controlled directly or indirectly by
Transferee's Principals ("RELATED ENTITIES") must not have been party to
any bankruptcy proceedings, voluntary or involuntary, made an assignment
for the benefit of creditors or taken advantage of any insolvency act,
or any act for the benefit of debtors within seven (7) years prior to
the date of the proposed Transfer;
(vi) Transferee shall assume all of the obligations of
Borrower under the Loan Documents in a manner satisfactory to Lender in
all respects, including, without limitation, by entering into an
assumption agreement in form and substance satisfactory to Lender;
(vii) There shall be no material litigation or regulatory
action pending or threatened against Transferee, Transferee's Principals
or Related Entities which is not reasonably acceptable to Lender;
(viii) Transferee, Transferee's Principals and Related Entities
shall not have defaulted under its or their obligations with respect to
any other Indebtedness in a manner which is not reasonably acceptable to
Lender;
(ix) Transferee and Transferee's Principals must be able to
satisfy all the representations and covenants set forth in SECTIONS
4.1.30 and 5.2.9 of this Agreement, no Default or Event of Default shall
otherwise occur as a result of such Transfer, and Transferee and
Transferee's Principals shall deliver (A) all organizational
documentation reasonably requested by Lender, which shall be reasonably
satisfactory to Lender and (B) all certificates, agreements and
covenants reasonably required by Lender;
(x) Transferee shall be approved by the Rating Agencies
selected by Lender, which approval, if required by Lender, shall take
the form of a confirmation in writing from such Rating Agencies to the
effect that such Transfer will not result in a requalification,
reduction, downgrade or withdrawal of the ratings in effect immediately
prior to such assumption or transfer for the Securities or any class
thereof issued in connection with a Securitization which are then
outstanding;
(xi) Borrower or Transferee, at its sole cost and expense,
shall deliver to Lender an Additional Insolvency Opinion reflecting such
Transfer satisfactory in form and substance to Lender;
(xii) Prior to any release of Guarantor, one (1) or more
substitute guarantors reasonably acceptable to Lender shall have assumed
all of the liabilities and obligations of Guarantor under the Guaranty
and Environmental
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Indemnity executed by Guarantor or execute a replacement guaranty and
environmental indemnity reasonably satisfactory to Lender;
(xiii) Borrower or Transferee shall deliver, at its sole cost
and expense, an endorsement to the Title Insurance Policies, as modified
by the assumption agreement, as a valid first lien on the Properties and
naming the Transferee as owner of the Properties, which endorsement
shall insure that, as of the date of the recording of the assumption
agreement, the Properties shall not be subject to any additional
exceptions or liens other than those contained in the relevant Title
Policy issued on the date hereof and other Permitted Encumbrances; and
(xiv) Each Individual Property shall be managed by a
Qualifying Property Manager pursuant to a Replacement Management
Agreement.
Immediately upon a Transfer to such Transferee and the satisfaction of all of
the above requirements, the named Borrower and Guarantor herein shall be
released from all liability under this Agreement, the Note, the Mortgage and the
other Loan Documents accruing after such Transfer. The foregoing release shall
be effective upon the date of such Transfer, but Lender agrees to provide
written evidence thereof reasonably requested by Borrower.
(f) Borrower, without the consent of Lender, may grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for water and sewer lines, telephone and telegraph lines, electric
lines and other utilities or for other similar purposes, provided that no
transfer, conveyance or encumbrance shall materially impair the utility and
operation of the related Individual Property or materially adversely affect the
value of the related Individual Property or the Net Operating Income of such
Individual Property. If Borrower shall receive any consideration in connection
with any of said described transfers or conveyances, Borrower shall have the
right to use any such proceeds in connection with any alterations performed in
connection therewith, or required thereby. In connection with any transfer,
conveyance or encumbrance permitted above, the Lender shall execute and deliver
any instrument reasonably necessary or appropriate to evidence its consent to
said action or to subordinate the Lien of the related Mortgage to such
easements, restrictions, covenants, reservations and rights of way or other
similar grants upon receipt by the Lender of: (A) a copy of the instrument of
transfer; and (B) an Officer's Certificate stating with respect to any transfer
described above, that such transfer does not materially impair the utility and
operation of the related Individual Property or materially reduce the value of
such Individual Property or the Net Operating Income of such Individual
Property.
(g) Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon Borrower's Transfer without
Lender's consent. This provision shall apply to every Transfer regardless of
whether voluntary or not, or whether or not Lender has consented to any previous
Transfer.
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VI. INSURANCE; CASUALTY; CONDEMNATION
SECTION 6.1 INSURANCE. (a) Borrower shall obtain and maintain, or
cause to be maintained, insurance for Borrower and the Properties providing at
least the following coverages:
(i) comprehensive all risk insurance ("SPECIAL FORM")
including, but not limited to, loss caused by any type of windstorm or
hail on the Improvements and the Personal Property, (A) in an amount
equal to one hundred percent (100%) of the "FULL REPLACEMENT COST,"
which for purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities
and footings) with a waiver of depreciation; (B) containing an agreed
amount endorsement with respect to the Improvements and Personal
Property waiving all co-insurance provisions; (C) providing for no
deductible in excess of Ten Thousand and No/100 Dollars ($10,000)
(except that deductibles of up to $25,000 shall be permitted for the
Individual Properties known as Gateway 22 and Gateway 23) for all such
insurance coverage excluding windstorm and earthquake and (D) containing
an "Ordinance or Law Coverage" or "Enforcement" endorsement if any of
the Improvements or the use of the Individual Property shall at any time
constitute legal non-conforming structures or uses. In addition,
Borrower shall obtain: (y) if any portion of the Improvements is
currently or at any time in the future located in a federally designated
"special flood hazard area", flood hazard insurance in an amount equal
to the lesser of (1) the outstanding principal balance of the Note or
(2) the maximum amount of such insurance available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973
or the National Flood Insurance Reform Act of 1994, as each may be
amended or such greater amount as Lender shall require; and (z)
earthquake insurance in amounts and in form and substance satisfactory
to Lender in the event the Individual Property is located in an area
with a high degree of seismic activity, provided that the insurance
pursuant to clauses (y) and (z) hereof shall be on terms consistent with
the comprehensive all risk insurance policy required under this
subsection (i).
(ii) business income insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance
provided for in SUBSECTION (I) above; (C) in an amount equal to one
hundred percent (100%) of the projected gross revenues from the
operation of the Properties (as reduced to reflect expenses not incurred
during a period of Restoration) for a period of at least twenty-four
(24) months after the date of the Casualty; and (D) containing an
extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and Personal Property has been
repaired, the continued loss of income will be insured until such income
either returns to the same level it was at prior to the loss, or the
expiration of six (6) months from the date that the applicable
Individual Property is repaired or replaced and operations are resumed,
whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period. The amount of such business income
insurance shall be determined prior to the Closing Date and at least
once each year thereafter based
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on Borrower's reasonable estimate of the gross income from each
Individual Property for the succeeding twenty-four (24) month period.
All proceeds payable to Lender pursuant to this subsection shall be held
by Lender and shall be applied to the obligations secured by the Loan
Documents from time to time due and payable hereunder and under the
Note; PROVIDED, HOWEVER, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured by
the Loan Documents on the respective dates of payment provided for in
this Agreement and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such business income
insurance;
(iii) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements,
and only if the Individual Property coverage form does not otherwise
apply, (A) owner's contingent or protective liability insurance,
otherwise known as Owner Contractor's Protective Liability, covering
claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the
insurance provided for in SUBSECTION (I) above written in a so-called
builder's risk completed value form (1) on a non-reporting basis, (2)
against all risks insured against pursuant to SUBSECTION (I) above, (3)
including permission to occupy the Individual Property, and (4) with an
agreed amount endorsement waiving co-insurance provisions;
(iv) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on
terms consistent with the commercial property insurance policy required
under SUBSECTION (I) above;
(v) commercial general liability insurance against claims
for personal injury, bodily injury, death or property damage occurring
upon, in or about the Individual Property, such insurance (A) to be on
the so-called "occurrence" form with a combined limit of not less than
Two Million and 00/100 Dollars ($2,000,000.00) in the aggregate and One
Million and 00/100 Dollars ($1,000,000.00) per occurrence; (B) to
continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economic conditions
making such protection inadequate and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and
completed operations on an "if any" basis; (3) independent contractors;
(4) blanket contractual liability for all written contracts and (5)
contractual liability covering the indemnities contained in Article 9 of
the Mortgages to the extent the same is available;
(vi) automobile liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing
minimum limits per occurrence of One Million Dollars and 00/100 Dollars
($1,000,000.00);
(vii) worker's compensation and employee's liability subject
to the worker's compensation laws of the applicable state;
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(viii) umbrella and excess liability insurance in an amount not
less than Fifty Million and 00/100 Dollars ($50,000,000.00) per
occurrence on terms consistent with the commercial general liability
insurance policy required under SUBSECTION (V) above, including, but not
limited to, supplemental coverage for employer liability and automobile
liability, which umbrella liability coverage shall apply in excess of
the automobile liability coverage in clause (vi) above (provided that
$35,000,000 of umbrella and excess liability insurance shall be
permitted until the renewal of the existing coverage);
(ix) the insurance required under Section 6.1(a)(i) and (ii)
above shall cover perils of terrorism and acts of terrorism and Borrower
shall maintain insurance for loss resulting from perils and acts of
terrorism on terms (including amounts) consistent with those required
under Section 6.1(a)(i) and (ii) above at all times during the term of
the Loan; provided, however, Borrower shall not be required to pay
annual premiums in excess of the Required Amount for the coverage
required under this Section 6.1.1(a)(ix). If full coverage for acts of
terrorism satisfying such requirements is not available for an amount
equal to or less than the Required Amount (but coverage for acts of
terrorism not fully satisfying such requirements is available), Borrower
shall be required to spend an amount equal to the Required Amount for
coverage for acts of terrorism, and the scope, form, deductible and
carrier with respect to such coverage shall be acceptable to Lender in
its sole discretion; and
(x) upon sixty (60) days written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time
to time may reasonably request against such other insurable hazards
which at the time are commonly insured against for property similar to
the Individual Property located in or around the region in which the
Individual Property is located.
(b) All insurance provided for in SECTION 6.1(A) shall be obtained
under valid and enforceable policies (collectively, the "POLICIES" or in the
singular, the "POLICY"), and shall be subject to the approval of Lender as to
insurance companies, amounts, deductibles, loss payees and insureds. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the State and having a claims paying
ability rating of "A" or better (and the equivalent thereof) by at least two (2)
of the Rating Agencies rating the Securities (one (1) of which shall be S&P if
they are rating the Securities and one (1) of which will be Moody's if they are
rating the Securities), or if only one (1) Rating Agency is rating the
Securities, then only by such Rating Agency. The Policies described in SECTION
6.1 (other than those strictly limited to liability protection) shall designate
Lender as loss payee. Not less than thirty (30) days prior to the expiration
dates of the Policies theretofore furnished to Lender, certificates of insurance
evidencing the Policies accompanied by evidence satisfactory to Lender of
payment of the premiums due thereunder (the "INSURANCE PREMIUMS"), shall be
delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate to the
Individual Property the amount of coverage from time to time required hereunder
and shall otherwise
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provide the same protection as would a separate Policy insuring only the
Properties in compliance with the provisions of SECTION 6.1(A).
(d) All Policies of insurance provided for or contemplated by
SECTION 6.1(A), except for the Policy referenced in SECTION 6.1(A)(VII) of this
Agreement, shall name Borrower, or the Tenant, as the insured and Lender as the
additional insured, as its interests may appear, and in the case of property
damage, boiler and machinery, flood and earthquake insurance, shall contain a
so-called New York standard non-contributing mortgagee clause in favor of Lender
providing that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section 6.1(a) shall
contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any Tenant or other occupant, or failure to comply with
the provisions of any Policy, which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way affect
the validity or enforceability of the insurance insofar as Lender is
concerned;
(ii) the Policy shall not be materially changed (other than
to increase the coverage provided thereby) or canceled without at least
thirty (30) days written notice to Lender and any other party named
therein as an additional insured;
(iii) the issuers thereof shall give written notice to Lender
if the Policy has not been renewed fifteen (15) days prior to its
expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right, without notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Properties, including, without
limitation, the obtaining of such insurance coverage as Lender in its reasonable
discretion deems appropriate after three (3) Business Days notice to Borrower if
prior to the date upon which any such coverage will lapse or at any time Lender
deems necessary (regardless of prior notice to Borrower) to avoid the lapse of
any such coverage. All premiums incurred by Lender in connection with such
action or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and, until paid, shall be secured by the
Mortgages and shall bear interest at the Default Rate. If Borrower fails in so
insuring the Properties or in so assigning and delivering the Policies, Lender
may, at its option, obtain such insurance using such carriers and agencies as
Lender shall elect from year to year and pay the premiums therefor, and Borrower
will reimburse Lender for any premium so paid, with interest thereon as stated
in the Note from the time of payment, on demand, and the amount so owning to
Lender shall be secured by the Mortgage. The insurance obtained by Lender may,
but need not, protect Borrower's interest and the coverage that Lender purchases
may not pay any claim that Borrower makes or any claim that is made against
Borrower in connection with the Properties.
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SECTION 6.2 CASUALTY. If any Individual Property shall be damaged
or destroyed, in whole or in part, by fire or other casualty (a "CASUALTY"),
Borrower (a) shall give to Lender prompt notice of such damage reasonably
estimated by Borrower to cost more than Five Hundred Thousand Dollars
($500,000.00) to repair, and (b) shall promptly commence and diligently
prosecute the completion of the Restoration of the Individual Property pursuant
to SECTION 6.4 hereof as nearly as possible to the condition such Individual
Property was in immediately prior to such Casualty, with such alterations as may
be reasonably approved by Lender and otherwise in accordance with SECTION 6.4
hereof. Borrower shall pay, or cause to be paid, all costs of such Restoration
whether or not such costs are covered by insurance. Lender may, but shall not be
obligated to make proof of loss if not made promptly by Borrower. In addition,
Lender may participate in any settlement discussions with any insurance
companies (and shall approve the final settlement, which approval shall not be
unreasonably withheld or delayed) with respect to any Casualty in which the Net
Proceeds or the costs of completing the Restoration are equal to or greater than
Five Hundred Thousand and 00/100 Dollars ($500,000.00) and Borrower shall
deliver to Lender all instruments required by Lender to permit such
participation.
SECTION 6.3 CONDEMNATION. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any proceeding for the
Condemnation of any Individual Property upon obtaining information of such
proceeding and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender may participate in any such proceedings
if an Event of Default exists or if the amount of the Award exceeds three
percent 3% of the Release Amount for the related Individual Property, and
Borrower shall from time to time deliver to Lender all instruments requested by
it to permit such participation. Borrower shall, at its expense, diligently
prosecute any such proceedings, and shall consult with Lender, its attorneys and
experts, and cooperate with them in the carrying on or defense of any such
proceedings. Notwithstanding any taking by any public or quasi-public authority
through Condemnation or otherwise (including, but not limited to, any transfer
made in lieu of or in anticipation of the exercise of such taking), Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note and in this Agreement and the Debt shall not be reduced
until any Award shall have been actually received and applied by Lender, after
the deduction of expenses of collection, to the reduction or discharge of the
Debt. Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest
at the rate or rates provided herein or in the Note. If any Individual Property
or any portion thereof is taken by a condemning authority, Borrower shall
promptly commence and diligently prosecute the Restoration of the applicable
Individual Property or any portion thereof pursuant to SECTION 6.4 hereof and
otherwise comply with the provisions of SECTION 6.4 hereof. If any Individual
Property is sold, through foreclosure or otherwise, prior to the receipt by
Lender of the Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt.
SECTION 6.4 RESTORATION. The following provisions shall apply in
connection with the Restoration of any Individual Property:
(a) If the Net Proceeds shall be less than the Relevant Restoration
Threshold and the costs of completing the Restoration shall be less than the
Relevant Restoration
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Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in SECTION 6.4(B)(I)
below are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than the Relevant
Restoration Threshold or the costs of completing the Restoration is equal to or
greater than the Relevant Restoration Threshold, then in either case Lender
shall make the Net Proceeds available for the Restoration in accordance with the
provisions of this SECTION 6.4(B). The term "NET PROCEEDS" for purposes of this
SECTION 6.4 shall mean: (x) the net amount of all insurance proceeds received by
Lender pursuant to SECTION 6.1 (A)(I), (IV), (IX) and (X) as a result of such
damage or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
same ("INSURANCE PROCEEDS"), or (y) the net amount of the Award, after deduction
of its reasonable costs and expenses (including, but not limited to, reasonable
counsel fees), if any, in collecting same ("CONDEMNATION PROCEEDS"), whichever
the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are Insurance
Proceeds, less than twenty-five percent (25%) of the total floor
area of the Improvements on the Individual Property has been
damaged, destroyed or rendered unusable as a result of such
Casualty or (2) in the event the Net Proceeds are Condemnation
Proceeds, less than ten percent (10%) of the land constituting
the Individual Property is taken, and such land is located along
the perimeter or periphery of the Individual Property, and no
portion of the Improvements is located on such land;
(C) Leases demising in the aggregate a percentage
amount equal to or greater than the Rentable Space Percentage of
the total rentable space in the Individual Property which has
been demised under executed and delivered Leases in effect as of
the date of the occurrence of such Casualty or Condemnation,
whichever the case may be, shall remain in full force and effect
during and after the completion of the Restoration,
notwithstanding the occurrence of any such Casualty or
Condemnation, whichever the case may be, and Borrower and/or
Tenant, as applicable under the respective Lease, will make all
necessary repairs and restorations thereto at their sole cost
and expense. The term "RENTABLE SPACE PERCENTAGE" shall mean a
percentage amount equal to sixty-five percent (65%);
(D) Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than one
hundred twenty (120) days after such Casualty or Condemnation or
obtaining building
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permits, whichever the case may be, occurs) and shall diligently
pursue the same to satisfactory completion;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note, which will be incurred with respect to
the Individual Property as a result of the occurrence of any
such Casualty or Condemnation, whichever the case may be, will
be covered out of (1) the Net Proceeds, (2) the insurance
coverage referred to in SECTION 6.1(A)(II) hereof, if
applicable, or (3) by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration
will be completed on or before the earliest to occur of (1) six
(6) months prior to the Maturity Date, (2) the earliest date
required for such completion under the terms of any Leases, (3)
such time as may be required under all applicable Legal
Requirements in order to repair and restore the applicable
Individual Property to the condition it was in immediately prior
to such Casualty or to as nearly as possible the condition it
was in immediately prior to such Condemnation, as applicable, or
(4) the expiration of the insurance coverage referred to in
SECTION 6.1(A)(II) hereof;
(G) the Individual Property and the use thereof
after the Restoration will be in compliance with and permitted
under all applicable Legal Requirements;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
compliance with all applicable Legal Requirements;
(I) such Casualty or Condemnation, as applicable,
does not result in the loss of access to the Individual Property
or the related Improvements;
(J) the Debt Service Coverage Ratio for the affected
Individual Property, after giving effect to the Restoration,
shall be equal to or greater than 1.25 to 1.0;
(K) Borrower shall deliver, or cause to be
delivered, to Lender a signed detailed budget approved in
writing by Borrower's architect or engineer stating the entire
cost of completing the Restoration, which budget shall be
approved by Lender, which approval shall not be unreasonably
withheld; and
(L) the Net Proceeds together with any cash or cash
equivalent deposited by Borrower with Lender are sufficient in
Lender's discretion to cover the cost of the Restoration.
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(ii) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance with the
provisions of this SECTION 6.4(B), shall constitute additional security
for the Debt and Other Obligations under the Loan Documents. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all materials installed and
work and labor performed (except to the extent that they are to be paid
for out of the requested disbursement) in connection with the
Restoration have been paid for in full or will be paid in full upon such
disbursement, and (B) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of intention to file same,
or any other liens or encumbrances of any nature whatsoever on the
Individual Property which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative
fully insured to the satisfaction of Lender by the title company issuing
the Title Insurance Policy.
(iii) All plans and specifications required in connection with
the Restoration, the cost of which exceeds the Relevant Restoration
Threshold, shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected by
Lender (the "CASUALTY Consultant"), such review and acceptance not to be
unreasonably withheld or delayed. Lender shall have the use of the plans
and specifications and all permits, licenses and approvals required or
obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration,
as well as the contracts under which they have been engaged, shall be
subject to prior review and acceptance by Lender and the Casualty
Consultant, such review and acceptance not to be unreasonably withheld
or delayed. All costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, MINUS the
Casualty Retainage. The term "CASUALTY RETAINAGE" shall mean an amount
equal to ten percent (10%) of the costs actually incurred for work in
place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this SECTION 6.4(B), be less than the amount
actually held back by Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. The Casualty Retainage shall not
be released until the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this
SECTION 6.4(B) and that all approvals necessary for the re-occupancy and
use of the Individual Property have been obtained from all appropriate
governmental and quasi-governmental authorities, and Lender receives
evidence
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satisfactory to Lender that the costs of the Restoration have been paid
in full or will be paid in full out of the Casualty Retainage; provided,
however, that Lender will release the portion of the Casualty Retainage
being held with respect to any contractor, subcontractor or materialman
engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor
or materialman delivers the lien waivers and evidence of payment in full
of all sums due to the contractor, subcontractor or materialman as may
be reasonably requested by Lender or by the title company issuing the
Title Insurance Policy, and Lender receives an endorsement to the Title
Insurance Policy insuring the continued priority of the lien of the
related Mortgage and evidence of payment of any premium payable for such
endorsement. If required by Lender, the release of any such portion of
the Casualty Retainage shall be approved by the surety company, if any,
which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of
the Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the reasonable opinion of Lender in
consultation with the Casualty Consultant, be sufficient to pay in full
the balance of the costs which are estimated by the Casualty Consultant
to be incurred in connection with the completion of the Restoration,
Borrower shall deposit the deficiency (the "NET PROCEEDS DEFICIENCY")
with Lender before any further disbursement of the Net Proceeds shall be
made. The Net Proceeds Deficiency deposited with Lender shall be held by
Lender and shall be disbursed for costs actually incurred in connection
with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to
this SECTION 6.4(B) shall constitute additional security for the Debt
and Other Obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds (and the
remaining balance, if any, of the Net Proceeds Deficiency) deposited
with Lender after the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this
SECTION 6.4(B), and the receipt by Lender of evidence satisfactory to
Lender that all costs incurred in connection with the Restoration have
been paid in full, shall be remitted by Lender to Borrower, provided no
Event of Default shall have occurred and shall be continuing under the
Note, this Agreement or any of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to SECTION 6.4(B)(VII) may be retained and applied by Lender toward the payment
of the Debt whether or not then due and payable in such order, priority and
proportions as Lender in its sole discretion shall deem proper
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(provided no Event of Default exists, Borrower shall not be required to pay any
prepayment consideration in connection with such payment), or, at the discretion
of Lender, the same may be paid, either in whole or in part, to Borrower for
such purposes as Lender shall designate, in its discretion.
(d) In the event of foreclosure of the Mortgage with respect to an
Individual Property, or other transfer of title of an Individual Property in
extinguishment in whole or in part of the Debt all right, title and interest of
Borrower in and to the Policies that are not blanket Policies then in force
concerning such Individual Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.
(e) Lender shall with reasonable promptness following any Casualty
or Condemnation notify Borrower whether or not Net Proceeds are required to be
made available to Borrower for restoration pursuant to this Section 6.4. All Net
Proceeds not required to be made available for Restoration shall be retained and
applied by Lender in accordance with SECTION 2.4.2 hereof (a "NET PROCEEDS
PREPAYMENT"). If such Net Proceeds Prepayment shall be equal to or greater than
Two Million and 00/100 Dollars ($2,000,000.00), Borrower shall have the right to
elect to prepay the outstanding principal balance of Adjusted Release Amount
(less the Net Proceeds Prepayment) for the affected Individual Property (a
"CASUALTY/CONDEMNATION PREPAYMENT") without payment of the Yield Maintenance
Premium upon satisfaction of the following conditions: (i) within thirty (30)
days following the date of the Net Proceeds Prepayment, Borrower shall provide
Lender with written notice of Borrower's intention to pay the Note in an amount
equal to the related Adjusted Release Amount (less the Net Proceeds Prepayment),
(ii) Borrower shall prepay the Note in such amount on or before the third (3rd)
Payment Date occurring following the date of the Net Proceeds Prepayment
(provided that if any such prepayment is made on a date other than a Payment
Date, Borrower shall pay Lender all interest which would have accrued on the
amount being prepaid through the next Payment Date), and (iii) no Event of
Default shall exist on the date of such Casualty/Condemnation Prepayment.
Notwithstanding anything in Section 6.2 or Section 6.3 to the contrary, Borrower
shall have no obligation to commence Restoration of the related Individual
Property upon delivery of the written notice set forth in clause (i) of the
preceding sentence (unless Borrower subsequently shall fail to satisfy the
requirement of clause (ii) of the preceding sentence).
VII. RESERVE FUNDS
SECTION 7.1 REQUIRED REPAIRS. Borrower shall perform the repairs at
the Properties, as more particularly set forth on SCHEDULE III hereto (such
repairs hereinafter referred to as "REQUIRED REPAIRS"). Borrower shall complete
the Required Repairs on or before the required deadline for each repair as set
forth on SCHEDULE III. It shall be an Event of Default under this Agreement if
Borrower does not complete the Required Repairs at each Individual Property by
the required deadline for each repair as set forth on SCHEDULE III.
SECTION 7.2 TAX AND INSURANCE ESCROW FUND. Borrower shall pay to
Lender on each Payment Date (a) one-twelfth (1/12)of the Taxes that Lender
estimates will be payable during the next ensuing twelve (12) months in order to
accumulate with Lender sufficient funds to pay all such Taxes at least thirty
(30) days prior to their respective due dates, and (b) one-
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twelfth (1/12) of the Insurance Premiums that Lender estimates will be payable
for the renewal of the coverage afforded by the Policies upon the expiration
thereof in order to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least thirty (30) days prior to the expiration of the
Policies (said amounts in (a) and (b) above are hereinafter called the "TAX AND
INSURANCE ESCROW FUND"). The Tax and Insurance Escrow Fund and the Monthly Debt
Service Payment Amount, shall be added together and shall be paid as an
aggregate sum by Borrower to Lender. Lender will apply the Tax and Insurance
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to this Agreement and under the Mortgages. In making any
payment relating to the Tax and Insurance Escrow Fund, Lender may do so
according to any ▇▇▇▇, statement or estimate procured from the appropriate
public office (with respect to Taxes) or insurer or agent (with respect to
Insurance Premiums) or from Borrower without inquiry into the accuracy of such
▇▇▇▇, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof, provided, however, Lender shall
use reasonable efforts to pay such real property taxes sufficiently early to
obtain the benefit of any available discounts of which it has knowledge. If the
amount of the Tax and Insurance Escrow Fund shall exceed the amounts due for
Taxes and Insurance Premiums, Lender shall, in its sole discretion, return any
excess to Borrower or credit such excess against future payments to be made to
the Tax and Insurance Escrow Fund. Any amount remaining in the Tax and Insurance
Escrow Fund after the Debt has been paid in full shall be returned to Borrower.
In allocating such excess, Lender may deal with the Person shown on the records
of Lender to be the owner of the Properties. If at any time Lender reasonably
determines that the Tax and Insurance Escrow Fund is not or will not be
sufficient to pay Taxes and Insurance Premiums by the dates set forth above,
Lender shall notify Borrower of such determination and Borrower shall increase
its monthly payments to Lender by the amount that Lender estimates is sufficient
to make up the deficiency at least thirty (30) days prior to delinquency of the
Taxes or Insurance Premiums.
SECTION 7.3 REPLACEMENTS AND REPLACEMENT RESERVE.
7.3.1 REPLACEMENT RESERVE FUND. Borrower shall pay to Lender on each
Payment Date one-twelfth (1/12) of $0.20 per rentable square foot of space at
the Properties (which would be one-twelfth (1/12) of $97,198 based upon the
current aggregate rentable square footage of 485,990) (the "REPLACEMENT RESERVE
MONTHLY DEPOSIT") for replacements and repairs required to be made to the
Properties during the calendar year (collectively, the "REPLACEMENTS"). Amounts
so deposited shall hereinafter be referred to as Borrower's "REPLACEMENT RESERVE
FUND" and the account in which such amounts are held shall hereinafter be
referred to as Borrower's "REPLACEMENT RESERVE ACCOUNT". Lender may reassess its
estimate of the amount necessary for the Replacement Reserve Fund from time to
time, and may increase the monthly amounts required to be deposited into the
Replacement Reserve Fund upon thirty (30) days notice to Borrower if Lender
determines in its commercially reasonable discretion based upon updated
engineering reports or inspections of the Properties that an increase is
necessary to maintain the proper maintenance and operation of the Properties.
Any amount held in the Replacement Reserve Account and allocated for an
Individual Property shall be retained by Lender and credited toward the future
Replacement Reserves Monthly Deposits required by Lender hereunder in the event
such Individual Property is released from the Lien of its related Mortgage in
accordance with SECTION 2.5 hereof.
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7.3.2 DISBURSEMENTS FROM REPLACEMENT RESERVE ACCOUNT. (a) Lender shall
make disbursements from the Replacement Reserve Account to pay Borrower only for
the costs of the Replacements. Lender shall not be obligated to make
disbursements from the Replacement Reserve Account to reimburse Borrower for the
costs of routine maintenance to an Individual Property, replacements of
inventory or for costs which are to be reimbursed from the Rollover Reserve
Fund.
(b) Lender shall, upon written request from Borrower and
satisfaction of the requirements set forth in this SECTION 7.3.2, disburse to
Borrower amounts from the Replacement Reserve Account necessary to pay for the
actual approved costs of Replacements or to reimburse Borrower therefor, upon
completion of such Replacements (or, upon partial completion in the case of
Replacements made pursuant to SECTION 7.3.2(E)) as determined by Lender. In no
event shall Lender be obligated to disburse funds from the Replacement Reserve
Account if a Default or an Event of Default exists.
(c) Each request for disbursement from the Replacement Reserve
Account shall be in a form specified or approved by Lender and shall specify (i)
the specific Replacements for which the disbursement is requested, (ii) the
quantity and price of each item purchased, if the Replacement includes the
purchase or replacement of specific items, (iii) the price of all materials
(grouped by type or category) used in any Replacement other than the purchase or
replacement of specific items, and (iv) the cost of all contracted labor or
other services applicable to each Replacement for which such request for
disbursement is made. With each request Borrower shall certify that all
Replacements have been made in accordance with all applicable Legal Requirements
of any Governmental Authority having jurisdiction over the applicable Individual
Property to which the Replacements are being provided and, unless Lender has
agreed to issue joint checks as described below, each request shall include
evidence of payment of all such amounts. Each request for disbursement shall
include copies of invoices for all items or materials purchased and all
contracted labor or services provided. Except as provided in SECTION 7.3.2(E),
each request for disbursement from the Replacement Reserve Account shall be made
only after completion of the Replacement for which disbursement is requested.
Borrower shall provide Lender evidence of completion of the subject Replacement
satisfactory to Lender in its reasonable judgment.
(d) Borrower shall pay all invoices in connection with the
Replacements with respect to which a disbursement is requested prior to
submitting such request for disbursement from the Replacement Reserve Account
or, at the request of Borrower, Lender will issue joint checks, payable to
Borrower and the contractor, supplier, materialman, mechanic, subcontractor or
other party to whom payment is due in connection with a Replacement. In the case
of payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender's disbursement from the Replacement
Reserve Account. In addition, as a condition to any disbursement, Lender may
require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal
to or greater than $100,000 for completion of its work or delivery of its
materials. Any lien waiver delivered hereunder shall conform to the requirements
of applicable law and shall cover all work performed and materials supplied
(including equipment and fixtures) for the applicable Individual Property by
that contractor, supplier, subcontractor, mechanic or materialman through the
date covered by the current reimbursement request (or, in the event that
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payment to such contractor, supplier, subcontractor, mechanic or materialmen is
to be made by a joint check, the release of lien shall be effective through the
date covered by the previous release of funds request).
(e) If (i) the cost of a Replacement exceeds $100,000, (ii) the
contractor performing such Replacement requires periodic payments pursuant to
terms of a written contract, and (iii) Lender has approved in writing in advance
such periodic payments, a request for reimbursement from the Replacement Reserve
Account may be made after completion of a portion of the work under such
contract, provided (A) such contract requires payment upon completion of such
portion of the work, (B) the materials for which the request is made are on site
at the applicable Individual Property and are properly secured or have been
installed in such Individual Property, (C) all other conditions in this
Agreement for disbursement have been satisfied, (D) funds remaining in the
Replacement Reserve Account are, in Lender's judgment, sufficient to complete
such Replacement and other Replacements when required, and (E) if required by
Lender, each contractor or subcontractor receiving payments under such contract
shall provide a waiver of lien with respect to amounts which have been paid to
that contractor or subcontractor.
(f) Borrower shall not make a request for disbursement from the
Replacement Reserve Account more frequently than once in any calendar month and
(except in connection with the final disbursement) the total cost of all
Replacements in any request shall not be less than $15,000.00.
7.3.3 PERFORMANCE OF REPLACEMENTS. (a) Borrower shall make
Replacements when required in order to keep each Individual Property in
condition and repair consistent with other similar properties in the same market
segment in the metropolitan area in which the respective Individual Property is
located, and to keep each Individual Property or any portion thereof from
deteriorating. Borrower shall complete all Replacements in a good and
workmanlike manner as soon as practicable following the commencement of making
each such Replacement.
(b) Lender reserves the right, at its option, to approve all
contracts or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials under contracts for an
amount in excess of $100,000 in connection with the Replacements performed by
Borrower. Upon Lender's request, Borrower shall assign any contract or
subcontract to Lender.
(c) In the event Lender determines in its reasonable discretion that
any Replacement is not being performed in a workmanlike or timely manner or that
any Replacement has not been completed in a workmanlike or timely manner, and
such failure continues to exist for more than thirty (30) days after notice from
Lender to Borrower, Lender shall have the option, upon ten (10) days notice to
Borrower (except in the case of an emergency), to withhold disbursement for such
unsatisfactory Replacement and to proceed under existing contracts or to
contract with third parties to complete such Replacement and to apply the
Replacement Reserve Fund toward the labor and materials necessary to complete
such Replacement, and to exercise any and all other remedies available to Lender
upon an Event of Default hereunder.
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(d) In order to facilitate Lender's completion or making of the
Replacements pursuant to SECTION 7.3.3(C) above, Borrower grants Lender the
right to enter onto any Individual Property and perform any and all work and
labor necessary to complete or make the Replacements and/or employ watchmen to
protect such Individual Property from damage, subject to the rights of Tenants.
All sums so expended by Lender, to the extent not from the Replacement Reserve
Fund, shall be deemed to have been advanced under the Loan to Borrower and
secured by the Mortgages. For this purpose Borrower constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution to
complete or undertake the Replacements in the name of Borrower. Such power of
attorney shall be deemed to be a power coupled with an interest and cannot be
revoked but shall only be effective following an Event of Default. Borrower
empowers said attorney-in-fact as follows: (i) to use any funds in the
Replacement Reserve Account for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to complete the Replacements;
(iii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
any Individual Property, or as may be necessary or desirable for the completion
of the Replacements, or for clearance of title; (v) to execute all applications
and certificates in the name of Borrower which may be required by any of the
contract documents; (vi) to prosecute and defend all actions or proceedings in
connection with any Individual Property or the rehabilitation and repair of any
Individual Property; and (vii) to do any and every act which Borrower might do
in its own behalf to fulfill the terms of this Agreement.
(e) Nothing in this SECTION 7.3.3 shall: (i) make Lender responsible
for making or completing the Replacements; (ii) require Lender to expend funds
in addition to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with the Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.
(f) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties making Replacements pursuant to this SECTION 7.3.3
to enter onto each Individual Property during normal business hours (subject to
the rights of tenants under their Leases) to inspect the progress of any
Replacements and all materials being used in connection therewith, to examine
all plans and shop drawings relating to such Replacements which are or may be
kept at each Individual Property, and to complete any Replacements made pursuant
to this SECTION 7.3.3. Borrower shall cause all contractors and subcontractors
to cooperate with Lender or Lender's representatives or such other persons
described above in connection with inspections described in this SECTION
7.3.3(F) or the completion of Replacements pursuant to this SECTION 7.3.3.
(g) Lender may require an inspection of the Individual Property at
Borrower's expense prior to making a monthly disbursement in excess of $100,000
from the Replacement Reserve Account in order to verify completion of the
Replacements for which reimbursement is sought. Lender may require that such
inspection be conducted by an appropriate independent qualified professional
selected by Lender and/or may require a copy of a certificate of completion by
an independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Replacement Reserve Account. Borrower shall
pay the
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expense of the inspection as required hereunder, whether such inspection is
conducted by Lender or by an independent qualified professional.
(h) The Replacements and all materials, equipment, fixtures, or any
other item comprising a part of any Replacement shall be constructed, installed
or completed, as applicable, free and clear of all mechanic's, materialman's or
other liens (except for those Liens existing on the date of this Agreement which
have been approved in writing by Lender).
(i) Before each disbursement in excess of $100,000 from the
Replacement Reserve Account, Lender may require Borrower to provide Lender with
a search of title to the applicable Individual Property effective to the date of
the disbursement, which search shows that no mechanic's or materialmen's liens
or other liens of any nature have been placed against the applicable Individual
Property since the date of recordation of the related Mortgage and that title to
such Individual Property is free and clear of all Liens (other than the lien of
the related Mortgage and any other Liens previously approved in writing by
Lender, if any).
(j) All Replacements shall comply with all applicable Legal
Requirements of all Governmental Authorities having jurisdiction over the
applicable Individual Property and applicable insurance requirements including,
without limitation, applicable building codes, special use permits,
environmental regulations, and requirements of insurance underwriters.
(k) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement. All
such policies shall be in form and amount reasonably satisfactory to Lender. All
such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender.
7.3.4 FAILURE TO MAKE REPLACEMENTS. (a) It shall be an Event of
Default under this Agreement if Borrower fails to comply with any provision of
this SECTION 7.3 and such failure is not cured within thirty (30) days after
notice from Lender; PROVIDED, HOWEVER, if such failure is not capable of being
cured within said thirty (30) day period, then provided that Borrower commences
action to complete such cure and thereafter diligently proceeds to complete such
cure, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower, in the exercise of due diligence, to cure
such failure, but such additional period of time shall not exceed ninety (90)
days. Upon the occurrence of such an Event of Default, Lender may use the
Replacement Reserve Fund (or any portion thereof) for any purpose, including but
not limited to completion of the Replacements as provided in SECTION 7.3.3, or
for any other repair or replacement to any Individual Property or toward payment
of the Debt in such order, proportion and priority as Lender may determine in
its sole discretion. Lender's right to withdraw and apply the Replacement
Reserve Funds shall be in addition to all other rights and remedies provided to
Lender under this Agreement and the other Loan Documents.
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(b) Nothing in this Agreement shall obligate Lender to apply all or
any portion of the Replacement Reserve Fund on account of an Event of Default to
payment of the Debt or in any specific order or priority.
7.3.5 BALANCE IN THE REPLACEMENT RESERVE ACCOUNT. The insufficiency of
any balance in the Replacement Reserve Account shall not relieve Borrower from
its obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.
7.3.6 INDEMNIFICATION
. Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with the performance of the Replacements unless the same are solely due to gross
negligence or willful misconduct of Lender. Borrower shall assign to Lender all
rights and claims Borrower may have against all persons or entities supplying
labor or materials in connection with the Replacements; provided, however, that
Lender may not pursue any such right or claim unless an Event of Default has
occurred and remains uncured.
SECTION 7.4 ROLLOVER RESERVE.
7.4.1 DEPOSITS TO ROLLOVER RESERVE FUND. Borrower shall pay to Lender
on each Payment Date one-twelfth (1/12) of $1.00 per rentable square foot of
space at the Properties (which would be one-twelfth (1/12) of $485,990 based
upon the current aggregate rentable square footage of 485,990), which amounts
shall be deposited with and held by Lender for tenant improvement and leasing
commission obligations incurred following the date hereof. Additionally,
Borrower shall deposit with Lender any Lease Termination Fees. Amounts so
deposited shall hereinafter be referred to as the "ROLLOVER RESERVE FUND" and
the account to which such amounts are held shall hereinafter be referred to as
the "ROLLOVER RESERVE ACCOUNT."
7.4.2 WITHDRAWAL OF ROLLOVER RESERVE FUNDS. Lender shall make
disbursements from the Rollover Reserve Fund for tenant improvement and leasing
commission obligations incurred by Borrower. All such expenses shall be approved
by Lender in its commercially reasonable discretion, except that Lender's
approval of such expenses shall not be required (a) if Lender has separately
approved (but was not deemed to have approved) the related Lease in accordance
with the provisions of SECTION 5.1.20 of this Agreement or (b) with respect to
tenant improvement expenses that are less than $25.00 per square foot. Lender
shall make disbursements as requested by Borrower on a monthly basis in
increments of no less than $5,000.00 upon delivery by Borrower of Lender's
standard form of draw request accompanied by copies of paid invoices for the
amounts requested and, if required by Lender, lien waivers and releases from all
parties furnishing materials and/or services in connection with the requested
payment. Lender may require an inspection of the Properties at Borrower's
expense prior to making a monthly disbursement in order to verify completion of
improvements for which reimbursement is sought. Any Lease Termination Fee shall
be applied first to tenant improvement and leasing commission obligations
incurred in connection with the reletting of the space for which such Lease
Termination Fee was paid pursuant to a Lease approved by Lender in
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accordance with the provisions of this Agreement, and any remaining portion of
such Lease Termination Fee shall be released to Borrower provided that no Event
of Default exists and Lender shall have received a tenant estoppel certificate
in form and substance reasonably satisfactory to Lender.
SECTION 7.5 ADS LETTER OF CREDIT7.5.1 . Unless the ADS Lease is
extended on terms acceptable to Lender prior to October 31, 2008, Borrower shall
deliver to Lender (a) cash or a Letter of Credit in the amount of $2,250,000 on
or before October 31, 2008 and (b) cash or an additional Letter of Credit in the
amount of $2,250,000 on or before October 31, 2009. If Borrower fails to deliver
either such Letter of Credit or cash in the required amount on the dates
required to be delivered, Lender shall have the right to implement a Cash Sweep
Period under the Cash Management Agreement and it shall be an Event of Default
if Borrower thereafter fails to deliver either such Letter of Credit or cash in
the required amount within thirty (30) days after notice from Lender. Any such
Letter of Credit, cash or funds deposited in the ADS Account pursuant to the
Cash Management Agreement shall be released to Borrower provided that (a) no
other Event of Default exists, (b) the ADS Lease is extended on terms
satisfactory to Lender or Borrower enters into one or more replacement Leases
for the space demised under the ADS Lease in accordance with the requirements of
SECTION 5.1.20 hereof and (c) Lender shall have received a tenant estoppel
certificate in form and substance reasonably satisfactory to Lender (it being
acknowledged that the form of estoppel certificate delivered with respect to the
ADS Lease in connection with the closing of the Loan is satisfactory to Lender).
7.5.2 In the event the ADS Lease is renewed in 2010, unless the ADS
Lease is further extended on terms acceptable to Lender prior to October 31,
2013, Borrower shall deliver to Lender (a) cash or a Letter of Credit in the
amount of $2,250,000 on or before October 31, 2013 and (b) cash or an additional
Letter of Credit in the amount of $2,250,000 on or before October 31, 2014. If
Borrower fails to deliver either such Letter of Credit or cash in the required
amount on the dates required to be delivered, Lender shall have the right to
implement a Cash Sweep Period under the Cash Management Agreement and it shall
be an Event of Default if Borrower thereafter fails to deliver either such
Letter of Credit or cash in the required amount within thirty (30) days after
notice from Lender. Any such Letter of Credit, cash or funds deposited in the
ADS Account pursuant to the Cash Management Agreement shall be released to
Borrower provided that (a) no other Event of Default exists, (b) the ADS Lease
is extended on terms satisfactory to Lender or Borrower enters into one or more
replacement Leases for the space demised under the ADS Lease in accordance with
the requirements of SECTION 5.1.20 hereof and (c) Lender shall have received a
tenant estoppel certificate in form and substance reasonably satisfactory to
Lender (it being acknowledged that the form of estoppel certificate delivered
with respect to the ADS Lease in connection with the closing of the Loan is
satisfactory to Lender).
SECTION 7.6 RESERVE FUNDS, GENERALLY. Borrower grants to Lender a
first-priority perfected security interest in each of the Reserve Funds and any
and all monies now or hereafter deposited in each Reserve Fund as additional
security for payment of the Debt. Until expended or applied in accordance
herewith, the Reserve Funds shall constitute additional security for the Debt.
Upon the occurrence of an Event of Default, Lender may, in addition to any and
all other rights and remedies available to Lender, apply any sums then present
in any or all of the Reserve Funds to the payment of the Debt in any order in
its sole discretion. The
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Reserve Funds shall not constitute trust funds and may be commingled with other
monies held by Lender. Amounts deposited in the Replacement Reserve Fund and the
Rollover Reserve Fund shall bear interest at the thirty day money market rate
published by the bank used by Lender to hold escrow deposits, and shall be held
and released by Lender, and used by Borrower, in accordance with the terms and
conditions of this Agreement. Lender shall be entitled to a servicing fee in the
amount of .25% per annum multiplied by the average daily balance on deposit in
the Replacement Reserve Fund and the Rollover Reserve Fund, and Lender is hereby
authorized to deduct such servicing fee from the Replacement Reserve Fund and
the Rollover Reserve Fund on a monthly basis. All interest or other income in
connection with the deposit or placement of the Replacement Reserve Fund and the
Rollover Reserve Fund, less the servicing fee, shall be reported under
Borrower's tax identification number, and shall only be disbursed as set forth
in this Agreement. All interest on any Reserve Fund other than the Replacement
Reserve Fund or Rollover Reserve Fund shall not be added to or become a part
thereof and shall be the sole property of and shall be paid to Lender. Borrower
shall be responsible for payment of any federal, state or local income or other
tax applicable to the interest earned on the Reserve Funds credited or paid to
Borrower. Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any Reserve
Fund or the monies deposited therein or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto. Lender shall not be liable for any loss sustained on the investment of
any funds constituting the Reserve Funds. Borrower shall indemnify Lender and
hold Lender harmless from and against any and all actions, suits, claims,
demands, liabilities, losses, damages, obligations and costs and expenses
(including litigation costs and reasonable attorneys fees and expenses) arising
from or in any way connected with the performance of the obligations for which
the Reserve Funds were established. Borrower shall assign to Lender all rights
and claims Borrower may have against all persons or entities supplying labor,
materials or other services which are to be paid from or secured by the Reserve
Funds; provided, however, that Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.
SECTION 7.7 LETTER OF CREDIT RIGHTS. Any Letter of Credit delivered
to Lender pursuant to this Agreement shall be held by Lender as additional
security for the Loan. Lender shall have the right to draw upon any Letter of
Credit immediately and without further notice:7.7.1 upon the occurrence and
during the continuance of an Event of Default;7.7.2 if Borrower fails to deliver
to Lender, no less than thirty (30) days prior to the expiration of any Letter
of Credit (including any renewal or extension thereof), a renewal or extension
of such Letter of Credit or a replacement Letter of Credit; or
7.7.3 if the institution issuing the Letter of Credit ceases to be an
Eligible Institution and Borrower fails to deliver to Lender a replacement
Letter of Credit from an Eligible Institution within thirty (30) days of the
date that Borrower is notified or otherwise becomes aware that such institution
ceased to be an Eligible Institution.
SECTION 7.8 APPLICATION OF LETTER OF CREDIT PROCEEDS. In the event
of a draw upon a Letter of Credit due to the existence of an Event of Default,
Lender may apply such amounts in such order and in such amounts as Lender shall
elect, in its sole and absolute discretion, to payment of the Debt. In the event
of a draw upon a Letter of Credit due to the
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occurrence of an event described in SECTION 7.7.2 or SECTION 7.7.3 above, Lender
shall deposit the proceeds of such Letter of Credit into a reserve account
designated by Lender and such proceeds shall be held and released in the same
manner applicable to the release of the Letter of Credit.VIII. DEFAULTS
SECTION 8.1 EVENT OF DEFAULT. (a) Each of the following events
shall constitute an event of default hereunder (an "EVENT OF DEFAULT"):
(i) if any portion of the Debt is not paid prior to the
fifth (5th) calendar day after the same is due or if the entire Debt is
not paid on the Maturity Date, along with applicable prepayment
premiums, if any;
(ii) if any of the Taxes or Other Charges are not paid prior
to the date when the same become delinquent, except to the extent that
Borrower is contesting same in accordance with the terms of Section
5.1.2 hereof, or there are sufficient funds in the Tax and Insurance
Escrow Fund to pay such Taxes or Other Charges and Lender fails to or
refuses to release the same from the Tax and Insurance Escrow Fund;
(iii) if the Policies are not kept in full force and effect,
or if certified copies of the Policies are not delivered to Lender
within ten (10) days of request;
(iv) if Borrower Transfers or encumbers any portion of the
Properties without Lender's prior written consent (to the extent such
consent is required) or otherwise violates the provisions of this
Agreement and Article 6 of any Mortgage;
(v) if any material representation or warranty made by
Borrower herein or in any other Loan Document, or in any report,
certificate, financial statement or other instrument, agreement or
document furnished to Lender shall have been false or misleading in any
material respect as of the date the representation or warranty was made;
(vi) if Borrower, Principal or Guarantor shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed
for Borrower, Principal or Guarantor or if Borrower, Principal or
Guarantor shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law, shall be
filed by or against, consented to, or acquiesced in by, Borrower,
Principal or Guarantor, or if any proceeding for the dissolution or
liquidation of Borrower, Principal or Guarantor shall be instituted;
provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower, Principal
or Guarantor, upon the same not being discharged, stayed or dismissed
within one hundred eighty (180) days;
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(viii) if Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if Borrower breaches any of its respective negative
covenants contained in Section 5.2 or any covenant contained in SECTION
4.1.30 hereof;
(x) with respect to any term, covenant or provision set
forth herein which specifically contains a notice requirement or grace
period, if Borrower shall be in default under such term, covenant or
condition after the giving of such notice or the expiration of such
grace period;
(xi) if any of the assumptions contained in the Insolvency
Opinion delivered to Lender in connection with the Loan, or in any
Additional Insolvency Opinion delivered subsequent to the closing of the
Loan, is or shall become untrue in any material respect;
(xii) [intentionally omitted];
(xiii) if Borrower shall continue to be in Default under any of
the terms, covenants or conditions of SECTION 9.1 hereof (unless
Borrower is unable to satisfy such term, covenants or conditions due to
circumstances beyond its control, such as the unavailability of
information requested by Lender), or willfully fails to cooperate with
Lender in connection with a Securitization pursuant to the provisions of
SECTION 9.1 hereof, for five (5) Business Days after notice to Borrower
from Lender;
(xiv) if Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement not specified
in SUBSECTIONS (I) to (XII) above, for ten (10) days after notice to
Borrower from Lender, in the case of any Default which can be cured by
the payment of a sum of money, or for thirty (30) days after notice from
Lender in the case of any other Default; provided, however, that if such
non-monetary Default is susceptible of cure but cannot reasonably be
cured within such thirty (30) day period and provided further that
Borrower shall have commenced to cure such Default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for such
time as is reasonably necessary for Borrower in the exercise of due
diligence to cure such Default, such additional period not to exceed one
hundred eighty (180) days; or
(xv) if there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such
documents, whether as to Borrower or any Individual Property, or if any
other such event shall occur or condition shall exist, if the effect of
such event or condition is to accelerate the maturity of any portion of
the Debt or to permit Lender to accelerate the maturity of all or any
portion of the Debt.
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(b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents or at law or in
equity, Lender may take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in and to all
or any Individual Property, including, without limitation, declaring the Debt to
be immediately due and payable, and Lender may enforce or avail itself of any or
all rights or remedies provided in the Loan Documents against Borrower and any
or all of the Properties, including, without limitation, all rights or remedies
available at law or in equity; and upon any Event of Default described in
clauses (vi), (vii) or (viii) above, the Debt and Other Obligations of Borrower
hereunder and under the other Loan Documents shall immediately and automatically
become due and payable, without notice or demand, and Borrower hereby expressly
waives any such notice or demand, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
SECTION 8.2 REMEDIES. (a) Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Borrower under this Agreement or any of the
other Loan Documents executed and delivered by, or applicable to, Borrower or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents with respect to all or any part of any Individual Property. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is continuing (i) Lender
is not subject to any "one action" or "election of remedies" law or rule (to the
extent waiveable by Borrower), and (ii) all liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Properties and each Mortgage has
been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt
or the Debt has been paid in full.
(b) With respect to Borrower and the Properties, nothing contained
herein or in any other Loan Document shall be construed as requiring Lender to
resort to any Individual Property for the satisfaction of any of the Debt in any
preference or priority to any other Individual Property, and Lender may seek
satisfaction out of all of the Properties, or any part thereof, in its absolute
discretion in respect of the Debt. In addition, to the extent permitted by
applicable law, Lender shall have the right from time to time to partially
foreclose the Mortgages in any manner and for any amounts secured by the
Mortgages then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event
Borrower defaults beyond any applicable grace period in the payment of one or
more scheduled payments of principal and interest, Lender may foreclose one or
more of the Mortgages to recover such delinquent payments or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal balance
of the Loan, Lender may foreclose one or more of the Mortgages to recover so
much of the principal balance of the Loan as Lender
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may accelerate and such other sums secured by one or more of the Mortgages as
Lender may elect. Notwithstanding one or more partial foreclosures, the
Properties shall remain subject to the Mortgages to secure payment of sums
secured by the Mortgages and not previously recovered.
(c) During the continuance of an Event of Default, Lender shall have
the right from time to time to sever the Note and the other Loan Documents into
one or more separate notes, mortgages and other security documents (the "SEVERED
LOAN DOCUMENTS") in such denominations as Lender shall determine in its sole
discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender following the
occurrence of an Event of Default as its true and lawful attorney, coupled with
an interest, in its name and stead to make and execute all documents necessary
or desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender's intent to exercise its
rights under such power. Borrower shall be obligated to pay any costs or
expenses incurred in connection with the preparation, execution, recording or
filing of the Severed Loan Documents in connection with an Event of Default and
the Severed Loan Documents shall not contain any representations, warranties or
covenants not contained in the Loan Documents and any such representations and
warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date.
SECTION 8.3 REMEDIES CUMULATIVE; WAIVERS. The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive of
any other right, power or remedy which Lender may have against Borrower pursuant
to this Agreement or the other Loan Documents, or existing at law or in equity
or otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
IX. SPECIAL PROVISIONS
SECTION 9.1 SECURITIZATION.
9.1.1 SALE OF NOTES AND SECURITIZATION. Borrower acknowledges and
agrees that Lender may sell all or any portion of the Loan and the Loan
Documents, or issue one or more participations therein, or consummate one or
more private or public securitizations of rated single- or multi-class
securities (the "SECURITIES") secured by or evidencing ownership interests
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in all or any portion of the Loan and the Loan Documents or a pool of assets
that include the Loan and the Loan Documents (such sales, participations and/or
securitizations, collectively, a "SECURITIZATION"). At the request of Lender,
and to the extent not already required to be provided by or on behalf of
Borrower under this Agreement, Borrower shall use reasonable efforts to provide
information not in the possession of Lender or which may be reasonably required
by Lender or take other actions reasonably required by Lender, in each case in
order to satisfy the market standards to which Lender customarily adheres or
which may be reasonably required by prospective investors and/or the Rating
Agencies in connection with any such Securitization including, without
limitation, to:
(a) provide additional and/or updated Provided Information, together
with appropriate verification and/or consents related to the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys reasonably acceptable to Lender, prospective investors and/or the
Rating Agencies;
(b) assist in preparing descriptive materials for presentations to
any or all of the Rating Agencies, and work with, and if requested, supervise,
third-party service providers engaged by Borrower and approved by Lender,
Principal and their respective affiliates to obtain, collect, and deliver
information requested or required by Lender, prospective investors and/or the
Rating Agencies;
(c) deliver (i) an Additional Insolvency Opinion and an opinion with
respect to due execution and enforceability with respect to the Properties,
Borrower, Principal, Guarantor and their respective Affiliates and the Loan
Documents, and (ii) revised organizational documents for Borrower, which counsel
opinions and organizational documents shall be reasonably satisfactory to
Lender, prospective investors and/or the Rating Agencies;
(d) if required by any prospective investor and/or any Rating
Agency, use commercially reasonable efforts to deliver such additional tenant
estoppel letters, subordination agreements or other agreements from parties to
agreements that affect the Properties, which estoppel letters, subordination
agreements or other agreements shall be reasonably satisfactory to Lender,
prospective investors and/or the Rating Agencies;
(e) make such representations and warranties as of the closing date
of the Securitization with respect to the Properties, Borrower, Principal,
Guarantor and the Loan Documents as may be reasonably requested by Lender,
prospective investors and/or the Rating Agencies and consistent with the facts
covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents;
(f) execute such amendments to the Loan Documents and organizational
documents as may be reasonably requested by the holder of the Note or the Rating
Agencies or otherwise to effect the Securitization; PROVIDED, HOWEVER, that
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would (i) change the interest rate, the stated
maturity or the amortization of principal set forth in the Note, or (ii) modify
or amend any other material term of the Loan;
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(g) if requested by Lender, review any information regarding the
Properties, Borrower, Principal, Guarantor, Property Manager and the Loan which
is contained in a preliminary or final private placement memorandum, prospectus,
prospectus supplement (including any amendment or supplement to either thereof),
or other disclosure document to be used by Lender or any affiliate thereof; and
(h) supply to Lender such documentation, financial statements and
reports in form and substance required in order to comply with any applicable
securities laws.
9.1.2 LOAN COMPONENTS. Borrower covenants and agrees that in
connection with any Securitization of the Loan, upon Lender's request Borrower
shall deliver one or more new component notes to replace the original note or
modify the original note to reflect multiple components of the Loan or create
one or more mezzanine loans (including amending Borrower's organizational
structure to provide for one or more mezzanine borrowers) (each a "RESIZING
EVENT"). Lender agrees that such new notes or modified note or mezzanine notes
shall have the same weighted average coupon as the original note prior to such
Resizing Event and shall otherwise comply with the provisions of SECTION
9.1.1(F). In connection with any Resizing Event, Borrower covenants and agrees
to modify the Cash Management Agreement with respect to the newly created
components and/or mezzanine loans.
9.1.3 SECURITIZATION COSTS. All reasonable third party costs and
expenses incurred by Borrower in connection with Borrower's complying with
requests made under this Section 9.1 (including, without limitation, the fees
and expenses of the Rating Agencies) shall be paid by Lender.
9.1.4 UNCROSS OF PROPERTIES. Borrower agrees that at any time JPM
shall have the unilateral right to elect to uncross any of the Properties (the
"AFFECTED PROPERTY"). In furtherance thereof, Lender shall have the right to (i)
sever or divide the Note and the other Loan Documents in order to allocate to
such Affected Property the portion of the Loan allocable to such Property (the
"ALLOCATED LOAN AMOUNT") evidenced by a new note and secured by such other loan
documents (collectively, the "NEW NOTE") having a principal amount equal to the
Release Amount applicable to such Affected Property, (ii) segregate the
applicable portion of each of the Reserve Funds relating to the Affected
Property, (iii) release any cross-default and/or cross-collateralization
provisions applicable to such Affected Property and (iv) take such additional
action consistent therewith; provided, that such New Note secured by such
Affected Property, together with the Loan Documents secured by the remaining
Properties, shall not increase in the aggregate (A) any monetary obligation of
Borrower under the Loan Documents, or (B) any other obligation of Borrower under
the Loan Documents in any material respect. In connection with the transfer of
any such Affected Property as provided for in this SECTION 9.1.4, the Loan shall
be reduced by an amount equal to amount of the New Note applicable to such
Affected Property and the new loan secured by such Affected Property and
evidenced by the New Note shall be in an amount equal to such Allocated Loan
Amount. Subsequent to the release of the Affected Property from the lien of the
Loan pursuant to this SECTION 9.1.4, the balances of the components of the Loan
shall be the same as they would have been had a prepayment occurred in an amount
equal to the Allocated Loan Amount of the Affected Property. At the request of
Lender, Borrower shall otherwise cooperate with JPM and Lender in their attempt
to satisfy all requirements necessary in order for JPM to obtain written
confirmation
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from the Rating Agencies that such transfer of the Affected Property from the
Securitization and splitting of the Loan shall not cause a downgrade, withdrawal
or qualification of the then current ratings of the Securities or any class
thereof, which requirements shall include, without limitation, the execution of
such documents and instruments and delivery by JPM of such opinions of counsel
as are typical for similar transactions, including, an opinion of counsel that
the release of the Affected Property will not be a "significant modification" of
this Loan within the meaning of Section 1.1001-3 of the regulations of the
United States Department of the Treasury and that all other requirements
applicable, if any, to a REMIC Trust, have been satisfied or have not otherwise
been violated. Lender shall cause all reasonable costs and expenses incurred by
Borrower in connection with this SECTION 9.1.4 (including, without limitation,
any costs and expenses incurred by Borrower in connection with the transfer of
the Affected Property to a Special Purpose Entity and the maintenance and
operation of such Special Purpose Entity) to be paid by JPM.
SECTION 9.2 [INTENTIONALLY OMITTED]SECTION 9.3 EXCULPATION. Subject
to the qualifications below, Lender shall not enforce the liability and
obligation of Borrower to perform and observe the obligations contained in the
Note, this Agreement, the Mortgages or the other Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Borrower, except
that Lender may bring a foreclosure action, an action for specific performance
or any other appropriate action or proceeding to enable Lender to enforce and
realize upon its interest under the Note, this Agreement, the Mortgages and the
other Loan Documents, or in the Properties, the Rents following an Event of
Default, or any other collateral given to Lender pursuant to the Loan Documents;
PROVIDED, HOWEVER, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Properties, in the Rents following an Event
of Default and in any other collateral given to Lender, and Lender, by accepting
the Note, this Agreement, the Mortgages and the other Loan Documents, agrees
that it shall not ▇▇▇ for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding under or by reason of or under or in
connection with the Note, this Agreement, the Mortgages or the other Loan
Documents. The provisions of this Section shall not, however, (a) constitute a
waiver, release or impairment of any obligation evidenced or secured by any of
the Loan Documents; (b) impair the right of Lender to name Borrower as a party
defendant in any action or suit for foreclosure and sale under any of the
Mortgages; (c) affect the validity or enforceability of or any guaranty made in
connection with the Loan or any of the rights and remedies of Lender thereunder;
(d) impair the right of Lender to obtain the appointment of a receiver; (e)
impair the enforcement of any of the Assignments of Leases following an Event of
Default; (f) constitute a prohibition against Lender commencing any other
appropriate action or proceeding in order for Lender to exercise its remedies
against all of the Properties. In addition, the foregoing shall not be deemed a
waiver of the right of Lender to enforce the liability and obligation of
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys' fees and costs reasonably incurred) arising out of or in
connection with the following:
(i) the misapplication or misappropriation of Rents;
(ii) the misapplication or misappropriation of Insurance
Proceeds or Awards;
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(iii) Borrower's failure to return or to reimburse Lender for
all Personal Property (other than Personal Property not material to the
operation or value of the affected Individual Property) taken from the
Property by or on behalf of Borrower and not replaced with Personal
Property of the same utility and of the same or greater value;
(iv) any act of actual waste or arson by Borrower, any
principal, affiliate, general partner or member thereof or by Guarantor;
(v) any fees or commissions paid by Borrower to any
principal, affiliate, general partner or member of Borrower or any
Guarantor in violation of the terms of this Guaranty, the other Loan
Documents;
(vi) Borrower's failure to comply with the provisions of
SECTION 9.4 of any of the Mortgages or
(vii) any fraud, willful misconduct or intentional material
misrepresentation by Borrower, Principal, Guarantor or any of their
respective Affiliates in connection with the Loan; or
(viii) any breach or default of any material provision of
SECTION 4.1.30 of this Agreement (other than breaches of the
requirements set forth in clauses (xii) or (xxiii) of the definition of
Special Purpose Entity).
Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt secured by the Mortgages or to require that all collateral shall continue
to secure all of the Debt owing to Lender in accordance with the Loan Documents,
and (B) the Debt shall be fully recourse to Borrower in the event or: (i) a
voluntary breach or default under SECTION 5.2.10 of this Agreement, (ii)
Borrower or Principal filing a voluntary petition under the Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law; (iii) Borrower or
Principal filing an answer consenting to or otherwise acquiescing in or joining
in any involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or
soliciting or causing to be solicited petitioning creditors for any involuntary
petition from any Person; (iv) Borrower or Principal consenting to or
acquiescing in or joining in an application for the appointment of a custodian,
receiver, trustee, or examiner for Borrower, Principal or any portion of the
Property; or (v) Borrower or Principal making an assignment for the benefit of
creditors.
SECTION 9.4 MATTERS CONCERNING PROPERTY MANAGER . If (a) an Event
of Default has occurred, (b) Property Manager shall become bankrupt or insolvent
or (c) a default occurs under the Property Management Agreement and continues
beyond all applicable notice and cure periods, Borrower shall, at the request of
Lender, terminate the Property Management Agreement and replace the Property
Manager with a Qualifying Property Manager pursuant to a Replacement Management
Agreement, it being understood and agreed that the management fee for such
Qualifying Property Manager shall not exceed then prevailing market rates.
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SECTION 9.5 SERVICER. At the option of Lender, the Loan may be
serviced by a servicer/trustee (any such servicer/trustee, together with its
agents, nominees or designees, are collectively referred to as "SERVICER")
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "SERVICING AGREEMENT") between
Lender and Servicer. Borrower shall be responsible for any reasonable set-up
fees or any other initial costs relating to or arising under the Servicing
Agreement; provided, however, that Borrower shall not be responsible for payment
of the monthly servicing fee due to Servicer under the Servicing Agreement.
X. MISCELLANEOUS
SECTION 10.1 SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth herein or in the other Loan Documents. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the legal representatives, successors and assigns of such
party. All covenants, promises and agreements in this Agreement, by or on behalf
of Borrower, shall inure to the benefit of the legal representatives, successors
and assigns of Lender.
SECTION 10.2 LENDER'S DISCRETION. Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
SECTION 10.3 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN
WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE
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LAW OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS 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 LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT
LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT:
CT Corporation System
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
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SECTION 10.4 MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Note, or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party against whom enforcement is sought,
and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or other
circumstances.
SECTION 10.5 DELAY NOT A WAIVER. Neither any failure nor any delay
on the part of Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Note or under any other Loan Document, or any
other instrument given as security therefor, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement, the Note or any
other Loan Document, Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
SECTION 10.6 NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section):
If to Lender: JPMorgan Chase Bank, N.A.
c/o ARCap Servicing, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Greenhouse
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Borrower: c/o Behringer Harvard Funds
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
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With a copy to: ▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇ & Scripps LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
SECTION 10.7 TRIAL BY JURY.
BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH
IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER AND LENDER.
SECTION 10.8 HEADINGS. The Article and/or Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
SECTION 10.9 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 10.10 PREFERENCES. Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by Borrower
during the existence of an Event of Default to any portion of the obligations of
Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Lender.
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SECTION 10.11 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.
SECTION 10.12 REMEDIES OF BORROWER. In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
SECTION 10.13 EXPENSES; INDEMNITY. (a) Borrower covenants and agrees
to pay or, if Borrower fails to pay, to reimburse, Lender upon receipt of
written notice from Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Lender in connection
with (i) the preparation, negotiation, execution and delivery of this Agreement
and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by
Lender as to any legal matters arising under this Agreement or the other Loan
Documents with respect to the Properties); (ii) Borrower's ongoing performance
of and compliance with Borrower's respective agreements and covenants contained
in this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements; (iii) Lender's ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (iv) except as otherwise provided in this
Agreement, the negotiation, preparation, execution, delivery and administration
of any consents, amendments, waivers or other modifications to this Agreement
and the other Loan Documents and any other documents or matters reasonably
requested by Lender; (v) securing Borrower's compliance with any requests made
pursuant to the provisions of this Agreement; (vi) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vii) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents, the Properties, or
any other security given for the Loan; and (viii) enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or with respect to the Properties (including any fees incurred by
Servicer in connection with the transfer of the Loan to a special servicer prior
to a Default or Event of Default) or in connection with any refinancing or
restructuring of the credit arrangements
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provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender. Any cost and expenses due and payable to Lender may be paid from any
amounts in the Lockbox Account or Cash Management Account, as applicable.
(b) Borrower shall indemnify, defend and hold harmless Lender from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against Lender in any manner relating to or arising
out of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
(c) Borrower covenants and agrees to pay for or, if Borrower fails
to pay, to reimburse Lender for, any fees and expenses incurred by any Rating
Agency in connection with any Rating Agency review of the Loan, the Loan
Documents or any transaction contemplated thereby or any consent, approval,
waiver or confirmation obtained from such Rating Agency pursuant to the terms
and conditions of this Agreement or any other Loan Document and Lender shall be
entitled to require payment of such fees and expenses as a condition precedent
to the obtaining of any such consent, approval, waiver or confirmation.
SECTION 10.14 SCHEDULES INCORPORATED. The Schedules annexed hereto
are hereby incorporated herein as a part of this Agreement with the same effect
as if set forth in the body hereof.
SECTION 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of
Lender's interest in and to this Agreement, the Note and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrower may otherwise have
against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
SECTION 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES. (a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or
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therein is intended to create a joint venture, partnership, tenancy-in-common,
or joint tenancy relationship between Borrower and Lender nor to grant Lender
any interest in the Properties other than that of mortgagee, beneficiary or
lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
SECTION 10.17 PUBLICITY. All news releases, publicity or advertising
by Borrower or its Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, JPM, or any of their Affiliates shall be subject to the
prior written approval of Lender.
SECTION 10.18 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF
MARSHALLING .OF ASSETS (a) Borrower acknowledges that Lender has made the Loan
to Borrower upon the security of its collective interest in the Properties and
in reliance upon the aggregate of the Properties taken together being of greater
value as collateral security than the sum of each Individual Property taken
separately. Borrower agrees that the Mortgages are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of
Default under any of the Mortgages shall constitute an Event of Default under
each of the other Mortgages which secure the Note; (ii) an Event of Default
under the Note or this Agreement shall constitute an Event of Default under each
Mortgage; (iii) each Mortgage shall constitute security for the Note as if a
single blanket lien were placed on all of the Properties as security for the
Note; and (iv) such cross-collateralization shall in no event be deemed to
constitute a fraudulent conveyance.
(b) To the fullest extent permitted by law, Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Mortgages, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Mortgages, any equitable right otherwise
available to Borrower which would require the separate sale of the Properties or
require Lender to exhaust its remedies against any Individual Property or any
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combination of the Properties before proceeding against any other Individual
Property or combination of Properties; and further in the event of such
foreclosure Borrower does hereby expressly consents to and authorizes, at the
option of Lender, the foreclosure and sale either separately or together of any
combination of the Properties.
SECTION 10.19 WAIVER OF COUNTERCLAIM. Borrower hereby waives the
right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against it by Lender or its agents.
SECTION 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE. In the
event of any conflict between the provisions of this Agreement and any of the
other Loan Documents, 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
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
SECTION 10.21 BROKERS AND FINANCIAL ADVISORS. Borrower hereby
represents that it has dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement other than NorthMarq Capital. Borrower hereby
agrees to indemnify, defend and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind (including Lender's
reasonable attorneys' fees and expenses) in any way relating to or arising from
a claim by any Person that such Person acted on behalf of Borrower in connection
with the transactions contemplated herein. The provisions of this SECTION 10.21
shall survive the expiration and termination of this Agreement and the payment
of the Debt.
SECTION 10.22 PRIOR AGREEMENTS. This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements or understandings among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan
Documents and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of such prior agreement do not
survive execution of this Agreement.
SECTION 10.23 TRANSFER OF LOAN
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. In the event that Lender transfers the Loan, Borrower shall continue
to make payments at the place set forth in the Note (and its obligation to make
such payments shall be deemed satisfied upon the making of such payments) until
such time that Borrower is notified in writing by Lender that payments are to be
made at another place.
SECTION 10.24 JOINT AND SEVERAL LIABILITY. If Borrower consists of
more than one (1) Person the obligations and liabilities of each Person shall be
joint and several.
(THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.)
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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.
BORROWER:
BEHRINGER HARVARD WESTERN PORTFOLIO LP, a
Delaware limited partnership
By: Behringer Harvard Western Portfolio
GP, LLC, a Delaware limited liability
company
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Secretary
LENDER:
JPMORGAN CHASE BANK, N.A., a banking
association chartered under the laws of the
United States of America
By:____________________________________
Name:
Title:
SCHEDULE I
PROPERTIES ALLOCATED LOAN AMOUNTS
------------------------------------------ ---------------------
INDIVIDUAL PROPERTY RELEASE AMOUNT
------------------------------------------ ---------------------
Southwest Center $15,375,000
Tigard, Oregon
------------------------------------------ ---------------------
Gateway 12 $5,875,000
Diamond Bar, California
------------------------------------------ ---------------------
Gateway 22 $9,750,000
Diamond Bar, California
------------------------------------------ ---------------------
Gateway 23 $13,000,000
Diamond Bar, California
------------------------------------------ ---------------------
Alliance Data Systems Building $26,750,000
Dallas, Texas
------------------------------------------ ---------------------
SCH. I-1
SCHEDULE II
RENT ROLL
SCH. II-1
SCHEDULE III
(REQUIRED REPAIRS--DEADLINES FOR COMPLETION)
----------------------------------- ------------- --------------- ---------------- -----------------
REPAIR DEADLINE
ITEM QUANTITY UNIT COST IMMEDIATE COST FOR COMPLETION
----------------------------------- ------------- --------------- ---------------- -----------------
Re-stripe main drives of N/A N/A N/A 10/31/05
parking lot at Alliance Data
Systems Property
----------------------------------- ------------- --------------- ---------------- -----------------
Recondition diesel generators N/A N/A N/A 10/31/05
at Alliance Data Systems
Property
----------------------------------- ------------- --------------- ---------------- -----------------
SCH. III-1
SCHEDULE IV
(ORGANIZATIONAL CHART OF BORROWER)
SCH. IV-1
SCHEDULE V
(EXCEPTIONS TO REPRESENTATIONS)
[None]
SCH. V-1