EXHIBIT 10.19
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CONSTRUCTION LOAN AGREEMENT
by and between
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
and
SOUTHWEST MARKET LIMITED PARTNERSHIP
Dated as of August 21, 1990
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS......................................... 1
ARTICLE II TERMS OF THE LOAN AND DISBURSEMENT OF PROCEEDS...... 16
Section 2.01 Agreement to Lend.............................. 16
Section 2.02 Repayment...................................... 16
Section 2.03 Loan Documents................................. 16
Section 2.04 Payment of Principal and Interest.............. 16
Section 2.05 Disbursements - General........................ 16
Section 2.06 Project Budget................................. 17
Section 2.07 Timing of Disbursements........................ 17
Section 2.08 Lender's Right to Condition Disbursements...... 18
Section 2.09 Disbursements for Project Costs................ 18
Section 2.10 Disbursement of Hard Costs Contingency Funds... 19
Section 2.11 Disbursements of Interest...................... 19
Section 2.12 Disbursement of Tenant Improvement Costs....... 19
Section 2.13 Modifications to Project Costs Statement....... 24
Section 2.14 Balancing...................................... 25
Section 2.15 Automatic Debit and Credit; Wire Transfer...... 25
ARTICLE III BORROWER'S FIXED RATE OPTION........................ 26
Section 3.01 Borrower's Fixed Rate Option................... 26
Section 3.02 Exercise of Conversion Option.................. 26
Section 3.03 Interest Rate Management Arrangement........... 26
Section 3.04 Conditions to Lender's Obligation to Enter
Into an Interest Rate Management Arrangement.. 28
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ARTICLE IV CONDITIONS TO THE INITIAL
DISBURSEMENT.................................. 29
Section 4.01 Loan Documents.................................. 29
Section 4.02 Title Policy.................................... 30
Section 4.03 Survey.......................................... 31
Section 4.04 Insurance
Section 4.05 Flood Insurance................................. 31
Section 4.06 Existence and Authorization..................... 31
Section 4.07 Opinion of Borrower's Counsel................... 32
Section 4.08 Opinion from Counsel to Each
Guarantor..................................... 33
Section 4.09 UCC Search...................................... 33
Section 4.10 Hazardous Material.............................. 33
Section 4.11 Streets and Utilities........................... 33
Section 4.12 Project Budget.................................. 34
Section 4.13 Construction Schedule........................... 34
Section 4.14 Permits......................................... 34
Section 4.15 Plans........................................... 34
Section 4.16 Architect Materials............................. 34
Section 4.17 General Contractors' Materials.................. 34
Section 4.18 Contractor and Subcontractor
Materials..................................... 35
Section 4.19 Engineer's Certificate.......................... 35
Section 4.20 Other Project Documents......................... 35
Section 4.21 Consultants' Report............................. 35
Section 4.22 Cost to Complete................................ 35
Section 4.23 OCC Materials................................... 35
Section 4.24 Appraisal....................................... 36
Section 4.25 Fees............................................ 36
Section 4.26 General Conditions.............................. 36
Section 4.27 Construction-Related Conditions................. 36
ARTICLE V CONDITIONS TO ALL SUBSEQUENT
DISBURSEMENTS..................................... 37
Section 5.01 Initial Disbursement............................ 37
Section 5.02 General Conditions.............................. 37
Section 5.03 Request for Disbursement Documents.............. 38
Section 5.04 Title Endorsements.............................. 39
Section 5.05 Plan and Permit Approval........................ 39
Section 5.06 Stored Materials................................ 40
Section 5.07 Contractors and Subcontractors.................. 40
Section 5.08 Final Construction Disbursement................. 41
Section 5.09 Advances Without Requests....................... 41
Section 5.10 Surveys......................................... 42
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ARTICLE VI REPRESENTATIONS AND WARRANTIES..................... 43
Section 6.01 Existence....................................... 43
Section 6.02 Authorization, Enforceable
Obligation................................... 43
Section 6.03 Conflicting Agreements.......................... 43
Section 6.04 Required Documents ............................. 44
Section 6.05 No Material Litigation.......................... 44
Section 6.06 Margin Regulations ............................. 44
Section 6.07 Compliance With Applicable Laws................. 44
Section 6.08 OCC Lease....................................... 45
Section 6.09 No Brokers...................................... 45
Section 6.10 Project Documents............................... 46
Section 6.11 Plans........................................... 46
Section 6.12 Project Budget and Construction Schedule........ 46
Section 6.13 Streets and Utilities........................... 46
Section 6.14 ERISA........................................... 46
Section 6.15 Environmental................................... 46
Section 6.16 Whole Tax Parcel................................ 47
Section 6.17 Casualty........................................ 47
Section 6.18 True Statements................................. 47
ARTICLE VII AFFIRMATIVE AND NEGATIVE COVENANTS................. 47
Section 7.01 Commencement and Completion of
Construction................................. 47
Section 7.02 Encroachments................................... 48
Section 7.03 Conformity with Plans........................... 48
Section 7.04 Compliance with Laws
and Other Requirements....................... 49
Section 7.05 Change Orders................................... 49
Section 7.06 Project Budget; Annual Operating
Budget....................................... 50
Section 7.07 Contractors and Subcontractors.................. 50
Section 7.08 Permits and Warranties.......................... 51
Section 7.09 Protection Against Liens and Claims............. 51
Section 7.10 Removal of Personalty........................... 52
Section 7.11 Insurance....................................... 52
Section 7.12 Title Reports................................... 52
Section 7.13 Entry and Inspection............................ 52
Section 7.14 Physical Security of Project.................... 52
Section 7.15 Information Covenants........................... 53
Section 7.16 Management of Property.......................... 55
Section 7.17 Project Documents............................... 55
Section 7.18 Operation and Maintenance of
Project...................................... 55
Section 7.19 Environmental................................... 56
Section 7.20 Other Business.................................. 56
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Section 7.21 Further Encumbrance............................. 56
Section 7.22 Transfers....................................... 58
Section 7.23 Reimbursable Expenses........................... 59
Section 7.24 Preservation of Existence....................... 59
Section 7.25 Future Tenant Estoppel
Certificates.................................. 60
Section 7.26 Use of Proceeds................................. 60
Section 7.27 Publicity....................................... 60
Section 7.28 Name............................................ 60
Section 7.29 Consultants' Fees............................... 61
Section 7.30 Partnership Agreement; No
No Partnership Distributions.................. 61
Section 7.31 Major Leases.................................... 61
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES..................... 62
Section 8.01 Events of Default............................... 62
Section 8.02 Remedies........................................ 66
ARTICLE IX MISCELLANEOUS...................................... 70
Section 9.01 Expenses........................................ 70
Section 9.02 Entire Agreement................................ 70
Section 9.03 Counterparts.................................... 70
Section 9.04 Governing Law/Venue/Jurisdiction................ 70
Section 9.05 Severability.................................... 70
Section 9.06 Successors and Assigns.......................... 71
Section 9.07 Setoff.......................................... 71
Section 9.08 Time of the Essence............................. 71
Section 9.09 Headings........................................ 71
Section 9.10 Notices......................................... 71
Section 9.11 Successive Remedies............................. 73
Section 9.12 No-Waiver....................................... 73
Section 9.13 Estoppel Certificates/Non-disturbance/
Other Agreements.............................. 73
Section 9.14 Cross-Default................................... 73
Section 9.15 Purpose of Loans................................ 74
Section 9.16 Inconsistencies with Loan
Documents..................................... 74
Section 9.17 Survival........................................ 74
Section 9.18 Indemnification................................. 74
Section 9.19 No Agency, Partnership or
Joint Venture; Nonliability
of Lender...................................... 75
Section 9.20 Negotiated Document............................. 76
Section 9.21 Limitation on Recourse.......................... 76
Section 9.22 Actions on Behalf of Lender..................... 77
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EXHIBITS
Exhibit A - Form of Assignment of Project Documents
Exhibit B - Form of Assignment of Rents
Exhibit C - Form of Completion Guaranty
Exhibit D - Form of Deed of Trust
Exhibit E - Form of Environmental Guaranty
Exhibit F - Form of Interest Guaranty
Exhibit G - Form of Note
Exhibit H - Form of Request for Disbursement
Exhibit I - Form of Lien Waiver Payment and Affidavit of
Payment
Exhibit ▇-▇ - Form of Architect's Consent
Exhibit J-2 - Form of Architect's Certificate
Exhibit K - Form of Contractor's Consent and
Certificate
Exhibit L - Form of Engineer's Certificate
Exhibit M - Form of OCC Estoppel
Exhibit N - Form of OCC Subordination, Etc. Agreement
SCHEDULES
Schedule 4.12 - Project Budget
Schedule 4.13 - Construction Schedule
Schedule 6.10 - Project Documents
Schedule 6.11 - Plans
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT made as of the 21st day of August,
1990 by and between SOUTHWEST MARKET LIMITED PARTNERSHIP, a limited partnership
organized and existing under the laws of the District of Columbia, having an
office at c/0 Boston Properties, ▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇
("Borrower"), and THE SUMITOMO BANK, LIMITED, a Japanese banking institution
acting through its NEW YORK BRANCH, having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender");
W I T N E S S E T H :
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WHEREAS, pursuant to that certain commitment letter dated June 13, 1990
from Lender to Borrower (the "Commitment") and on the terms and conditions
hereinafter set forth, Lender is willing to lend to Borrower the aggregate sum
of EIGHTY MILLION DOLLARS ($80,000,000), to be evidenced by a promissory note
and secured by, among other things, a lien upon certain real property located in
the District of Columbia;
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
as follows:
ARTICLE I
DEFINITIONS
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Section 1.01. Definitions. As used in this Agreement, the capitalized
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terms set forth in this Article I shall have the meanings given them in this
Article I. Capitalized terms used in this Agreement but not defined in this
Article I shall have the meanings set forth elsewhere in this Agreement.
Capitalized terms used but not defined in this Agreement shall have the meanings
given such terms in the Note or, if not defined therein, in the Deed of Trust
(as those terms are hereinafter defined).
Affiliate. As used herein, "Affiliate" shall mean each of: (a) any
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general Partner, (b) any Guarantor, and (c) any other Person which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, Borrower, any general Partner or any Guarantor.
For purposes of this and all other definitions, the
term "control" shall mean the possession, directly or indirectly, of the power
to cause the direction of the management and policies of a Person, whether
through the ownership of voting securities or equity interests, by contract,
mutual understanding, family relationship or otherwise.
Agent. As used herein, "Agent" shall mean Commercial Settlements,
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Inc., a District of Columbia corporation, an authorized agent of the Title
Companies.
Agreement. As used herein, "Agreement" shall mean this Construction
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Loan Agreement, including all schedules and exhibits hereto, as the same may be
amended or otherwise modified from time to time.
Annual Operating Budget. As used herein, "Annual Operating Budget"
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shall have the meaning given such term in Section 7.15(g) hereof.
Appraisal. As used herein, "Appraisal" shall mean an appraisal of the
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fair market value of the Project performed by the Appraiser in accordance with
the rules and guidelines of the American Institute of Real Estate Appraisers.
Appraised Value of the Trust Estate. As used herein, "Appraised Value
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of the Trust Estate" shall mean the fair market value of Borrower's estate in
the Trust Estate as set forth (a) as of the date hereof in the Appraisal
performed and prepared by the Appraiser dated May 9, 1990, and delivered to
Lender in connection with the making of the Loan or (b) thereafter, from time to
time, in a current Appraisal prepared by the Appraiser.
Appraiser. As used herein, "Appraiser" shall mean Leggatt ▇▇▇▇▇▇ &
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▇▇▇▇▇▇ Appraisal and Consulting Company, Inc., or another appraiser designated
by Borrower and approved by Lender, such approval not to be unreasonably
withheld or delayed.
Architect. As used herein, "Architect" shall mean each of the
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following: (a) with respect to all of the Project other than the Tenant
Improvements, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ Associates P.C.; (b) with respect to the OCC
Tenant Improvements only, Studios Architecture; and (c) with respect to the Spec
Tenant Improvements to be constructed pursuant to a Space Lease, the Person
designated by Borrower or the Space Tenant to perform the design services for
such Spec Tenant Improvements. Architect also shall mean, with respect to the
successor or successors to each Architect in (a), (b) and (c) above, each such
other Person as may hereafter be designated by Borrower or a Space Tenant and
reasonably approved by Lender in accordance with the terms hereof to act in the
place of any of
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the foregoing Persons as architect for such Person's respective portion of the
Project; provided, however, that Lender shall have such approval right only to
the extent that Borrower has the right to designate and/or approve such
successor Architect in accordance with the terms of such Person's contract with
Borrower or a Space Tenant.
Architect Contract. As used herein, "Architect Contract" shall mean
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each of the following: (a) with respect to ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ Associates P.C.,
that certain agreement with Borrower dated December 18, 1989; (b) with respect
to Studios Architecture, that certain agreement currently under negotiation with
Borrower providing for interior design services for the OCC Tenant Improvements,
(c) with respect to a Person designated by Borrower or a Space Tenant to perform
the design services for Space Tenant Improvements, the contract between Borrower
and such Person for such services; and (d) the contract between Borrower and any
subsequent Architect similarly providing for architectural services for the
Project.
Assignment of Project Documents. As used herein, "Assignment of
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Project Documents" shall mean the Collateral Assignment of Project Documents in
the form of Exhibit A hereto.
Assignment of Rents. As used herein, "Assignment of Rents" shall mean
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the Collateral Assignment of Leases, Rents, Profits and Income and Pledge of
Accounts in the form of Exhibit B hereto.
Business Day. As used herein, a "Business Day" shall mean a day on
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which (a) commercial banks in New York City are open for business, (b)
commercial banks in London, England are open for business, and (c) dealings in
U.S. Dollar deposits are carried on in the London Interbank Eurodollar Market
(as defined in the Note).
Change Order. As used herein, "Change Order" shall mean a change in
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the Plans, or in the Construction Contract.
Completion Date. As used herein, "Completion Date" shall mean
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October 31, 1991, subject to extension for Force Majeure as provided in this
Agreement.
Completion Guaranty. As used herein, "Completion Guaranty" shall mean
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the joint and several guaranty in the form of Exhibit C hereto made by
Guarantors in favor of Lender, guaranteeing Lien-free completion of the entire
Project.
Completion of Construction. As used herein, "Completion of
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Construction" shall mean that (a) the core, shell and other portions of the
Project (other than Tenant Improvements) have been constructed in a good and
workmanlike manner substantially in accordance with the Plans and with all
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Laws and all requirements of the National Fire Protection Association (or its
successor); (b) all required inspections by Governmental Authorities have been
completed and either a permanent certificate of occupancy or a temporary
certificate of occupancy subject to no conditions that cannot be satisfied
within the Project Budget and Project Schedule has been obtained covering all of
the core, shell and other "base building" portions of the Project such that
(without limiting the foregoing), upon construction of the Tenant Improvements,
the entire Project may lawfully be occupied for its intended purpose; (c) all
conditions to the final Disbursement of Hard Costs as set forth in Section 5.08
have been satisfied (except to the extent same relate to completion of the OCC
Tenant Improvements in space other than the "Initial Premises" (as defined in
the OCC Lease)) or, in Lender's sole discretion, waived; (d) all Tenant
Improvements required to be constructed by Borrower under the OCC Lease for the
Initial Premises shall have been constructed in a good and workmanlike manner
substantially in accordance with the plans and specifications therefor and with
all Laws and all requirements of the National Fire Protection Association (or
its successor); (e) Borrower shall have obtained either a permanent certificate
of occupancy or a temporary certificate of occupancy subject to no conditions
that cannot be satisfied within the Project Budget and Project Schedule covering
the Initial Premises; and (f) the OCC shall have commenced paying Base Rent
without protest and as required by the terms of the OCC Lease.
Consultants. As used herein, "Consultants" shall mean all independent
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third-party consultants, including the Inspecting Engineer, that Lender
reasonably deems necessary and selects to provide the following services to
Lender: (a) review the Plans; (b) review Project Cost breakdowns and the
Construction Schedule; (c) conduct compliance inspections with respect to the
progress of construction of the Project and approve each element of a Request
for Disbursement; and (d) perform such other services as may, from time to time,
reasonably be required by Lender in connection with the performance of any
undertaking of Lender contemplated hereunder or to protect or assess the value
of lender's security or to assist in enforcing Lender's rights under any of the
Loan Documents.
Construction Contract. As used herein, "Construction Contract" shall
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mean (a) that certain Agreement Between Owner and Contractor dated as of
September 27, 1989 made by and between Borrower and ▇▇▇▇▇▇▇▇ & Street Company, a
Florida corporation, providing for the construction of the Project or (b) the
lump-sum contract between Borrower and any subsequent Contractor similarly
providing for construction of the Project.
Construction Schedule. As used herein, "Construction Schedule" shall
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mean the schedule of dates upon which completion of certain portions of the
Project is anticipated to
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occur, which schedule is or shall, pursuant to Section 4.13, hereafter be
attached hereto as Schedule 4.13.
Contract and Contractor. As used herein, "Contract" shall mean a
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contract, other than the Construction Contract or Architect Contract, to which
Borrower or Boston Properties, as Borrower's agent on behalf of Borrower, is a
party for the supply of materials, labor, services or a combination thereof in
connection with the Project. As used herein, "Contractor" shall mean the Person
who, as a party to a Contract, is to supply materials, labor, services or a
combination thereof.
Conversion Date. As used herein, "Conversion Date" shall have the
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meaning ascribed to such term in Subsection 3.03(b) hereof.
Debt Service Coverage Ratio. As used herein, "Debt Service Coverage
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Ratio" shall mean the ratio obtained by dividing (a) Net Cash Flow for the
pertinent period by
(b) Project Debt Service for the pertinent period.
Deed of Trust. As used herein, "Deed of Trust" shall mean the
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Construction Loan Deed of Trust and Security Agreement in the form of Exhibit D
hereto, as the same may be modified, consolidated or restated from time to time.
Designated Representative. As used herein, "Designated Representative"
-------------------------
shall mean an individual authorized, from time to time, in writing by Borrower,
with the approval of Lender, to deliver Requests for Disbursements,
certificates, and other documents and material to Lender pursuant to this
Agreement and the other Loan Documents.
Disbursement. As used herein, "Disbursement" shall mean each of the
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disbursements of the proceeds of the Loan made pursuant to this Agreement.
Environmental Guaranty. As used herein, "Environmental Guaranty" shall
----------------------
mean the joint and several guaranty in the form of Exhibit E hereto made by
Guarantors in favor of Lender guaranteeing Borrower's performance of certain
obligations under the Deed of Trust relating to Hazardous Material.
Event of Default. As used herein, "Event of Default" shall have the
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meaning ascribed to such term in Section 8.01 hereof.
Exercise Period. As used herein, "Exercise Period" shall have the
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meaning ascribed to such term in Subsection 3.02(c) hereof.
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Expenses. As used herein, "Expenses" shall mean the actual costs
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incurred by Borrower with respect to or allocable to a given period in
connection with the operation or ownership of the Trust Estate; provided,
however, that in the case of capital expenditures, Expenses shall mean the total
amount of such expenditures allocated over the useful life of the property for
which the expenditure was made, and in the case of prepaid expenditures, the
total amount of such prepaid expenditures allocated over the period for which
the expenditure was prepaid. Expenses shall not include (a) payments of
interest and other charges required to be made in respect of the Note, the Deed
of Trust or any other Loan Document, and (b) payments of principal, interest and
other charges required to be made by Borrower in respect of any other
indebtedness secured by all or any part of the Trust Estate or the Revenues, and
(c) distributions to Partners. Expenses shall include, without limitation: (i)
real property taxes; (ii) utility charges; (iii) premiums on insurance policies;
(iv) maintenance and cleaning expenses; (v) legal, accounting brokerage, and
other professional fees attributable to the operation of the Trust Estate; and
(vi) all other expenses, fees, charges and costs incurred in connection with the
ownership or operation of the Trust Estate that are usually and customarily
incurred by owners of first-class commercial office buildings of a size and
usage comparable to the Trust Estate in the District of Columbia area, provided,
however, that no Item included in the Project Budget as an item to be financed
by the Loan shall be deemed part of "Expenses."
Force Majeure. As used herein, "Force Majeure" shall mean the
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occurrence of any of the following events which results in the delay of some
performance mandated by this Agreement: the enactment of any law or issuance of
any governmental order, rule or regulation establishing rationing or priorities
in the use of materials or restricting the use of labor; labor strikes,
lockouts, acts of God, enemy action, civil commotion or fire; or other similar
unavoidable casualty or events. Force Majeure shall include Unavoidable
Government Delay as hereinafter defined.
Funding Costs. As used herein, "Funding Costs" shall have the meaning
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ascribed to such term in the Note.
General Contractor. As used herein, "General Contractor" shall mean
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each of the following: (a) with respect to all of the Project other than the
Spec Tenant Improvements, ▇▇▇▇▇▇▇▇ & Street Company, a Florida corporation, or
such other party as may hereafter be designated by Borrower and reasonably
approved by Lender in accordance with the terms hereof to act as the general
contractor for the Project; and (b) with respect to the Spec Tenant
Improvements, such Person as may be designated by Borrower or by any Space
Tenant and reasonably approved by Lender in accordance with the terms hereof to
act
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as the general contractor for the Spec Tenant Improvements; provided, however,
that Lender shall have the right to approve the General Contractor for the Spec
Tenant Improvements only to the extent that Borrower has the right to designate
and/or approve such successor General Contractor in accordance with the terms of
such Person's contract with Borrower or a Space Tenant.
Governmental Authority. As used herein, "Governmental Authority" shall
----------------------
have the meaning ascribed to such term in the Deed of Trust.
Guarantees. As used herein, "Guarantees" shall mean the Completion
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Guaranty, the Interest Guaranty, and the Environmental Guaranty.
Guarantors and Guarantor. As used herein "Guarantors" shall mean
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and "Guarantor" shall mean one of the
Guarantors.
Hard Costs. As used herein, "Hard Costs" shall mean those Project
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Costs set forth on the Project Budget under the headings "Land and Land Carry"
and "Building Construction", including without limitation costs of labor,
materials, equipment, and fixtures.
Hazardous Material. As used herein, "Hazardous Material" shall have
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the meaning ascribed to such term in the. Deed of Trust.
Improvements. As used herein, "Improvements" shall mean the meaning
------------
ascribed to such term in the Deed of Trust.
Indebtedness. As used herein, "Indebtedness" shall have the meaning
------------
ascribed to such term in the Deed of Trust.
Initial Disbursement. As used herein, "Initial Disbursement" shall
--------------------
mean the first disbursement of proceeds of the Loan made hereunder.
Inspecting Engineer. As used herein, "Inspecting Engineer" shall mean
-------------------
EMJ Construction Consultants or such other party as shall hereafter be appointed
by Lender to act as the Inspecting Engineer.
Institutional Lender. As used herein, "Institutional Lender" shall
--------------------
mean (a) a savings and loan association, a savings bank, a commercial bank or
trust company, an insurance company, an educational, religious or charitable
institution, an endowment fund, a federal, state, municipal or private, foreign
or domestic employees' welfare pension or retirement fund or system, an
investment banking firm, a real estate investment trust or other financial
institution provided that
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any such entity (i) is subject to or submits to service of process within the
State of New York and the District of Columbia, (ii) has total assets of at
least One Billion Dollars ($1,000,000,000), (iii) either (A) reports to or is
subject to the supervision of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the Department of Labor, the Federal Reserve
Board, the Office of Thrift Supervision or any similar state or federal
regulatory agency or official, or any successor to any of the foregoing
agencies, entities or officials, or (B) is subject to public financial reporting
requirements or oversight jurisdiction of the Securities and Exchange
Commission; (iv) is financially sound in Lender's sole discretion; and (v) is
acting in its own interest and capacity or as a fiduciary or trustee for any of
the foregoing; (b) an Affiliate of Borrower; or (c) any other Person approved by
Lender.
Interest Guaranty. As used herein, "Interest Guaranty" shall mean the
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joint and several guaranty and indemnity in the form of Exhibit F hereto made by
Guarantors in favor of Lender, guaranteeing the payment of interest on the Note
and indemnifying Lender against certain liabilities.
Interest Rate Management Arrangement. As used herein, "Interest Rate
------------------------------------
Management Arrangement" shall mean an interest rate swap agreement, an agreement
providing for an interest rate ceiling (commonly known as a "cap") or an
interest rate floor and ceiling (commonly known as a "collar"), or any other
contractual protection against interest rate increases that is generally
accepted in the financial industry and is in such form and on such terms as are
customary in the ordinary conduct of Lender's business or are otherwise
acceptable to Lender in its reasonable discretion.
Involuntary Rate. As used herein, "Involuntary Rate" shall have the
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meaning ascribed to such term in the Note.
Item. As used herein, "Item" shall mean any identified line item set
----
forth in either the Project Budget or the Annual Operating Budget, as
applicable.
Land. As used herein, "Land" shall have the meaning ascribed to such
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term in the Deed of Trust.
Laws. As used herein, "Laws" shall mean all laws, rules, regulations,
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codes, and ordinances of Governmental Authorities, and all rulings, orders,
decisions and interpretations issued by Governmental Authorities in respect
thereof.
Lien. As used herein, "Lien" shall mean any charge, lien (including
----
mechanics, materialmen and other liens), mortgage, deed of trust, pledge,
security interest or other encumbrance of any nature whatsoever upon, of, or in
property
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or other assets of a Person, whether absolute or conditional, voluntary or
involuntary, whether created by agreement, assignment, statute, judicial
proceedings or otherwise.
Loan. As used herein, "Loan" shall mean the aggregate of all principal
----
amounts advanced to Borrower pursuant to the terms hereof or pursuant to the
other Loan Documents and all interest required by the terms hereof, by the terms
of the Note or by the terms of the other Loan Documents to be paid by Borrower
to Lender.
Loan Documents. As used herein, "Loan Documents" shall mean and
--------------
include this Agreement, the Note, the Deed of Trust, the Interest Guaranty, the
Completion Guaranty, the Environmental Guaranty, the Assignment of Rents, the
Assignment of Project Documents, all UCC-l Financing Statements given by
Borrower to Lender, and any and all other documents given from time to time as
security for, or in evidence of, or to provide the terms of or otherwise in
connection with the Loan.
Loan Participant. As used herein, "Loan Participant" shall have the
----------------
meaning ascribed to such term in the Note.
Loan Term. As used herein, "Loan Term" shall have the meaning ascribed
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to such term in the Note.
Loan to Value Ratio. As used herein, "Loan to Value Ratio" shall mean
-------------------
the ratio (expressed as a percentage) obtained at any particular time by
dividing (a) the sum of (i) the then-outstanding principal balance of the Note
and (ii) the then-outstanding principal balance of any other indebtedness
secured by all or any part of the Trust Estate or the Revenues, by (b) the
Appraised Value of the Trust Estate at the time.
Lot 872. As used herein, "Lot 872" shall mean that portion of Square
-------
538, Lot 49, Assessment and Tax Lot 872, subject to a long-term leasehold
interest of ▇▇▇▇ ▇▇▇▇▇▇, Inc., and improved as of the date hereof by a
restaurant commonly know as the Market Inn.
Major Change Order. As used herein, "Major Change Order" shall have
------------------
the meaning ascribed to such term in Section 7.05(e) hereof.
Major Lease. As used herein, "Major Lease" shall have the meaning
-----------
ascribed to such term in the Deed of Trust.
Maturity Date. As used herein, "Maturity Date" shall have the meaning
-------------
ascribed to such term in the Note.
Net Cash Flow. As used herein, "Net Cash Flow" shall mean an amount
-------------
equal to Revenues for a particular period minus Expenses for such period.
- 9 -
Note. As used herein, "Note" shall mean the Promissory Note in the
----
principal amount of Eighty Million Dollars ($80,000,000) or such lesser amount
as may be advanced by Lender to Borrower under this Agreement, and otherwise in
the form of Exhibit G hereto.
OCC. As used herein, "OCC" shall mean the Office of the Comptroller of
---
the Currency, an agency of the United States Government.
OCC Lease. As used herein, "OCC Lease" shall mean that certain Lease
---------
Agreement dated as of August 21, 1989 by and between Borrower and the OCC, as
amended by (a) a letter agreement dated July 18, 1989 and executed by the OCC on
August 2, 1989 and by Boston Properties on behalf of Borrower on August 23,
1989, (b) a letter agreement dated August 28, 1989 to the OCC and executed by
Boston Properties on behalf of Borrower, (c) a letter agreement dated December
18, 1989 and executed by the OCC and Boston Properties on behalf of Borrower,
(d) a letter agreement dated June 29, 1990 by and between Borrower and the OCC,
and (e) a letter agreement dated June 29, 1990 by and between Borrower and the
OCC, as the same may hereafter be further amended, modified or supplemented in
accordance with the terms of the Loan Documents.
OCC Tenant Improvements. As used herein, "OCC Tenant Improvements"
-----------------------
shall have the meaning ascribed to such term in Section 2.12(b) hereof.
Out-of-Pocket Costs. As used herein, "Out-of-Pocket Costs" shall have
-------------------
the meaning ascribed to such term in the Deed of Trust.
Partner. As used herein, "Partner" shall mean those Persons identified
-------
as limited or general partners in the limited partnership agreement of Borrower
in effect on the date hereof, and any other Person hereafter holding legal
and/or beneficial title to an equity interest in Borrower.
Permitted Exceptions. As used herein, "Permitted Exceptions" shall
--------------------
have the meaning ascribed to such term in the Deed of Trust.
Permitted Transferee. As used herein, "Permitted Transferee" shall
--------------------
mean a Person (a) in which ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ in the
aggregate or either alone shall have an indirect or direct ownership interest of
at least twenty-five percent (25%) in the aggregate, (b) which shall be
controlled by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or by either alone, and
(c) which (i) shall control Borrower or a Person that is the successor to
Borrower and the day-to-day operations and management of the Trust Estate and
(ii) shall have the right to make all significant economic and management
- 10 -
decisions on behalf of Borrower (or such successor) without the need for the
vote, approval or consent of any other Person other than a Permitted Transferee.
Person. As used herein, "Person" shall mean any natural person or
------
entity, including without limitation, any trustee, corporation, partnership,
joint stock company, trust, association, unincorporated organization, bank,
business association or firm, or Governmental Agency.
Personal Property. As used herein, "Personal Property" shall mean all
-----------------
of Borrower's right, title and interest, whether now existing or hereafter
acquired, in and to all furniture, furnishings, fixtures, machinery, equipment,
inventory and other personal property of every kind, tangible or intangible, now
or hereafter located at, upon or about the Premises and used or to be used in
connection with or related or arising with respect to the Trust Estate and/or
the Project, excluding that personal property owned by any Space Tenant and
located at, upon or about the Premises that does not become the property of
Borrower under the terms of the applicable Space Lease.
Phase II. As used herein, "Phase II" shall mean the additional
--------
building to be built by Borrower on the remaining undeveloped portion of Square
538, Lot 49, Assessment and Tax Lot 874, substantially in accordance with the
loan proposal heretofore submitted to Lender, to be known as Two Independence,
Square.
Plans. As used herein, "Plans" shall mean all preliminary and, as they
-----
are developed in accordance with the provisions hereof, final drawings, plans,
specifications and other documents (including but not limited to architectural,
structural, mechanical, electrical, and safety), prepared by Borrower,
Architect, General Contractor, any Contractor or Subcontractor, or any other
architect and/or engineer reasonably acceptable to Lender, which Plans shall be
subject to Lender's prior written approval to the extent required by this
Agreement, and which shall describe and show the construction and labor,
materials, equipment and fixtures necessary for the completion of the Project.
Portion of Principal. As used herein, "Portion of Principal" shall
--------------------
have the meaning ascribed to such term in the Note.
Premises. As used herein, "Premises" shall have the meaning ascribed
--------
to such term in the Deed of Trust.
Project. As used herein, "Project" shall mean (a) the development of
-------
the Premises in accordance with the Plans, including, without limitation, the
construction of the
- 11 -
Improvements and all Tenant Improvements and the performance of all other work
required by the Plans or applicable Laws, whether on or off the Land, including
without limitation (i) constructing parking, curbs, gutters, sidewalks, and
public areas and amenities, (ii) providing landscaping, (iii) repairing,
constructing or modifying streets, alleys and other passage-ways or connections
with or support for the foregoing, (iv) repairing or constructing utilities, and
(v) otherwise repairing or modifying existing improvements on or near the Land;
and (b) the ownership and operation of the Premises developed as aforesaid.
Project Budget. As used herein, "Project Budget" shall mean the budget
--------------
now or, pursuant to Section 4.12, hereafter attached hereto as Schedule 4.12,
prepared by Borrower, as the same may be modified from time to time in
accordance with the terms hereof, setting forth a projection of all Project
Costs.
Project Costs. As used herein, "Project Costs" shall mean (a) the
-------------
costs identified on the Project Budget to be funded with the proceeds of the
Loan; (b) all amounts payable to or for the benefit of the OCC under the terms
of the OCC Lease, including amounts payable as liquidated damages, tenant
improvement allowances, contributions for signs, logos and/or other mediums
naming the Improvements, contributions for improving the vicinity of the
Premises, and payments for failure to complete a health facility; and (c) all
other costs necessary to construct or otherwise payable in connection with the
construction of the entire Project.
Project Development Agreement. As used herein, "Project Development
-----------------------------
Agreement" shall mean the Development Agreement, dated as of September 1, 1989,
between Borrower and Boston Properties, a Massachusetts business trust.
Project Documents. As used herein, "Project Documents" shall mean,
-----------------
collectively, all agreements, documents, instruments and materials of whatever
nature now or hereafter existing which relate to the Project or the Trust
Estate, including but not limited to: (a) the Plans and all other plans,
specifications, and drawings and all soil, environmental and engineering test
reports relating to the Project, (b) all approvals, consents, licenses and
permits issued by any Governmental Authority in connection with the Project, (c)
the Construction Contract, the Architect Contract, all Contracts and
Subcontracts, and all other agreements relating to the Project between Borrower
and any consultant, architect, engineer, Contractor, Subcontractor, project
manager or supervisor, laborer or supplier of materials, (d) all development,
management and brokerage agreements, and (e) all payment or performance bonds,
warranties, and guaranties with respect to any portion of the Project. Project
Documents shall not include Space Leases.
- 12 -
Project Debt Service. As used herein, "Project Debt Service" shall
--------------------
mean the sum of (a) all payments of interest and other charges which must be
made by Borrower during a particular period in respect of the Loan, plus (b) all
payments of principal, interest, and other charges which must be made by the
Borrower during such period in connection with all other indebtedness of the
Borrower secured by the Project or revenues therefrom.
Qualifying Space Lease. As used herein, a "Qualifying Space Lease"
----------------------
shall mean a bona fide lease agreement pursuant to which all or a portion of the
Premises is or is intended to be occupied; provided, however, that (a) such
lease is then in full force and effect; (b) such lease, if entered into after
the date hereof, has been created substantially in accordance with all
requirements applicable to leases as set forth in the Deed of Trust, Assignment
of Rents, and other Loan Documents; and (c) either (i) the tenant under such
lease is paying all the rent and other charges due thereunder or (ii) as to a
tenant not yet paying rent, such tenant is obligated to pay all of such rent,
costs, and other charges thereunder, subject only to satisfaction of conditions
precedent to such obligation set forth in such lease and evidenced by an
estoppel certificate in form and substance reasonably satisfactory to Lender.
Lender hereby acknowledges and agrees that, subject to its remaining in full
force and effect, the OCC Lease shall be deemed to be a Qualifying Space Lease.
Request for Disbursement. As used herein, "Request for Disbursement"
------------------------
shall mean a written request for a Disbursement signed by the Designated
Representative on behalf of Borrower in substantially the form of Exhibit H
hereto.
Revenues. As used herein, "Revenues" shall mean all cash revenues
--------
actually received by Borrower under Qualifying Space Leases and all binding and
effective written licenses, concessions and other agreements providing for the
use of space in the Premises entered into in accordance with the terms of the
Loan Documents and assigned to Lender pursuant to one or more of the Loan
Documents with respect to or allocable to a particular period; provided,
however, that (a) Revenues shall not include payments made by a Space Tenant to
Borrower for (i) a security deposit or (ii) Tenant Improvements to the extent
such payments are transmitted to a contractor installing such Tenant
Improvements or are retained by Borrower as reimbursement for the cost of
installing such Tenant Improvements; and (b) with respect to percentage rent or
other payments based on the revenues or income of a Space Tenant or other Person
which Borrower proposes to include in the determination of Revenues, Revenues
shall mean the monthly average of percentage rent or such other payments
received by Borrower for the previous twelve (12) months and to the extent
Borrower has not received percentage rent or such other
- 13 -
payments under such Qualifying Space Leases or other agreements for the previous
twelve-month period, the percentage rent or such other payments for such
Qualifying Space Leases or other agreements shall not be included in the
calculation of Revenues.
Soft Costs. As used herein, "Soft Costs" shall mean all Project Costs
----------
set forth on the Project Budget under the headings "Architect and Engineer",
"Financing", "Marketing", "Carrying Costs", "Legal", and "Overhead", including
without limitation fees for the Architect and the Lender's attorneys and
Consultants, interest on the Loan, real estate taxes, transfer and recordation
taxes, survey costs, and title insurance premiums.
Space Lease. As used herein, "Space Lease" shall have the meaning
-----------
ascribed to such term in the Deed of Trust.
Space Tenant. As used herein, "Space Tenant" shall have the meaning
------------
ascribed to such term in the Deed of Trust.
Spec Tenant Improvements. As used herein, "Spec Tenant Improvements"
------------------------
shall have the meaning ascribed to such term in Section 2.12(c) hereof.
Stored Materials. As used herein, "Stored Materials" shall mean
----------------
materials purchased by Borrower and stored at the Premises or at an off-site
location reasonably acceptable to Lender for use in the Project, but not yet
installed or incorporated into the Project.
Subcontract and Subcontractor. As used herein, "Subcontract" shall
-----------------------------
mean a contract to which Borrower is not a party for the supply of materials,
labor, services or a combination thereof in connection with the Project. As
used herein, "Subcontractor" shall mean the Person who, as a party to a
Subcontract, is to supply materials, labor, services or a combination thereof.
Subordinate Financing. As used herein, "Subordinate Financing" shall
---------------------
have the meaning ascribed to such term in Section 7.21 hereof.
Subordinate Lender. As used herein, "Subordinate Lender" shall have
------------------
the meaning ascribed to such term in Section 7.21 hereof.
Survey. As used herein, "Survey" shall have the meaning ascribed to
------
such term in Section 4.03.
Tenant Improvement Costs. As used herein, "Tenant Improvement Costs"
------------------------
shall mean those Hard Costs and Soft Costs attributable to construction of the
Tenant Improvements as set forth on the Project Budget under the headings
"Tenant Work (OCC)" and "Tenant Work (Spec)".
- 14 -
Tenant Improvements. As used herein, "Tenant Improvements" shall mean,
-------------------
with respect to each and every portion of space in the Improvements, all
improvements, alterations, and tenant finish work required to be constructed by
Borrower pursuant to a Space Lease.
Timing Notice. As used herein, "Timing Notice" shall have the meaning
-------------
ascribed to such term in Section 3.02(b) hereof.
Title Companies. As used herein, "Title Companies" shall mean Chicago
---------------
Title Insurance Company and Ticor Title Insurance Company, as coinsurers under
an agreement acceptable to Lender.
Title Policies. As used herein, "Title Policies" shall have the
--------------
meaning ascribed to such term in Section 4.02 hereof.
Transfer. As used herein, "Transfer" shall mean any or all of the
--------
following events, whether effected voluntarily, involuntarily, by operation of
law or otherwise: (i) the assignment, sale or other transfer of the Trust
Estate or any part thereof or any interest therein (including, without
limitation, any air or development rights), (ii) the lease or sublease of all or
substantially all of the space in the Improvements, in a single or successive
transactions to any single lessee or related lessees, and (iii) the transfer of
any interest in Borrower or any interest in a Person, which has a direct or
indirect ownership interest in Borrower, other than the assignment or collateral
assignment by a limited partner of such limited partner's interest in Borrower,
provided the general partners of Borrower have consented to such assignment and
that the interests so assigned do not exceed, in the aggregate, forty-nine
percent (49%) of the partnership interests in Borrower.
Trust Estate. As used herein, "Trust Estate" shall have the meaning
------------
ascribed to such term in the Deed of Trust.
Unavoidable Government Delay. As used herein, "Unavoidable Government
----------------------------
Delay" shall mean the actual delay of some performance mandated by this
Agreement (other than a monetary obligation) due to any act or failure to act of
the OCC or any person or firm exclusively employed or retained by, or under the
exclusive direction of the OCC or Studios Architecture which, pursuant to
Paragraph 9(b) of Exhibit B to the OCC Lease, would require the OCC Tenant
Improvements to be deemed to be substantially complete prior to actual
substantial completion thereof and as to which Borrower, to the extent required,
has preserved its rights under Paragraph 8 of Exhibit B to the OCC Lease.
- 15 -
Undisbursed Construction Funds. As used herein, "Undisbursed
------------------------------
Construction Funds" shall mean, as of any time of determination, the undisbursed
principal portion of the Loan.
Section 1.02. Accounting Terms. All accounting terms not specifically
----------------
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, generally accepted accounting principles customarily used in
the real estate industry, applied on a consistent basis.
ARTICLE II
TERMS OF THE LOAN AND DISBURSEMENT OF PROCEEDS
----------------------------------------------
Section 2.01. Agreement to Lend. Subject to and on the terms and
-----------------
conditions of this Agreement and the other Loan Documents, Lender shall lend to
Borrower and Borrower shall borrow from Lender the principal amount of EIGHTY
MILLION DOLLARS ($80,000,000), such amount being the aggregate maximum principal
amount that Lender shall under any circumstances be required to advance to
Borrower.
Section 2.02. Repayment. On (a) the Maturity Date, or (b) such
---------
earlier date upon which the Loan becomes due and payable pursuant to the terms
of the Loan Documents, Borrower shall fully repay the Loan to Lender.
Section 2.03. Loan Documents. This Agreement, the Note, the Deed of
--------------
Trust, and the other Loan Documents provide the terms of, evidence, and secure
the Loan.
Section 2.04. Payment of Principal and Interest. The Loan shall bear
---------------------------------
interest at the rate or rates of interest calculated in accordance with the
terms of the Note and shall be payable at the place and in the time and manner
provided and more particularly set forth in the Note.
Section 2.05. Disbursements - General.
-----------------------
(a) Unless Lender otherwise agrees in writing:
(i) The principal amount of each Disbursement, including any
portion thereof advanced for the payment of interest, shall not be less than the
lesser of One Hundred Thousand Dollars ($100,000.00) or an amount equal to the
Undisbursed Construction Funds;
(ii) Not more than one Disbursement shall be made in any calendar
month; and
- 16 -
(iii) Disbursements shall be made in accordance with and on the
terms and conditions of this Article II and the other provisions of this
Agreement.
(b) Borrower acknowledges and agrees that Lender may make
Disbursements to Guarantors for Project Costs pursuant to, and in accordance
with, the terms of the Completion Guaranty.
Section 2.06. Project Budget. The proceeds of the Loan shall be
--------------
disbursed to pay Project Costs in accordance with the Project Budget and this
Agreement. The amount set forth in the Project Budget opposite each Item of
Project Cost shall be the maximum amount of Loan funds which Lender shall
disburse in payment of such Item, subject to any increase in the amount of such
Item in accordance with the terms of this Section 2.06 and Section 2.10.
Borrower, upon prior written notice to Lender, may reduce the amount remaining
to be disbursed with respect to any Item to reflect actual or anticipated
savings in Project Costs with respect thereto and allocate such savings to
increase the amount remaining to be disbursed with respect to any other Item,
provided, however, that the application of funds from such savings (i) among
Items of Hard Costs, (ii) between an Item of Hard Costs and an Item of Soft
Costs, or (iii) between the major Project Budget categories of Architecture and
Engineer, Marketing, Legal, Overhead and Operating Costs shall not exceed ten
percent (10%) of the cost Item, or with respect to clause (iii) above the major
Project Budget category, to which such funds are applied without Lender's prior
consent, which consent will not be unreasonably withheld or delayed and which
will be deemed given if Borrower does not receive written objection from Lender
within ten (10) Business Days after Borrower's notice to Lender. Borrower shall
retain a numbered, sequential record of all such reallocations.
Section 2.07. Timing of Disbursenemts. No later than the tenth (10th)
-----------------------
Business Day of each calendar month (except in the case of the Initial
Disbursement), and at such other times as Lender may agree, Borrower shall
submit to Lender a Request for Disbursement accompanied by the information,
documents and materials required pursuant to the provisions of this Agreement.
Lender will not review and approve any Request for Disbursement not submitted by
the date set forth in the preceding sentence until the next succeeding month and
no Loan funds will be disbursed other than pursuant to a Request for
Disbursement that has been reviewed and approved by Lender. Each Request for
Disbursement by Borrower shall constitute a representation and warranty by
Borrower that, (i) at such time, each of the conditions precedent to
Disbursements specified in Articles IV and V of this Agreement is satisfied, and
(ii) all of the representations and warranties contained in Articles IV and V
are true and correct in all material respects on the date of such Request for
Disbursement. Lender shall make each Disbursement within the time period set
forth in Section 2.09(i).
- 17 -
Section 2.08. Lender's Right to Condition Disbursements. In addition
-----------------------------------------
to the conditions set forth in Articles IV and V of this Agreemnent, Lender
shall have the right to condition any Disbursement upon Lender's use or receipt
and approval of the following:
(a) Bills, invoices, documents of title, vouchers, statements,
payroll records, receipts and any other documents reasonably necessary to enable
Lender to confirm to its reasonable satisfaction the total amount expended,
incurred or due for any requested or paid Item;
(b) Use of a voucher or joint check system acceptable to Lender
for payments of Disbursements directly to any Contractor or Subcontractor if (i)
there shall have occurred an Event of Default, or (ii) Borrower shall be in
default on any obligation to pay such Contractor or Subcontractor and Lender
reasonably believes the default will have a material adverse effect on the
Project or Lender's security, or (iii) there shall have occurred a material
adverse change in the financial condition of Borrower, any General Partner of
Borrower or any Guarantor; or
(c) Any other documents, requirements, evidence or information
that Lender may reasonably request under any provision of the Loan Documents.
Section 2.09. Disbursements for Project Costs. The amounts set forth
-------------------------------
on the Project Budget shall be disbursed as follows:
(a) Each Request for Disbursement for each Item of Hard Costs and
Soft Costs shall show the total amount incurred for work performed or material
or equipment furnished for the periods since the last Request for Disbursement
and from the inception of the Project and the percentage of materials provided
and/or work completed for each such Item from the inception of the Project to
the date of the Request for Disbursement. The Request for Disbursement shall be
in sufficient detail to show that the amount of the Disbursement requested is
within the limits for each Item of Project Costs as shown in the Project Budget.
(b) Each Disbursement shall be in the amount requested by
Borrower in the Request for Disbursement, which amount shall not exceed, (i)
with respect to Hard Costs, the Hard Costs incurred by Borrower as of the date
of a Request for Disbursement, plus, subject to Section 5.06 hereinbelow, the
----
cost of Stored Materials not as yet installed or incorporated in the Project,
less "retained amounts" provided for under the terms of the Construction
----
Contract and/or relevant Contracts or Subcontracts and (ii) with respect to Soft
Costs, those Soft Costs incurred by Borrower as of the date of the Request for a
- 18 -
Disbursement. Retainage shall be disbursed upon satisfaction of the conditions
for the final disbursement of Hard Costs set forth in Section 5.08. However,
retainage due a Contractor or Subcontractor (including the General Contractor to
the extent that it is acting in the capacity of a Subcontractor) may be released
upon completion of such Contractor's or Subcontractor's work, in accordance with
the terms of the Construction Contract or applicable Contract or Subcontract,
provided that (i) the labor and/or materials to be provided have been
substantially completed or supplied pursuant to the Construction Contract or
such applicable Contract or Subcontract and the Plans applicable to the
Construction Contract or such Contract or Subcontract, (ii) the Contractor or
Subcontractor has executed and delivered a final Lien waiver and affidavit of
payment in the form of Exhibit I hereto, modified to state that all work and
materials to be performed and supplied by such Contractor or Subcontractor have
been performed and supplied and upon payment only of such retainage, all amounts
owing to such Contractor or Subcontractor will be paid in full, and otherwise
satisfactory to Lender and in compliance with the lien law of the District of
Columbia, (iii) all requirements of all Governmental Authorities have been
satisfied with respect to the Contractor's or Subcontractor's work, and (iv)
Inspecting Engineer has confirmed in writing that such Contractor or
Subcontractor has complied with clause (i) and (iii). Tenant Improvement Costs
shall be disbursed subject to the additional conditions and limitations set
forth in Section 2.12 hereof.
(c) There shall be deducted from each Disbursement and it shall
not include: (i) any amounts previously disbursed hereunder, (ii) any costs
covered by the Request for Disbursement not approved, certified or verified as
required by this Agreement, (iii) any Soft Costs covered by the Initial Request
for Disbursement and, thereafter, a previous Request for Disbursement for which
proof of payment has been requested but not received by Lender, (iv) any Hard
Costs for which Lien waivers have not been received by Lender for the Initial
Request for Disbursement to the extent required by Section 4.27(c) hereinbelow
and, thereafter, all Requests for Disbursement submitted prior to the then-
pending Request for Disbursement; and/or (v) any real estate taxes, mechanics
Liens, security interests, claims or other charges against the Premises or
Project and any interest, fees or other costs which Borrower may have failed to
pay in accordance with this Agreement or the other Loan Documents.
(d) Except as may otherwise be expressly provided for herein with
respect to Stored Materials, for purposes of this Section 2.09, Project Costs
shall be deemed to have been "incurred" by Borrower at the following times: (i)
Hard Costs -when the labor has been performed or the materials have been
supplied and incorporated into the Project,
- 19 -
payment therefor has been requested by the General Contractor or a Contractor
and the Subcontractor, if any, therefor, and the General Contractor or
Contractor and the Subcontractor, if any, therefor is entitled to payment
pursuant to the Construction Contract and the applicable Contract or
Subcontract; and (ii) Soft Costs -when such costs are due and payable (or have
been paid by Borrower) and the services relating thereto have been rendered or
the value thereof has been received by Borrower.
(e) All Hard Costs shall be certified by General Contractor (or
the Contractor providing the labor or materials related to such Hard Costs) and
Borrower in the manner provided in this Section 2.09 and in Section 5.03 and
shall be verified by the Inspecting Engineer as having been incurred.
Verification of the monthly progress and Hard Costs which have been incurred by
Borrower from time to time and the estimated total Hard Costs from time to time
may be made by Lender and/or Inspecting Engineer in its or their reasonable
judgment.
(f) If (i) Borrower shall have requested an acceleration of
payments under this Agreement or (ii) there shall have occurred an Event of
Default or (iii) Borrower shall be in default on any obligation to pay money in
any way related to the Project and Lender has reason to believe this default
will have an adverse effect on the Project or Lender's security or (iv) Lender
shall be entitled under any other Loan Document to advance funds or make
payments in respect of the Project, and if Lender considers that its best
interests and the best interests of the Project lie in accelerating the amounts
to be advanced pursuant to this Article II, it shall be entitled to do so in
amounts not more than was required under the applicable underlying contract and
no person dealing with Borrower or General Contractor or any other Person shall
have standing to demand any different performance from Lender.
(g) Subject to the provisions of Section 2.12 governing Tenant
Improvement Costs, all other Hard Costs not advanced during the course of
construction of the Project shall be advanced upon the satisfaction of the
conditions for the receipt of the final disbursement for Hard Costs set forth in
Section 5.08 hereof. Subject to the provisions of Section 2.12 governing Tenant
Improvement Costs, all other Soft Costs not advanced prior to Completion of
Construction shall be advanced until exhausted, not more frequently than once a
month, for Soft Costs as incurred after Completion of Construction.
(h) If Lender is entitled and deems it appropriate to make
Disbursements directly to the third parties entitled to payment as provided in
Sections 2.08(b) and 2.09(f) hereof, all sums so advanced by direct payment
shall satisfy pro tanto the obligations of Lender under this Agreement and
--- -----
Lender shall have no obligation to see to the disposition by any such Person of
any direct payments made to such Person.
- 20 -
(i) Each Disbursement shall be payable within five (5) Business
Days after satisfaction of all conditions to the requested Disbursement.
Section 2.10. Disbursement of Contingency Funds. Any amount set forth
---------------------------------
in the Project Budget for "Contingency" or "Change Orders" ("Contingency") may
be used to pay any Project Costs not specifically included in the Project
Budget, including excess costs on specific Items or costs associated with
permitted Change Orders relating to specific Items. Contingency amounts may be
disbursed upon the written request of Borrower to Lender and upon compliance
with the conditions precedent applicable to the Item or Items for which
contingency funds are requested. Use of Contingency funds (other than for
application to Change Orders not subject to Lender's prior approval pursuant to
Section 7.05 hereof) shall be subject to the prior reasonable approval of
Lender. Prior to Completion of Construction, no Contingency funds may be used
to pay interest on the Loan.
Section 2.11. Disbursements of Interest. The amount set forth under
-------------------------
the Item "Interest" shall be periodically disbursed directly to Lender in order
to pay interest. Pursuant to Section 2.15 hereinbelow, Lender is authorized to
credit to Borrower's demand deposit account with Lender and to make
Disbursements automatically from such demand deposit account to pay interest
without request from or prior notice to Borrower. The amount of such
Disbursements shall be added to the principal amount of the Loan, and Lender
will provide Borrower with a monthly statement showing the total amount of such
Disbursements. Depletion of the amounts set forth for the Item "Interest" shall
not release Borrower from any of Borrower's obligations under the Loan
Documents, including but not limited to its obligation to pay interest on the
Loan.
Section 2.12. Disbursement of Tenant Improvement Costs.
----------------------------------------
(a) Tenant Improvement Costs shall be disbursed in the manner and
on the terms and conditions provided in this Agreement for the disbursement of
all other Project Costs, modified only as set forth in this Section 2.12.
(b) Lender's disbursement of Tenant Improvement Costs for Tenant
Improvements required to be constructed under the OCC Lease (the "OCC Tenant
Improvements") shall, in addition to the other terms and conditions of this
Agreement, be subject to the following terms and conditions:
(i) Lender shall not be required to make any Disbursement with
respect to the OCC Tenant Improvements unless and until (A)
Borrower has provided Lender with a detailed
- 21 -
breakdown of the Project Costs included in the Project Budget
under the heading "Tenant Improvements (OCC)" in form and
substance reasonably satisfactory to Lender and (B) Borrower
and Studios Architecture have executed a valid and binding
contract, reasonably acceptable to Lender, for the planning
and design of the Tenant Improvements, which contract requires
Studios Architecture to execute a certificate and consent
substantially in the form of Exhibit J-1 hereto and containing
the information in Exhibit J-2 hereto, to the extent
applicable to the services to be provided by Studios
Architecture.
(ii) Each Request for Disbursement that includes any Tenant
Improvement Costs for the OCC Tenant Improvements ("OCC Tenant
Improvement Costs") shall be accompanied by a copy of (A) the
monthly invoice to be submitted to the OCC under Paragraph
3(b) of Exhibit B to the OCC Lease in respect of such OCC
Tenant Improvement Costs, together with copies of all related
materials and information to be submitted with such invoice,
and (B) evidence of payment by the OCC of all prior monthly
invoices, to the extent payment has been made.
(iii) In addition to all other limitations set forth in this
Agreement, no Disbursement for OCC Tenant Improvement Costs
shall be greater than the Borrowers pro rata portion of the
Improvements Allowance (as defined in the OCC Lease) which in
accordance with the OCC Lease is then due and owing as set
forth in the then current monthly invoice for Tenant Work
Costs (as defined in the OCC Lease).
(iv) In the event that the OCC hereafter elects to prepay any of
its share of OCC Tenant Improvement Costs, such prepaid
amounts shall be deposited into the Receipts Account (as
defined in the Assignment of Rents) and disbursed to pay the
OCC's share of OCC Tenant Improvement Costs in accordance with
the terms of the Assignment of Rents.
(c) Lenders disbursement of Tenant Improvement Costs for Tenant
Improvements constructed in space in the Project other than that demised by the
OCC Lease (the "Spec Tenant Improvements") shall, in addition to the other terms
and conditions of this Agreement, be subject to the following terms and
conditions:
- 22 -
(i) Borrower shall be entitled to request and Lender shall be
obligated to make Disbursements in respect of Tenant
Improvement Costs for Spec Tenant Improvements ("Spec Tenant
Improvement Costs") constructed before January 1, 1993, or
constructed thereafter pursuant to Space Leases entered into
prior to January 1, 1993.
(ii) In addition to all other limitations set forth in this
Agreement the following limitations shall apply to
Disbursements for Spec Tenant Improvement Costs:
(A) The aggregate of Disbursements for particular Spec Tenant
Improvements shall not exceed the lesser of (1) if such
Spec Tenant Improvements are being constructed pursuant
to a Space Lease, the actual aggregate allowance provided
by Borrower for such Spec Tenant Improvements under such
Space Lease and (2) whether or not such Spec Tenant
Improvements are being constructed pursuant to a Space
Lease, the product of Twenty-Six Dollars ($26.00)
multiplied by the rentable square feet of space for which
the Spec Tenant Improvements are being constructed;
provided, however, to the extent that there are "savings"
(as defined in the next sentence) with respect to the
cost of constructing particular Spec Tenant Improvements,
the amount of such savings (on a per square foot basis)
may be applied by Borrower to increase the per square
foot maximum amount of the Loan available for Spec Tenant
Improvement Costs under clause (2). "Savings" as used in
the preceding sentence shall mean (Y) the amount by which
the cost of constructing Spec Tenant Improvements for
space not demised by a Space Lease is less than Twenty-
Six Dollars ($26.00) per square foot and (Z) the amount
by which the portion of the cost of constructing Spec
Tenant Improvements covered by a Space Lease that is to
be borne by Borrower is less than Twenty-Six Dollars
($26.00) per square foot.
- 23-
(B) No Disbursement shall exceed the "Borrower's Share" (as
hereinafter defined) multiplied by the then incurred but
unpaid Spec Tenant Improvement Costs. The "Borrower's
Share" shall be a fraction, the numerator of which shall
be the aggregate maximum of all Disbursements available
for particular Spec Tenant Improvements Costs, determined
pursuant to Section 2.12(c)(ii)(A) above, and the
denominator of which shall be the total of such Spec
Tenant Improvement Costs, as reasonably estimated by
Lender in consultation with Borrower.
(iii) Prior to the first Disbursement for Spec Tenant Improvement
Costs for particular Spec Tenant Improvements, Lender shall
have received and approved (such approval not to be withheld
or delayed unreasonably) the following:
(A) With respect to Spec Tenant Improvements to be designed
by an architect, engineer, designer or space planner
other than the Architect and/or to be constructed by a
contractor other than the General Contractor, copies of
the agreements with such Persons providing for the
performance of all work required to complete such Spec
Tenant Improvements;
(B) Copies of the Plans for such Spec Tenant Improvements;
and
(C) A budget and construction schedule for the completion of
such Spec Tenant Improvements.
If Borrower or an Affiliate is not required to design or
construct the Spec Tenant Improvements for which a
Disbursement is being requested, then the items identified in
this Section 2.12(c)(iii) shall be provided by Borrower only
to the extent required to be or, if not so required, actually
made available to Borrower by the tenant under the pertinent
Space Lease.
(v) Prior to the final Disbursement for Tenant Improvement Costs
for particular Spec Tenant Improvements, Lender shall have
received and
- 24 -
approved certificates, letters, waivers, affidavits and
endorsements to the effect set forth in Section 5.08, but
limited to such Spec Tenant Improvements.
Section 2.13. Modifications to Project Budget. From time to time,
-------------------------------
Borrower or Lender may determine that increases or decreases are necessary to
the amounts set forth in the Project Budget because of actual or anticipated
changes in Project Costs. If, after due consultation and consideration of the
views of Borrower and supporting documentation, Borrower and Lender do not agree
to what increases or decreases need to be made to the Project Budget amounts set
forth in the Project Budget, the determination of Lender shall control, unless
Borrower delivers an acceptable letter of credit or other security to the Lender
for the disputed amount, to the extent that the disputed amount increases the
overall Project Budget.
Section 2.14. Balancing. Disbursements to pay Project Costs shall
---------
only be made at such times as the Loan is "in balance." The Loan shall be
deemed to be "in balance" only at such times as Lender shall determine, after
consultation with Borrower, that the sum of (a) the portion of the Loan not yet
disbursed for each Item of Project Costs (including Retainage on funds
previously advanced on account of such Item), plus (b) any excess amounts from
savings on any other Items to be applied to the Item in question plus (c) the
portion of such Item to be paid by the OCC or another Space Tenant under the OCC
Lease or another Space Lease, is equal to or greater than the full cost of such
Item. If the Loan is not in balance, Lender shall have no obligation to make,
and Borrower shall not be entitled to receive, Disbursements pursuant hereto
(excluding Disbursements for interest drawn by and paid to Lender) with respect
to that portion of the Loan for each Item which is out of balance. When the
Loan is again in balance, Lender shall resume funding the portion of the Loan
for the Item in question in accordance with the terms of this Loan Agreement.
With respect to those Items covered by the Construction Contract or other fixed
price Contracts, if an Item or Items under the Construction Contract or such
other Contract is or are out of balance by an aggregate amount of Five Hundred
Thousand Dollars ($500,000) or more, Lender shall have the right to require that
the Contractor or Subcontractor performing the work for the Item or Items which
is or are out of balance provide a payment and performance bond to guarantee the
completion of the work for the Item or Items, to the extent the Contractor or
Subcontractor has not already provided such bond.
2.15. Automatic Debit and Credit; Wire Transfers. Subject to Section
------------------------------------------
2.08(b), Disbursements of the Loan proceeds shall be made in immediately
available funds by Lender crediting the Disbursement Account established by
Borrower with Lender pursuant to the Assignment of Rents. Upon Borrower's
request, Lender will wire such Loan proceeds from the
- 25 -
Disbursement Account to such account(s) as Borrower shall designate in the
related Request for Disbursement. Borrower hereby authorizes Lender to
automatically debit the Disbursement Account for all interest, fees and other
charges payable to Lender pursuant to the Note, this Agreement and/or any of the
Loan Documents; provided, however, that the failure of Lender to so debit the
Disbursement Account shall not relieve Borrower of any of its obligations under
the Note, this Agreement and/or any of the Loan Documents.
ARTICLE III
BORROWER'S FIXED RATE OPTION
----------------------------
Section 3.01. Borrower's Fixed Rate Option. At any time after
----------------------------
Completion of Construction has occurred, Borrower shall have the right, on and
subject to the terms and conditions hereinafter set forth (the "Conversion
Option"), to cause the interest rate on a Portion of Principal to be converted
from the floating rate or rates then in effect pursuant to the terms of the Note
to the Fixed Rate for an Interest Period designated by Borrower.
Section 3.02. Exercise of Conversion Option.
-----------------------------
(a) Borrower may exercise the Conversion Option on any Business Day by
(i) giving Lender an Interest Rate Notice in accordance with the Note
designating the Fixed Rate and the desired Interest Period and (ii) thereafter
accepting a Fixed Rate in the manner provided in this Article III.
(b) Upon or after delivery of an Interest Rate Notice designating the
Fixed Rate, but in no event later than 5:00 p.m. New York time on the Business
Day immediately preceding the last day of the ensuing Exercise Period (as
defined in Section 3.02(c) below), Borrower shall deliver to Lender written
notice ("Timing Notice") identifying one or more representatives of Borrower
(and their telephone numbers), each of whom (i) is individually authorized to
accept or reject the Fixed Rate obtainable by Lender and offered to Borrower, as
hereinafter provided, and (ii) will be available to Lender by telephone until
5:00 p.m. New York time on the Business Day said timing Notice is given and from
9:00 a.m. New York time until 3:00 p.m. New York time on the next following
Business Day.
(c) An "Exercise Period" shall mean a period commencing at 9:00 a.m.
New York time on the Monday (or, if such Monday is not a Business Day, the next
following Business Day) next following the date on which an Interest Rate Notice
designating the Fixed Rate is given to Lender and continuing through and
including 3:00 p.m. New York time on the next following Thursday (or, if such
Thursday is not a Business Day, the next preceding Business Day).
- 26 -
Section 3.03. Interest Rate Management Arrangement.
------------------------------------
(a) Lender shall, by no later than 3:00 p.m. on the Business Day next
following Borrower's giving of a Timing Notice during an Exercise Period, use
all reasonable efforts to obtain an offer for an Interest Rate Management
Arrangement having a term equal to the Interest Period designated in the
Interest Rate Notice that will enable Lender to convert the interest rate on the
affected Portion of Principal on Lender's books from a floating to a fixed rate
of interest (subject, however, to adjustment as provided in the Note). Prior to
accepting such offer for an Interest Rate Management Arrangement, Lender shall
telephonically quote to Borrower the fixed per annum interest rate together with
all Funding Costs that will result from effectuating such an Interest Rate
Management Arrangement, which rate Borrower shall immediately either accept or
reject. If Lender is able to contact Borrower and Borrower fails to immediately
accept or reject the offered Fixed Rate, Lender shall have no obligation to
further attempt to effectuate such an Interest Rate Management Arrangement. The
Fixed Rate offered by Lender shall be the sum of the fixed rate of interest
obtainable in the offered Interest Rate Management Arrangement plus five hundred
fifty one-thousandths of one percent (0.550%).
(b) If Borrower accepts the Fixed Rate quoted by Lender, Lender shall
use all reasonable efforts to accept and enter into the offered Interest Rate
Management Arrangement. If Lender is able to enter into the offered Interest
Rate Management Arrangement then, commencing on the third (3rd) Business Day
after Lender enters into the offered Interest Rate Management Arrangement (the
"Conversion Date"), the interest rate on the Portion of Principal to which the
Fixed Rate is to apply shall, without further notice to or action by Borrower or
Lender, bear Interest at the Fixed Rate for the designated Interest Period.
Borrower's acceptance of a Fixed Rate shall be irrevocable for the designated
interest Period.
(c) If Borrower rejects the Fixed Rate quoted by Lender pursuant to
Subsection 3.03(a) or if Lender is unable to contact Borrower to obtain
Borrower's election as to such Fixed Rate, Lender shall not accept the offered
Interest Rate Management Arrangement and shall, until 3:00 p.m. on the final
Business Day of the Exercise Period then in effect, continue to use all
reasonable efforts to seek an Interest Rate Management Arrangement that will
result in a Fixed Rate acceptable to Borrower. If Borrower fails to accept a
Fixed Rate by 3:00 p.m. on such date, Borrower shall have no further right
during such Exercise Period to convert the interest rate on the Note from a
floating to a fixed rate. Borrower shall nonetheless retain the right, subject
to the same terms and conditions hereof, to give another Interest Rate Notice
designating the Fixed Rate and, during the ensuing Exercise Period, to give the
Timing Notice and accept a Fixed Rate.
- 27 -
(d) If Borrower accepts the Fixed Rate, Borrower shall reimburse
Lender for all Funding Costs incurred by Lender as a result of Borrower's
exercise of the Conversion Option and acceptance of a Fixed Rate.
(e) Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, the following limitations shall apply to
Borrower's rights in respect of the Conversion Option:
(i) In exercising the Conversion Option, Borrower may designate
an Interest Period that expires on or before, but not after
the Maturity Date. If Borrower designates the Fixed Rate for
an Interest Period that expires prior to the Maturity Date,
then the applicable rate or rates of interest for the
remainder of the Loan Term shall be that or those rates from
time to time in effect by reason of Borrower's election of
such rate or rates pursuant to Section 3(b) of the Note or by
operation of the other provisions of the Note.
(ii) In exercising the Conversion Option, Borrower must designate
as the Portion of Principal to bear interest at the Fixed
Rate the entire principal balance of the Loan outstanding at
such time. Amounts thereafter advanced under the Note shall
bear interest at the Eurodollar Rate or Prime Rate in
accordance with the terms of the Note, but shall not be
entitled to bear interest at the Fixed Rate unless and until
(A) the Interest Period for the Fixed Rate as previously
selected by Borrower expires prior to the Maturity Date and
Borrower thereafter again exercises the Conversion Option or
(B) the entire remaining balance of the Loan still available
to be drawn has been drawn and Lender, upon Borrower's
delivery of an appropriate Interest Rate Notice, is able to
obtain an Interest Rate Management Arrangement that will
permit Lender, on terms reasonably acceptable to Lender and
Borrower, to convert the interest rate on the amount of such
entire remaining balance to a fixed rate of interest.
Section 3.04. Conditions to Lender's Obligation to Enter Into an
--------------------------------------------------
Interest Rate Management Arrangement. Lender's obligation to enter into an
------------------------------------
Interest Rate Management Arrangement and thereby convert the interest rate on
the Note to the Fixed Rate shall in all respects be conditioned upon the
satisfaction (or waiver by Lender) of all of the following conditions:
- 28 -
(a) Borrower shall have delivered to Lender Borrower's certificate
that no material adverse change in the financial condition of Borrower and
Guarantors' certificate that no material adverse change in the financial
condition of Guarantors has occurred since the date hereof.
(b) There shall exist at the Conversion Date (i) no uncured Event of
Default and (ii) no fact or circumstance, which, with the passage of time,
giving of notice or action of third parties, could become an Event of Default
that is not then being cured in accordance with the terms of this Agreement and
the Loan Documents.
(c) All of the representations and warranties set forth in this
Agreement, the Loan Documents and other documents delivered to Lender in
connection with the funding of the Loan shall be true and correct in all
material respects as of the Conversion Date, and Borrower shall have recertified
such representations and warranties to Lender as of such date.
(d) As of the Conversion Date, there shall be (i) no litigation
pending nor shall lit litigation have been threatened in writing by a potential
claimant or a potential claimant's counsel with respect to the Trust Estate, and
(ii) no condemnation or similar proceeding shall be pending nor shall same have
been threatened by a duly authorized official of a Governmental Authority acting
in his official capacity with respect to all or any part of the Trust Estate,
either of which, if determined adversely to Borrower, would materially and
adversely affect the Trust Estate or the priority of Lender's lien thereon or
the financial condition of Borrower or Guarantors
(e) Borrower shall have complied in all respects with the applicable
terms and conditions of this Article III.
ARTICLE IV
CONDITIONS TO THE INITIAL DISBURSEMENT
--------------------------------------
The obligation of Lender to make the Initial Disbursement to or for the
account of Borrower shall be subject to the satisfaction of all the conditions
set forth in this Article IV and, absent satisfaction or Lender's written waiver
of the same, Lender shall have no obligation to make the Initial Disbursement.
Section 4.01. Loan Documents. The following Loan Documents shall have
--------------
been duly executed by all parties thereto other than Lender, acknowledged as
required, and delivered either to Lender or, as to Loan Documents that are to be
- 29 -
recorded or filed, to the Agent with written instructions satisfactory to Lender
that such Loan Documents be filed or recorded prior to the funding of the
Initial Disbursement:
(a) this Agreement;
(b) the Note;
(c) the Deed of Trust;
(d) such Form UCC-l Financing Statements as Lender may require
naming Borrower as debtor;
(e) the Assignment of Rents;
(f) a Notice of Assignment of the OCC Lease in form and substance
satisfactory to Lender as required by the Assignment of Rents;
(g) the Assignment of Project Documents; and
(h) the Guarantees.
Section 4.02. Title Policies. Lender shall have received ALTA
--------------
extended coverage mortgagee form of title insurance policies 1987 form B (the
"Title Policy") (with proof of the payment of the premiums therefor) or
commitments therefor in form and substance acceptable to Lender issued by the
Agent on behalf of the Title Companies, together with (a) an executed
coinsurance agreement in form and substance satisfactory to Lender and (b)
reinsurance from other title insurance companies approved by Lender and
evidenced by executed reinsurance agreements satisfactory to Lender containing a
right of direct access, insuring the lien of the Deed of Trust to be a first
lien against the Premises, free and clear of all defects, encumbrances and
exceptions, including mechanics' Liens and claims of Liens, other than the
Permitted Exceptions, together with such affirmative insurance as Lender may
require. The aggregate amount of the Title Policies shall be not less than the
maximum amount of the Loan, the coverage then provided by the Title Policies
shall be in the amount of the Initial Disbursement, and the Title Policies shall
contain a "pending disbursements" clause in substantially the following form:
"Pending disbursement of the full proceeds of the loan secured by
the mortgage set forth under Schedule A hereof, this policy insures
only to the extent of the amount actually disbursed but increases as
each disbursement is made in good faith and without knowledge of any
defects in, or objections to, the title up to the face amount of the
policy. At the time of each disbursement of the proceeds of the loan,
- 30 -
the title must be continued down to such time for possible liens or
objections intervening between the date hereof and the date of such
disbursement."
Section 4.03. Survey. Lender shall have received a current survey
------
(the "Survey") of the Premises prepared by a surveyor acceptable to Lender who
is qualified as a land surveyor in the District of Columbia, which shall be
satisfactory, in form and substance, to Lender and which survey shall (a) on its
face set forth (i) the legal description of the Premises and (ii) a
certification from the surveyor to Lender and the Title Companies that it was
prepared in compliance with standards of the American Land Title Association and
otherwise containing such certifications of fact as Lender may require; (b) show
the locations of the Improvements then constructed on the Premises; (c) show
that the Improvements, to the extent then constructed, are located entirely
within the Land property lines and do not encroach upon any easement or breach
or violate any Law or any covenant, condition or restriction of record, or any
building or zoning ordinance; and (d) otherwise satisfy the reasonable
requirements of Lender and the Title Companies.
Section 4.04. Insurance. Lender shall have received evidence that the
---------
insurance required under Section 1.08 of the Deed of Trust is in full force and
effect with all annual premiums paid.
Section 4.05. Flood Insurance. Lender shall have been provided with
---------------
satisfactory evidence, which may be in the form of a letter from an insurance
broker, municipal engineer, or other knowledgeable source unaffiliated with
Borrower, as to whether (a) the Premises is located in an area designated by the
Department of Housing and Urban Development as having special flood or mudslide
hazards, and (b) the community in which the Project is located is participating
in the National Flood Insurance Program. If both of the aforesaid conditions
exist, Lender shall have received evidence that satisfactory policies of flood
insurance covering the Project are in full force and effect with all annual
premiums paid and that such policies have been endorsed to name Lender as a loss
payee pursuant to the standard mortgage clause without contribution.
Section 4.06. Existence and Authorization. Lender shall have received
---------------------------
true, correct, and complete executed copies of the following documents:
(a) With respect to each Guarantor, each general Partner of
Borrower, and each general Partner of a general Partner of Borrower that is a
corporation:
- 31 -
(i) The certificate of incorporation of such corporation
and all amendments thereof, certified by the Secretary of State of the state of
such corporation's incorporation, together with a certificate of said Secretary
of State to the effect that the corporation is in good standing therein;
(ii) A certificate from the Secretary of State or comparable
official of the jurisdiction in which the Premises are located (if other than
such corporation's state of incorporation) to the effect that the corporation is
in good standing and qualified to do business therein;
(iii) Bylaws certified to Lender by the secretary of the
corporation; and
(iv) A certificate of the secretary of the corporation
certifying (A) resolutions of the shareholders and directors of the corporation
authorizing the consummation of the transactions contemplated by the Loan
Documents to which such corporation is a party or a signatory and the execution,
delivery, and performance of each of the Loan Documents to which such
corporation is a party or a signatory and (B) the incumbency and signature of
each of the officers of the corporation to execute any Loan Documents; and
(b) With respect to Borrower and each Guarantor, each general
Partner of Borrower, and each general partner of a general partner of Borrower
that is a partnership:
(i) The partnership or joint venture agreement and all
amendments, attachments and agreements related thereto certified to Lender by
all general Partners thereof;
(ii) All certificates filed or required to be filed by the
partnership in the jurisdiction of its formation and the jurisdiction where the
Premises are located in order for it to do business in those jurisdictions; and
(iii) Such evidence as may be available from the Secretary of
State or comparable official of the jurisdiction of the partnership's formation
to the effect that the partnership continues to exist and is in good standing.
Section 4.07. Opinion of Borrower's Counsel. Lender shall have
-----------------------------
received a favorable opinion of Borrower's counsel to the following effect:
(a) Borrower is duly organized, validly existing, in good
standing, and authorized to do business in the District of Columbia.
- 32 -
(b) All Loan Documents to which the Borrower is a party have been
duly authorized, executed and delivered by Borrower and constitute legal, valid,
binding and enforceable agreements in accordance with their respective terms
under federal and District of Columbia law, subject only to any applicable
bankruptcy, insolvency, reorganization, moratorium law, or other laws affecting
creditors rights generally, and do not breach or violate any agreement, court
order, or law of which such counsel has knowledge and by or under which Borrower
is bound or affected.
(c) Such other matters as Lender may require.
Section 4.08. Opinion from Counsel to Each Guarantor. Lender shall
--------------------------------------
have received a favorable opinion from counsel to each Guarantor to the same
effect as the opinion of Borrower's counsel (to the extent applicable).
Section 4.09. UCC Search. Lender shall have received current searches
----------
of the UCC filing offices in such jurisdictions as Lender may require and the
land records in the District of Columbia showing no security interests affecting
the Premises, the Project, Borrower, the general Partners of Borrower, the
general Partners of the general Partners of Borrower or Guarantors other than
those expressly permitted by the Loan Documents.
Section 4.10. Hazardous Material. Borrower shall have furnished
------------------
Lender with a report or reports satisfactory to Lender showing no Hazardous
Material present at or conveyed from or to the Premises, except to the extent
used in construction of the Project and for which there is no practical
alternative and which will be used in strict compliance with all Laws and
removed in its entirety from the Project promptly upon completion of such use.
Borrower shall have furnished Lender with evidence satisfactory to Lender that
no Hazardous Material will be knowingly incorporated into the Project by
Borrower or, following Completion of Construction, present at or conveyed from
or to the Premises except for petroleum products, cleaning solvents, paint and
other similar materials necessary in the ordinary operation of the Premises and
which are stored, handled and disposed of in strict compliance with all Laws
applicable thereto.
Section 4.11. Streets and Utilities. Borrower shall have furnished
---------------------
evidence satisfactory to Lender that (a) all utility services necessary for the
construction of the Project and the operation thereof for its intended purposes
are available at the boundaries of the Premises and in adequate supply at the
boundaries of the Premises and (b) the Project has lawful, adequate,
unobstructed, and unimpaired access to public streets.
- 33 -
Section 4.12. Project Budget. Lender shall have received and approved
--------------
a detailed budget of all Project Costs, together with supporting documentation
reasonably requested by Lender, which budget shall, upon approval by Lender, be
initialed by Borrower and Lender and attached hereto as Schedule 4.12.
Section 4.13. Construction Schedule. Lender shall have received and
---------------------
approved a detailed schedule for the construction of the Project and
corresponding expenditures, which schedule shall show, among other things, a
trade-by-trade breakdown of the estimated periods of commencement and completion
of the work of each such trade. Upon approval by Lender, the schedule shall be
initialed by Borrower and Lender and attached hereto as Schedule 4.13.
Section 4.14. Permits. Lender shall have received evidence (a) that
-------
Borrower has obtained all approvals, permits, licenses and other authorization
of Governmental Authorities (i) for that portion of construction of the Project
covered by the Plans for which the Initial Disbursement is being requested and
(ii) for future construction to the extent then obtainable and (b) that there is
no basis to believe that any and all approvals, permits, licenses and other
authorizations of Governmental Authorities needed for Completion of Construction
will not be forthcoming in a timely manner consistent with the Construction
Schedule.
Section 4.15. Plans. Lender shall have received and approved the
-----
Plans for the Project, to the extent available as of the date the Initial
Disbursement is funded. Plans shall be scheduled by sheet number, title, date
and revised date, which schedule shall be true and correct, and such Plans shall
include the filed plans referred to in any permit for the Project.
Section 4.16. Architect Materials. Lender shall have received and
-------------------
approved (a) a true, correct and complete copy of the fully executed Architect
Contract for each Architect, (b) a consent executed by each Architect,
substantially in the form of Exhibit J-1 hereto, and (c) a certificate executed
by each Architect, substantially in the form of Exhibit J-2 hereto. Lender shall
have received and approved copies of all inspection and test records and reports
made by or for each Architect with respect to the Project.
Section 4.17. General Contractor's Materials. Lender shall have
------------------------------
received and approved a true, correct and complete copy of the fully executed
Construction Contract, together with a consent and certificate executed by the
Contractor substantially in the form of Exhibit K.
- 34 -
Section 4.18. Contractor and Subcontractor Materials. Lender shall
--------------------------------------
have received (a) a list of all Contractors and Subcontractors and (b) copies of
all Contracts and Subcontracts as executed or as then being negotiated.
Section 4.19. Engineer's Certificate. Lender shall have received from
----------------------
▇▇▇▇▇ & ▇▇▇▇▇, Consulting Engineers, and from any other engineer providing
services on the Project, an executed certificate substantially in the form of
Exhibit L hereto.
Section 4.20. Other Project Documents. Lender shall have received
-----------------------
true, correct and complete copies of any and all Project Documents not elsewhere
identified herein and reasonably requested by Lender, and such additional
information as Lender may require relative to the development, construction,
use, occupancy, and management of the Project.
Section 4.21. Consultants' Report. Lender shall have received reports
-------------------
from Lender's Consultants, including the Inspecting Engineer, addressed to
Lender regarding such matters as Lender requests and, without limiting the
foregoing, to the effect that (a) the Plans conform with generally acceptable
building construction practice, including architectural, structural, mechanical
and electrical aspects thereof, (b) the Inspecting Engineer concurs with (i) the
Hard Costs shown in the Project Budget, and (ii) the Construction Schedule
prepared by Borrower, (c) based upon the information submitted by Borrower or
such other Person as the Inspecting Engineer may deem necessary or appropriate,
all permits, licenses and approvals required for the construction of the Project
have been obtained to the extent applicable to the state of construction or no
impediment exists to further required permits, licenses and approvals being
timely obtained, (d) Contracts and Subcontracts are in effect which
satisfactorily provide for the construction of the Project, (e) all roads and
utilities necessary for the full utilization of the Project for its intended
purposes have been completed or there are sufficient amounts budgeted for such
improvements, (f) the construction of the Project theretofore performed has been
completed substantially in accordance with the Plans reviewed by Inspecting
Engineer and approved by Lender, and (g) the Project has, in the aggregate,
reached a stated percentage of completion.
Section 4.22. Cost to Complete. Lender shall have determined in the
----------------
exercise of its sole discretion that the Project can be built for not more than
the amount specified therefore in the Project Budget.
Section 4.23. OCC Materials. Lender shall have received an executed
-------------
estoppel certificate from the OCC substantially in the form of Exhibit M hereto
and an executed
- 35 -
subordination, nondisturbance and attornment agreement substantially in the form
of Exhibit N hereto.
Section 4.24. Appraisal. Lender shall have approved the Appraisal
---------
heretofore delivered by Borrower.
Section 4.25. Fees. Borrower shall have made arrangements reasonably
----
satisfactory to Lender for the payment from the Initial Disbursement of the
following fees, costs and expenses:
(a) A commitment fee of Three Hundred Twenty Thousand Dollars
($320,000.00), to be retained by Lender whether or not any further Disbursements
are made under this Agreement;
(b) The fees, costs and other expenses then due and payable to
Lender's Consultants under their agreements with Lender;
(c) Reimbursement to Lender for monies it has heretofore' paid to
its Consultants in connection with the transactions contemplated by the Loan
Documents; and
(d) Lender's counsel's fees and disbursements incurred in
connection with the Loan.
Section 4.26. General Conditions.
------------------
(a) On the date of funding of the Initial Disbursement, there
shall exist (i) no Event of Default and (ii) no fact or circumstance, which,
with the passage of time, giving of notice or action of third parties, could
become an Event of Default.
(b) All representations and warranties contained herein and in
the other Loan Documents and in any document delivered to Lender by Borrower in
connection with the Loan shall be true and correct in all material respects.
(c) Lender shall have received such additional agreements,
certificates, reports, approvals, instruments, documents, financing statements,
consents and opinions as Lender may reasonably request, all in form and
substance reasonably satisfactory to Lender.
Section 4.27. Construction-related Conditions. Lender shall have
-------------------------------
received all of the following documents, materials and information with respect
to the Initial Disbursement:
(a) A Request for Disbursement;
- 36 -
(b) All information required by Section 5.06 (to the extent the
Initial Disbursement is for Stored Materials);
(c) Partial Lien waivers and affidavits of payment in the form of
Exhibit I hereto from the General Contractor and all Contractors and
Subcontractors for the full amount (less actual retainage) of all Hard Costs due
and owing to the General Contractor, Contractors and Subcontractors as of the
date of the last payment from Borrower (or an Affiliate) to such Persons;
(d) A certificate from each Architect with responsibility for
work being paid for from the Initial Disbursement to the effect set forth in
Section 5.03(c);
(e) A certificate from the General Contractor to the effect set
forth in Section 5.03(d); and
(f) As to any phase of construction that has been completed, the
information and materials set forth in Section 5.03(f).
ARTICLE V
CONDITIONS TO ALL SUBSEQUENT DISBURSEMENTS
------------------------------------------
The obligation of Lender to make each Disbursement after the Initial
Disbursement to or for the account of Borrower shall be subject to the
satisfaction of all the conditions set forth in this Article V and, absent
satisfaction or Lender's written waiver of the same, Lender shall have no
obligation to make such Disbursement.
Section 5.01. Initial Disbursement. All conditions to making the
--------------------
Initial Disbursement shall have been satisfied or waived in writing by Lender
and the Initial Disbursement shall have been made.
Section 5.02. General Conditions.
------------------
(a) All representations and warranties contained herein and in
the other Loan Documents and in any document delivered to Lender by Borrower in
connection with the Loan, including without limitation all Requests for
Disbursement, shall be true and correct in all material respects on and as of
the date of the Disbursement then to be made as though made on and as of that
date, except to the extent otherwise disclosed by Borrower to Lender in writing,
provided that the facts set forth in such disclosures are acceptable to Lender
in its sole discretion.
- 37 -
(b) On the date of funding the Disbursement, there shall exist
(i) no Event of Default and (ii) no fact or circumstance which, with the passage
of time, giving of notice or action of third parties, could become an Event of
Default.
Section 5.03. Request for Disbursement Documents. Prior to each
----------------------------------
Disbursement, Borrower shall have furnished to Lender and Lender shall have
received and approved all of the following documents, materials, and
information:
(a) A Request for Disbursement;
(b) Partial Lien waivers in the form of Exhibit I hereto from the
General Contractor and all Contractors and Subcontractors for the full amount
(less actual retainage) of all Hard Costs covered by all prior Requests for
Disbursement, except that Borrower shall not be required to obtain Lien waivers
(i) with respect to (and shall not be entitled to any Disbursement for) any
claim for labor, service, equipment or material that is being actively contested
in accordance with the requirements of the Deed of Trust and (ii) with respect
to any Contractor or Subcontractor that only supplies materials to the Project
and whose Contract or Subcontract requires the payment of less than One Hundred
Thousand Dollars ($100,000.00) in the aggregate, except to the extent Lender has
given Borrower not less than fifteen (15) days' prior written notice that a Lien
waiver will be required from such Contractor or Subcontractor for a subsequent
Disbursement;
(c) A certificate from each Architect with responsibility for
work being paid for from that Disbursement, in the form set forth in Exhibit H,
with respect to that portion of the Project for which such Architect has design
responsibility, to the effect that, in the Architect's professional opinion: (i)
all revisions to the Plans since the date of the last Disbursement are in
conformity with all applicable Laws, (ii) the work completed to the date of the
Disbursement is in substantial conformity with the Plans, Construction Contract
and applicable Contract if any, and (iii) stating the percentage of completion
of the work on such portion of the Project;
(d) A certificate from the General Contractor or appropriate
Contractor, if any (with respect to Hard Costs only), in the form set forth in
Exhibit H, setting forth all incurred Items of Project Costs for the periods
since the last Request for Disbursement and from the inception of the Project
(or, as appropriate, the Spec Tenant Improvements), all Items of Project Costs
projected to complete the Project (or, as appropriate, the Spec Tenant
Improvements), any variance between actual and projected Project Costs and the
amounts set forth in the Project Budget, the percentage of materials provided
and/or work completed for each Item from the inception of the Project (or, as
appropriate, the Spec Tenant
- 38 -
Improvements) to the date of the certification, and all changes from the
previous certificate which are known or reasonably anticipated by the General
Contractor or appropriate Contractor, if any.
(e) A report from the Inspecting Engineer with respect to any
revised Plans, Project Budget and Construction Schedule (or, as to Spec Tenant
Improvements, any new plans, schedule and budget) stating (i) that in the
opinion of Inspecting Engineer, all Change Orders and modifications or
amendments to the Plans, Project Budget and Construction Schedule (or, as to
Spec Tenant Improvements, any new plans, schedule and budget) required hereby to
be approved by Lender have been approved by Lender; (ii) that, in the opinion of
Inspecting Engineer, based on a review of the partial Lien waivers, certificates
and other reports submitted to substantiate the Request for Disbursement, the
construction of the Project (or, as appropriate, the Spec Tenant Improvements)
theretofore performed has been completed substantially in accordance with the
Plans, Construction Contract and applicable Contract, if any, reviewed by
Inspecting Engineer and approved by Lender; (iii) what percentage of completion
in the aggregate has been reached in the construction of the Project (or, as
appropriate, the Spec Tenant Improvements); (iv) the extent to which, if any,
the Disbursements for the Hard Costs not yet approved are not sufficient to
complete construction of the Project; (v) whether completion of the portions of
the Project not yet completed can, in Inspecting Engineer's opinion, be
completed prior to the Completion Date (or, with respect to Spec Tenant
Improvements only, the completion date set forth in the supplemental schedule
for such Spec Tenant Improvements); and (vi) that Inspecting Engineer has
approved the items referred to in Sections 5.03(b), (c), and (d) hereof; and
(f) As to a stage of construction which has been completed, any
required reports or approvals covering structural and mechanical work and
certifications or other appropriate written statements from the appropriate
Governmental Authorities for electrical work with respect to such stage to the
extent reasonably obtainable.
Section 5.04. Title Endorsements. Prior to each Disbursement, Lender
------------------
shall have received from the Agent on behalf of the Title Companies endorsements
to the Title Policies extending the coverage to be provided thereby to the date
and to the full amount of the requested Disbursement, without exception for
mechanics Liens or claims of Liens, or any other matter not previously approved
by Lender in writing. Such endorsements will insure the Deed of Trust to be a
first lien on the Project, subject only to the Permitted Exceptions.
Section 5.05. Plan and Permit Approval. Lender shall have received
------------------------
and approved all changes to the Plans (to the extent required by Section 7.05(e)
hereof) and all new Plans and all permits, licenses, approvals and other
authorizations
- 39 -
from Governmental Authorities necessary to complete the work contemplated by
such Plans, to the extent then required or obtainable, for the development,
construction, use and occupancy of the Project in respect of which the
Disbursement is requested.
Section 5.06. Stored Materials. Lender will make Disbursements for the
----------------
cost of Stored Materials (not including any profit or overhead of General
Contractor or any Contractor or Subcontractor (other than the manufacturer or
supplier of such materials) payable in respect of such Stored Materials, for
which a Disbursement shall be made only after incorporation of the Stored
Materials into the Project) subject to the other provisions of this Agreement,
and further provided that Lender shall have received the following, in form and
substance satisfactory to Lender:
(a) for materials stored on the Premises, invoices indicating
actual cost of the Stored Materials, not including profit and overhead;
(b) evidence that the Stored Materials are appropriate for
purchase during the then current stage of construction;
(c) evidence that the Stored Materials have been paid for and are
owned by (or upon payment of the amount to be disbursed pursuant to the
applicable Request for Disbursement shall be paid for and owned by) Borrower
free of all lien rights or claims of the vendor or any third party;
(d) evidence satisfactory to Lender that the Stored Materials are
securely stored on-site or in a bonded warehouse or storage yard approved by
Lender and, if stored in a warehouse or storage yard, the warehouse or storage
yard has been notified that Lender has a security interest in the subject stored
materials and the original warehouse receipt;
(e) for those stored materials stored off-site, a certificate or
binder of insurance from Borrower or the supplier, fabricator or other
subcontractor, covering the Stored Materials against loss, theft and damage in a
manner and amount satisfactory to Lender, naming Lender as a loss-payee; and
(f) evidence of filing of any UCC-1 financing statement or
statements required to perfect Lender's lien with respect to such Stored
Materials, and satisfactory assurance to Lender that such materials are covered
by the security agreement provisions of the Deed of Trust and that Lender has a
perfected security interest in such materials.
Section 5.07 Contractors and Subcontractors. To the extent required
------------------------------
by Section 7.07 hereof, Lender shall have received copies of all Contracts and
Subcontracts not theretofore reviewed by Lender.
- 40 -
Section 5.08. Final Construction Disbursement. The final Disbursement
-------------------------------
of Hard Costs for all portions of the Project excluding Spec Tenant Improvement
Costs and the release of related retainage (to the extent not theretofore
released pursuant to Section 2.09(b)) shall be made subject to satisfaction of
all of the foregoing as well as the following conditions:
(a) Lender shall have received a certification by Borrower and a
letter from each Architect other than the Architect for the Spec Tenant
Improvements that all work on the Project other than the Spec Tenant
Improvements has been finished and made available for use substantially in
accordance with the Plans, Construction Contract, other applicable Contract if
any, and OCC Lease;
(b) Lender shall have received a certificate of Inspecting
Engineer stating, in effect, that all of the Project other than the Spec Tenant
Improvements has been completed in a good and workmanlike manner substantially
in accordance with the Plans, Construction Contract, other applicable Contract
if any, and OCC Lease;
(c) Lender shall have received final Lien waivers and affidavits
of payment from the General Contractor and all Contractors and Subcontractors
who have performed work, labor or services or furnished supplies in connection
with the construction, of the project substantially in the form of Exhibit I
hereto, modified to state that all work, labor, services and materials to be
performed or provided by such Person have been performed and provided and, upon
payment of a specified sum, all amounts owing to such Person in respect of the
Project will then be paid in full; and
(d) Lender shall have received final and comprehensive
endorsements to the Title Policies or evidence satisfactory to Lender that the
Title Companies are in a position to issue to Lender final policies of title
insurance with such endorsements thereto as Lender may reasonably require,
insuring the Deed of Trust as a first lien, subject only to the Permitted
Exceptions and providing coverage in the full amount of the Loan.
Section 5.09. Advances Without Requests. Notwithstanding anything
-------------------------
to the contrary and without regard to the minimum Disbursement amount set forth
in Section 2.05(a), Borrower hereby authorizes Lender to disburse proceeds of
the Loan to pay (i) interest and fees on the dates when interest and fees are
due and owing in accordance with Section 2.12 hereof and the terms of the Note
and the other Loan Documents and (ii) upon the occurrence of an Event of
Default, or upon Borrower's default on any obligation to pay money in any way
related to the Project which default Lender reasonably believes may have a
material adverse effect on the Project, (A) all costs of title searches or
abstracts, document taxes, stamp
- 41 -
taxes and recording expenses; (B) the Inspecting Engineer's fees and expenses
reasonably incurred; (C) reasonable fees and expenses for any services of a
Consultant which may be required for purposes contemplated by this Agreement;
and (D) notwithstanding that Borrower may not have requested a Disbursement of
such amount, subject to the further provisions of the Deed of Trust, all costs,
fees and expenses due to (1) contractors, subcontractors, laborers, materialmen
or other persons furnishing labor, services or materials used or to be used on
or in connection with the Project, (2) taxing authorities or insurers in payment
of taxes or hazard, liability or title insurance premiums when due, and/or (3)
the holder, of any Lien on the Premises or Project or Borrower 5 interest
therein, as necessary to discharge such Lien. The authorization hereby granted
shall be irrevocable, and no further direction or authorization from Borrower
shall be necessary for Lender to make such Disbursements. However, the
provisions of this Article V shall neither require Lender to make such
Disbursements, nor prevent Borrower from paying interest and fees from its own
funds. Any Disbursement so made shall be deemed made to and received by Borrower
and shall be added to the unpaid principal balance of the Note. Lender will
promptly advise Borrower of the making of any Disbursement pursuant to this
Section 5.09, and such notice shall set forth, in reasonable detail, a
description of those Items which were paid with the proceeds of such
Disbursement.
Section 5.10. Surveys. If necessary in the reasonable judgment of
-------
Lender or if required by either of the Title Companies, Borrower, within thirty
(30) days after written notice from Lender or such Title Company, shall from
time to time furnish to Lender updates of the Survey certified to Lender and the
Title Companies and updated by inspection with respect to all relevant
requirements and giving current information as described in Section 4.03. Within
thirty (30) days after Completion of Construction, Borrower shall deliver to
Lender a final, "as-built" version of the Survey which shall show: (a) the
Project as completed in accordance with the Plans and otherwise in accordance
with the provisions of this Agreement, (b) all easements affecting the Premises,
whether benefiting or burdening same, rights of way and existing utility lines,
whether recorded or disclosed by a physical inspection of the Premises, (c) a
calculation of the dimensions of the Premises, (d) the lines of the public
streets abutting the Premises and the widths thereof, (e) encroachments and the
extent thereof in feet and inches onto the Premises and all encroachments by any
buildings, structures or improvements located on the Premises onto any easements
over, and onto property adjacent to, the Premises, and (f) all Improvements, and
any other physical matters on the ground which may adversely affect the Premises
or title thereto and the relationship of such Improvements and other physical
matters by distances to the perimeter of the Premises, established building
lines and street lines.
- 42 -
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lender to enter into this Agreement and to make the Initial
Disbursement and each subsequent Disbursement under the Loan, Borrower makes the
following representations and warranties which shall survive the execution and
delivery of this Agreement, the Note and the other Loan Documents and shall be
remade from time to time as elsewhere provided in this Agreement.
Section 6.01. Existence. Borrower is a limited partnership duly
---------
organized and validly existing under the laws of the District of Columbia.
Borrower has the authority, rights and franchises to own its properties, to
carry on its business as now conducted, to perform its obligations hereunder and
under the other Loan Documents, to complete the Project in accordance with the
Plans, and to own and operate the Project as a first-class commercial office
building. Borrower has made all filings in each jurisdiction in which the
character of its business or nature of its properties makes such filings
necessary and where not filing could have a material adverse impact on its
business. Borrower conducts no business, directly or indirectly, except for the
development, construction, ownership, and operation of the Project and of Phase
II, and the ownership of Lot 872.
Section 6.02. Authorization, Enforceable Obligation. Borrower has the
-------------------------------------
authority and legal right to execute, deliver and perform the Loan Documents to
which Borrower is a party, to borrow under the Loan Documents and to grant the
liens and security interests contemplated thereby, and has taken all necessary
action to authorize the borrowings on the terms and conditions hereof and the
execution, delivery and performance of the Loan Documents to which Borrower is a
party. No consent, license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with any
Governmental Authority which has not been obtained is required for the
execution, delivery and performance by Borrower of the Loan Documents to which
it is a party. Each of the Loan Documents to which Borrower is a party has been
executed and delivered by a Person duly authorized to execute and deliver such
documents on behalf of Borrower and constitutes the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms.
Section 6.03. Conflicting Agreements. Neither the execution nor
----------------------
delivery of this Agreement or any other Loan Document or any amendments thereto,
nor fulfillment of or compliance with the terms and provisions hereof or
thereof, nor
- 43 -
the consummation of the transactions contemplated hereby or by any of the other
documents referred to herein, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any lien (other than the lien of
the Loan Documents) upon any of the properties or assets of Borrower pursuant to
its partnership agreement, any award of any arbitrator or any agreement
(including any Project Document and any agreement with Borrower's partners),
instrument, order, judgment, decree, statute, law, ordinance, franchise,
certificate, permit, rule, regulation or the like to which Borrower is subject,
or to or by which its properties or its assets or the Trust Estate are bound or
affected.
Section 6.04. Required Documents. Borrower has furnished Lender true,
------------------
correct and complete certified copies of all documents and materials to be
furnished under Section 4.06 hereof.
Section 6.05. No Material Litigation. No litigation, investigation or
----------------------
administrative proceeding of or before any court, arbitrator or governmental
authority is pending or has been threatened in writing by or on behalf of a
potential claimant against Borrower, the general Partners of Borrower or assets
of Borrower or that would, if determined adversely, be likely to have a material
adverse effect on (a) Borrower's ability to perform its obligations under the
Loan Documents in accordance with the terms thereof, (b) the validity of this
Agreement or any other Loan Document, or (c) Lender's security under this
Agreement or any other Loan Document. No notice has been received by Borrower of
any proceeding to condemn, purchase or otherwise acquire the Trust Estate or any
part thereof or interest therein, and, to the best of Borrower's knowledge, no
such proceeding has been threatened by a duly authorized official of a
Governmental Authority acting in his official capacity.
Section 6.06. Margin Regulations. No part of the proceeds of the Loan
------------------
will be used to purchase or carry any margin stock (as such term is defined in
Regulations G, U and X of the Board of Governors of the Federal Reserve System).
Borrower is not engaged, principally or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
margin stock.
Section 6.07. Compliance With Applicable Laws. Each of Borrower, the
-------------------------------
Project, and the Trust Estate is in compliance with the requirements of all
Laws, the failure to comply with which would materially and adversely affect
Borrower's ability to perform its obligations under this Agreement or any of the
other Loan Documents, and no written notice of non-compliance with any of the
foregoing has been received by Borrower from any Governmental Authority. No
consent, approval or
- 44 -
authorization, or registration, declaration or filing with any Governmental
Authority or any other Person is required for the valid execution, delivery and
performance by Borrower of this Agreement or any other Loan Document, or the
carrying out of the transactions contemplated hereby or thereby. All approvals,
permits, licenses and other authorizations of Governmental Authorities required
for the current stage of construction of the Project and for future stages to
the extent now obtainable have been obtained and are in full force and effect
and true and complete copies thereof have been furnished to Lender. Borrower
has no basis to believe that any and all approvals, permits, licenses and other
authorizations of Governmental Authorities needed for Completion of Construction
will not be forthcoming in a timely manner consistent with the Construction
Schedule.
Section 6.08. OCC Lease. Borrower has furnished to Lender a true and
---------
complete copy of the OCC Lease with all amendments and supplements thereto. The
OCC Lease is in full force and effect and (a) no notice of default has been
given by either Borrower or the OCC thereunder, (b) there are no material
defaults under any of the provisions thereof and (c) all conditions to the
effectiveness and continuing effectiveness thereof required to be satisfied as
of the date hereof have been satisfied.
Section 6.09. No Brokers. Borrower and Lender each represent to the
----------
other that they have not dealt with any mortgage or other broker or finder in
connection with the Loan. Borrower and Lender agree to indemnify, defend and
hold the other harmless from and against any claim for brokerage fees or
commissions or other compensation in connection with the Loan by reason of an
alleged misrepresentation of the statement made by it in the immediately
preceding sentence. In case any action, suit or proceeding is brought against
Lender by reason of such alleged misrepresentation by Borrower (a) Lender shall
give prompt notice thereof to Borrower, (b) Borrower may, at Borrower's sole
cost and expense, resist and defend such action, suit or proceeding by counsel
reasonably satisfactory to Lender, and (c) if Borrower elects to defend such
action, suit or proceeding, Lender shall not compromise or settle any such
action, suit or proceeding without the consent of Borrower unless Lender waives
its right to indemnification under this Section. In case any action, suit or
proceeding is brought against Borrower by reason of such alleged
misrepresentation by Lender, (i) Borrower shall give prompt notice thereof to
Lender, (ii) Lender may, at Lender's sole cost and expense, resist and defend
such action, suit or proceeding by counsel reasonably satisfactory to Borrower,
and (iii) if Lender elects to defend such action, suit or proceeding, Borrower
shall not compromise or settle any such action, suit or proceeding without the
consent of Lender, unless Borrower waives its right to indemnification under
this Section.
- 45 -
Section 6.10. Project Documents. All material Project Documents,
-----------------
excluding the Plans, Construction Contract, and the Architect Contract for each
Architect, and, to the best of Borrower's knowledge after due inquiry, all other
Project Documents, are listed in Schedule 6.10 annexed hereto and made a part
hereof, and, to the extent required by the provisions of this Agreement or to
the extent Lender has so requested, true and complete copies of all Project
Documents, including the Plans, Construction Contract, and the Architect
Contract for each Architect, together with all amendments thereof and
modifications thereto, have been delivered to Lender. All Project Documents are
in full force and effect in accordance with their respective terms, and no party
to any Project Document has asserted any claim of default or offset against the
other with respect thereto that remains uncured.
Section 6.11. Plans. All Plans for the Project are listed in Schedule
-----
6.11 hereto. The Plans have been approved, and all amendments and supplements
to the Plans will be approved, by (a) all Governmental Authorities with
jurisdiction over the Project, to the extent required, (b) the General
Contractor (to the extent required by the Construction Contract), and (c) the
beneficiary of any restrictive covenant requiring such approval.
Section 6.12. Project Budget and Construction Schedule. The Project
----------------------------------------
Budget accurately reflects, to the best of Borrower's knowledge and belief, all
Project Costs which have been and will be incurred by Borrower in the
acquisition, development and construction of the Project. The Construction
Schedule accurately reflects, to the best of Borrower's knowledge and belief,
the time required to complete the entire Project and each portion thereof.
Section 6.13. Streets and Utilities. All utility services necessary
---------------------
for the construction of the Project and the operation thereof for its intended
purposes are available at the boundaries of the Premises, including water
supply, fire protection, storm and sanitary sewer, gas, electricity, and
telephone facilities. The Project has lawful, adequate, unobstructed, and
unimpaired access to public streets.
Section 6.14. ERISA. Borrower does not have a defined benefit pension
-----
plan under the Employee Retirement Income Security Act of 1974, as amended, the
unfunded liabilities of which could, upon termination of the plan, be held to be
a liability of Borrower by the Pension Benefit Guaranty Corporation.
Section 6.15. Environmental. Except as disclosed in the Environmental
-------------
Report, there are not now and, to Borrower's best knowledge after due inquiry;
never have been any Hazardous Materials present at or conveyed from or to the
Premises or
- 46 -
incorporated into the Project, except for Hazardous Materials used in the normal
course of construction of the Project, as to which there exists no practical
alternative and which have been used or are being used in strict compliance with
all Laws and have been or will be removed in their entirety from the Premises
promptly upon completion of such use.
Section 6.16. Whole Tax Parcel. The Land constitutes a single, whole
----------------
tax parcel and is assessed separately from any other real property.
Section 6.17. Casualty. The Project has not been materially damaged
--------
by fire or other casualty, or if damaged, Lender as loss payee has received
insurance proceeds and, if necessary, a Completion Deposit in the manner, amount
and as otherwise contemplated by Section 1.09 of the Deed of Trust and such
proceeds and Completion Deposit are sufficient to effect the satisfactory
restoration of the Project and to permit Completion of Construction on or prior
to the Completion Date and in accordance with all of the terms and provisions of
this Agreement.
Section 6.18. True Statements. Neither this Agreement, any other Loan
---------------
Document nor any other document delivered to Lender in connection with the Loan
(including without limitation all Requests for Disbursements) contains, or will
contain when made, any untrue statement of a material fact and by this reference
all representations and warranties made in any of the Loan Documents are hereby
made a part of this Agreement to the same extent as if fully set forth herein.
ARTICLE VII
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Section 7.01. Commencement and Completion of Construction. Borrower
-------------------------------------------
shall proceed with the construction of the Project with due diligence,
substantially in accordance with the Construction Schedule, and subject to the
terms of this Section 7.01, shall effect Completion of Construction on or prior
to the Completion Date. Borrower shall thereafter complete all incomplete
portions of the Project in a timely fashion in compliance with the OCC Lease and
all other applicable Space Leases. The Completion Date may be extended for a
period not to exceed sixty (60) days by Force Majeure, provided that (i)
Borrower shall promptly, but in no event later than ten (10) days after the
occurrence of Force Majeure circumstances, notify Lender of the existence of
such Force Majeure circumstances, which notice shall set forth the date upon
which such circumstance began, (ii) Borrower shall provide Lender with such
evidence of the Force Majeure circumstances as
- 47 -
Lender shall reasonably request, including any information provided by General
Contractor to Borrower in General Contractor's request for extension of the
Completion Date pursuant to the terms of the Construction Contract or by
Borrower to the OCC under the OCC Lease and (iii) dates for the performance of
Borrower's obligations under the OCC Lease shall be extended by an equal period
pursuant to Section 28.16 of the OCC Lease. The progress of construction of the
Project shall be deemed to be substantially in accordance with the Construction
Schedule so long as target dates set forth in such schedule have been met or, if
such target dates have not been met, Lender has determined in its reasonable
discretion that Completion of Construction will occur not later than the
Completion Date as extended in compliance with this Section 7.01. Borrower
shall not permit construction to cease for more than ten (10) consecutive days
or for more than twenty (20) days in the aggregate, subject, however, to delays
for Force Majeure as permitted by this Section 7.01. During any discontinuance
of construction, Borrower shall make adequate provision, acceptable to Lender,
for the protection of the Project to the extent then constructed, against
deterioration and against other loss, damage or theft.
Section 7.02. Encroachments. Borrower shall construct the
-------------
Improvements entirely on the Land without encroachment upon any lot line or
boundary, easement or right-of-way or any other land, except for the existing
encroachment of the foundation of the Project onto land adjacent to the Land to
the east, as shown on the Survey heretofore delivered to Lender.
Section 7.03. Conformity with Plans. Borrower shall construct the
---------------------
Project in substantial conformity with the Plans and in a good and workmanlike
manner with new materials of good quality. If at any time construction of the
Improvements is not in compliance with the foregoing requirements, Borrower
shall promptly give notice thereof to Lender and Lender shall have the right to
stop such nonconforming construction and order repair or reconstruction in
accordance with the foregoing requirements and to withhold all further
Disbursements until construction is in satisfactory compliance therewith. Upon
notice from Lender to Borrower, or Borrower's discovery irrespective of such
notice, that construction is not in substantial conformity with such
requirements, Borrower shall commence correcting the deviation as promptly as
practical and, in any event, within fifteen (15) days after such notice or
discovery and shall prosecute such work diligently to completion, which in no
event shall be later than sixty (60) days after such notice or discovery. If
Lender reasonably determines that the corrective work is not proceeding
satisfactorily, Lender may, upon not less than fifteen (15) days' notice to
Borrower, prosecute such corrective work to completion at Borrower's expense.
Lender's approval of any
- 48 -
Disbursement shall not constitute a waiver of Lender's right to require
correction of any such defects or departures from the Plans not theretofore
discovered by, or called to the attention, of Lender.
Section 7.04. Compliance with Laws and Other Requirements. Borrower
-------------------------------------------
shall in all material respects with all conditions, covenants, restrictions,
Space Leases, easements, reservations, rights and rights of way and all
applicable Laws and other requirements relating to the Trust Estate and the
Project, and obtain in a timely fashion all necessary approvals, consents,
licenses and permits of all Governmental Authorities.
Section 7.05. Change Orders. Change Orders:
-------------
(a) Shall all be in writing, numbered in sequence, and signed by
Borrower and General Contractor or the appropriate Contractor;
(b) Shall all, as part of each Request for Disbursement, be
certified by Borrower and each Architect, the Architect's professional opinion,
with respect to that portion of the Project for which such Architect has design
responsibility, to be in compliance with all applicable Laws and other
requirements;
(c) Shall all contain an estimate by Borrower and General
Contractor or the appropriate Contractor of the increase or decrease in each
Item of Project Costs that would be caused by the change (or, if the Change
Order involves changes both increasing or decreasing estimated Project Costs,
the amount of each change either increasing or decreasing Project Costs shall be
stated), as well as the aggregate amount of changes in estimated Project Costs,
both increases and decreases, previously made;
(d) Shall, if a Major Change Order, be submitted to Lender not
later than five (5) Business Days prior to the proposed effectiveness thereof;
and
(e) Shall be subject to the prior written approval of Lender
where (i) the change affects the structural aspects or intended use of the
Improvements, (ii) the Change Order includes any change that, regardless of the
net effect of the aggregate Change Order, increases or decreases any estimated
Project Costs by Seventy-Five Thousand Dollars ($75,000.00) or more, or (iii)
together with prior Change Orders, whether or not approved, the change involves
an aggregate amount, whether for increases or decreases, of over Five Hundred
Thousand Dollars ($500,000.00) or (iv) the change would cause any Governmental
Authority to suspend or revoke any license, approval, permit or other
authorization. (All such
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Change Orders are herein referred to as "Major Change Orders".) If any Change
Order involves a net increase in estimated Project Costs the payment of which
increase is not the sole obligation of the OCC or another Space Tenant under its
respective Space Lease, whether or not such Change Order is subject to Lender's
prior approval, Lender shall have no obligation to make any further
Disbursements unless the Loan taking such Change Order into account, remains in
balance.
Section 7.06. Project Budget; Annual Operating Budget.
---------------------------------------
(a) Subject to the provisions of Section 2.14 hereof, Borrower
shall complete the entire Project within the Project Budget and operate the
Project within the applicable Annual Operating Budget. Unless Lender otherwise
consents in writing, Borrower shall not materially supplement, modify or amend
the approved Project Budget or applicable Annual Operating Budget other than as
permitted under Sections 2.06, 7.05 or 7.06(b) hereof.
(b) Borrower shall promptly notify Lender of any fact or
circumstance that may render the Project Budget inaccurate with respect to any
Project Costs reflected therein or render any Annual Operating Budget inaccurate
with respect to any operating expenses reflected therein. With respect to the
Annual Operating Budget only, the same shall not be deemed to have been rendered
inaccurate by any variation or variations which in the aggregate are equal to or
less than ten percent (10%) of the total amount of such budget.
Section 7.07. Contractors and Subcontractors.
------------------------------
(a) Borrower shall not permit the performance of any work on the
Project pursuant to any Contract or Subcontract (i) with a total payment in
excess of One Hundred Thousand Dollars ($100,000) or (ii) which Lender has
requested to review, until Lender shall have received copies of such Contract or
Subcontract.
(b) Borrower shall deliver to Lender from time to time not later
than five (5) Business Days after Lender's demand therefor correct lists of all
Contractors and Subcontractors employed in connection with the Project and
copies of such Contractors' and Subcontractors' contracts. Each such list shall
show the name, address and telephone number of each such Contractor or
Subcontractor, a general statement of the nature of the work to be done, the
labor and materials to be supplied, the names of materialmen, if known, the
approximate dollar value of such labor, work and materials itemized with respect
to each Contractor and Subcontractor, and the unpaid portion and status of such
work or whether such materials have been delivered. In the event that Lender
reasonably determines that any information provided to Lender
- 50 -
is incomplete, Lender and its Consultants shall have the right, without either
the obligation or the duty, to contact directly each Contractor and
Subcontractor to verify the facts disclosed by such list or any other
information provided by Borrower or relating to the Project. In the event that
Borrower or General Contractor shall fail to maintain the same in respect of the
performance of any Contractor or Subcontractor, Lender may require that the
performance of any such Contractor or Subcontractor be secured by a payment and
performance bond in form, and issued by a surety company, reasonably acceptable
to Lender; provided, however, that Lender shall not be entitled to require that
-------- -------
the performance of any Subcontractor be bonded if the performance of another
Person retaining such Subcontractor has been bonded as to the portion of the
work to be performed by such Subcontractor.
Section 7.08. Permits and Warranties. Borrower shall deliver to
----------------------
Lender from time to time not later than five (5) days after Lender's demand
therefor, originals or copies of: (a) all building and other permits approvals,
and authorizations required in connection with the construction of the Project
or the operation or occupation of the Premises or any part thereof promptly upon
issuance and receipt by Borrower thereof, and in any event before any act is
done which requires the issuance of the respective permit, approval or
authorization, and (b) upon request of Lender, all warranties and guaranties
received from any person furnishing labor, materials, equipment, fixtures or
furnishings in connection with the Project.
Section 7.09. Protection Against Liens and Claims.
-----------------------------------
(a) Borrower shall take all reasonable steps to forestall the
assertion of claims of Lien against the Project or the Trust Estate or any part
thereof.
(b) In the event that any claim is asserted against Lender or the
Undisbursed Construction Funds by any Person furnishing labor, services,
equipment or material to the Project and the claim is not being contested in
accordance with the Deed of Trust, Lender may, in its sole discretion, file an
interpleader action requiring all claimants to interplead and litigate their
respective claims, and in any such action Lender shall be released and
discharged from all obligations with respect to any funds deposited in court,
and Lender's reasonable costs and expenses, including without limitation
reasonable attorneys fees, shall be paid from such funds or from any undisbursed
portion of the Loan. Any such funds deposited in court and all reasonable costs
and expenses of Lender in connection therewith shall be deemed to be
Disbursements under this Agreement and the Note.
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Section 7.10. Removal of Personalty. Borrower shall not:
---------------------
(a) Install in or otherwise use in connection with the Project
any materials, equipment or fixtures under any security agreement or similar
agreement however denominated whereby the right is reserved or accrues to anyone
to remove or repossess any such items or whereby any person other than Lender
reserves or acquires a Lien upon such items;
(b) Remove or permit the removal of any Personal Property located
on the Property or used in connection with the Project, except in compliance
with the terms of the Deed of Trust; or
(c) Without the consent of Lender, permit the storage of any
Personal Property at any location other than the Premises except for Personal
Property stored in a bonded warehouse facility, segregated and separately
identified to the Project, and insured to the reasonable satisfaction of Lender.
Section 7.11. Insurance. Borrower shall provide or cause to be
---------
provided the policies of insurance required by Section 1.08 of the Deed of
Trust.
Section 7.12. Title Reports. Borrower shall deliver or cause to be
-------------
delivered to Lender, in form and substance satisfactory to Lender: (a) such
endorsements and binders to the Title Policies and (b) such preliminary title
reports and other title searches as may be required by the terms of this
Agreement or as Lender may from time to time reasonably require in connection
with Disbursements hereunder.
Section 7.13. Entry and Inspection. Lender and its Consultants,
--------------------
including the Inspecting Engineer, shall, during normal construction and
business hours, upon notice to General Contractor (which may be telephonic) and
subject to Space Tenants' rights under any Space Leases, have the right of entry
and free access to the Premises and the right to inspect all work done, labor
performed, and materials furnished in and about the Project and to examine all
Plans, wherever located. Borrower will cooperate and will cause Architect,
General Contractor and all Contractors and Subcontractors to cooperate with
Lender and its Consultants to enable Lender and its Consultants to perform their
functions. At the time of each inspection by the Inspecting Engineer, Borrower
will make available to the Inspecting Engineer, on demand, daily log sheets
covering the construction period showing the date, weather, Contractors and
Subcontractors on the job, number of workers and status of construction.
Section 7.14. Physical Security of Project. Borrower shall provide
----------------------------
such watchmen and take such other measures to protect the physical security of
the Project and the Trust Estate as Lender may from time to time reasonably
require.
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Section 7.15. Information Covenants.
---------------------
(a) Borrower shall keep and maintain or will cause to be kept and
maintained, on a fiscal year basis in accordance with consistently applied
generally accepted accounting practices customarily used in the real estate
industry, complete and accurate books, accounts and records reflecting all of
the financial affairs of Borrower and all of the earnings and expenses in
connection with the operation of the Trust Estate or in connection with any
services, equipment or furnishings provided in connection with the operation of
the Trust Estate, and, without expense to Lender, shall deliver to Lender
annually, within ninety (90) days after the close of each of Borrower's fiscal
years (i) an operating statement (including, without limitation, the amount of
rent escalations under the Qualifying Space Leases for such fiscal year) and an
annual budget certified by a general Partner of Borrower or the chief financial
officer of the Person that directly or indirectly controls the day-to-day
operations and management of the Trust Estate showing in reasonable detail the
income and expenses of the operations of the Trust Estate, a statement of profit
and loss, and a balance sheet for the immediately preceding fiscal year of
Borrower, (ii) a complete copy of a financial statement of Borrower for the
immediately preceding fiscal year of Borrower certified to Lender by a general
partner or other principal of Borrower, containing a statement of surplus, and a
balance sheet of Borrower, and (iii) a rent roll current to within thirty (30)
days, showing the Space Tenants in occupancy, their square footage, their fixed
and basic rents, and their tax and operating escalations. Lender or its designee
will be permitted upon not less than ten (10) days prior notice to Borrower, to
examine such books and records and all supporting vouchers and data at the
office of Borrower with respect to the Trust Estate and make such copies or
extracts at Borrower's expense thereof as Lender or its designee shall
reasonably desire. Lender shall not have any duty to make any such inspection
and shall not incur any liability or obligation as a result of not making such
inspection. Lender agrees that any information obtained by Lender in its review
or examination of Borrower's books and records pursuant to this Section 7.15
shall be confidential and solely for the benefit of Lender and any Loan
Participant. Each participation agreement between Lender and any Loan
Participant shall require such Loan Participant to maintain the confidentiality
of any information obtained by Lender in its review of Borrower's books and
records; however, Lender shall have no liability to Borrower by reason of any
Loan Participant's breach of such covenant.
(b) Each annual statement shall be accompanied by a certificate
of Borrower, dated as of the delivery of such statement to Lender, stating that
Borrower, to the best of its knowledge, knows of no Event of Default that is
continuing, or,
- 53 -
if any such Event of Default is continuing, specifying the nature and period of
existence thereof and what action Borrower has taken or proposes to take with
respect thereto, and, except as otherwise specified, stating that to the best of
its knowledge Borrower has fulfilled all its obligations under this Agreement
and the other Loan Documents that are required to be fulfilled on or prior to
the date of such certificate.
(c) Borrower shall deliver or cause to be delivered to Lender,
not later than ninety (90) days after the end of each calendar year during the
Loan Term a financial statement of each Guarantor, certified, respectively, by
each Guarantor.
(d) Borrower shall furnish to Lender within thirty (30) days
after request therefor such further detailed information covering the operation
of the Trust Estate and the financial affairs of Borrower and each Guarantor as
may be reasonably requested by Lender.
(e) Borrower shall deliver to Lender as soon as practicable and
in any event within ten (10) days of Borrower's learning thereof, notice of:
(i) Any dispute raised by the General Contractor under the
Construction Contract relating to an increase in the Contract Sum (as therein
defined) and any material delay in the progress of the Project, whether or not
constituting Force Majeure;
(ii) Any litigation affecting or relating to (A) Borrower,
(B) any Guarantor which would materially, adversely affect such Guarantor's
ability to perform its obligations under the Loan Documents, (C) the Trust
Estate or (D) the Project;
(iii) Any dispute involving any Governmental Authority
relating to the Trust Estate or the Project, the adverse determination of which
might materially adversely affect the Trust Estate or the Project;
(iv) Any threat or commencement of proceedings in
condemnation or eminent domain relating to the Trust Estate; and
(v) Any event which, with the giving of notice and/or the
passage of time, could become an Event of Default, together with a written
statement setting forth the nature of the event and the action Borrower proposes
to take with respect thereto.
(f) Borrower shall deliver or cause to be delivered to Lender, as
soon as available and in any event within thirty (30) days after the end of each
calendar quarter,
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a report as to the status of construction and leasing of the Project including
leasing schedules and reports, executed copies of any Space Leases entered into
during such quarter, a list of all Space Leases then pending or the subject of
negotiation by Borrower and such other leasing information as Lender shall
reasonably request with respect to the Space Leases and the Trust Estate.
(g) Borrower shall deliver or cause to be delivered to Lender, on
the date on which Borrower submits its final Request for Disbursement of Hard
Costs under Section 5.08 and not later than sixty (60) days prior to the end of
each calendar year thereafter, an annual operating budget (the "Annual Operating
Budget") for the Project which shall be subject to approval by Lender in its
reasonable judgment. Lender's failure to disapprove a proposed Annual Operating
Budget within thirty (30) days after submission shall be deemed to be Lender's
approval of such submission.
Section 7.16. Management of Property. Borrower shall not enter into
----------------------
any agreement providing for the management, leasing or operation of all or any
part of the Premises without the prior; written consent of Lender, such consent
not to be unreasonably withheld or delayed. Lender hereby approves Boston
Properties, a Massachusetts business trust, as manager of the Premises provided
that Boston Properties is and remains an Affiliate of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇. Each manager of the Project shall execute and deliver to
Lender a consent on Lender's standard form to the collateral assignment to
Lender of the management contract for the Project.
Section 7.17. Project Documents.
-----------------
(a) Except to the extent otherwise provided for herein, Borrower
shall maintain in full force and effect, and shall comply with all of its
obligations under, each of the Project Documents, including without limitation
the Architect Contract and the Construction Contract.
(b) Unless Lender otherwise consents in writing Borrower shall
not: (i) permit any of the Project Documents to be materially supplemented,
modified, amended or terminated excluding any supplements, modifications or
amendments in respect of Change Orders not requiring Lender's approval
hereunder; (ii) waive, or consent to any departure from, any of the material
provisions of any of the Project Documents; or (iii) transfer, convey, encumber,
assign or release any interest in any of the Project Documents (except under the
Loan Documents).
Section 7.18. Operation and Maintenance of Project. Borrower shall (i)
------------------------------------
use its best efforts to keep the Project and the Improvements fully leased in a
manner consistent with the
- 55 -
highest commercial use thereof and at prevailing rates, (ii) enter into
appropriate leases, service contracts and maintenance or operating agreements in
accordance with the terms of this Agreement and the other Loan Documents, and
(iii) make all necessary and customary capital improvements, repairs,
replacements, additions, renovations or refurbishing of or to the Trust Estate.
Borrower shall incur and pay or cause to be paid all costs, expenses and charges
necessary or appropriate to comply with the requirements of this Section 7.18.
Section 7.19. Environmental. No Hazardous Material shall be used
-------------
during construction of the Project unless there exists no practical alternative
thereto and then such Hazardous Material shall be used and stored in strict
compliance with all Laws and shall be removed in its entirety from the Premises
promptly upon completion of such use. Borrower shall establish and maintain a
procedure to monitor the compliance of the Project with all applicable Laws
relating to Hazardous Materials.
Section 7.20. Other Business. Borrower shall not engage in any
--------------
business other than the developing, constructing, operating, owning, managing,
financing, and leasing of the Project and Phase II and the ownership of Lot 872.
Except with Lender's prior written approval, not to be unreasonably withheld,
Borrower will not change the height, bulk, location or use of Phase II or Lot
872 from that heretofore presented to Lender so as to materially adversely
affect the Premises.
Section 7.21. Further Encumbrance. Except as otherwise expressly
-------------------
permitted by this Section 7.21, Borrower shall not further mortgage, encumber
for debt or pledge the Project, Trust Estate, Revenues or any part thereof or
any interest therein (including, without limitation, any air or development
rights). Borrower shall be permitted to further encumber for debt, mortgage or
pledge the Trust Estate or a part thereof as security for additional
indebtedness ("Subordinate Financing") provided that all of the following
conditions have been met by Borrower to Lender's reasonable satisfaction or
Lender has waived the same in writing:
(a) Borrower has validly elected the Fixed Rate under the Note
for an Interest Period ending on the Maturity Date.
(b) The Debt Service Coverage Ratio (calculated as if the
Subordinate Financing had occurred and payments of principal and interest were
payable with respect thereto) for the month preceding the month in which the
Subordinate Financing is to occur, shall be equal to or greater than 1.15.
- 56 -
(c) After taking the Subordinate Financing into account, the Loan
to Value Ratio as of the date of the Subordinate Financing shall be no greater
than eighty percent (80%) .
(d) Borrower shall give Lender telephonic notice, promptly
confirmed in writing, of Borrower's intention to engage in any such Subordinate
Financing at least twenty (20) days prior to Borrower's entering into such
Subordinate Financing. Not later than ten (10) days prior to the closing of such
Subordinate Financing, Borrower shall submit to Lender all documentation with
respect to such Subordinate Financing. Lender shall have ten (10) days from
receipt of such documentation to approve such documentation and if Lender shall
not have responded to Borrower's request for approval within ten (10) days after
receipt thereof, Lender shall be deemed to have approved the documentation with
respect to such Subordinate Financing. All documentation with respect to any
Subordinate Financing shall be approved by Lender if such documentation, in
Lender's reasonable judgment, (i) expressly provides that the Subordinate
Financing and all rights given to the lender under such Subordinate Financing
(..Subordinate Lender") shall be subject and subordinate to the Loan and all
Loan Documents (as then in effect) in all respects, and (ii) provides for the
following:
(A) The Subordinate Financing shall not contain any provisions
which conflict with the Deed of Trust or the Assignment of Rents with regard to
the collection and release and of insurance proceeds, distribution of
condemnation awards and collection of rents following an Event of Default or
shall expressly provide that the Deed of Trust and Assignment of Rents control
with respect to the foregoing. The Subordinate Financing shall not assign to the
Subordinate Lender any interest in the Rents payable under a Government Lease
(as those terms are defined in the Assignment of Rents).
(B) Any debt service or other payment paid on the Subordinate
Financing out of Revenues from the Trust Estate after an Event of Default has
occurred, shall be held in trust by the Subordinate Lender for the benefit of
Lender and shall be paid over to Lender upon request if Lender has given the
Subordinate Lender notice of such Event of Default and the Subordinate Lender
(i) has not cured such Event of Default within ten (10) days after receipt of
notice thereof, or (ii) with respect to non-monetary defaults, (A) the
Subordinate Lender has not commenced action to remedy such Event of Default
within thirty (30) days after notice and (B) the Subordinate Lender is not
pursuing such remedial action to completion with due diligence, provided in each
case that at the time of such action by the Subordinate Lender the Borrower
would be entitled to cure the applicable Event of Default.
- 57 -
(C) The Subordinate Lender shall enter into non-disturbance
agreements with Space Tenants under Space Leases if Lender has entered into or,
after the date of the Subordinate Financing, Lender enters into such agreements
with such tenants.
(e) There shall exist at the time of such Subordinate Financing
no Event of Default nor any fact or circumstance, which with the passage of
time, giving of notice or action of third parties, could become an Event of
Default that is not then being cured in accordance with the terms of this
Agreement and the other Loan Documents.
(f) The Subordinate Lender shall be an Institutional Lender at
the time of entry into the Subordinate Financing.
(g) With respect to any Subordinate Financing permitted hereunder
and approved by Lender pursuant hereto, Lender shall, upon request and at
Borrower's sole cost, enter into an agreement with the Subordinate Lender
pursuant to which Lender shall agree to provide the Subordinate Lender with (i)
concurrent notices of any notice of default which could become an Event of
Default under any of the Loan Documents, and (ii) an opportunity to cure any
such default within the applicable notice and grace periods, if any, given to
Borrower under the applicable provisions of any of the Loan Documents.
Section 7.22. Transfers. Borrower will not cause, permit or suffer a
---------
Transfer, other than to a Permitted Transferee, a Subordinate Lender or a party
claiming by, through or under a Subordinate Lender (by virtue of foreclosure,
sale or by accepting a deed in lieu of foreclosure), without the prior written
consent of Lender, which consent shall not be unreasonably withheld or delayed.
For purposes of this Section 7.22, Lender shall consider, by way of illustration
and not in limitation, the following factors in its determination of granting
consent to any such Transfer: (i) the financial condition of the proposed
transferee; (ii) the general reputation in the community of the proposed
transferee; and (iii) the management and real estate experience of the proposed
transferee. For purposes of this Section 7.22, if Lender has not responded to
Borrower's request for approval or consent within ten (10) days following
receipt thereof, Lender's rights regarding prior approval or consent shall be
deemed waived; provided, however, Lender's right to consent or approve the
proposed transferee shall not be deemed waived if Lender has requested further
information concerning such proposed transferee as in its reasonable judgment is
necessary to evaluate Borrower's request. Lender shall have an additional ten
(10) day period following receipt of such additional information by Lender in
which to approve or disapprove the proposed transferee. If Lender has not
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responded within the ten (10) day period referred to in the preceding sentence,
Lender shall be deemed to have waived its right to so consent.
Section 7.23. Reimbursable Expenses. Borrower shall reimburse Lender
---------------------
for all Out-of-Pocket Costs in connection with (a) the preparation, negotiation,
execution and delivery of the Loan Documents and all certificates, agreements,
instruments and opinions delivered in connection herewith and therewith, (b) any
amendment, modification or supplement to any of the Loan Documents or any
agreement or instrument delivered in connection herewith or therewith, (c) any
waiver of any provision of this Agreement, any of the Loan Documents or any
agreement or instrument delivered in connection herewith or therewith, (d) any
restructuring of the terms of any of the Loan Documents or any agreement or
instrument delivered in connection herewith or therewith, and (e) the
administration and enforcement of the Loan Documents or any agreement or
instrument delivered in connection herewith or therewith from and after the
occurrence of an Event of Default or following an acceleration of the Loan. All
of the foregoing expenses shall be reimbursed by Borrower whether or not Lender
gives notice to Borrower of such Event of Default under this Agreement or takes
any other action to enforce the provisions of any of the Loan Documents or any
agreement or instrument delivered in connection herewith and therewith.
Borrower shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing,
recording and enforcement of any of the Loan Documents or any agreement or
instrument delivered in connection herewith or therewith and shall save Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or failure to pay such taxes and fees. All amounts
payable pursuant to this Section 7.23 shall be due and payable not later than
ten (10) Business Days following written demand by Lender, together with
interest thereon (i) if Lender has actually paid such amount, at the Prime Rate
(as defined in the Note) from the date of demand therefor through the date which
is ten (10) Business Days after demand therefor (the "Due Date"), and (ii)
whether or not Lender has actually paid such amount, at the Involuntary Rate
from the Due Date through the date of payment by Borrower. The obligation to
pay such amounts shall survive the repayment of the Loan and shall continue in
full force and effect so long as the possibility of any such liability, claims
or losses pursuant to this Section 7.23 exists.
Section 7.24. Preservation of Existence. Borrower shall, as long as
-------------------------
any part of the Loan remains unpaid, do all things necessary to preserve and
keep in full force and effect its existence, franchises, rights and privileges
as a partnership under the laws of the state of its formation and will comply
with all regulations, rules, statutes, orders and
- 59 -
decrees of all Governmental Authorities applicable to the Trust Estate or any
part thereof, subject, however, to Borrower's right to contest such regulations,
rules statutes, orders and decrees pursuant to Section 1.11 of the Deed of
Trust.
Section 7.25. Future Tenant Estoppel Certificates.
------------------------------------
(a) From time to time during the Loan Term upon Lender's request,
but not more often than once each calendar year other than following the
occurrence of an Event of Default, Borrower shall, within forty-five (45) days
following request by Lender, deliver to Lender estoppel certificates in the form
prepared by Lender with respect to all Major Leases and shall use all reasonable
efforts to deliver to Lender such estoppel certificates with respect to all
other of the Qualifying Space Leases, which estoppel certificates shall be
executed by Borrower and each other party to the appropriate Qualifying Space
Lease, stating (i) that the Qualifying Space Lease is unmodified and in full
force and effect or, if modified, stating the modification(s), if any, (ii)
whether or not, to the best knowledge of each party to such Qualifying Space
Lease, any other party to such Qualifying Space Lease is in default in any
respect under such Qualifying Space Lease and, if so, specifying such default,
and (iii) any other matters that may be reasonably requested by Lender. If
Borrower is unable to deliver any such estoppel certificate to Lender because,
despite Borrower's reasonable efforts, the Space Tenant from whom it has been
requested has not delivered it to Borrower, Borrower shall deliver Borrower's
certificate to Lender as to the matters set forth in Clauses (i)-(iii) and shall
deliver the Space Tenant's estoppel certificate to Lender within two (2)
Business Days after receiving it.
(b) At any time during the Loan Term, Borrower shall, within ten
(10) days after request by Lender, execute and deliver Borrower's certificate
stating (i) that the Qualifying Space Leases are unmodified and in full force
and effect as modified, stating the modification(s), and (ii) that all rents due
under Qualifying Space Leases have been paid when due, or if not, specifying the
Qualifying Space Leases under which rents have not been paid when due.
Section 7.26. Use of Proceeds. Borrower will use the proceeds of the
---------------
Loan and any Completion Deposit solely to pay Project Costs.
Section 7.27. Publicity. Promptly following the Initial Disbursement,
---------
Borrower shall, at its sole expense, publish in a publication of its choice a
"tombstone notice" of the Loan in form and substance mutually satisfactory to
Lender and Borrower.
Section 7.28. Name. Borrower shall not change its name without
----
Lender's prior consent.
- 60 -
Section 7.29. Consultants' Fees. Borrower shall pay all fees and
-----------------
expenses of Lender's Consultants which are reasonable and customary, such
obligation on the part of Borrower to survive the repayment of the Loan. After a
default by Borrower in the payment of any of the fees, costs and other expenses
of Lender's Consultants or after any Event of Default, Lender, in its
discretion, may pay such fees, costs and other expenses at any time by a
Disbursement for Soft Costs under the Loan or from any Completion Deposit and
Borrower hereby authorizes Lender to make such payments.
Section 7.30. Partnership Agreement; No Partnership Distributions.
---------------------------------------------------
Borrower shall not amend its agreement of limited partnership so as to limit the
authority of the current general Partner of Borrower to control and act for
Borrower, shorten the term of such agreement, modify the permitted purposes of
Borrower, or adversely affect either the ability of Borrower to perform its
obligations under the Loan Documents or the interests of Lender thereunder.
Except as part of the Initial Disbursement to reimburse Land and related
acquisition costs, Borrower will not, without the prior written consent of
Lender, make any distribution of partnership assets or proceeds to any Partner
of Borrower in such Person's capacity as a Partner other than for reimbursement
of actual expenses incurred by a Partner of Borrower on behalf of Borrower,
whether or not such a partnership distribution is permitted under the terms of
Borrower's partnership agreement; provided, however, if (a) Completion of
Construction shall have occurred; (b) no monetary default or Event of Default
under the Loan Documents shall then exist or would exist after giving effect to
the proposed distribution, then, to the extent of Net Cash Flow excluding cash
from the Loan, Borrower, not more frequently than quarterly, may make
distributions of partnership assets or proceeds (other than Loan proceeds) to
any Partner of Borrower. Nothing in this Section 7.30 shall prohibit Borrower's
paying a development fee to a Partner or Affiliate of Borrower, provided that
such payment is pursuant to and in accordance with an agreement heretofor
approved by Lender or hereafter entered into with Lender's approval, which
approval shall not be withheld or delayed unreasonably provided that the fee to
be paid thereunder is within the amount of the Item established therefor in the
Project Budget.
Section 7.31. Major Leases. Borrower shall fully perform in a timely
------------
fashion all of its obligations under all Major Leases, including the OCC Lease.
- 61 -
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
------------------------------
Section 8.01. Events of Default. Each of the following specified
-----------------
events shall constitute an "Event of Default" under this Agreement whether the
occurrence of such event shall be voluntary or involuntary or come about or be
affected by operation of law or otherwise:
(a) If any representation, warranty or statement made by (i)
Borrower herein, in any other Loan Document or any Request for Disbursement,
certificate, document, financial or other statement given by Borrower in
connection with the Loan, or (ii) Guarantors in any of the Guarantees or any
certificate, document, financial or other statement given by Guarantors in
connection with the Loan, shall prove to have been untrue or incorrect in any
material respect when made and the existence of the facts constituting such
untruth or incorrectness shall have a material and adverse effect upon the value
of the Trust Estate or Lender's security for the Loan; or
(b) If any Lien Or security interest created by any Loan
Document, at any time after the execution and delivery thereof and for any
reason, ceases or fails to constitute a valid, perfected and subsisting first
lien or security interest in and to the property purported to be covered
thereby, subject only to the Permitted Exceptions; or
(c) If the Project or any portion thereof is not completed in
substantial conformity with the Plans in an orderly and expeditious manner
substantially in accordance with the time references set forth in the
Construction Schedule or before the Completion Date, subject to the provisions
of Section 7.01, or is not, through Completion of Construction, free and clear
of mechanics', materialmen's and other Liens asserted by suppliers of labor,
services, equipment or material to the Project, subject to Borrower's rights
under the Deed of Trust to contest Liens; provided, however, that Borrower's
failure to achieve Completion of Construction by the Completion Date (as same
may be extended by Force Majeure) shall not constitute an Event of Default if
(i) the requirements set forth in clauses (a), (b), and (f) of the definition of
Completion of Construction have by such date been satisfied, (ii) Borrower's
failure to satisfy the requirements in clauses (c), (d), and (e) of the
definition of Completion of Construction is due solely to Unavoidable Government
Delay, (iii) the written declaration required by Section 2.3 of the OCC Lease
has been executed, setting forth all information therein required, including the
Lease Commencement Date (as defined in the OCC Lease), and (iv) by July 1, 1992
either
- 62 -
(A) Borrower shall have achieved Completion of Construction or (B) Lender shall
be and remain reasonably satisfied that Borrower's continuing failure to achieve
Completion of Construction is not reasonably likely to have a material adverse
effect on the security for the Loan; or
(d) If all or a substantial or material portion of the Trust
Estate is injured, damaged or destroyed by fire or other casualty or damaged
thereby to an extent that would, in Lender's reasonable judgment, prevent or
preclude Completion of Construction in an orderly and expeditious manner and in
any event before the Completion Date; provided, however, that such damage shall
not constitute an Event of Default if Borrower shall be entitled to restore the
Trust Estate in accordance with the terms of the Deed of Trust; or
(e) If Borrower is enjoined by any Governmental Authority from
constructing the Project or performing its obligations hereunder and such
injunction is not released or stayed within thirty (30) days after the granting
thereof, or such longer period of time, not to exceed sixty (60) days upon the
prior consent of Lender, not to be unreasonably withheld, unless Borrower
demonstrates to the reasonable satisfaction of Lender that such injunction will
be released or stayed and Lender reasonably determines that such injunction will
not prevent or preclude Completion of Construction in an orderly and expeditious
manner and in any event before the Completion Date; or
(f) If all or a substantial or material portion of the Trust
Estate is condemned, seized or appropriated by any Governmental Authority;
provided, however, that if such a taking is a partial taking and Borrower shall
be entitled to restore the Trust Estate in accordance with the Deed of Trust,
such taking shall not be deemed to be an Event of Default; or
(g) If Completion of Construction shall not occur by the
Completion Date; or
(h) If a default by Borrower shall occur under the Architect
Contract, Construction Contract or any Major Lease (including the OCC Lease),
which default Lender reasonably determines is likely to affect Borrower's
ability to complete construction of the Project before the Completion Date, and,
if such default is subject to cure, shall remain uncured on the date that is the
last day of the grace period applicable to such default; or
(i) If the General Contractor or any Architect shall fail to
perform or observe any term, covenant or agreement contained in the Construction
Contract or any
- 63 -
Architect Contract, respectively, or in the consent signed by the General
Contractor or such Architect for the benefit of Lender and (i) Lender has
determined, in its reasonable judgment, that such failure would have a material
adverse effect on the Project or would prevent or preclude Completion of
Construction in an orderly and expeditious manner and in any event before the
Completion Date, (ii) such failure shall continue for a period of twenty (20)
calendar days from the date that notice of such determination is given to
Borrower, (iii) Borrower shall fail to submit to Lender the name of a proposed
successor General Contractor or Architect within twenty (20) calendar days
thereafter, (iv) Lender shall disapprove such proposed successor General
Contractor subsequent to such twenty (20) day period (provided that Lender's
approval shall not be unreasonably withheld), and (v) Borrower shall fail to
enter into a replacement Construction Contract or Architect Contract within
thirty (30) days after submission and approval of such replacement General
Contractor or Architect and such replacement Architect or General Contractor
shall fail to execute a consent in favor of Lender substantially in the form,
respectively, of Exhibit J or K within such time period; provided, however, that
if Lender fails to approve the first successor General Contractor or Architect
submitted by Borrower, then Borrower shall have an additional ten (10) days
between steps (iv) and (v) above to submit the name of a second proposed
successor General Contractor or Architect and Lender shall have an additional
ten (10) days after such subsequent submission to approve such proposed
successor; or
(j) The General Contractor or the Architect shall cease to act
as General Contractor or Architect for the Project, and (i) Borrower shall fail
to submit to Lender the name of a proposed successor General Contractor or
Architect within thirty (30) calendar days thereafter, or (ii) Lender shall
disapprove such proposed successor General Contractor or Architect subsequent to
such thirty-day period (provided that Lender's approval shall not be
unreasonably withheld) or (iii) Borrower shall fail to enter into a replacement
Construction Contract or Architect Contract within thirty (30) days after
submission and approval of such replacement General Contractor or Architect and
such replacement Architect or General Contractor shall fail to execute a consent
in favor of Lender substantially in the form, respectively, of Exhibit J or K
within such time period; provided, however, that if Lender fails to approve the
first successor General Contractor or Architect proposed by Borrower, Borrower
shall have an additional twenty (20) days between steps (ii) and (iii) above to
propose a second successor General Contractor or Architect, which Lender shall
expeditiously approve or disapprove, and there shall be no Event of Default if
Borrower enters into a
- 64 -
replacement Construction Contract or Architect Contract within thirty (30) days
after submission and approval of such second replacement General Contractor or
Architect; or
(k) If the Loan is not in balance and the Contractor or
Subcontractor for the Item or Items out of balance have not provided payment and
performance bonds as provided in Section 2.14 within thirty (30) days after
notice from Lender;
(l) If Borrower shall fail to perform or observe any other
covenant, term or agreement on its part contained in this Agreement and not
otherwise provided for in this Section 8.01, which failure shall have continued
unremedied for thirty (30) days after notice thereof has been given to Borrower
by Lender, provided, however, that if in Lender's reasonable judgment the nature
of the failure referred to in this clause (1) is such that it is curable by
Borrower but cannot be cured within said thirty (30) days, then an Event of
Default shall not be deemed to have occurred hereunder so long as (x) Borrower
has commenced to cure said failure within said thirty (30) day period, and has
notified Lender of such commencement within said thirty (30) days, (y) Borrower
thereafter proceeds with diligence to cure the same in Lender's reasonable
judgment, and (z) sufficient progress is being made in curing such default, in
Lender's reasonable judgment; or
(m) If any Event of Default shall have occurred and remain
uncured under any other Loan Document; or
(n) If a default shall occur under any guaranty now or hereafter
provided in respect of the Loan, including without limitation the Guarantees,
and such default shall remain uncured beyond the applicable notice arid grace
period thereunder, if any; or
(o) If any of the Guarantees is not in effect, unless it has
lapsed pursuant to its terms, or the obligation to make payments of the
guaranteed obligations under any such guaranty is determined by a court of
competent jurisdiction to be unenforceable; or
(p) The termination, liquidation or dissolution or the
commencement of proceedings towards the liquidation or dissolution of Borrower,
or a general Partner of Borrower or a general partner of a general Partner of
Borrower (unless immediately reconstituted pursuant to the provisions of its
partnership agreement or applicable law or in connection with a Transfer to a
Permitted Transferee); or
- 65 -
(q) The occurrence, prior to Completion of Construction, of a
material and adverse change in the financial condition of Borrower or any
Guarantor which, in the sole judgment of Lender, renders it unable to fulfill
its financial obligations as they become due; or
(r) If Borrower is unable to satisfy or cause the satisfaction
of any condition for the receipt of a Disbursement, or to resolve the situation
to the reasonable satisfaction of Lender, for a period in excess of thirty (30)
days after written notice from Lender; or
(s) If any certificate of occupancy or building permit for the
Project or any portion thereof is revoked, cancelled or otherwise ceases to be
effective; provided, however, that such revocation, cancellation or suspension
shall not be an Event of Default if, prior to Completion of Construction,
Borrower is diligently proceeding to cure such default, such cure may be
effected within the Project Budget or with a Completion Deposit, and the time
required to cure such default does not materially adversely affect Borrower's
ability to meet the Construction Schedule or adversely affect any of Lender's
collateral security for the Loan, and after completion of Construction, such
revocation, cancellation or suspension shall not permit the OCC to cease paying
rent under the terms of the OCC Lease.
Section 8.02. Remedies.
--------
(a) If any Event of Default shall occur, all obligations of
Lender under this Agreement, including without limitation Lender's obligation to
make any further Disbursements or to advance funds from any Completion Deposit,
at the option of Lender, shall cease and terminate, and Lender may declare the
entire outstanding Loan, including interest thereon and any other fees, costs
and charges then payable under any of the Loan Documents, immediately due and
payable, whereupon the same shall become immediately due and payable, without
presentment, protest or further demand or notice of any kind, all of which are
hereby expressly waived by Borrower; and, upon such occurrence of an Event of
Default or at any time following Lender's declaration that the Loan is due and
payable as provided above, Lender, in addition to the foregoing, may immediately
exercise any and all other rights, remedies and recourse available to it at law
or in equity or under this or any of the other Loan Documents (including,
without limitation, the right to sell the Trust Estate and/or foreclose any and
all liens and security interests securing the repayment of the Loan under the
Deed of Trust and the other Loan Documents).
- 66 -
(b) Borrower hereby irrevocably constitutes and appoints Lender,
the Inspecting Engineer and/or any other independent contractor selected by
Lender as its true and lawful attorney-in-fact, with full power, of
substitution, for the purpose of performing Borrower's obligations in the name
of Borrower under the Loan Documents and completing construction of the Project,
whether or not substantially in accordance with the Plans (with such additions,
changes and corrections in the Plans as shall be necessary or desirable in
Lender's opinion to complete the Project), but Lender may act pursuant to this
power-of-attorney only after an Event of Default occurs. The foregoing power-of-
attorney shall be deemed coupled with an interest and shall be irrevocable until
payment in full of the Loans and all other sums due and owing to Lender under
any of the Loan Documents. Without limiting the generality of the foregoing,
said attorney-in-fact is hereby empowered by Borrower to do any one or more of
the following:
(i) To use any funds of Borrower in Lender's possession and
any Disbursements not yet approved or disbursed hereunder, for the purpose of
completing the Project in the manner called for by the Plans or as provided in
clause (ii) below and all sums advanced hereunder and any other amounts expended
by Lender to complete the Project shall be deemed to have been advanced to or
for the account of Borrower pursuant hereto;
(ii) To make such additions, changes and correction in the
Plans as shall be necessary or desirable in Lender's opinion to complete the
Project as contemplated by the Plans;
(iii) To employ any contractors, subcontractors, agents,
architects and inspectors required for said purposes;
(iv) To employ attorneys to defend against attempts to
interfere with the exercise of the powers granted hereby;
(v) To pay, settle or compromise all bills and claims which
are or may be liens against the Premises or Project or may be necessary or
desirable for the completion of the Project or the clearance of title;
(vi) To execute all applications and certificates in the
name of Borrower which may be required by any construction contract;
(vii) To prosecute and defend all actions or proceedings in
connection with tile construction of the Project
- 67 -
on the Premises and to take such action, require such performance and do any and
every other act as is deemed reasonably necessary by Lender to complete the
Project;
(viii) To let new or additional contracts with the same
contractor(s) or others to the extent not prohibited by their existing
contracts;
(ix) To employ watchmen and erect security fences to
project the Project from injury; and/or
(x) To take such action and require such performance as
it deems necessary under any of the bonds which may be, or insurance policies to
be or which have been, furnished hereunder, to make settlements and compromises
with the sureties or insurers thereunder and, in connection therewith, to
execute instruments of release and satisfaction.
(c) Without limiting any other similar rights herein granted,
from and after the occurrence of an Event of Default, Borrower does irrevocably
permit and authorize Lender to advance any Disbursement directly to General
Contractor, Contractors, Subcontractors, materialmen, suppliers and other
persons to pay for the completion of the Project, but Lender is not under any
obligation so to do. No further direction or authorization from Borrower shall
be necessary to warrant such direct advances and all such advances shall satisfy
pro tanto the obligations of Lender hereunder as fully as if made to or for the
--- -----
account of Borrower regardless of the disposition thereof by any contractors,
materialmen, suppliers or such other persons. Lender may impose any condition
for such direct payment including, but not limited to, receipt of estoppel
certificates, waivers of lien, releases and the like.
(d) Any and all costs and expenses (including attorneys' fees
and disbursements) incurred by Lender in pursuing its remedies hereunder and
exercising such power-of-attorney shall be additional indebtedness of Borrower
to Lender hereunder, and shall be secured by the Security Documents.
(e) Other than as may result from the negligence or willful
misconduct of Lender or its agents, servants or employees, Borrower does hereby
indemnify and hold Lender harmless from and against any and all liability,
claims, cost, damage, and Out-of-Pocket Costs which may be imposed upon or
incurred by Lender by reason of action taken by Lender hereunder, and from and
against any and all claims or demands whatsoever which may be asserted against
Lender by reason of any alleged obligation or undertaking on its part to perform
or discharge any of the terms, covenants and conditions of any
- 68 -
obligation of Borrower, to the extent same (i) arise during or relate to the
period prior to Lender's taking possession of the Trust Estate following the
occurrence of an Event of Default or (ii) arise during or relate to the period
following Lender's taking possession of the Trust Estate and involve the acts or
failures to act of Borrower or its agents, servants or employees. In case any
action, suit or proceeding is brought against Lender by reason of any such
occurrence, as a condition of Borrower's indemnity obligation under this Section
8.02(c), (i) Lender shall give prompt notice to Borrower of any such action,
suit or proceeding, and (ii) Borrower may, at Borrower's sole cost and expense,
resist and defend such action, suit or proceeding by counsel reasonably
satisfactory to Lender and (iii) if Borrower elects to defend such action, suit,
or proceeding, Lender shall not compromise or settle any such action, suit or
proceeding without the consent of Borrower unless Borrower waives its right to
the foregoing indemnification. Lender may, however, engage its own counsel, at
its expense, to participate in said defense and in such case, the respective
counsel for Borrower and Lender shall cooperate with each other with respect
thereto (it being understood that at all times counsel for Borrower shall
control such defense) and shall provide each other with copies of all papers
filed in such case which, when practical, shall be delivered prior to filing
thereof, or otherwise contemporaneously with filing thereof, and with such other
papers as shall be reasonably requested by the other counsel which shall be
delivered promptly upon request therefor. All sums determined to be payable by
Borrower to Lender by reason of the foregoing indemnity pursuant to a non-
appealable order of a court of competent jurisdiction, shall be due and payable
by Borrower to Lender within ten (10) Business Days after demand therefor or on
such later date as specifically set forth in such demand, and if such sums are
not timely paid, said sums shall bear interest at the Involuntary Rate from the
date such payment was due through the date of payment.
(f) Notwithstanding anything to the contrary contained herein,
Lender is not and shall not be obligated to attempt to use, operate, occupy or
manage the Trust Estate or any part thereof or perform any of the terms
conditions and agreements herein or in any of the other Loan Documents or in any
other documents on the part of Borrower to be performed, and Lender shall have
no liability whatsoever to Borrower or, unless and until Lender takes possession
of the Trust Estate following the occurrence of an Event of Default, any other
person or entity (other than by reason of its gross negligence or wilful
misconduct) for failing, attempting or ceasing to perform the same, or for the
manner of performing or attempting to perform the same, or any part thereof.
- 69 -
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.01. Expenses. Borrower shall pay all Out-of-Pocket Costs
--------
and all costs and expenses incurred by Borrower in connection with the Loan and
any advance thereunder including, without limitation, the fees and expenses set
forth in Section 7.30 hereof, recording fees for any documents that Lender
reasonably deems it appropriate to record, recording taxes when required by the
terms of this Agreement to be paid by Borrower (including any such costs
associated with recording tax audits or investigations demanded or conducted by
a state or local tax authority with respect to the Deed of Trust) transfer
taxes, license and permit fees, appraisal fees, costs of environmental
inspections, filing fees, title premiums and other fees of the Title Company, as
and when appropriate.
Section 9.02. Entire Agreement. This Agreement, taken together with
----------------
all of the other Loan Documents and all certificates and other documents
delivered by Borrower to Lender, embodies the entire agreement with respect to
the subject matter hereof, and supercedes or incorporates all prior negotiations
or agreements written and oral.
Section 9.03. Counterparts. This Agreement may be executed in any
------------
number of counterparts with the same effect as if the parties hereto had signed
the same document. All such counterparts shall constitute one instrument.
Section 9.04. Governing Law/Venue/Jurisdiction. This Agreement and
--------------------------------
the other Loan Documents are to be governed by and construed in accordance with
the laws of the District of Columbia. By its execution and delivery of the Note
and this Agreement, Borrower shall be deemed to have agreed that the appropriate
venue and jurisdiction for any litigation pertaining to the Loan, the Note or
the Loan Documents shall be in the District of Columbia and that the appropriate
location for any foreclosure sale pertaining to the collateral described in the
Loan Documents shall be in the District of Columbia.
Section 9.05. Severability. If any of the terms and provisions
------------
specified herein is held by a court of law to be in violation of any applicable
local, state or federal ordinance, statute, law, administrative or judicial
decision, or public policy, and if such court should declare such term or
provision to be illegal, invalid, unlawful, void, voidable, or unenforceable as
written, then such provision shall be given full force and effect to the fullest
possible extent that it is legal, valid and enforceable, and the remainder of
the terms
- 70 -
and provisions herein, shall be construed as if such illegal, invalid, unlawful,
void, voidable or unenforceable term or provision was not contained therein, and
that the rights, obligations and interest of Borrower and Lender under the
remainder of this Agreement, shall continue in full force and effect.
Section 9.06. Successors and Assigns. All covenants and agreements
----------------------
herein shall bind the respective successors and assigns of Borrower and Lender
(but this provision is not intended nor shall it be construed to permit Borrower
to transfer or assign its rights and obligations hereunder or under the Loan
Documents except as permitted by the provisions of the Loan Documents), whether
so expressed or not, and all such covenants shall inure to the benefit of Lender
and Borrower and their respective nominees, successors and assigns, whether so
expressed or not. All successors and assigns of Borrower, including all Persons
succeeding to Borrower's interest in the Trust Estate as permitted by the Loan
Documents or otherwise consented to by Lender, shall, prior to such succession
or assignment, expressly assume in writing all of Borrower's obligations under
the Loan Documents.
Section 9.07. Setoff. Borrower hereby waives any and all rights of
------
setoff with respect to principal and interest due on the Note and any other
payments due Lender under the Loan Documents, including rights of setoff with
respect to the Note and the Loan Documents which may arise from claims,
transactions or occurrences heretofore unknown to Borrower.
Section 9.08. Time of the Essence. Time is of the essence with regard
-------------------
to Borrower's performance under the terms and provisions of this Agreement, the
other Loan Documents and any amendment, modification or revision hereof or
thereof, subject, however, to the applicable grace periods, if any, set forth in
the Loan Documents. No extension of time for the payment of the Loan or any
installment thereof made by agreement with any person now or hereafter liable
for payment of the Loan shall operate to release, discharge, modify, change or
affect the original liability of Borrower under this Agreement, either in whole
or in part.
Section 9.09. Headings. The Table of Contents, and the titles and
--------
headings of Articles and Sections of this Agreement are intended for convenience
only, and shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 9.10. Notices. Each notice, request, demand, instruction or
-------
other communication required by the Note, this Agreement or the Loan Documents
to be given to Borrower or
- 71 -
Lender shall be in writing and shall be either (a) personally delivered to the
parties named below by a commercial messenger service regularly retaining
receipts for such delivery (b) sent by registered or certified mail, return
receipt requested, or (c) delivered by a reputable air courier service such as
Federal Express, Express Mail, Airborne or ▇▇▇▇▇ Air, shall be effective upon
delivery thereof to the addresses, and shall be addressed to the parties as set
forth below:
To Borrower: Southwest Market Limited Partnership
c/o Boston Properties
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President-Treasurer
and Boston Properties
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President
and Boston Properties
▇▇▇ ▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Regional General Counsel
To Lender: The Sumitomo Bank Limited,
New York Branch
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Real Estate Finance
Department
With a Copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(Matter No: 88291-00038)
If Lender or Borrower desires to change its address for the purpose of receipt
of notice, or to change the other party to receive a copy of notice, such notice
or change of address or recipient shall be given in the manner specified herein.
However, unless and until such written notice of change is actually received,
the last address and addressee as stated by written notice, or provided herein
if no written notice of change has been received, shall be deemed to continue in
effect for all purposes hereunder. Any notice given in accordance with the terms
hereof, the delivery of which is refused by the addressee, shall be effective at
the time of such attempted delivery.
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Section 9.11. Successive Remedies. No power or remedy herein
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conferred is exclusive of or shall prejudice any other power or remedy of Lender
given by law or by the terms of any of the Loan Documents. Each such power or
remedy may be exercised by Lender from time to time as often as it deems
necessary.
Section 9.12. No-Waiver. No failure by Lender to insist, or election
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by Lender not to insist, upon the strict performance of any of the terms,
provisions or conditions of this Agreement or any of the Loan Documents shall be
deemed to be a waiver of the same or any other term, provision or condition
thereof and Lender shall have the right at any time thereafter to insist upon
strict performance of any and all of the same. If Lender advances any portion
of the Loan in the absence of strict compliance with any or all of the
conditions of Lender's obligations to make such advance, the same shall be
deemed to have been made in pursuance of this Agreement and not to be a
modification hereof.
Section 9.13. Estoppel Certificates/Non-disturbance/Other Agreements.
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Within ten (10) Business Days after request by Borrower, (a) Lender shall
deliver to Borrower an estoppel certificate, duly executed and acknowledged by
Lender, stating the outstanding principal amount of the Loan and whether there
exists any Event of Default under any of the Loan Documents, and (b) Lender
shall execute and deliver a subordination, non-disturbance and attornment
agreement in substantially the form attached to the Deed of Trust as Schedule C,
for any Qualifying Space Lease entered into subsequent to the date hereof. If
Borrower shall pay, in full, the principal of and premium, if any, and interest
in the Note in accordance with the terms thereof and hereof and all other sums
payable hereunder and under the other Loan Documents by Borrower and shall fully
repay the Loan and shall comply with all the terms, conditions and requirements
hereof and the other Loan Documents, then upon prior notice to Lender, Lender
shall on such date of payment execute and deliver to Borrower such discharges,
assignments and/or satisfactions as Borrower may reasonably request and shall
accommodate Borrower by appearing at the closing of such assignment, discharge
or satisfaction or make such other arrangement with respect thereto mutually
satisfactory to Lender and Borrower, provided that Borrower shall pay all
Out-of-Pocket Costs with respect thereto.
Section 9.14. Cross-Default. Any Event of Default under this
-------------
Agreement shall be deemed to be an Event of Default under each of the Loan
Documents, entitling Lender to exercise any or all remedies available to Lender
under the terms of any or all Loan Documents.
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Section 9.15. Purpose of Loans. Borrower hereby represents and
----------------
warrants that the indebtedness evidenced by the Note is being obtained solely
for the purpose of carrying on a business or commercial enterprise. Nothing
contained in the preceding sentence shall be deemed to be a limitation of
Borrower's use of the proceeds of the Loan.
Section 9.16. Inconsistencies with Loan Documents. In the event of any
-----------------------------------
conflict between this Agreement and the provisions of any of the other Loan
Documents, the provisions of this Agreement shall control; provided, however,
that any provision of any other Loan Documents which imposes additional burdens
on Borrower or restricts the rights of Borrower or gives Lender additional
rights or remedies shall not be deemed to be in conflict or inconsistent with
this Agreement and shall be given full force and effect.
Section 9.17. Survival. All of the representations, warranties,
--------
terms, covenants, agreements and conditions contained in this Agreement shall
specifically survive the execution and delivery of this Agreement and the other
Loan Documents and the advance of the Loan and shall, unless otherwise expressly
provided, continue in full force and effect until the Loan or the portion
thereof which has been advanced, together with interest thereon, and all other
costs, charges and other sums payable hereunder or thereunder, are paid in full.
Section 9.18. Indemnification. Borrower shall indemnify Lender for
---------------
and hold Lender harmless from and against any and all claims, damages, losses,
liabilities, Out-of-Pocket Costs of any kind whatsoever (other than such Out-of-
Pocket Costs which are the responsibility of Lender pursuant to the terms of
this Agreement) which Lender may incur (or which may be claimed against Lender)
by reason of, or in connection with (a) the destruction of the Trust Estate (or
any part thereof in a casualty for which insurance was required under the Loan
Documents and was not obtained and kept in full force and effect by Borrower,
(b) all obligations, covenants, representations and warranties of Borrower under
the Trust Estate relating to Hazardous Material to the full extent of any losses
or damages (including those resulting from diminution in the value of the Trust
Estate incurred by Lender as a result of the existence of Hazardous Material to
the extent such Hazardous Material existed prior to the date Lender has taken
possession and has assumed control of the Trust Estate pursuant to the Deed of
Trust, and (c) any action or proceeding to which Lender is made a party by
reason of Lender's holding of an interest in the Trust Estate; provided,
however, Borrower shall have no obligation to indemnify Lender for any such
claims, damages, losses, liabilities, costs or expenses arising by
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reason of the negligence or willful misconduct of Lender or Lender's agents,
servants or employees. In case any action, suit or proceeding is brought against
Lender by reason of any such occurrence, as a condition to Borrower's indemnity
obligation under this Section 9.18 (i) Lender shall give prompt notice to
Borrower of any such action, suit or proceeding, (ii) Borrower may, at
Borrower's sole cost and expense, resist and defend such action, suit or
proceeding by counsel reasonably satisfactory to Lender, and (iii), if Borrower
elects to defend such action, suit or proceeding, Lender shall not compromise or
settle any such action, suit or proceeding without the consent of Borrower,
unless Lender waives its right to the foregoing indemnification. Lender may,
however, engage its own counsel, at its expense, to participate in said defense
and in such case, the respective counsel for Borrower and Lender shall cooperate
with each other with respect thereto (it being understood that at all times
counsel for Borrower shall control such defense) and shall provide each other
with copies of all papers filed in such case which, when practical, shall be
delivered prior to filing thereof, or otherwise contemporaneously with filing
thereof, and with such other papers as shall be reasonably requested by the
other counsel which shall be delivered promptly upon request therefor. All sums
determined to be payable by Borrower to Lender by reason of the foregoing
indemnity pursuant to a non-appealable order of a court of competent
jurisdiction shall be due and payable by Borrower to Lender within ten (10)
Business Days after demand therefor or on such later date as specifically set
forth in such demand, and if such sums are not timely paid, said sums shall bear
interest at the Involuntary Rate from the date such payment was due through the
date of payment. This Section 9.18 shall survive the payment in full of the
Indebtedness.
Section 9.19. No Agency, Partnership or Joint Venture: Nonliability
-----------------------------------------------------
of Lender.
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(a) Lender is not the agent or representative of Borrower, and
Borrower is not the agent or representative of Lender. Borrower and Lender
intend and agree that the relationship between them shall be solely that of
creditor and debtor. Nothing herein nor the acts of the parties hereto shall be
construed to create a partnership or joint venture between Borrower and Lender.
(b) All inspections of the construction of the Project made by
or through Lender are for purposes of administration of the Loan only and
Borrower is not entitled rely upon the same with respect to the quality,
adequacy or suitability of materials or workmanship, conformity to the Plans,
state of completion or otherwise. Borrower shall make its own inspections of
such construction to determine that the
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quality of the work and all other requirements of such construction are being
performed in a manner satisfactory to Borrower and in conformity with the Plans
and all other requirements.
(c) By accepting or approving anything required to be observed,
performed, fulfilled or given to Lender pursuant to the Loan Documents,
including any certificate, statement of profit and loss or other financial
statement, survey, appraisal, lease or insurance policy, Lender shall not be
deemed to have warranted or represented the sufficiency, legality, effectiveness
or legal effect of the same, or of any term, provision or condition thereof, and
such acceptance or approval thereof shall not constitute a warranty or
representation to anyone with respect thereto by Lender.
(d) Lender neither undertakes nor assumes any responsibility or
duty to Borrower to select, review, inspect, supervise, pass judgment upon or
inform Borrower of any matter in connection with the Project, including without
limitation matters relating to the quality, adequacy or suitability of: (i) the
Plans (ii) Architects, Contractors, Subcontractors and other Persons employed or
utilized in connection with the construction of the Improvements, or the
workmanship of or the materials used by any of them, or (iii) the progress or
course of construction and its conformity or nonconformity with the Plans.
(e) Lender owes no duty of care to protect Borrower against
negligent, faulty, inadequate or defective building or construction.
Section 9.20. Negotiated Document. Lender and Borrower acknowledge
-------------------
that the provisions and the language of this Agreement and the other Loan
Documents have been negotiated, and agree that no provision of this Agreement or
any other Loan Document shall be construed against either Lender or Borrower by
reason of either Lender or Borrower having drafted such provision, this
Agreement or any other Loan Document.
Section 9.21. Limitation on Recourse. Except for certain limited
----------------------
personal liability as specified below, it is expressly understood and agreed
that the extent of liability for payment by the Borrower of any sums due under
this Agreement, the Note, the Deed of Trust or any of the other Loan Documents
is limited to (a) the Trust Estate, and all Revenues therefrom received by the
Borrower after the occurrence of an Event of Default which are not applied to
the Loan or to Expenses of the Trust Estate, and (b) proceeds of insurance on
said Trust Estate or proceeds on account of condemnation
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thereof (to the extent such proceeds are not applied by the Lender in
restoration or repair of the Trust Estate pursuant to the terms of the Deed of
Trust), the Lender agreeing not to look personally to the Borrower, the general
partners of the Borrower (a "P-i"), the partners or shareholders of any general
partner of the Borrower (a "P-2"), or the owners of partnership or shareholder
interests, whether owned or held directly or indirectly, in partners of the
general partners of the Borrower (a "P-3"), for payment of any such sums. The
Lender, for itself and its successors, endorsees, participants and assigns,
hereby waives any right to enforce collection of any money judgment against any
assets of the Borrower, any ▇-▇, ▇-▇, ▇▇ ▇-▇, other than as set forth in clauses
(a) and (b) above, whether by reason of a judgment pursuant to an action brought
under the Note or any action in foreclosure or otherwise for a deficiency
judgment against the Borrower, and ▇-▇, ▇-▇, ▇-▇, other than as set forth in
clauses (a) and (b) above. However, notwithstanding the foregoing, the Borrower
and each P-1, P-2 and P-3 shall be fully subject to personal liability (i) for
fraud, respectively, by Borrower or such ▇-▇, ▇-▇ ▇▇ ▇-▇ and (ii) to the extent
that the proceeds of insurance on the Trust estate, the proceeds on account of
condemnation thereof, or Revenues of the Trust Estate are received by the
Borrower or such ▇-▇, ▇-▇ ▇▇ ▇-▇ after the occurrence of an Event of Default and
are not applied to the Loan, the Expenses of the Trust Estate or, in respect of
insurance or condemnation proceeds, in restoration or repair of the Trust Estate
pursuant to the terms of the Deed of Trust. The foregoing provisions shall not
in any way be deemed to release, affect or impair the indebtedness and
obligations evidenced by the Note or the security therefor, or the Lender's
right to enforce its remedies under the Deed of Trust or any other of the Loan
Documents by any action, including, without limitation, an action brought under
the Note or any sale or foreclosure under the Deed of Trust. The foregoing
provisions shall not in any way be deemed to release, affect or impair the
indebtedness and obligations evidenced by the Note or the security therefor, or
the Lender's right to enforce its remedies under the Deed of Trust or any other
of the Loan Documents by any action, including, without limitation, an action
brought under the Note or any sale or foreclosure under the Deed of Trust.
Furthermore, none of the foregoing provisions shall in any way derogate from the
liability which any person has assumed by a separate instrument in the nature of
a guarantee of any obligation undertaken in connection with the Loan.
9.22 Actions on Behalf of Lender. Any consent, review, approval or
---------------------------
other similar act required of Lender under the terms of this Agreement or any
other Loan Document may, at Lender's option, be done by or in consultation with
any Consultant or Consultants to Lender. At Lender's direction,
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Borrower shall provide such information to Consultants as may be required to be
provided to Lender hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the day and year first written above.
SOUTHWEST MARKET LIMITED PARTNERSHIP,
a District of Columbia limited partnership
By: Boston Southwest Associates
Limited Partnership, a
Massachusetts limited
partnership, General Partner
ATTEST: By: Independence Square, Inc.,
a Delaware corporation, its
managing general partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------- President
THE SUMITOMO BANK, LIMITED, a
Japanese banking institution, acting
through its NEW YORK BRANCH
ATTEST:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------ ----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇
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Title: Joint General Manager
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