EXHIBIT 10.20
--------------------------------------------------------------------------------
CONSTRUCTION LOAN AGREEMENT
by and between
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
and
SOUTHWEST MARKET LIMITED PARTNERSHIP
for
TWO INDEPENDENCE SQUARE
Dated as of February 22, 1991
--------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINITIONS....................................... 1
Section 1.01 Definitions.................................... 1
Section 1.02 Accounting Terms............................... 18
ARTICLE II TERMS OF THE LOAN AND DISBURSEMENT
OF PROCEEDS..................................... 18
Section 2.01 Agreement to Lend.............................. 18
Section 2.02 Repayment...................................... 18
Section 2.03 Loan Documents................................. 19
Section 2.04 Payment of Principal
and Interest................................. 19
Section 2.05 Disbursements - General........................ 19
Section 2.06 Project Budget................................. 20
Section 2.07 Timing of Disbursements........................ 20
Section 2.08 Lender's Right to Condition
Disbursements................................ 21
Section 2.09 Disbursements for Project Costs................ 21
Section 2.10 Disbursement of Contingency
Funds........................................ 24
Section 2.11 Disbursements of Interest...................... 24
Section 2.12 Disbursement of Tenant
Improvement Costs............................ 25
Section 2.13 Modifications to Project Budget................ 28
Section 2.14 Balancing...................................... 29
Section 2.15 Automatic Debit and Credit; Wire
Transfers.................................... 29
ARTICLE III BORROWER'S FIXED RATE OPTION...................... 30
Section 3.01 Borrower's Fixed Rate Option................... 30
Section 3.02 Exercise of Conversion Option.................. 30
Section 3.03 Interest Rate Management
Arrangement.................................. 31
Section 3.04 Conditions to Lender's Obligation
to Enter Into an Interest Rate
Management Arrangement....................... 33
i
Page
----
ARTICLE IV CONDITIONS TO THE INITIAL
DISBURSEMENT........................................ 34
Section 4.01 Loan Documents..................................... 34
Section 4.02 Title Policies..................................... 34
Section 4.03 Survey............................................. 35
Section 4.04 Insurance.......................................... 35
Section 4.05 Flood Insurance.................................... 35
Section 4.06 Existence and Authorization........................ 36
Section 4.07 Opinion of Borrower's Counsel...................... 37
Section 4.08 Opinion from Counsel to Each
Guarantor........................................ 37
Section 4.09 UCC Search......................................... 37
Section 4.10 Hazardous Material................................. 37
Section 4.11 Streets and Utilities.............................. 38
Section 4.12 Project Budget..................................... 38
Section 4.13 Base Building Construction Schedule................ 38
Section 4.14 Permits............................................ 38
Section 4.15 Plans.............................................. 39
Section 4.16 Stored Materials................................... 39
Section 4.17 Architects' Materials.............................. 39
Section 4.18 General Contractor's Materials..................... 39
Section 4.19 Contractor and Subcontractor
Materials........................................ 39
Section 4.20 Engineer's Certificate............................. 39
Section 4.21 Other Project Documents............................ 40
Section 4.22 Consultants' Report................................ 40
Section 4.23 Cost to Complete................................... 40
Section 4.24 Government Materials............................... 40
Section 4.25 Appraisal.......................................... 40
Section 4.26 Fees............................................... 40
Section 4.27 General Conditions................................. 41
Section 4.28 Construction-Related Conditions.................... 41
Section 4.29 Bid Protest Litigation............................. 42
Section 4.30 Land Use Agreements................................ 42
ARTICLE V CONDITIONS TO ALL SUBSEQUENT
DISBURSEMENTS....................................... 42
Section 5.01 Initial Disbursement............................... 42
Section 5.02 General Conditions................................. 42
Section 5.03 Request for Disbursement Documents................. 43
Section 5.04 Title Endorsements................................. 45
Section 5.05 Plans; Permit Approval............................. 45
Section 5.06 Stored Materials................................... 45
Section 5.07 Contractors and Subcontractors..................... 46
Section 5.08 Final Construction Disbursement.................... 46
Section 5.09 Advances Without Requests.......................... 47
Section 5.10 Surveys............................................ 48
Section 5.11 Final Disbursement of Loan Proceeds................ 49
ii
Page
----
ARTICLE VI REPRESENTATIONS AND WARRANTIES....................... 51
Section 6.01 Existence........................................ 51
Section 6.02 Authorization; Enforceable
Obligation..................................... 51
Section 6.03 Conflicting Agreements........................... 51
Section 6.04 Required Documents............................... 52
Section 6.05 No Material Litigation........................... 52
Section 6.06 Bid Protest Litigation........................... 52
Section 6.07 Margin Regulations............................... 52
Section 6.08 Compliance With Applicable Laws.................. 53
Section 6.09 Government Leases................................ 53
Section 6.10 No Brokers....................................... 53
Section 6.11 Project Documents................................ 54
Section 6.12 Plans............................................ 54
Section 6.13 Project Budget and Construction
Schedule....................................... 54
Section 6.14 Streets and Utilities............................ 54
Section 6.15 ERISA............................................ 55
Section 6.16 Environmental.................................... 55
Section 6.17 Whole Tax Parcel................................. 55
Section 6.18 Casualty......................................... 55
Section 6.19 True Statements.................................. 55
ARTICLE VII AFFIRMATIVE AND NEGATIVE COVENANTS.................. 56
Section 7.01 Commencement and Completion of
Construction................................... 56
Section 7.02 Encroachments.................................... 57
Section 7.03 Plans............................................ 57
Section 7.04 Compliance with Laws
and Other Requirements......................... 58
Section 7.05 Change Orders.................................... 58
Section 7.06 Project Budget; Annual Operating
Budget......................................... 59
Section 7.07 Contractors and Subcontractors................... 59
Section 7.08 Permits and Warranties........................... 60
Section 7.09 Protection Against Liens and Claims.............. 60
Section 7.10 Removal of Personalty............................ 60
Section 7.11 Insurance........................................ 61
Section 7.12 Title Reports.................................... 61
Section 7.13 Entry and Inspection............................. 61
Section 7.14 Physical Security of Project..................... 61
Section 7.15 Information Covenants............................ 62
Section 7.16 Management of Property........................... 64
Section 7.17 Project Documents................................ 65
Section 7.18 Operation and Maintenance of
Project........................................ 65
Section 7.19 Environmental.................................... 65
Section 7.20 Other Business................................... 65
iii
Page
----
Section 7.21 Further Encumbrance................................. 66
Section 7.22 Transfers........................................... 68
Section 7.23 Reimbursable Expenses............................... 68
Section 7.24 Preservation of Existence........................... 69
Section 7.25 Future Tenant Estoppel
Certificates...................................... 69
Section 7.26 Use of Proceeds..................................... 70
Section 7.27 Publicity........................................... 70
Section 7.28 Name................................................ 70
Section 7.29 Consultants' Fees................................... 70
Section 7.30 Partnership Agreement; No
Partnership Distributions......................... 70
Section 7.31 Space Leases........................................ 71
Section 7.32 Tenant Improvements Schedule........................ 71
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES......................... 71
Section 8.01 Events of Default................................... 71
Section 8.02 Remedies............................................ 76
ARTICLE IX MISCELLANEOUS.......................................... 79
Section 9.01 Expenses............................................ 79
Section 9.02 Entire Agreement.................................... 79
Section 9.03 Counterparts........................................ 80
Section 9.04 Governing Law/Venue/Jurisdiction.................... 80
Section 9.05 Severability........................................ 80
Section 9.06 Successors and Assigns.............................. 80
Section 9.07 Setoff.............................................. 81
Section 9.08 Time of the Essence................................. 81
Section 9.09 Headings............................................ 81
Section 9.10 Notices............................................. 81
Section 9.11 Successive Remedies................................. 82
Section 9.12 No Waiver........................................... 82
Section 9.13 Estoppel Certificates/Non-disturbance/
Other Agreements.................................. 83
Section 9.14 Cross-Default....................................... 83
Section 9.15 Purpose of Loans.................................... 83
Section 9.16 Inconsistencies with Loan
Documents......................................... 83
Section 9.17 Survival............................................ 83
Section 9.18 Indemnification..................................... 84
Section 9.19 No Agency, Partnership or
Joint Venture; Nonliability
of Lender......................................... 85
Section 9.20 Negotiated Document................................. 86
Section 9.21 Limitation on Recourse.............................. 86
Section 9.22 Actions on Behalf of Lender......................... 87
iv
EXHIBITS
Exhibit A - Form of Request for Disbursement
Exhibit B - Form of Lien Waiver and Affidavit of
Payment
SCHEDULES
Schedule 4.12 - Project Budget
Schedule 4.13 - Base Building Construction Schedule
Schedule 6.11 - Project Documents
Schedule 6.12 - Plans
v
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT made as of the 22 day of February,
1991 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/o 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 :
- - - - - - - - - -
WHEREAS, pursuant to that certain commitment letter dated September 28,
1990 from Lender to Borrower, as amended by that certain letter from Lender to
Borrower dated December 12, 1990 (collectively, the "Commitment"), and on the
terms and conditions hereinafter set forth, Lender is willing to lend to
Borrower the aggregate sum of up to ONE HUNDRED TWENTY-FIVE MILLION DOLLARS
($125,000,000), 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
-----------
Section 1.01. Definitions. As used in this Agreement, the capitalized
-----------
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
---------
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,
-----
Inc., a District of Columbia corporation, an authorized agent of the Title
Companies.
Agreement. As used herein, "Agreement" shall mean this Construction
---------
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"
-----------------------
shall have the meaning given such term in Section 7.15(h) hereof.
Appraisal. As used herein, "Appraisal" shall mean an appraisal of the
---------
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
-----------------------------------
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 November 2, 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 Leggat ▇▇▇▇▇▇ &
---------
▇▇▇▇▇▇ 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
---------
following: (a) with respect to all of the Project other than the Tenant
Improvements, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ Associates P.C.; (b) with respect to the GSA
Tenant Improvements only, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Architects, P.C. ("▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇");
and (c) with respect to the Retail Tenant Improvements to be constructed
pursuant to a Space Lease, the Person
- 2 -
designated by Borrower or the Space Tenant to perform the design services for
such Retail 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 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
------------------
each of the following: (a) with respect to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Fox Associates P.C.,
that certain agreement with Borrower dated December 18, 1989; (b) with respect
to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, that certain agreement dated July 1, 1990 providing for
interior design services for the GSA Tenant Improvements, (c) with respect to a
Person designated by Borrower or a retail Tenant to perform the design services
for Retail 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
-------------------------------
Project Documents" shall mean the Collateral Assignment of Project Documents
from Borrower to Lender of even date herewith in a form mutually agreed to by
Borrower and Lender.
Assignment of Rents. As used herein, "Assignment of Rent" shall mean
-------------------
the Collateral Assignment of Leases, Rents, Profits and Income and Pledge of
Accounts with an effective date the same as the date hereof in a form mutually
agreed to by Borrower and Lender.
Base Building. As used herein, "Base Building" shall mean the
-------------
structure, built in accordance with the Plans, as it exists at the completion of
all work shown on the Two Independence Square Preliminary Schedule, dated August
15, 1990, and after the issuance of a certificate of occupancy by the
appropriate Governmental Authority for all work shown on the Preliminary
Schedules.
Base Building Construction Schedule. As used herein, Base Building
-----------------------------------
Construction Schedule shall mean the schedule of dates upon which completion of
certain portions of the Base Building is anticipated to occur, which schedule
is, pursuant to Section 4.13, attached hereto as Schedule 4.13.
- 3 -
Bid Protest Guaranty. As used herein, "Bid Protest Guaranty" shall
--------------------
mean the joint and several guaranty of even date herewith made by Guarantors in
favor of Lender in a form mutually agreed to by Borrower and Lender guaranteeing
payment to Lender of the entire Indebtedness.
Bid Protest Litigation. As used herein, "Bid Protest Litigation" shall
----------------------
mean that certain civil action No. 90-2951, filed December 4, 1990 in the United
States District Court for the District of Columbia (the "District Court")
challenging the award of the GSA Building Lease to Borrower for which the
District Court issued an order dated January 11, 1991, dismissing plaintiff's
suit and confirming the award of the GSA Building Lease to Borrower, and from
which plaintiff has outstanding rights to request a modification from the
District Court or to appeals.
Business Day. As used herein, a "Business Day" shall mean a day on
------------
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
------------
the Plans, or in the Construction Contracts.
Completion Date. As used herein, "Completion Date" shall mean January
---------------
1, 1994, subject to extension for Force Majeure and Unavoidable Government Delay
as provided in this Agreement.
Completion Guaranty. As used herein, "Completion Guaranty" shall mean
-------------------
the joint and several guaranty of even date herewith made by Guarantors in favor
of Lender in a form mutually agreed to by Borrower and Lender, guaranteeing
Lien-free completion of the entire Project.
Completion of Construction. As used herein, "Completion of
--------------------------
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 Laws
and all requirements of the National Fire Protection Association (or its
successor); (h) 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 Construction 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
- 4 -
purpose; (c) all conditions to the Final Construction Disbursement as set forth
in Section 5.08 have been satisfied or, in Lender's sole discretion, waived; (d)
all Tenant Improvements required to be constructed by Borrower under the
Government Leases 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 Construction Schedule
covering the entire Leased Premises; and (f) the GSA shall have commenced paying
Base Rent on the entire Leased Premises without protest and as required by the
terms of the GSA Building Lease.
Construction Contract. As used herein, "Construction Contract" shall
----------------------
mean (a) that certain Agreement Between Owner and General Contractor dated as of
October 12, 1990, 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 General Contractor
similarly providing for construction of the Project.
Construction Schedule. As used herein, "Construction Schedule" shall
---------------------
mean the schedule of dates upon which completion of certain portions of the
Project is anticipated to occur, which schedule shall be comprised of the Base
Building Construction Schedule and the Tenant Improvements Schedule.
Consultants. As used herein, "Consultants" shall mean all independent
------------
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.
Contract and Contractor. As used herein, "Contract" shall mean a
-------- ----------
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
- 5 -
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
----------------
meaning ascribed to such term in Subsection 3.03(b) hereof.
Debt Service Coverage Ratio. As used herein, "Debt Service Coverage
---------------------------
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
-------------
Construction Loan Deed of Trust and Security Agreement with an effective date
the same as the date hereof, by and among Borrower, Lender and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as trustees for Lender, 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 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
------------
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 of even date herewith made by Guarantors in
favor Lender in a form mutually agreed to by Borrower and Lender guaranteeing
Borrower's performance of certain obligations under the Deed of Trust relating
to Hazardous Material.
Environmental Report. As used herein, "Environmental Report" shall
--------------------
mean the Geotechnical Environmental Site Assessment dated December 2, 1987 by
▇▇▇▇▇▇ Associates, Inc., the Report of Underground Storage Tank Removal dated
March 20, 1990 (Proj. No. 5057 MD 20) by ▇▇▇▇▇▇ Associates, Inc., and the
Environmental Report, Two Independence Square dated October 24, 1990 by ▇▇▇▇▇▇
Associates, Inc.
Event of Default. As used herein, "Event of Default" shall have the
----------------
meaning ascribed to such term in Section 8.01 hereof.
- 6 -
Exercise Period. As used herein, "Exercise Period" shall have the
---------------
meaning ascribed to such term in Subsection 3.02(c) hereof.
Expenses. As used herein, "Expenses" shall mean the actual costs
--------
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."
Final Construction Disbursement. As used herein, "Final Construction
-------------------------------
Disbursement" shall have the meaning ascribed to such term in Section 5.08
hereof.
Final Disbursement of Loan Proceeds. As used herein, "Final
-----------------------------------
Disbursement of Loan Proceeds" shall have the meaning ascribed to such term in
Section 5.11 hereof.
Force Majeure. As used herein, "Force Majeure" shall mean the
-------------
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 or
lockouts; acts of God; enemy action; civil commotion or fire; or other similar
unavoidable casualties or events.
- 7 -
Funding Costs. As used herein, "Funding Costs" shall have the meaning
-------------
ascribed to such term in the Note.
General Contractor. As used herein, "General Contractor" shall mean
------------------
▇▇▇▇▇▇▇▇ & 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.
Government Leases. As used herein, "Government Leases" shall mean the
-----------------
GSA Building Lease and the Parking Agreement.
Governmental Authority. As used herein, "Governmental Authority" shall
----------------------
have the meaning ascribed to such term in the Deed of Trust.
GSA. As used herein, "GSA" shall mean the General Services
---
Administration, an agency of the United States government.
GSA Building Lease. As used herein, "GSA Building Lease" shall mean
------------------
that certain U.S. Government Lease for Real Property No. GS-llB-00l1l
"Negotiated," dated June 1, 1990, by and between Borrower as lessor and the
United States of America as lessee, and all attachments, exhibits and schedules
thereto, as the same hereafter may be amended, modified or supplemented in
accordance with the terms of the Loan Documents, the space covered by which
lease is intended to be used for office space and related facilities for NASA.
GSA Tenant Improvements. As used herein, "GSA Tenant Improvements"
-----------------------
shall have the meaning ascribed to such term in Section 2.12(b) hereof.
Guarantees. As used herein, "Guarantees" shall mean the Completion
----------
Guaranty, the Interest Guaranty, the Environmental Guaranty and the Bid Protest
Guaranty.
Guarantors and Guarantor. As used herein "Guarantors" shall mean
---------- ---------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and "Guarantor" shall mean one of the
Guarantors.
Hard Costs. As used herein, "Hard Costs" shall mean those Project
----------
Costs set forth on the Project Budget under the headings "Land Equity" and
"Building Construction", including without limitation costs of labor, materials,
equipment, and fixtures.
- 8 -
Hazardous Material. As used herein, "Hazardous Material" shall have
------------------
the meaning ascribed to such term in the Deed of Trust.
Improvements. As used herein, "Improvements" shall have 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 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
-----------------
joint and several guaranty and indemnity of even date herewith made by
Guarantors in favor of Lender in a form mutually agreed to by Borrower and
Lender guaranteeing the payment of interest on the Note and indemnifying Lender
against certain liabilities.
- 9 -
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
----------------
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
----
term in the Deed of Trust.
Laws. As used herein, "Laws" shall mean all laws, rules, regulations,
----
codes, and ordinances of Governmental Authorities, and all rulings, orders,
decisions and interpretations issued by Governmental Authorities in respect
thereof.
Leased Premises. As used herein, "Leased Premises" shall mean all of
---------------
the space demised by the Government Leases.
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 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 Bid Protest Guaranty, the
Assignment of Rents, the Assignment of Project Documents, all UCC-l Financing
Statements given by Borrower to Lender, and any
- 10 -
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 and the
Indebtedness.
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
---------
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 known 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 mean any Space Lease
-----------
or other agreement demising thirty thousand (30,000) rentable square feet of
space or more, including without limitation the Space Leases and other
agreements set forth on Schedule B attached to the Deed of Trust.
Maturity Date. As used herein, "Maturity Date" shall have the meaning
-------------
ascribed to such term in the Note.
NASA. As used herein, "NASA" shall mean the National Aeronautics and
----
Space Administration, an agency of the United States government.
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.
Note. As used herein, "Note" shall mean the Promissory Note made by
----
Borrower to the order of Lender in the principal amount of One Hundred Twenty-
Five Million Dollars ($125,000,000) or such lesser amount as may be advanced by
Lender to Borrower under this Agreement, and otherwise in the form mutually
agreed to by Borrower and Lender.
- 11 -
Out-of-Pocket Costs. As used herein, "Out-of-Pocket Costs" shall have
-------------------
the meaning ascribed to such term in the Deed of Trust.
Parking Agreement. As used herein, "Parking Agreement" shall mean that
-----------------
certain Contract No. NASW-4580, dated February 26, 1991 by and between Borrower
and NASA and all attachments, exhibits and schedules thereto, as the same
hereafter may be amended, modified or supplemented in accordance with the terms
of the Loan Documents, the space covered by which agreement is intended to be
used for parking space for NASA.
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
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,
- 12 -
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 I. As used herein, "Phase I" shall mean the building on that
-------
portion of ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇ designated as Assessment and Tax Lot 873, known as
One Independence Square, being built by Borrower in accordance with the loan
agreement heretofore entered into by and between Borrower and Lender.
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, GSA, NASA 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 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 passageways 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
- 13 -
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 GSA, NASA or other
government agency under the terms of the Government Leases, including amounts
payable as liquidated damages, tenant improvement allowances, contributions for
signs, logos and/or other mediums naming the Improvements, and contributions for
improving the vicinity of the Premises; and (c) all other costs necessary to
construct or otherwise payable in connection with the construction of the entire
Project.
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.
Project Development Agreement. As used herein, "Project Development
-----------------------------
Agreement" shall mean the Development Agreement, dated as of December 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.
Qualifying Space Lease. As used herein, a "Qualifying Space Lease"
----------------------
shall mean a bona fide lease agreement pursuant to
- 14 -
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 their remaining in full force and effect, the Government
Leases shall be deemed to be Qualifying Space Leases.
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 A
hereto.
Restaurant Improvements. As used herein, "Restaurant Improvements"
-----------------------
shall have the meaning ascribed to such term in Section 2.12(c) hereof.
Restaurant Lease. As used herein, "Restaurant Lease" shall have the
----------------
meaning ascribed to such term in the Deed of Trust.
Retail Tenant Improvements. As used herein, "Retail Tenant
--------------------------
Improvements" shall have the meaning ascribed to such term in Section 2.12(c)
hereof.
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
- 15 -
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 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.
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
- 16 -
forth on the Project Budget under the headings "Tenant Work (NASA)" and "Tenant
Work (Spec)"
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, including, without limitation, GSA Tenant
Improvements, Retail Tenant Improvements and Restaurant Improvements.
Tenant Improvements Schedule. As used herein, "Tenant Improvements
----------------------------
Schedule" shall mean the schedule required by Section 7.32 hereof to be provided
to Lender of the dates upon which completion of Tenant Improvements is estimated
to occur.
Termination Event. As used herein, "Termination Event" shall have the
-----------------
meaning ascribed to such term in the Bid Protest Guaranty.
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, Ticor Title Insurance Company, Commonwealth Land Title
Insurance Company and Lawyers Title Insurance Corporation, as coinsurers under
agreements 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) subject to the rights of tenants under the
Government Leases, 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.
- 17 -
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 GSA or NASA or any person or firm exclusively employed or retained by, or
under the exclusive direction of the GSA or NASA (including the issuance of a
stop work order or an order suspending work other than a stop work order in
connection with the Bid Protest Litigation) which extends the dates for the
performance of Borrower's obligations under the GSA Building Lease by an equal
period or, pursuant to Paragraph 4S.VIII. of Solicitation for Qffers No. 89-047
(which is an attachment to and incorporated into the GSA Building Lease), would
require the GSA 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 45.1 of Solicitation
for Offers No. 89-047.
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 up to ONE
HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000), 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, (b) such earlier
---------
date upon which the Loan becomes due and payable pursuant to the terms of the
Loan Documents or (c) the occurrence of a Termination Event, Borrower shall
fully repay to Lender the Loan and all other Indebtedness owed to Lender.
- 18 -
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
(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.
(c) Notwithstanding any other provision of this Agreement to the
contrary, including, without limitation, Section 2.06 hereof, prior to the
termination of the Bid Protest Guaranty Borrower shall not request and Lender
shall not make any disbursement or reallocation of Loan proceeds for the Item
designated "Land Equity" in an amount in excess of Seven Million Dollars
($7,000,000) without Lender's prior written approval, which may be withheld in
Lender's absolute discretion and which will not be deemed given after the
passage of time. After the termination of the Bid Protest Guaranty, Borrower may
request Disbursements for Land Equity in accordance with disbursements proposed
for such Item in the Project Budget and Construction Schedule as previously
approved by Lender.
(d) (i) If Borrower is enjoined or prevented by issuance of a stop
work order or suspension of work by any Governmental Authority or court of
competent jurisdiction from constructing the Project or performing its
obligations hereunder, other than in connection with the Bid Protest Litigation,
Lender shall make Disbursements for Project Costs incurred prior to the issuance
of such injunction, stop work
- 19 -
order or suspension of work on and subject to the terms and conditions of this
Agreement; provided, however, that in no event shall Lender be required, while
any such injunction, stop work order or suspension of work remains in effect, to
make any Disbursement for Project Costs incurred subsequent to such injunction,
stop work order or suspension of work.
(ii) Lender shall not be required to make any Disbursements for
Project Costs, without regard to when such Project Costs were incurred, during
any period in which, in connection with the Bid Protest Litigation, Borrower is
enjoined or prevented by issuance of a stop work order or suspension of work by
any Governmental Authority or court of competent jurisdiction from constructing
the Project or performing its obligations hereunder.
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; provided,
however, that any reallocation made necessary by a unilateral change order by
GSA under the GSA Building Lease shall not be subject to the ten percent (10%)
limitation set forth herein. Borrower shall retain a numbered, sequential record
of all such reallocations.
Section 2.07. Timing of Disbursements. 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
- 20 -
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).
Section 2.08. Lender's Right to Condition Disbursements. In addition
-----------------------------------------
to the conditions set forth in Articles IV and V of this Agreement, 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 this 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
- 21 -
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
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 B 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
- 22 -
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, 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
- 23 -
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 2.11 governing
disbursement of interest and Section 2.12 governing Tenant Improvement Costs,
(i) all other Hard Costs incurred but 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 Construction Disbursement set forth in
Section 5.08 hereof, (ii) all other Soft Costs not advanced prior to Completion
of Construction shall be advanced not more frequently than once a month for Soft
Costs as incurred after completion of Construction and (iii) all Soft Costs arid
other savings not disbursed in (i) and (ii) above shall be disbursed in
accordance with Section 5.11 hereof.
(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.
(i) Each Disbursement shall be payable within five (5) Business
Days after satisfaction of all conditions to the requested Disbursement.
Sect ion 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 the Base Building, no Contingency funds may be
used to pay interest on the Loan. After completion of the Base Building, but
prior to Completion of Construction, an amount not to exceed fifty percent (50%)
of the balance of the Contingency funds available as of the date of completion
of the Base Building may be used to pay interest on the Loan.
Section 2.11. Disbursement of Interest. The amount set forth under the
------------------------
Item "Interest" shall be periodically disbursed directly to Lender in order to
pay interest. No
- 24 -
amounts under the Item "Interest" shall be disbursed from Loan proceeds
subsequent to the date of Completion of Construction until Lender makes the
Final Disbursement of Loan Proceeds pursuant to the terms of Section 5.11
hereof. 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 GSA Building Lease (the "GSA
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 GSA Tenant Improvements unless and until (A)
Borrower has provided Lender with a detailed breakdown of
the Project Costs included in the Project Budget under the
heading "Tenant Work (NASA)" in form and substance
reasonably satisfactory to Lender, (B) Borrower and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ have executed a valid and binding contract,
reasonably acceptable to Lender, for the planning and design
of the GSA Tenant Improvements, which contract requires
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to execute a certificate and consent in a
form mutually satisfactory to Lender and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, to
the extent applicable to the services to be provided by
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and (c) Borrower has delivered to Lender a
Tenant Improvements Schedule.
- 25 -
(ii) Each Request for Disbursement that includes any Tenant
Improvement Costs for the GSA Tenant Improvements ("GSA Tenant
Improvement Costs") shall be accompanied by a copy of (A) any
invoice to be submitted to the GSA under Paragraph 103,
Attachment I to the GSA Building Lease in respect of such GSA
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 GSA of all prior invoices
submitted for prior and current phases of construction, to the
extent payment has been made.
(iii) In addition to all other limitations set forth in this
Agreement, Lender will not make any Disbursement for GSA Tenant
Improvement Costs for those items required under the GSA
Building Lease to be paid for directly by GSA.
(c) Lender's disbursement of Tenant Improvement Costs for Tenant
Improvements constructed in space in the Project other than that demised by the
GSA Building Lease, designated in the Project Budget as "Tenant Work (Spec)"
(the "Retail Tenant Improvements"), shall, in addition to the other terms and
conditions of this Agreement, be subject to the following terms and conditions:
(i) In addition to all other limitations set forth in this Agreement
the following limitations shall apply to Disbursements that
include any Tenant Improvement Costs for Retail Tenant
Improvements ("Retail Tenant Improvement Costs"):
(A) The aggregate of disbursements for Retail Tenant
Improvements for space designated for food service (the
"Restaurant Improvements") shall not exceed the lesser of
(1) if such Restaurant Improvements are being constructed
pursuant to a Space Lease, the actual aggregate allowance
provided by Borrower for such Restaurant Improvements under
such Space Lease and (2) whether or not such Restaurant
Improvements are being constructed pursuant to a Space
Lease, Five Hundred Thousand Dollars ($500,000).
- 26 -
(B) The aggregate of Disbursements for particular Retail Tenant
Improvements for space other than the Restaurant
Improvements shall not exceed the lesser of (1) if such
Retail Tenant Improvements are being constructed pursuant to
a Space Lease, the actual aggregate allowance provided by
Borrower for such Retail Tenant Improvements under such
Space Lease and (2) whether or not such Retail Tenant
Improvements are being constructed pursuant to a Space
Lease, One Hundred Thousand Dollars ($100,000).
(C) Notwithstanding Sections 2.12(c)(i)(A) and (B) above, to the
extent that there are "savings" (as defined in the next
sentence) with respect to the cost of constructing
particular Retail Tenant Improvements, the amount of such
savings may be applied by Borrower to increase the maximum
amount of the Loan available for Retail Tenant Improvement
Costs under clause (2) of Sections 2.12(c)(i)(A) and (B).
"Savings" as used in the preceding sentence shall mean (Y)
the amount by which the aggregate cost of constructing the
Restaurant Improvements is less than Five Hundred Thousand
Dollars ($500,000) and (Z) the amount by which the aggregate
cost of constructing the Retail Tenant Improvements
excluding the Restaurant Improvements is less than One
Hundred Thousand Dollars ($100,000).
(D) No Disbursement shall exceed the "Borrower's Share" (as
hereinafter defined) multiplied by the then incurred but
unpaid Retail 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 Retail Tenant Improvements Costs, determined
pursuant to Sections 2.12(c)(i)(A), (B) and (C) above, and
the denominator of which shall be the total of such Retail
- 27 -
Tenant Improvement Costs, as reasonably estimated by
Lender in consultation with Borrower.
(ii) Prior to the first Disbursement for Retail Tenant Improvement
Costs for particular Retail Tenant Improvements, Lender shall
have received and approved (such approval not to be withheld
or delayed unreasonably) the following:
(A) With respect to Retail 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 Retail
Tenant Improvements;
(B) Copies of the Plans for such Retail Tenant Improvements;
and
(C) A budget and construction schedule for the completion
of such Retail Tenant Improvements.
If Borrower or an Affiliate is not required to design or
construct the Retail Tenant Improvements for which a
Disbursement is being requested, then the items identified in
this Section 2.12(c)(ii) 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.
(iii) Prior to the final Disbursement for Tenant Improvement Costs
for particular Retail Tenant Improvements, Lender shall have
received and approved certificates, letters, waivers,
affidavits and endorsements to the effect set forth in
Section 5.08, but limited to such Retail 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
- 28 -
Project Costs (including unilateral GSA change orders). If, after due
consultation and consideration of the views of Borrower and supporting
documentation, Borrower and Lender do not agree on 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 GSA or another Space Tenant under the
Government Leases 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 creditinq 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 Disbursement Account to
such account(s) as Borrower shall designate in the related Request for
Disbursement. Alternatively, upon Borrower's request, Lender shall wire such
Loan proceeds directly to such accounts as Borrower shall
- 29 -
designate in the related Request for Disbursement without first depositing such
proceeds into the Disbursement Account. 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
- 30 -
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).
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
twenty-five one-thousandths of one percent (0.525%).
(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
- 31 -
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.
(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
- 32 -
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 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:
(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 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 ally 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.
- 33 -
ARTICLE IV
CONDITIONS TO THE INITIAL DISBURSEMENT
--------------------------------------
The obligation of Lender to make the Initial Disbursement to or for
this 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
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) Notices of Assignment of the Government 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
Policies") (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
- 34 -
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,
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
- 35 -
the Department of Housing and Urban Development as having special flood or mud
slide 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, arid 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:
(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
- 36 -
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.
(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. (a) Borrower shall have furnished
------------------
Lender with a report or reports satisfactory to Lender showing no Hazardous
Material present at the Premises,
- 37 -
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. (b) Borrower shall have furnished Lender with a report that no
Hazardous Material was present at the site in the past, or if it was, that all
such materials were removed and disposed of in strict compliance with all
applicable federal, state and local environmental statutes, regulations and
requirements. (c) 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.
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. Base Building Construction Schedule. Lender shall have
-----------------------------------
received and approved a detailed schedule for construction of the Base Building
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
- 38 -
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. Stored Materials.
----------------
(a) Lender shall have received and approved a list of all
Stored Materials currently stored on or off-site indicating actual cost of the
Stored Materials, not including profit or overhead.
(b) If Borrower requests any payment for Stored Materials in
the Initial Disbursement request, Borrower shall have provided all of the
information required by Section 5.06 of this Agreement with respect to the
Stored Materials for which payment as part of the Initial Disbursement is
sought.
Section 4.17. Architects' Materials. Lender shall have received and
---------------------
approved (a) a true, correct and complete copy of the fully executed Architect
Contract for each Architect and (b) a consent and certificate executed by each
Architect in a form mutually acceptable to Lender and such Architect. 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 4.18. 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 General Contractor in a form mutually acceptable to Lender and the
General Contractor.
Section 4.19. 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 4.20. Engineer's Certificate. Lender shall have received
----------------------
from ▇▇▇▇▇ & ▇▇▇▇▇, Consulting Engineers, and from any other engineer providing
services on the Project, an executed certificate in a form mutually acceptable
to Lender and such engineer.
- 39 -
Section 4.21. 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 4.22. 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 Base Building 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 4.23. 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 4.24. Government Materials. Lender shall have received
--------------------
executed attornment agreements and estoppel certificates from GSA and NASA
relating to their respective Government Leases in a form reasonably satisfactory
to Lender.
Section 4.25. Appraisal. Lender shall have approved the Appraisal
---------
heretofore delivered by Borrower.
Section 4.26. Fees. Borrower shall have made arrangements reasonably
----
satisfactory to Lender for the payment from the Initial Disbursement of the
following fees, costs and expenses:
- 40 -
(a) A commitment fee of Four Hundred Sixty-Eight Thousand Seven
Hundred Fifty Dollars ($468,750.00), 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 4.27. 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 4.28. 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;
(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 B 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
- 41 -
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).
Section 4.29. Bid Protest Litigation. The Bid Protest Litigation
----------------------
shall have been terminated as set forth in Section 2.12(b) of the Bid Protest
Guaranty, or, if not, Borrower shall have executed and delivered the Bid Protest
Guaranty.
Section 4.30. Land Use Agreements. Borrower and Lender shall have
--------------------
executed in a form mutually acceptable to the parties the Multiple Lot Agreement
and Floor-Area-Ratio Agreement (both as defined in the Deed of Trust) relating
to the operation and use of the Property, Phase I and Lot 872.
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,
- 42 -
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.
(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 B 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 A,
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 new Plans and revisions to the existing 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;
- 43 -
(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 A, 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 Retail Tenant Improvements), all Items of Project Costs
projected to complete the Project (or, as appropriate, the Retail 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 Retail Tenant 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
new or revised Plans, Project Budget and Construction Schedule stating (i) that
in the opinion of Inspecting Engineer, all new Plans, Change Orders and
modifications or amendments to the Plans, Project Budget and Construction
Schedule 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 Retail 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; (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 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 phase 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.
(g) At Lender's reasonable discretion, an affidavit of
subcontractor in the form of Exhibit C attached
- 44 -
hereto from each Major Subcontractor which sets forth the amounts owed to such
Subcontractor's subcontractors, materialmen, and laborers.
Section 5.04. Title Endorsements. Immediately prior to each
------------------
Disbursement and, in connection therewith, upon Borrower's election of the
Eurodollar Rate as the Interest Rate Option in accordance with the terms of the
Note, 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. Plans; Permit Approval. Lender shall have received and
----------------------
approved all new Plans and all changes to the Plans (to the extent required by
Section 7.05(e) hereof. Borrower shall have received and delivered to Lender
evidence of receipt of all permits, licenses, approvals and other authorizations
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
- 45 -
shall be paid for and owned by) Borrower free of all lien rights or claims of
the vendor or any third party;
(d) evidence that (i) the Stored Materials are easily and readily
identifiable for use as intended in the Project and (ii) 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.
Section 5.08. Final Construction Disbursement. The final Disbursement
-------------------------------
of Hard Costs incurred but not advanced during the course of construction for
all portions of the Project and the release of related retainage (to the extent
not theretofore released pursuant to Section 2.09(b)) (the "Final Construction
Disbursement") 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 that all work for which such Architect has design
responsibility on the Project has been finished and made available for use
substantially in accordance with the Plans, Construction Contract, other
applicable Contract if any, and Government Leases;
(b) Lender shall have received a certificate of Inspecting
Engineer stating, in effect, that all of the Project, except for Punch List
Items (as defined in Section 5.11 hereof) and any remaining Retail Tenant
Improvements for space other than Restaurant Improvements, has been completed in
a good and workmanlike manner substantially in accordance with
- 46 -
the Plans, Construction Contract, other applicable Contract if any, and
Government Leases;
(c) Lender shall have received 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 B hereto,
modified to state that all work, labor, services and materials to be performed
or provided by such Person, except for Punch List Items and any remaining Retail
Tenant Improvements for space other than Restaurant Improvements, 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 (a) interest and fees on the dates when interest and fees are due
and owing in accordance with Section 2.11 hereof and the terms of the Note and
the other Loan Documents and (b) 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, (i) all costs of title searches or abstracts, document
taxes, stamp taxes and recording expenses; (ii) the Inspecting Engineer's fees
and expenses reasonably incurred; (iii) reasonable fees and expenses for any
services of a Consultant which may be required for purposes contemplated by this
Agreement; and (iv) 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 (A) contractors, subcontractors,
laborers, materialmen or other persons furnishing labor, services or materials
used or to be used on or in connection with the Project, (B) taxing authorities
or insurers in payment of taxes or hazard, liability or title insurance premiums
when due, and/or (C) the holder of any Lien on the Premises or Project or
Borrower's 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
- 47 -
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.
--------
(a) Within thirty (30) days after completion of the foundation of
the Improvements, Borrower shall provide Lender with a surveyor's report which
shows (i) the location of the foundations of the Improvements, (ii) that the
foundations have been built within the boundaries of the Land, and (iii) that
the foundations have been built without encroachments or violations of any
easements, covenants, conditions or restrictions of record.
(b) 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.
(c) Within thirty (30) days after Completion of Construction,
Borrower shall deliver to Lender a final, "as-built" version of the Survey which
shall show: (i) the Project as completed in accordance with the Plans and
otherwise in accordance with the provisions of this Agreement, (ii) 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, (iii) a calculation of the dimensions of the
Premises, (iv) the lines of the public streets abutting the Premises and the
widths thereof, (v) 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 (vi) all Improvements, and any other physical matters on the
ground which may
- 48 -
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.
Section 5.11. Final Disbursement of Loan Proceeds.
-----------------------------------
(a) Provided that there exists no uncured Event of Default nor
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 being cured in
accordance with the terms of this Agreement and the Loan Documents, Lender shall
disburse, either simultaneously with or after, and upon compliance with all the
requirements of, (y) the Final Construction Disbursement (pursuant to Section
5.08 hereof) and (z) the disbursement of any Soft Costs after Completion of
Construction (pursuant to Section 2.09(g) hereof) ("Final Disbursement of Loan
Proceeds") so much of the Loan proceeds remaining as Borrower may request,
subject to the escrow requirements set forth in subsection (b) of this Section
5.11, upon receipt of the following, which shall be satisfactory to Lender in
Lender's reasonable discretion:
(i) a certification from Borrower that (A) all construction
except for Punch List Items and any remaining Retail Tenant Improvements for
space other than Restaurant Improvements has been completed and all Project
Costs have been paid in full in accordance with the Project Documents, and (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 are true and correct in all material respects as of the date of the
certification except as to such changes as may have been previously approved by
Lender in writing;
(ii) a certification from the surveyor that the "as-built"
survey delivered pursuant to Section 5.10 hereof has not changed from the date
delivered, or, if it has changed, an updated survey showing all of the
information required in Section 5.10(c) hereof;
(iii) estoppel certificates from all Space Tenants certifying
that (A) such Space Tenant is currently paying rent under a Space Lease, (B) no
notice of default has been given by either Borrower or the Space Tenant under
such Space Lease, and (C) all conditions to the effectiveness and continuing
effectiveness of such Space Lease required to be satisfied as of the date
thereof have been satisfied;
(iv) a certificate from each Architect that, in the
Architect's professional opinion, the portion of the Project for which such
Architect has design responsibility has been completed but for any Punch List
Items;
- 49 -
(v) a "punch list" agreed to by Borrower, the General
Contractor, each Architect and the appropriate Space Tenant, and approved by
Lender (which approval will not be unreasonably withheld, delayed or
conditioned) setting forth only those details of finish work and adjustments
which do not interfere with the use of the affected Premises and which remain to
be completed (the "Punch List Items") and a cost estimate for each such Punch
List Item;
(vi) lien waivers and affidavits of payment from the General
Contractor and all Contracts and Subcontractors who have performed work, labor
or services or furnished supplies in connection with the construction of the
Project in the same form and substance as required by Section 5.08(c) hereof;
(vii) a Request for Disbursement, setting forth the amount
of remaining Loan proceeds to be disbursed in the Final Disbursement of Loan
Proceeds; and
(viii) a letter from the Appraiser, dated within thirty (30)
days prior to the Final Disbursement of Loan Proceeds, which (A) confirms that,
upon disbursement of so much of the remaining Loan proceeds as Borrower may
request, the Loan to Value Ratio will not exceed seventy-five percent (75%) and
(B) explains any changes in the Appraised Value of the Trust Estate or the
methodology used to determine such updated Appraised Value of the Trust Estate.
(b) In the event that there are any Punch List Items or Retail
Tenant Improvements for space other than Restaurant Improvements remaining to be
completed when Borrower requests the Final Disbursement of Loan Proceeds,
Borrower shall deposit with Lender in an interest-bearing escrow account an
amount equal to two hundred percent (200%) of the estimated cost of such Punch
List Items plus the entire amount of the undisbursed Loan proceeds designated in
the Project Budget for the Retail Tenant Improvements for space other than
Restaurant Improvements, to be held as additional security for the Loan and
disbursed by Lender for the completion of the Punch List Items or Retail Tenant
Improvements for space other than Restaurant Improvements upon application by
Borrower in accordance with the Disbursement procedures set forth in this Loan
Agreement. Borrower shall execute such documents as may be necessary to give
Lender a perfected security interest in such escrow account.
- 50 -
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
I, 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 arid 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 the consummation of the transactions contemplated hereby or by
- 51 -
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. Except for the Bid Protest
----------------------
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. Bid Protest Litigation. (a) Borrower has received a
----------------------
notice to proceed with construction under the terms of the GSA Building Lease
and has not received and is not operating in violation of any "stop-work" order
or injunction (preliminary or permanent) issued in connection with the Bid
Protest Litigation. (b) Borrower has furnished Lender true, complete and
correct copies of all documents and materials requested by Lender that are in
Borrower's possession and are pertinent to the Bid Protest Litigation.
Section 6.07. 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
- 52 -
activities, in the business of extending credit for the purpose of purchasing or
carrying any margin stock.
Section 6.08. 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 noncompliance with any of the
foregoing has been received by Borrower from any Governmental Authority. No
consent, approval or 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 6.09. Government Leases. Borrower has furnished to Lender
-----------------
true and complete copies of the Government Leases currently in effect with all
amendments and supplements thereto. Such leases are in full force and effect
and (a) no notice of default has been given by either Borrower or the
appropriate governmental agency 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 6.10. 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
- 53 -
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.
Section 6.11. 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 6.11 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 6.12. Plans. All Plans for the Project required as of the
-----
date hereof under the terms of the GSA Building Lease are listed in Schedule
6.12 hereto. The Plans listed therein have been approved, and all amendments
and supplements to the Plans listed therein (a) will be approved by (i) the
General Contractor (to the extent required by the Construction Contract), (ii)
the beneficiary of any restrictive covenant requiring such approval, and (iii)
the Space Tenant that will occupy the space covered by the Plans and (b) will be
submitted to all Governmental Authorities with jurisdiction over the Project, to
the extent required, in a form such Governmental Authorities are anticipated to
approve.
Section 6.13. 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 6.14. Streets and Utilities. All utility services necessary
---------------------
for the construction of the Project and the
- 54 -
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 6.15. 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 6.16. 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 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 6.17. Whole Tax Parcel. The Land constitutes a single, whole
----------------
tax parcel and is assessed separately from any other real property.
Section 6.18. 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 6.19. 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.
- 55 -
ARTICLE VII
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Section 7.01. Commencement and Completion of Construction.
--------------------------------------------
(a) 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.
(b) 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 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 GSA under the GSA Building Lease and
(iii) dates for the performance of Borrower's obligations under the GSA Building
Lease shall be extended by an equal period pursuant to Paragraph 45.VIII. of the
Solicitation for Offers of the GSA Building Lease.
(c) The Completion Date may be extended for a period not to
exceed ninety (90) days by Unavoidable Government Delay, provided that (i)
Borrower shall promptly, but in no event later than ten (10) days after the
occurrence of the Unavoidable Government Delay circumstances, notify Lender of
the existence of such circumstances, which notice shall set forth the date on
which such circumstances began and (ii) Borrower shall provide Lender with such
evidence of the Unavoidable Government Delay circumstances as Lender shall
reasonably request, including any information or notice provided by the GSA to
Borrower under the GSA Building Lease.
(d) 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.
- 56 -
(e) 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 and Unavoidable
Government Delay 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 as required or
irrevocably permitted by any Governmental Authorities. Borrower shall (a)
provide evidence of such requirement and (b) furnish Lender with affirmative
title insurance coverage with respect to such required or irrevocably permitted
encroachment.
Section 7.03. Plans.
------
(a) Borrower shall provide to Lender all Plans necessary for the
construction of the Project as they are prepared and shall have all such Plans
approved by all necessary entities as set forth in Section 6.12.
(b) 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 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.
- 57 -
Section 7.04. Compliance with Laws and Other Requirements. Borrower
-------------------------------------------
shall comply 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 (as hereinafter defined), be
submitted to Lender not later than five (5) Business Days prior to the proposed
effectiveness thereof; and
(e) Shall, to the extent not a unilateral change order required
by the GSA, 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
One Hundred Thousand Dollars ($100,000.00) 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 Seven Hundred Fifty Thousand Dollars
($750,000.00) or (iv) the change would cause any Governmental Authority to
suspend or revoke any license, approval, permit or other authorization. (All
such 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
- 58 -
the sole obligation of the GSA 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 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
- 59 -
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 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.
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
- 60 -
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.
- 61 -
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,
- 62 -
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 arid 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, (D) the
Project or (E) the Government Leases;
(iii) Any dispute involving any Governmental Authority relating to
the Trust Estate, the Project or the Government Leases, 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;
(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; and
(vi) Any event which is or could become a Termination Event under
the terms of the Bid Protest Guaranty.
- 63 -
(f) Borrower shall deliver to Lender as soon as practicable and in any
event within ten (10) days of Borrower's receipt or delivery thereof a copy of
each report, statement, certification, claim, data or notice received, made or
delivered by Borrower in connection with the Government Leases that relates to
events that will materially affect Borrower's performance under the terms of the
Government Leases, including, without limitation, notices relating to the
progress of construction of the Improvements, the imposition by the government
of any penalties or damages, the exercise by the government of any termination
or cancellation rights, the exercise by the government of any right to audit the
Government Leases, the filing of any dispute or litigation or the failure of
Borrower to comply with any of the requirements of the Government Leases,
including, without limitation, such notices as are required under the following
sections of the Government Leases: (i) of the GSA Building Lease, Sections 5,
26, 28, 31, 32, 45, 78 and 105 of the Solicitation for Offers, Exhibit III
(relating to the Parking Agreement), and all Sections of the General Clauses,
and (ii) relevant sections of the Parking Agreement.
(g) 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, 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.
(h) 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
- 64 -
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 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 I and the ownership of Lot 872.
Without Lender's prior written approval Borrower will not change the height,
bulk, location or use (a) of Lot 872 from that
- 65 -
heretofore presented to Lender so as to materially adversely affect the Premises
or (b) of Phase I except as permitted under the documents providing for,
evidencing, securing or otherwise relating to the loan made by Lender to
Borrower in respect of Phase I.
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.
(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
- 66 -
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 arid 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.
(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
- 67 -
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
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
- 68 -
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 arid 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 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
- 69 -
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 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.
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.
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
- 70 -
Borrower's partnership agreement; provided, however, that so long as 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 (a) at any point
while the Loan is outstanding, Borrower, pursuant to Section 2.05 hereof, shall
be permitted to make one or more distributions from the Item designated in the
Project Budget as "Land Equity" in amounts totalling, in the aggregate, not more
than Seven Million Dollars ($7,000,000), (b) upon termination of the Bid Protest
Guaranty in accordance with its terms, Borrower shall be permitted in accordance
with Section 2.05 hereof to disburse the amount remaining under the Item
designated in the Project Budget as "Land Equity" in accordance with the Project
Budget and Construction Schedule provided to Lender in connection with the Loan,
and (c) if Completion of Construction shall have occurred, 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 heretofore 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. Space Leases. Borrower shall fully perform in a timely
------------
fashion all of its obligations under all Space Leases, including the Government
Leases.
Section 7.32. Tenant Improvements Schedule. Borrower shall provide to
----------------------------
Lender a Tenant Improvements Schedule immediately upon becoming available and in
any event prior to commencing construction of any Tenant Improvements.
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,
- 71 -
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; 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, in connection with the Bid Protest Litigation,
is enjoined or prevented by issuance of a stop work order or suspension of work
by any Governmental Authority or court of competent jurisdiction from
constructing the Project or performing its obligations hereunder and such
injunction, stop work order or suspension of work is not released or stayed (i)
within sixty (60) days after the granting thereof, or (ii) within an additional
period of time after such sixty (60) days, not to exceed an additional sixty
(60) days, upon the prior consent of Lender, not to be unreasonably withheld if
Borrower demonstrates to the reasonable satisfaction of Lender that such
injunction, stop work order or suspension of work will be released or stayed and
Lender in good faith determines that such injunction, stop work order or
suspension of work will not prevent or preclude Completion of Construction in an
orderly and expeditious manner and in any event before the Completion Date; or
- 72 -
(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 Space Lease (including the Government
Leases), 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 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, in a form mutually
acceptable to Lender and such replacement Architect or General Contractor,
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
- 73 -
(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, in a form mutually acceptable to Lender and such replacement
Architect or General Contractor, 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 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; or
(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 (i) 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, (ii) Borrower
thereafter proceeds with diligence to cure the same in Lender's reasonable
judgment, and (iii) sufficient progress is being made in curing such default, in
Lender's reasonable judgment; or
(m) If any Event of Default shall have occurred under any other
Loan Document and shall remain uncured under the terms of any other Loan
Document; or
- 74 -
(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 and 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
(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 GSA or other
contracting party to cease paying rent or making payments under the terms of the
Government Leases; or
(t) The GSA Building Lease shall have been terminated or
cancelled for any reason.
- 75 -
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, 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).
(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
- 76 -
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 the construction of the Project 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
- 77 -
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 Deed of Trust.
(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 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(e), (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
- 78 -
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.
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 7.29 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.
- 79 -
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 arid 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 and provisions herein shall be construed as if such illegal, invalid,
unlawful, void, voidable or unenforceable term or provision was not contained
herein, and that the rights, obligations and interest of Borrower and Lender
tinder 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.
- 80 -
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 amid 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 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 addressees, 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
- 81 -
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: 88291-00041)
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.
Section 9.11. Successive Remedies. No power or remedy herein
-------------------
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
---------
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.
- 82 -
Section 9.13. Estoppel Certificates/Non-disturbance/Other Agreements.
------------------------------------------------------
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.
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 . 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
- 83 -
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 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
- 84 -
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.
------
(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 to 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 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
- 85 -
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 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-1"), 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
P-1, P-2, or p-3, 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
- 86 -
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 guaranty of
any obligation undertaken in connection with the Loan.
Section 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, 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/ Motimer ▇. ▇▇▇▇▇▇▇▇▇
----------------------------- ------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Motimer ▇. ▇▇▇▇▇▇▇▇▇
----------------------- President
- 87 -
THE SUMITOMO BANK, LIMITED, a
Japanese banking institution, acting
through its NEW YORK BRANCH
ATTEST:
By:
------------------------------- -------------------------------
Name: Name:
-------------------------- ----------------------------
Title:
----------------------------
- 88 -
