EXHIBIT 99.1
LOAN AGREEMENT
Dated as of July 27, 2005
Between
BEHRINGER HARVARD BUENA VISTA PLAZA LP,
as Borrower
and
BEAR ▇▇▇▇▇▇▇ COMMERCIAL MORTGAGE, INC.,
as Lender
TABLE OF CONTENTS
PAGE
ARTICLE 1 - DEFINITIONS; PRINCIPLES OF CONSTRUCTION....................................................1
Section 1.1 Definitions.......................................................................1
Section 1.2 Principles of Construction.......................................................20
ARTICLE 2 - GENERAL TERMS.............................................................................20
Section 2.1 Loan Commitment; Disbursement to Borrower........................................20
Section 2.2 Interest Rate....................................................................21
Section 2.3 Loan Payment.....................................................................22
Section 2.4 Prepayments......................................................................23
Section 2.5 Defeasance.......................................................................24
Section 2.6 Release of Property..............................................................26
Section 2.7 Lockbox Account/Cash Management..................................................27
ARTICLE 3 - CONDITIONS PRECEDENT......................................................................28
Section 3.1 Conditions Precedent to Closing..................................................28
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES............................................................32
Section 4.1 Borrower Representations.........................................................32
Section 4.2 Survival of Representations......................................................41
ARTICLE 5 - BORROWER COVENANTS........................................................................41
Section 5.1 Affirmative Covenants............................................................41
Section 5.2 Negative Covenants...............................................................50
Section 5.3 Performance by Property Manager..................................................58
ARTICLE 6 - INSURANCE; CASUALTY; CONDEMNATION.........................................................59
Section 6.1 Insurance........................................................................59
Section 6.2 Casualty.........................................................................62
Section 6.3 Condemnation.....................................................................62
Section 6.4 Restoration (a).................................................................63
ARTICLE 7 - RESERVE FUNDS.............................................................................67
Section 7.1 Required Repair Funds............................................................67
Section 7.2 Tax and Insurance Escrow Fund....................................................68
Section 7.3 Replacements and Replacement Reserve.............................................69
Section 7.4 Rollover Reserve.................................................................73
Section 7.5 Partial Release of Rollover Reserve Fund.........................................74
Section 7.6 Intentionally Deleted............................................................74
Section 7.7 Reserve Funds, Generally.........................................................74
ARTICLE 8 - DEFAULTS..................................................................................75
Section 8.1 Event of Default.................................................................75
Section 8.2 Remedies.........................................................................78
Section 8.3 Remedies Cumulative; Waivers.....................................................79
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE 9 - SPECIAL PROVISIONS........................................................................79
Section 9.1 Sale of Notes and Securitization.................................................79
Section 9.2 Securitization...................................................................80
Section 9.3 Rating Surveillance..............................................................80
Section 9.4 Exculpation......................................................................80
Section 9.5 Termination of Property Manager..................................................81
Section 9.6 Servicer.........................................................................82
Section 9.7 Resizing.........................................................................82
ARTICLE 10 - MISCELLANEOUS.............................................................................82
Section 10.1 Survival.........................................................................82
Section 10.2 Lender's Discretion..............................................................82
Section 10.3 Governing Law....................................................................83
Section 10.4 Modification, Waiver in Writing..................................................84
Section 10.5 Delay Not a Waiver...............................................................84
Section 10.6 Notices..........................................................................84
Section 10.7 Trial by Jury....................................................................85
Section 10.8 Headings.........................................................................85
Section 10.9 Severability.....................................................................86
Section 10.10 Preferences......................................................................86
Section 10.11 Waiver of Notice.................................................................86
Section 10.12 Remedies of Borrower.............................................................86
Section 10.13 Expenses; Indemnity..............................................................86
Section 10.14 Schedules Incorporated...........................................................87
Section 10.15 Offsets, Counterclaims and Defenses..............................................87
Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries....................88
Section 10.17 Publicity........................................................................88
Section 10.18 Waiver of Marshalling of Assets..................................................88
Section 10.19 Waiver of Counterclaim...........................................................89
Section 10.20 Conflict; Construction of Documents; Reliance....................................89
Section 10.21 Brokers and Financial Advisors...................................................89
Section 10.22 Prior Agreements.................................................................89
Section 10.23 Transfer of Loan.................................................................89
Section 10.24 Joint and Several Liability......................................................90
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SCHEDULES
---------
Schedule I - [reserved]
Schedule II - Assignment and Assumption Agreement
Schedule III - Co-Owner Indemnity
Schedule IV - Required Repairs
Schedule V - Tenants-In-Common Agreement
Schedule VI - Affiliate Agreements
Schedule VII - Co-Owner Transferee Criteria
Schedule VIII - Consent and Assumption Agreement
Schedule IX - Co-Owner Transferee Partnership Agreement
Schedule X - General Partner Operating Agreement
Schedule XI - Rent Roll
Schedule XII - Exceptions to Representations
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 27th day of July, 2005 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between BEAR ▇▇▇▇▇▇▇ COMMERCIAL MORTGAGE, INC., a New
York corporation, having an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ("LENDER"), and BEHRINGER HARVARD BUENA VISTA PLAZA LP, a Delaware limited
partnership, having its principal place of business c/o Behringer Harvard Funds,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("BORROWER").
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined)
from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and
in accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
ARTICLE 1 - DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 DEFINITIONS. For all purposes of this Agreement, except
as otherwise expressly required or unless the context clearly indicates a
contrary intent:
"ACCREDITED INVESTOR" shall mean an Accredited Investor as defined in
the regulations promulgated by the Securities and Exchange Commission.
"ADDITIONAL INSOLVENCY OPINION" shall mean any subsequent Insolvency
Opinion.
"AFFILIATE" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"AGENT" shall mean ▇▇▇▇▇ Fargo Bank, N.A., a national banking
association, or any successor Eligible Institution acting as Agent under the
Cash Management Agreement.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ANNUAL BUDGET" shall mean the operating budget, including all planned
capital expenditures, for the Property prepared by Borrower for the applicable
Fiscal Year or other period.
"APPROVED ANNUAL BUDGET" shall have the meaning set forth in SECTION
5.1.11(D) hereof.
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"APPROVED INVESTOR QUESTIONNAIRE" shall mean a questionnaire to be
completed by prospective Co-Owner Transferees, in a form approved by Lender.
"ASSIGNMENT OF LEASES" shall mean, with respect to the Property, that
certain first priority Assignment of Leases and Rents, dated as of the Closing
Date, from Borrower, as assignor, to MERS, as nominee of Lender, as assignee,
assigning to Lender all of Borrower's interest in and to the Leases and Rents of
the Property as security for the Loan, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"ASSIGNMENT OF PROPERTY MANAGEMENT AGREEMENT" shall mean that certain
Assignment of Management Agreement and Subordination of Management Fees dated as
of the Closing Date, among Lender, Borrower and Property Manager, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an agreement, in the
form attached hereto as Schedule II, or otherwise acceptable to Lender, pursuant
to which a Co-Owner Transferee takes title to an undivided interest in the
Property subject to the Mortgage and the Loan Documents.
"AWARD" shall mean any compensation paid by any Governmental Authority
in connection with a Condemnation in respect of all or any part of the Property.
"BANKRUPTCY ACTION" shall mean with respect to any Person (a) such
Person filing a voluntary petition under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law; (b) the filing of an involuntary
petition against such Person under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, in which such Person colludes with, or
otherwise assists such Person, or cause to be solicited petitioning creditors
for any involuntary petition against such Person; (c) such Person filing an
answer consenting to or otherwise acquiescing in or joining in any involuntary
petition filed against it, by any other Person under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law; (d) such Person consenting
to or acquiescing in or joining in an application for the appointment of a
custodian, receiver, trustee, or examiner for such person or any portion of the
Property; (e) such Person making an assignment for the benefit of creditors, or
admitting, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, 11
U.S.C. ss.101, et seq., as the same may be amended from time to time, and any
successor statute or statutes and all rules and regulations from time to time
promulgated thereunder, and any comparable foreign laws relating to bankruptcy,
insolvency or creditors' rights or any other Federal or state bankruptcy or
insolvency law.
"BASIC CARRYING COSTS" shall mean, with respect to the Property, the sum
of the following costs associated with the Property for the relevant Fiscal Year
or payment period: (i) Taxes and (ii) Insurance Premiums.
"BEHRINGER HOLDINGS" shall mean Behringer Harvard Holdings, a Delaware
limited liability company.
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"BEHRINGER HARVARD FUNDS" shall mean, individually or collectively,
Behringer Holdings, Behringer Harvard Short-Term Opportunity Fund I LP, a Texas
limited partnership, Behringer Harvard Mid-Term Value Enhancement Fund I LP, a
Texas limited partnership, Behringer Harvard Operating Partnership I LP, a Texas
limited partnership, Behringer Harvard REIT I, Inc., a Maryland corporation,
Behringer Harvard Opportunity REIT I, Inc., a Maryland corporation, and/or
Behringer Harvard Strategic Opportunity Fund I LP, a Texas limited partnership.
"BORROWER" shall mean Behringer Harvard Buena Vista Plaza LP, a Delaware
limited partnership, together with its permitted successors and assigns.
"BORROWER'S KNOWLEDGE" shall mean the actual knowledge attributable to
those principals, employees and officers of Borrower who have given substantive
attention to the Property, the Loan Documents and related matters, without any
implied duty to conduct any inquiry or investigation.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, New York are not open for
business.
"CAPITAL EXPENDITURES" shall mean, for any period, the amount expended
for items capitalized under GAAP or other accounting principles reasonably
acceptable to Lender, consistently applied (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
"CASH MANAGEMENT ACCOUNT" shall have the meaning set forth in SECTION
2.7.2 hereof.
"CASH MANAGEMENT AGREEMENT" shall mean that certain Cash Management
Agreement, dated as of the date hereof, by and among Borrower, Manager, Agent
and Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"CASH TRAP EVENT PERIOD" shall have the meaning set forth in the Cash
Management Agreement.
"CASH TRAP TRIGGER EVENT" shall have the meaning set forth in the Cash
Management Agreement.
"CASUALTY" shall have the meaning specified in Section 6.2 hereof.
"CASUALTY CONSULTANT" shall have the meaning set forth in Section
6.4(b)(iii) hereof.
"CASUALTY RETAINAGE" shall have the meaning set forth in Section
6.4(b)(iv) hereof.
"CASUALTY/CONDEMNATION PREPAYMENT" shall have the meaning specified in
Section 6.4(e) hereof.
"CLOSING DATE" shall mean the date of the funding of the Loan.
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"CO-OWNER INDEMNITY" shall mean, individually or collectively, those
certain Co-Owner Indemnity Agreements, each by Borrower or a Co-Owner
Transferee, as applicable, and a principal thereof acceptable to Lender, in
favor of Lender, together with any such agreement hereafter executed by a
Co-Owner Transferee, which shall be in the form set forth on SCHEDULE III.
"CO-OWNER TRANSFEREE" shall have the meaning set forth in Section
5.2.13(b).
"CO-OWNER TRANSFEREE CRITERIA" shall mean the criteria set forth on
SCHEDULE VII hereto.
"CO-OWNER TRANSFEREE PARTNERSHIP AGREEMENT" shall mean a limited
partnership agreement substantially in the form set forth on SCHEDULE IX hereto.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"CONSENT AND ASSUMPTION AGREEMENT" shall mean an agreement, in the form
attached hereto as Schedule VIII, or otherwise acceptable to Lender, pursuant to
which a Co-Owner Transferee assumes its pro rata share of the obligations of
Borrower under the Loan Documents.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums (including the Defeasance Payment Amount and
any Yield Maintenance Premium) due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgage or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled principal and interest payments due under this Agreement and the
Note.
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the applicable
period in which:
1. the numerator is the Net Operating Income (excluding interest on
credit accounts) for such period as set forth in the statements required
hereunder, without deduction for (i) actual management fees incurred in
connection with the operation of the Property, (ii) amounts paid to the Reserve
Funds, less (A) management fees equal to the greater of (1) assumed management
fees of four percent (4%) of Gross Income from Operations or (2) the actual
management fees incurred, and (B) assumed annual Replacement Reserve Fund
contributions and reserves for tenant improvements and leasing commissions equal
to [$_______________] in the aggregate (adjusted proportionately for any period
other than one year); and
4
2. the denominator is the aggregate amount of principal and
interest due and payable on the Note for such applicable period.
"DEFAULT" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the Maximum Legal Rate, or (b) five percent (5%)
above the Interest Rate.
"DEFEASANCE DATE" shall have the meaning set forth in Section
2.5.1(a)(i) hereof.
"DEFEASANCE DEPOSIT" shall mean an amount equal to the remaining
principal amount of the Note, the Defeasance Payment Amount, any costs and
expenses incurred or to be incurred in the purchase of U.S. Obligations
necessary to meet the Scheduled Defeasance Payments and any revenue, documentary
stamp or intangible taxes or any other tax or charge due in connection with the
transfer of the Note or otherwise required to accomplish the agreements of
Sections 2.4 and 2.5 hereof (including, without limitation, any fees and
expenses of accountants, attorneys and the Rating Agencies incurred in
connection therewith).
"DEFEASANCE EVENT" shall have the meaning set forth in Section 2.5.1(a)
hereof.
"DEFEASANCE EXPIRATION DATE" shall mean the date that is two (2) years
from the "startup day" within the meaning of Section 860G(a)(9) of the Code for
the REMIC Trust.
"DEFEASANCE PAYMENT AMOUNT" shall mean the amount (if any) which, when
added to the remaining principal amount of the Note, will be sufficient to
purchase U.S. Obligations providing the required Scheduled Defeasance Payments.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section 9.2
hereof.
"DISNEY" shall mean Disney Enterprises, Inc.
"DISNEY LEASE" shall mean that certain lease dated September 26, 1989,
as supplemented and amended by that certain (i) Lease Addendum dated November 6,
1989, (ii) Second Lease Addendum dated November 5, 1999, (iii) Letter Agreement
dated ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) Letter Agreement dated May 15, 2003, and (v) Third
Lease Addendum dated January 1, 2004, between Borrower or its predecessor in
interest, as landlord, and Disney or its predecessor in interest, as tenant.
"DISNEY LEASE SEGMENT #1" shall mean that certain leasing of 32,894
square feet of space leased by Disney under the Disney Lease which, as of the
date of this Agreement, is scheduled to expire in December, 2008.
"DISNEY LEASE SEGMENT #2" shall mean that certain leasing of 49,342
square feet of space leased by Disney under the Disney Lease which, as of the
date of this Agreement, is scheduled to expire in December, 2009.
5
"DISNEY LEASE SEGMENT #3" shall mean that certain leasing of 32,894
square feet of space leased by Disney under the Disney Lease which, as of the
date of this Agreement, is scheduled to expire in December, 2010.
"DISNEY LEASE SEGMENTS" shall mean, collectively, Disney Lease Segment
#1, Disney Lease Segment #2 and Disney Lease Segment #3.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from
all other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.
ss.9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution or trust
company, the short term unsecured debt obligations or commercial paper of which
are rated at least "A-1+" by S&P, "P-1" by ▇▇▇▇▇'▇ and "F-1+" by Fitch in the
case of accounts in which funds are held for thirty (30) days or less (or, in
the case of (a) accounts in which funds are held for more than thirty (30) days,
the long-term unsecured debt obligations of which are rated at least "AA" by
Fitch and S&P and "Aa2" by ▇▇▇▇▇'▇ or (b) any Letter of Credit, the long-term
unsecured debt obligations of which are rated at least "A" by Fitch and S&P and
"A2" by ▇▇▇▇▇'▇).
"EMBARGOED PERSON" shall mean any person, entity or government subject
to trade restrictions under U.S. law, including, but not limited to, The USA
PATRIOT Act (including the anti-terrorism provisions thereof), the International
Emergency Economic Powers Act, 50 U.S.C. ▇▇.▇▇. 1701, et seq., The Trading with
the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder including those related to Specially Designated Nationals
and Specially Designated Global Terrorists, with the result that the investment
in Borrower, Principal or Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan made by the Lender is in violation
of law.
"ENVIRONMENTAL LAWS" shall mean any present and future federal, state
and local laws, statutes ordinances, rules, regulations and the like, as well as
common law, conditioning transfer of property upon a negative declaration or
other approval of a governmental authority of the environmental condition of the
Property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any Governmental
Authority or other person or entity, whether or not in connection with transfer
of title to or interest in property; or imposing conditions or requirements
relating to Hazardous Substances in connection with permits or other
authorization for lawful activity .
"ENVIRONMENTAL LIENS" shall mean all liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other person or entity.
6
"ENVIRONMENTAL REPORT" shall mean that certain Phase I environmental
report (or Phase II environmental report, if required) in respect of the
Property delivered to Lender in connection herewith.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 8.1(a)
hereof.
"EXCHANGE ACT" shall have the meaning set forth in Section 9.2 hereof.
"EXTRAORDINARY EXPENSE" shall have the meaning set forth in SECTION
5.1.11(E) hereof.
"FISCAL YEAR" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"FITCH" shall mean Fitch, Inc.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"GENERAL PARTNER OPERATING AGREEMENT" shall mean a limited liability
company operating agreement substantially in the form set forth on SCHEDULE X
hereto.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean for any period, all income,
computed in accordance with GAAP or other accounting principles reasonably
acceptable to Lender, derived from the ownership and operation of the Property
from whatever source during such period, including, but not limited to, Rents
from tenants in occupancy, open for business (except that tenants with ratings
of BBB or better from the Rating Agencies need not be in occupancy or open for
business) and paying full contractual rent without right of offset or credit,
utility charges, escalations, forfeited security deposits, interest on credit
accounts, service fees or charges, license fees, parking fees, rent concessions
or credits, business interruption or other loss of income or rental insurance
proceeds or other required pass-throughs and interest on Reserve Accounts, if
any, but excluding Rents which in the aggregate exceed 5% of the total Rents
that are from month-to-month tenants or tenants that are included in any
Bankruptcy Action (unless such tenant's Lease has been affirmed in the related
Bankruptcy Action), sales, use and occupancy or other taxes on receipts required
to be accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Insurance
Proceeds (other than business interruption or other loss of income or rental
insurance), Awards, unforfeited security deposits, utility and other similar
deposits and any disbursements to Borrower from the Reserve Funds, if any. Gross
income shall not be diminished as a result of the Mortgage or the creation of
any intervening estate or interest in the Property or any part thereof.
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"HAZARDOUS SUBSTANCE" shall mean any and all substances (whether solid,
liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous
wastes, hazardous substances, hazardous materials, extremely hazardous wastes,
or words of similar meaning or regulatory effect under any present or future
Environmental Laws or that may have a negative impact on human health or the
environment, including but not limited to petroleum and petroleum products,
asbestos and asbestos-containing materials, polychlorinated biphenyls, lead,
radon, radioactive materials, flammables and explosives, but excluding
substances of kinds and in amounts ordinarily and customarily used or stored in
similar properties for the purposes of cleaning or other maintenance or
operations and otherwise in compliance with all Environmental Laws.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause
of the Mortgage with respect to the Property.
"INDEBTEDNESS" of a Person, at a particular date, means the sum (without
duplication) at such date of (a) indebtedness or liability for borrowed money;
(b) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under letters of credit;
(e) obligations under acceptance facilities; (f) all guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds, to invest in any Person or entity, or otherwise to assure a
creditor against loss; and (g) obligations secured by any Liens, whether or not
the obligations have been assumed.
"INDEMNITOR" shall mean Behringer Harvard REIT I, Inc., a Maryland
Corporation.
"INDEMNITY AGREEMENT" shall mean that certain Indemnity Agreement dated
as of the Closing Date by Borrower and Indemnitor (or a substitute indemnitor
approved by Lender in accordance with the terms hereof) in favor of Lender.
"INDEPENDENT MANAGER" shall mean a manager of a limited liability
company who is not at the time of initial appointment, or at any time while
serving as a manager of such an entity, and has not been at any time during the
preceding five (5) years: (a) a stockholder, director, member, manager (with the
exception of serving as the Independent Manager), officer, employee, partner,
attorney or counsel of the Borrower or any Affiliate of either of them; (b) a
creditor, customer, supplier or other Person who derives any of its purchases or
revenues from its activities with the Borrower or any Affiliate of either of
them; (c) a Person controlling or under common control with any such
stockholder, director, officer, partner, customer, supplier or other Person; or
(d) a member of the immediate family of any such stockholder, director, officer,
employee, partner, customer, supplier or other person. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of management, policies or activities
of a Person, whether through ownership of voting securities, by contract or
otherwise. "INDEPENDENT DIRECTOR" and "INDEPENDENT TRUSTEE" shall have
correlative meanings.
"INITIAL ROLLOVER DEPOSIT" shall have the meaning set forth in Section
7.4.1 hereof.
"INSOLVENCY OPINION" shall have the meaning set forth in Section 3.1.6
hereof.
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"INSURANCE PREMIUMS" shall have the meaning set forth in Section 6.1(b)
hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section 6.4(b)
hereof.
"INTEREST RATE" shall mean 5.324% per annum.
"LEASE" shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in the
Property of Borrower, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.
"LEGAL REQUIREMENTS" shall mean, with respect to the Property, all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting the Property or any part thereof, or the
construction, use, alteration or operation thereof, or any part thereof, whether
now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting the Property or any part
thereof, including, without limitation, any which may (a) require repairs,
modifications or alterations in or to the Property or any part thereof, or (b)
in any way limit the use and enjoyment thereof.
"LENDER" shall mean Bear ▇▇▇▇▇▇▇ Commercial Mortgage, Inc., together
with its successors and assigns.
"LETTER OF CREDIT" shall mean a clean, irrevocable, unconditional,
transferable (with all transfer fees for the account of the applicant
thereunder), evergreen letter of credit acceptable to Lender (a) with respect to
which Borrower has no reimbursement obligations, (b) entitling the Lender to
draw thereon in New York, Los Angeles or another location approved by Lender,
and (c) issued by an Eligible Institution.
"LICENSES" shall have the meaning set forth in Section 4.1.22 hereof.
"LIEN" shall mean, with respect to the Property, any mortgage, deed of
trust, deed to secure debt, lien, pledge, hypothecation, assignment (for
security), security interest, or any other encumbrance, charge or transfer (for
security) of, on or affecting Borrower, the Property, any portion thereof or any
interest therein, including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
and mechanic's, materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement and evidenced by the Note.
9
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases and Rents, the Co-Owner Indemnity, the
Assignment of Property Management Agreement, the Indemnity Agreement and all
other documents pursuant to which any Person incurs, has incurred or assumes any
obligation to or for the benefit of Lender in connection with the Loan.
"LOCKBOX ACCOUNT" shall have the meaning specified in Section 2.6.3
hereof.
"LOCKBOX AGREEMENT" shall mean that certain Clearing Account Agreement
dated the date hereof among Borrower, Lender and Lockbox Bank, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time, relating to funds deposited in the Lockbox Account.
"LOCKBOX BANK" shall mean JPMorgan Chase Bank, N.A., or any successor or
permitted assigns thereof.
"MATERIAL ACTION" means, with respect to any Person, to file any
insolvency or reorganization case or proceeding, to institute proceedings to
have such Person be adjudicated bankrupt or insolvent, to institute proceedings
under any applicable insolvency law, to seek any relief under any law relating
to relief from debts or the protection of debtors, to consent to the filing or
institution of bankruptcy or insolvency proceedings against such Person, to file
a petition seeking, or consent to, reorganization or relief with respect to such
Person under any applicable federal or state law relating to bankruptcy or
insolvency, to seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian, or any similar official of or for
such Person or a substantial part of its property, to make any assignment for
the benefit of creditors of such Person, to admit in writing such Person's
inability to pay its debts generally as they become due, or to take action in
furtherance of any of the foregoing.
"MATURITY DATE" shall mean August 1, 2015, or such other date on which
the final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MERS" shall mean Mortgage Electronic Registration Systems, Inc., a
Delaware corporation.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean (a) an amount equal to
interest only on the outstanding principal balance of the Loan, calculated in
accordance with the terms hereof, for each Payment Date commencing with the
Payment Date occurring in September, 2005 through and including the Payment Date
occurring in August, 2010 and (b) a constant monthly payment of $122,495.12 with
respect to each Payment Date thereafter.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
10
"MORTGAGE" shall mean that certain first priority Deed of Trust and
Security Agreement, dated the date hereof, executed and delivered by Borrower to
MERS, as nominee of Lender, as security for the Loan and encumbering the
Property, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"NET CASH FLOW" for any period shall mean the amount obtained by
subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
"NET CASH FLOW SCHEDULE" shall have the meaning set forth in Section
5.1.11(b) hereof.
"NET OPERATING INCOME" shall mean the amount obtained by subtracting
from Gross Income from Operations (i) Operating Expenses and (ii) a vacancy
allowance equal to the greater of (x) underwritten vacancy of 10% and (y) actual
vacancy.
"NET PROCEEDS" shall have the meaning set forth in Section 6.4(b)
hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
6.4(b)(vi) hereof.
"NET PROCEEDS PREPAYMENT" shall have the meaning set forth in Section
6.4(e) hereof.
"NOTE" shall mean that certain Promissory Note of even date herewith in
the principal amount of Twenty-Two Million and No/100 Dollars ($22,000,000.00),
made by Borrower in favor of Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"OFFICERS' CERTIFICATE" shall mean a certificate delivered to Lender by
Borrower which is signed by an authorized officer of Property Manager.
"OPERATING EXPENSES" shall mean the total of all expenditures, computed
in accordance with GAAP or other accounting principles reasonably acceptable to
Lender, of whatever kind relating to the operation, maintenance and management
of the Property that are incurred on a regular monthly or other periodic basis,
including without limitation, utilities, ordinary repairs and maintenance,
insurance, license fees, property taxes and assessments, advertising expenses,
management fees, payroll and related taxes, computer processing charges,
operational equipment or other lease payments, and other similar costs, but
excluding depreciation, Debt Service, Capital Expenditures and contributions to
the Reserve Funds.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof, but shall exclude charges for
utilities payable directly by a Tenant.
"PAYMENT DATE" shall mean the first (1st) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately preceding Business Day.
11
"PERMITTED ENCUMBRANCES" shall mean, with respect to the Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to the Property or any part thereof, (c) Liens, if
any, for Taxes imposed by any Governmental Authority not yet due or delinquent,
and (d) such other title and survey exceptions as Lender has approved or may
approve in writing in Lender's reasonable discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of the Property or Borrower's ability to repay the Loan.
"PERMITTED RELEASE DATE" shall mean the date that is the third (3rd)
anniversary of the first Payment Date.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage with respect to the Property.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to the Property, a
report prepared by a company satisfactory to Lender regarding the physical
condition of the Property, satisfactory in form and substance to Lender in its
sole discretion, which report shall, among other things, (a) confirm that the
Property and its use complies, in all material respects, with all applicable
Legal Requirements (including, without limitation, zoning, subdivision and
building laws) and (b) to the extent available, include a copy of a final
certificate of occupancy with respect to all Improvements on the Property.
"POLICIES" shall have the meaning specified in Section 6.1(b) hereof.
"POLICY" shall have the meaning specified in Section 6.1(b) hereof.
"PREPAYMENT RATE" shall mean the bond equivalent yield (in the secondary
market) on the United States Treasury Security that as of the Prepayment Rate
Determination Date has a remaining term to maturity closest to, but not
exceeding, the remaining term to the Maturity Date, as most recently published
in the "Treasury Bonds, Notes and Bills" section in The Wall Street Journal as
of such Prepayment Rate Determination Date. If more than one issue of United
States Treasury Securities has the remaining term to the Maturity Date referred
to above, the "Prepayment Rate" shall be the yield on the United States Treasury
Security most recently issued as of such date. If the publication of the
Prepayment Rate in The Wall Street Journal is discontinued, Lender shall
determine the Prepayment Rate on the basis of "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System, or on the basis of such other
publication or statistical guide as Lender may reasonably select.
"PREPAYMENT RATE DETERMINATION DATE" shall mean the date which is five
(5) Business Days prior to the prepayment date.
12
"PROPERTY" shall mean the parcel of real property, the Improvements
thereon and all personal property owned by Borrower and encumbered by the
Mortgage, together with all rights pertaining to such property and Improvements,
as more particularly described in the Granting Clauses of the Mortgage and
referred to therein as the "Property".
"PROPERTY MANAGEMENT AGREEMENT" shall mean, with respect to the
Property, the management agreement entered into by and between Borrower and the
Property Manager, pursuant to which the Property Manager is to provide
management and other services with respect to the Property.
"PROPERTY MANAGER" shall mean HPT Management Services LP, a Texas
limited partnership, or any successor or assign permitted hereunder.
"PROVIDED INFORMATION" shall have the meaning set forth in Section
9.1(a) hereof.
"QUALIFYING PROPERTY MANAGER" shall mean either (a) a reputable and
experienced management organization reasonably satisfactory to Lender, which
organization or its principals possess at least ten (10) years experience in
managing properties similar in size, scope and value of the Property and which,
on the date Lender determines whether such management organization is a
Qualifying Property Manager, manages at least 1,000,000 square feet of office
space, provided that Borrower shall have obtained prior written confirmation
from the Rating Agency that management of the Property by such entity will not
cause a downgrading, withdrawal or qualification of the then current rating of
the securities issued pursuant to the Securitization, or (b) the fee owner of
the Property, provided that such owner possesses experience in managing and
operating properties similar in size, scope and value of the Property. Lender
acknowledges that, notwithstanding anything herein to the contrary, HPT
Management Services LP shall be deemed to be a Qualifying Property Manager.
"RATING AGENCIES" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any
other nationally recognized statistical rating agency which has been approved by
Lender.
"RATING CONFIRMATION" means a written confirmation from each of the
Rating Agencies (unless otherwise agreed by Lender) that an action shall not
result in a downgrade, withdrawal or qualification of any securities issued in
connection with a Securitization.
"RATING SURVEILLANCE CHARGE" shall have the meaning set forth in Section
9.3 hereof.
"RELEASE" with respect to any Hazardous Substance includes but is not
limited to any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.
"RELEVANT LEASING THRESHOLD" shall mean any Lease for an amount of
leaseable square footage equal to or greater than 10,000 square feet.
"RELEVANT RESTORATION THRESHOLD" shall mean One Million and No/100
dollars ($1,000,000).
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"REMEDIATION" includes but is not limited to any response, remedial,
removal, or corrective action; any activity to clean up, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance; any
actions to prevent, cure or mitigate any Release of any Hazardous Substance; any
action to comply with any Environmental Laws or with any permits issued pursuant
thereto; any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or evaluation relating to
any Hazardous Substances or to anything referred to herein.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code that holds the Note.
"RENTS" shall mean, with respect to the Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, without limitation, all oil and gas or other mineral
royalties and bonuses), income, receivables, receipts, revenues, deposits
(including, without limitation, security, utility and other deposits), accounts,
cash, issues, profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Borrower or its agents or employees (but excluding amounts paid by Borrower
to its agents or employees) from any and all sources arising from or
attributable to the Property, and proceeds, if any, from business interruption
or other loss of income insurance.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in
Section 7.3.1 hereof.
"REPLACEMENT RESERVE FUND" shall have the meaning set forth in Section
7.3.1 hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth
in Section 7.3.1 hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 7.3.1(a)
hereof.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in Section
7.1.1 hereof.
"REQUIRED REPAIR FUND" shall have the meaning set forth in Section 7.1.1
hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section 7.1.1
hereof.
"RESERVE FUNDS" shall mean the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Required Repair Fund (if any), the Rollover
Reserve Funds and any other escrow fund established by the Loan Documents.
"RESIZING EVENT" shall have the meaning set forth in Section 9.7.
"RESTORATION" shall have the meaning set forth in Section 6.2 hereof.
"ROLLOVER RESERVE ACCOUNT" shall have the meaning set forth in Section
7.4.1 hereof.
"ROLLOVER RESERVE FUND" shall have the meaning set forth in Section
7.4.1 hereof.
14
"S&P" shall mean Standard & Poor's Ratings Group, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies.
"SCHEDULED DEFEASANCE PAYMENTS" shall have the meaning set forth in
Section 2.5.1(b) hereof.
"SECURITIES" shall have the meaning set forth in Section 9.1 hereof.
"SECURITIES ACT" shall have the meaning set forth in Section 9.2 hereof.
"SECURITIZATION" shall have the meaning set forth in Section 9.1 hereof.
"SECURITIZATION NOTICE" shall have the meaning set forth in Section
5.2.13(e) hereof.
"SECURITY AGREEMENT" shall have the meaning set forth in SECTION
2.5.1(A)(VI) hereof.
"SERVICER" shall have the meaning set forth in Section 9.6 hereof.
"SERVICING AGREEMENT" shall have the meaning set forth in Section 9.6
hereof.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in Section
8.2(c) hereof.
"SPECIAL PURPOSE ENTITY" means a corporation, limited partnership,
limited liability company, or Delaware statutory trust which at all times on and
after the Closing Date:
(i) is organized solely for the purpose of (A) acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging,
managing and operating the Property, entering into this Agreement with
the Lender, any Tenants in Common Agreement and the Property Management
Agreement and related documents, refinancing the Property in connection
with a permitted repayment of the Loan, and transacting lawful business
that is incident, necessary and appropriate to accomplish the foregoing;
or (B) acting as a general partner of the limited partnership that owns
the Property, a member of the limited liability company that owns the
Property or the beneficiary or trustee of a Delaware statutory trust
that owns the Property;
(ii) is not engaged and will not engage in any business
unrelated to (A) the acquisition, development, ownership, management,
operation or sale of the Property, (B) acting as general partner of the
limited partnership that owns the Property, (C) acting as a member of
the limited liability company that owns the Property, or (D) acting as
the beneficiary or trustee of a Delaware statutory trust that owns the
Property, as applicable;
(iii) does not have and will not have any assets other than
those related to the Property or its partnership interest in the limited
partnership, the member interest in the limited liability company or the
beneficial interest in the Delaware statutory trust that owns the
Property or acts as the general partner, managing member or beneficiary
or trustee thereof, as applicable;
15
(iv) has not engaged, sought or consented to and will not
engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets,
transfer of partnership, membership or beneficial or trustee interests
(if such entity is a general partner in a limited partnership, a member
in a limited liability company or a beneficiary of a Delaware trust), or
amendment of its limited partnership agreement, articles of
incorporation, articles of organization, certificate of formation,
limited liability company agreement and/or operating agreement or trust
formation and governance documents (as applicable) with respect to the
matters set forth in this definition (in each case, except as permitted
hereunder or otherwise with Lender's prior written consent);
(v) if such entity is a limited partnership, has as its only
general partners, Special Purpose Entities that are corporations,
limited partnerships or limited liability companies each of which (A) is
a corporation or single-member Delaware limited liability company, (B)
has one Independent Director, and (C) holds a direct interest as general
partner in the limited partnership of not less than 0.5% (or 0.1%, if
the limited partnership is a Delaware entity);
(vi) if such entity is a corporation, has and shall have at
least one (1) Independent Director, and shall not cause or permit the
board of directors of such entity to take any Material Action either
with respect to itself or, if the corporation is a not Borrower, with
respect to Borrower or any action requiring the unanimous affirmative
vote of one hundred percent (100%) of the members of its board of
directors unless one Independent Director shall have participated in
such vote and shall have voted in favor of such action;
(vii) if such entity is a Delaware statutory trust, has and
shall have at least one (1) Independent Trustee, and shall not cause or
permit the board of trustees of such entity to take any Material Action
either with respect to itself or, if the Delaware statutory trust is a
not Borrower, with respect to Borrower or any action requiring the
unanimous affirmative vote of one hundred percent (100%) of the members
of its board of trustees unless one Independent Trustee shall have
participated in such vote and shall have voted in favor of such action;
(viii) if such entity is a limited liability company (other
than limited liability company meeting all of the requirements
applicable to a single-member limited liability company set forth in
this definition of "Special Purpose Entity"), such limited liability
company has as its manager a Special Purpose Entity that is a
corporation, that has at least one (1) Independent Manager and that owns
at least 1.0% (one percent) of the equity of the limited liability
company;
(ix) if such entity is a limited liability company that does
not have as its manager a Special Purpose Entity that is a corporation
(any such limited liability company is referred to herein as a
"single-member limited liability company" regardless of whether it has
one or more members), (a) is and shall be a Delaware limited liability
company, (b) has and shall have at least one (1) Independent Manager of
such company, (c) shall not take any Material Action and shall not cause
or permit the members or
16
managers of such entity to take any Material Action unless one
Independent Manager then serving shall have participated and consented
in writing to such action, and (c) has and shall have either (1) a
member which owns no economic interest in the company, has signed the
company's limited liability company agreement and has no obligation to
make capital contributions to the company, or one (1) natural person or
one entity that is not a member of the company, that has signed its
limited liability company agreement and that, under the terms of such
limited liability company agreement becomes a member of the company
immediately prior to the withdrawal or dissolution of the last remaining
member of the company;
(x) if such entity is (a) a limited liability company, has
an operating agreement, (b) a limited partnership, has a limited
partnership agreement, (c) a corporation, has a certificate of
incorporation or articles, or (d) a Delaware statutory trust, has
organizational documents that, in each case, provide that such entity
will not: (1) dissolve, merge, liquidate, consolidate; (2) except as
permitted herein, sell all or substantially all of its assets or the
assets of the Borrower (as applicable) except as permitted herein, (3)
engage in any other business activity, or amend its organizational
documents with respect to the matters set forth in this definition
without the consent of the Lender; or (4) without the affirmative vote
of all directors of the corporation (that is such entity or the general
partner or managing or co-managing member or manager of such entity)
file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in
which it has a direct or indirect legal or beneficial ownership
interest;
(xi) [intentionally omitted];
(xii) is solvent and pays its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) from
its assets as the same become due, and is maintaining adequate capital
for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations;
(xiii) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(xiv) will file its own tax returns; PROVIDED, however, that
Borrower's assets and income may be included in a consolidated tax
return of its parent companies if inclusion on such consolidated tax
return is in compliance with applicable law or, in the event that
Borrower is a disregarded entity for federal tax purposes, then
Borrower's assets and income may be included on the tax returns filed by
its owner;
(xv) has maintained and will maintain its own resolutions and
agreements;
(xvi) (a) has not commingled and will not commingle its funds
or assets with those of any other Person except other Borrowers and (b)
has not participated and will not participate in any cash management
system with any other Person, except with respect to a custodial account
maintained by the Property Manager on behalf of Affiliates of Borrower
and, with respect to funds in such custodial account, has separately
17
accounted, and will continue to separately account for, each item of
income and expense applicable to the Property and Borrower;
(xvii) has held and will hold its assets in its own name;
(xviii) has conducted and will conduct its business in its name
or in a name franchised or licensed to it by an entity other than an
Affiliate of Borrower;
(xix) has maintained and will maintain its balance sheets,
operating statements and other entity documents separate from any other
Person and has not permitted and will not permit its assets to be listed
as assets on the financial statement of any other entity except as
required or permitted by GAAP; PROVIDED, HOWEVER, that any such
consolidated financial statement shall contain a note indicating that it
maintains separate balance sheets and operating statements for the
Borrower and the Property;
(xx) has a sufficient number of employees in light of its
contemplated business operations, which may be none;
(xxi) has observed and will observe all partnership, corporate
or limited liability company or Delaware statutory trust formalities, as
applicable;
(xxii) has and will have no Indebtedness (including loans
(whether or not such loans are evidenced by a written agreement) between
Borrower and any Affiliates of Borrower and relating to the management
of funds in the custodial account maintained by the Property Manager)
other than (i) the Loan, (ii) liabilities incurred in the ordinary
course of business relating to the ownership and operation of the
Property and the routine administration of Borrower (other than
liabilities that are reserved for) and, in the case of a general partner
or managing member of a Person, liabilities arising by reason of its
status as a general partner or managing member, which liabilities are
paid not more than sixty (60) days after the later of the date incurred
or invoiced (unless disputed in good faith with adequate reserves
established therefor), are not evidenced by a note and which amounts are
normal and reasonable under the circumstances, and (iii) such other
liabilities that are permitted pursuant to the Loan Documents;
(xxiii) has not and will not assume or guarantee or become
obligated for the debts of any other Person or hold out its credit as
being available to satisfy the obligations of any other Person except as
permitted pursuant to the Loan Documents;
(xxiv) has not and will not acquire obligations or securities
of its partners, members, beneficiaries or shareholders or any other
Affiliate;
(xxv) has allocated and will allocate fairly and reasonably
any overhead expenses that are shared with any Affiliate, including, but
not limited to, paying for shared office space and services performed by
any employee of an Affiliate;
(xxvi) has not maintained or used, and will not maintain or
use, invoices and checks bearing the name of any other Person, PROVIDED,
HOWEVER, that Property Manager,
18
on behalf of such Person, may maintain and use invoices and checks
bearing Property Manager's name;
(xxvii) has not pledged and will not pledge its assets for the
benefit of any other Person except as permitted or required pursuant to
this Agreement;
(xxviii) has held itself out and identified itself and will hold
itself out and identify itself as a separate and distinct entity under
its own name or in a name franchised or licensed to it by an entity
other than an Affiliate of Borrower and not as a division or part of any
other Person, except for services rendered by Property Manager under the
Property Management Agreement, so long as Property Manager holds itself
out as an agent of the Borrower;
(xxix) has maintained and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain
or identify its individual assets from those of any other Person;
(xxx) has not made and will not make loans to any Person or
hold evidence of indebtedness issued by any other person or entity
(other than cash and investment-grade securities issued by an entity
that is not an Affiliate of or subject to common ownership with such
entity);
(xxxi) has not identified and will not identify its partners,
members, beneficiaries or shareholders, or any Affiliate of any of them,
as a division or part of it, and has not identified itself and shall not
identify itself as a division of any other Person;
(xxxii) other than the Property Management Agreement and the
Tenants in Common Agreement, has not entered into or been a party to,
and will not enter into or be a party to, any transaction with its
partners, members, beneficiaries, shareholders or Affiliates except (A)
in the ordinary course of its business and on terms which are
intrinsically fair, commercially reasonable and are no less favorable to
it than would be obtained in a comparable arm's-length transaction with
an unrelated third party and (B) in connection with this Agreement;
(xxxiii) does not and will not have any of its obligations
guaranteed by any Affiliate except as otherwise required in the Loan
Documents; and
(xxxiv) has complied and will comply with all of the terms and
provisions contained in its organizational documents. The statement of
facts contained in its organizational documents are true and correct and
will remain true and correct.
"SPONSOR" shall mean Behringer Harvard Holdings, LLC, a Delaware limited
liability company.
"STATE" shall mean, with respect to the Property, the State or
Commonwealth in which the Property or any part thereof is located.
"SUCCESSOR BORROWER" shall have the meaning set forth in SECTION 2.5.3
hereof.
19
"SURVEY" shall mean a survey of the Property in question prepared by a
surveyor licensed in the State and satisfactory to Lender and the company or
companies issuing the Title Insurance Policy, and containing a certification of
such surveyor satisfactory to Lender.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in
Section 7.2 hereof regardless of whether the funds held therein are held by
Lender for the payment of Taxes or Insurance Premiums or both.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"TENANT" shall mean any person or entity with a possessory right to all
or any part of the Property pursuant to a Lease or other written agreement.
"TENANT DIRECTION LETTERS" shall mean notices signed by Borrower, which
shall be irrevocable by Borrower and otherwise in form acceptable to Lender in
its reasonable discretion, directing each Tenant to pay Rent and other sums due
to Borrower pursuant to its Lease directly to the Lockbox Bank.
"TENANTS-IN-COMMON AGREEMENT" shall mean an agreement, in the form
attached hereto as SCHEDULE V, or otherwise in form and substance each
acceptable to Lender, by and among each Person comprising Borrower, if
applicable.
"TIC PRINCIPAL" shall mean, with respect to any Co-Owner Transferee, the
individual or entity that executes the Co-Owner Indemnity Agreement, which
individual or entity shall be acceptable to Lender.
"TITLE INSURANCE POLICY" shall mean, with respect to the Property, an
ALTA mortgagee title insurance policy in the form (acceptable to Lender) (or, if
the Property is in a State which does not permit the issuance of such ALTA
policy, such form as shall be permitted in such State and acceptable to Lender)
issued with respect to the Property and insuring the lien of the Mortgage
encumbering the Property.
"TRANSFER" shall have the meaning set forth in Section 5.2.13(a) hereof.
"TRANSFEREE" shall have the meaning set forth in Section 5.2.13(d)(ii)
hereof.
"TRANSFEREE'S PRINCIPALS" shall have the meaning set forth in Section
5.2.13(d)(ii) hereof.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the applicable State in which the Property is located.
"U.S. OBLIGATIONS" shall mean non redeemable securities evidencing an
obligation to timely pay principal and/or interest in a full and timely manner
that are (a) direct obligations of the United States of America for the payment
of which its full faith and credit is pledged, or (b)
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to the extent acceptable to the Rating Agencies, other "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended.
"YIELD MAINTENANCE PREMIUM" shall mean an amount equal to the greater of
(a) one percent (1%) of the outstanding principal of the Loan to be prepaid or
satisfied and (b) the excess, if any, of (i) the sum of the present values of
all then-scheduled payments of principal and interest under the Note assuming
that all outstanding principal and interest on the Loan is paid on the Maturity
Date (with each such payment and assumed payment discounted to its present value
at the date of prepayment at the rate which, when compounded monthly, is
equivalent to the Prepayment Rate when compounded semi-annually and deducting
from the sum of such present values any short-term interest paid from the date
of prepayment to the next succeeding Payment Date in the event such payment is
not made on a Payment Date), over (ii) the principal amount being prepaid.
Section 1.2 PRINCIPLES OF CONSTRUCTION. All references to sections
and schedules are to sections and schedules in or to this Agreement unless
otherwise specified. All uses of the word "including" shall mean "including,
without limitation" unless the context shall indicate otherwise. Unless
otherwise specified, the words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so defined.
ARTICLE 2 - GENERAL TERMS
Section 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
2.1.1 THE LOAN. Subject to and upon the terms and conditions
set forth herein, Lender hereby agrees to make and Borrower hereby agrees to
accept the Loan on the Closing Date.
2.1.2 SINGLE DISBURSEMENT TO BORROWER. Borrower may request
and receive only one borrowing hereunder in respect of the Loan and any amount
borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 THE NOTE, MORTGAGE AND LOAN DOCUMENTS. The Loan shall be
evidenced by the Note and secured by the Mortgage, the Assignment of Leases and
the other Loan Documents.
2.1.4 USE OF PROCEEDS. Borrower shall use the proceeds of the
Loan to (a) acquire the Property and repay and discharge any existing loans
relating to the Property, (b) pay all past-due Basic Carrying Costs, if any, in
respect of the Property, (c) make deposits into the Reserve Funds on the Closing
Date in the amounts provided herein, (d) pay costs and expenses incurred in
connection with the closing of the Loan, as approved by Lender, (e) fund any
working capital requirements of the Property and (f) distribute the balance, if
any, to Borrower.
Section 2.2 INTEREST RATE.
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2.2.1 INTEREST RATE. Interest on the outstanding principal
balance of the Loan shall accrue from (and include) the Closing Date to but
excluding the Maturity Date at the Interest Rate (unless the Default Rate shall
be in effect).
2.2.2 INTEREST CALCULATION. Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by
(b) a daily rate based on a three hundred sixty (360) day year by (c) the
outstanding principal balance.
2.2.3 DEFAULT RATE. In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the outstanding
principal balance of the Loan and, to the extent permitted by law, all accrued
and unpaid interest in respect of the Loan and any other amounts due pursuant to
the Loan Documents, shall accrue interest at the Default Rate, calculated from
the date such payment was due without regard to any grace or cure periods
contained herein.
2.2.4 USURY SAVINGS. This Agreement, the Note and the other
Loan Documents are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance of
the Loan at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the Maximum Legal Rate. If, by the
terms of this Agreement or the other Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of the Maximum Legal Rate, the Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to the
Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate
shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid to
Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.
Section 2.3 LOAN PAYMENT.
2.3.1 MONTHLY DEBT SERVICE PAYMENTS. Borrower shall pay to
Lender (a) on the Closing Date, an amount equal to interest only on the
outstanding principal balance of the Loan from the Closing Date up to and
including July 31, 2005, and (b) on each Payment Date thereafter Borrower shall
make a payment to Lender of principal and/or interest, as applicable, in an
amount equal to the Monthly Debt Service Payment Amount, which payments shall be
applied first to accrued and unpaid interest and the balance to principal.
2.3.2 PAYMENTS GENERALLY. The first (1st) interest accrual
period hereunder shall commence on and include the Closing Date and shall end on
and include July 31, 2005. Each interest accrual period thereafter shall
commence on the first (1st) day of each calendar month during the term of this
Agreement and shall end on and include the final calendar date of such calendar
month. For purposes of making payments hereunder, but not for purposes of
calculating interest accrual periods, if the day on which such payment is due is
not a Business
22
Day, then amounts due on such date shall be due on the immediately preceding
Business Day and with respect to payments of principal due on the Maturity Date,
interest shall be payable at the Interest Rate or the Default Rate, as the case
may be, through and including the day immediately preceding such Maturity Date.
All amounts due under this Agreement and the other Loan Documents shall be
payable without setoff, counterclaim, defense or any other deduction whatsoever.
2.3.3 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender
on the Maturity Date the outstanding principal balance of the Loan, all accrued
and unpaid interest and all other amounts due hereunder and under the Note, the
Mortgage and the other Loan Documents.
2.3.4 LATE PAYMENT CHARGE. If any principal, interest or any
other sums due under the Loan Documents (excluding principal due on the Maturity
Date) are not paid by Borrower on or prior to the date on which it is due,
Borrower shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the Maximum Legal Rate in order to defray the
expense incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment. Any
such amount shall be secured by the Mortgage and the other Loan Documents to the
extent permitted by applicable law.
2.3.5 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 11:00 A.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's office or as
otherwise directed by Lender, and any funds received by Lender after such time
shall, for all purposes hereof, be deemed to have been paid on the next
succeeding Business Day.
Section 2.4 PREPAYMENTS.
2.4.1 VOLUNTARY PREPAYMENTS. Except as otherwise provided in
Section 2.4.2, Borrower shall not have the right to prepay the Loan in whole or
in part prior to the Maturity Date; provided that on the Payment Date three (3)
months prior to the Maturity Date, or on any Payment Date thereafter (or on any
date thereafter provided that interest is paid through the next Payment Date),
Borrower may, at its option and upon thirty (30) days prior written notice to
Lender, prepay the Debt in whole without payment of the Yield Maintenance
Premium. If for any reason Borrower prepays the Loan on a date other than a
Payment Date, Borrower shall pay Lender, in addition to the Debt, all interest
which would have accrued on the amount of the Loan through and including the
Payment Date next occurring following the date of such prepayment.
2.4.2 MANDATORY PREPAYMENTS. On the next occurring Payment
Date following the date on which Lender actually receives any Net Proceeds, if
Lender is not obligated or does not elect to make such Net Proceeds available to
Borrower for the Restoration of the Property or otherwise remit such Net
Proceeds to Borrower pursuant to SECTION 6.4 hereof, Borrower shall prepay or
authorize Lender to apply such Net Proceeds as a prepayment of all or a portion
of the outstanding principal balance of the Loan together with accrued interest
and any
23
other sums due hereunder in an amount equal to one hundred percent (100%) of
such Net Proceeds; provided, however, if an Event of Default has occurred and is
continuing, Lender may apply such Net Proceeds to the Debt (until paid in full)
in any order or priority in its sole discretion. Other than during the
continuance of an Event of Default, no Yield Maintenance Premium shall be due in
connection with any prepayment made pursuant to this SECTION 2.4.2.
2.4.3 PREPAYMENTS AFTER DEFAULT. If during the continuance of
an Event of Default, payment of all or any part of the Debt is tendered by
Borrower or otherwise recovered by Lender, such tender or recovery shall be (a)
made on the next occurring Payment Date together with the Monthly Debt Service
Payment and (b) deemed a voluntary prepayment by Borrower in violation of the
prohibition against prepayment set forth in SECTION 2.4.1 hereof and Borrower
shall pay, in addition to the Debt, an amount equal to the Yield Maintenance
Premium.
2.4.4 PREPAYMENT PRIOR TO DEFEASANCE EXPIRATION DATE. If the
Permitted Release Date has occurred but the Defeasance Expiration Date has not
occurred, the Debt may be prepaid in whole (but not in part) prior to the date
permitted under Section 2.4.1 hereof upon not less than thirty (30) days prior
written notice to Lender specifying the Payment Date on which prepayment is to
be made (a "PREPAYMENT DATE") provided no Event of Default exists and upon
payment of an amount equal to the greater of (a) the Yield Maintenance Premium
and (b) one percent (1%) of the outstanding principal balance of the Loan as of
the Prepayment Date. Lender shall notify Borrower of the amount and the basis of
determination of the required prepayment consideration. If any notice of
prepayment is given, the Debt shall be due and payable on the Prepayment Date.
Lender shall not be obligated to accept any prepayment of the Debt unless it is
accompanied by the prepayment consideration due in connection therewith. If for
any reason Borrower prepays the Loan on a date other than a Payment Date,
Borrower shall pay Lender, in addition to the Debt, all interest which would
have accrued on the amount of the Loan through and including the Payment Date
next occurring following the date of such prepayment.
Section 2.5 DEFEASANCE.
2.5.1 VOLUNTARY DEFEASANCE. (a) Provided no Event of Default
shall then exist, Borrower shall have the right at any time after the Defeasance
Expiration Date and prior to the date voluntarily prepayments are permitted
under Section 2.4.1 hereof to voluntarily defease all, but not part, of the Loan
by and upon satisfaction of the following conditions (such event being a
"DEFEASANCE EVENT"):
(i) Borrower shall provide not less than thirty (30) days
prior written notice to Lender specifying the Payment Date (the
"DEFEASANCE DATE") on which the Defeasance Event is to occur;
(ii) Borrower shall pay to Lender all accrued and unpaid
interest on the principal balance of the Loan to and including the
Defeasance Date. If for any reason the Defeasance Date is not a Payment
Date, the Borrower shall also pay interest that would have accrued on
the Note through and including the Payment Date immediately preceding
the next Payment Date, PROVIDED, HOWEVER, if the Defeasance Deposit
shall include short-term interest computed from the date of such
prepayment through to the
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next succeeding Payment Date, Borrower shall not be required to pay such
short term interest pursuant to this sentence;
(iii) Borrower shall pay to Lender all other sums, not
including scheduled interest or principal payments, then due under the
Note, this Agreement, the Mortgage and the other Loan Documents;
(iv) Borrower shall pay to Lender the required Defeasance
Deposit for the Defeasance Event;
(v) Borrower shall execute and deliver a pledge and security
agreement, in form and substance that would be reasonably satisfactory
to a prudent lender creating a first priority lien on the Defeasance
Deposit and the U.S. Obligations purchased with the Defeasance Deposit
in accordance with the provisions of this Section 2.5 (the "Security
Agreement");
(vi) Borrower shall deliver an opinion of counsel for
Borrower that is standard in commercial lending transactions and subject
only to customary qualifications, assumptions and exceptions opining,
among other things, that Borrower has legally and validly transferred
and assigned the U.S. Obligations and all obligations, rights and duties
under and to the Note to the Successor Borrower, that Lender has a
perfected first priority security interest in the Defeasance Deposit and
the U.S. Obligations delivered by Borrower and that any REMIC Trust
formed pursuant to a Securitization will not fail to maintain its status
as a "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code as a result of such Defeasance Event;
(vii) If required pursuant to the applicable pooling and
servicing agreement or by the Rating Agencies, Borrower shall deliver
confirmation in writing from each of the applicable Rating Agencies to
the effect that such release will not result in a downgrade, withdrawal
or qualification of the respective ratings in effect immediately prior
to such Defeasance Event for the Securities issued in connection with
the Securitization which are then outstanding. If required by the
applicable Rating Agencies, Borrower shall also deliver or cause to be
delivered an Additional Insolvency Opinion with respect to the Successor
Borrower in form and substance satisfactory to Lender and the applicable
Rating Agencies;
(viii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this SECTION 2.5.1(A) have
been satisfied;
(ix) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the U.S.
Obligations purchased with the Defeasance Deposit generate monthly
amounts equal to or greater than the Scheduled Defeasance Payments;
(x) Borrower shall deliver such other certificates,
documents or instruments as Lender may reasonably request; and
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(xi) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Defeasance Event, including (A) any
costs and expenses associated with a release of the Lien of the Mortgage
as provided in SECTION 2.6 hereof, (B) reasonable attorneys' fees and
expenses incurred in connection with the Defeasance Event, (C) the costs
and expenses of the Rating Agencies, (D) any revenue, documentary stamp
or intangible taxes or any other tax or charge due in connection with
the transfer of the Note, or otherwise required to accomplish the
defeasance and (E) the costs and expenses of Servicer and any trustee,
including reasonable attorneys' fees.
(b) In connection with the Defeasance Event, Borrower shall
use the Defeasance Deposit to purchase U.S. Obligations which provide payments
on or prior to, but as close as possible to, all successive scheduled Payment
Dates after the Defeasance Date upon which interest and principal payments are
required under this Agreement and the Note, and in amounts equal to the
scheduled payments due on such dates under this Agreement and the Note
(including, without limitation, scheduled payments of principal, interest,
servicing fees (if any), and any other amounts due under the Loan Documents on
such Payment Dates) and assuming the Note is prepaid in full on the Anticipated
Repayment Date (the "SCHEDULED DEFEASANCE PAYMENTS"). Borrower, pursuant to the
Security Agreement or other appropriate document, shall authorize and direct
that the payments received from the U.S. Obligations may be made directly to the
Lockbox Account (unless otherwise directed by Lender) and applied to satisfy the
Debt Service obligations of Borrower under this Agreement and the Note. Any
portion of the Defeasance Deposit in excess of the amount necessary to purchase
the U.S. Obligations required by this Section 2.5 and satisfy Borrower's other
obligations under this SECTION 2.5 and SECTION 2.6 shall be remitted to
Borrower.
2.5.2 COLLATERAL. Each of the U.S. Obligations that are part
of the defeasance collateral shall be duly endorsed by the holder thereof as
directed by Lender or accompanied by a written instrument of transfer in form
and substance that would be satisfactory to a prudent lender (including, without
limitation, such instruments as may be required by the depository institution
holding such securities or by the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the book-entry facilities of
such institution) in order to perfect upon the delivery of the defeasance
collateral a first priority security interest therein in favor of Lender in
conformity with all applicable state and federal laws governing the granting of
such security interests.
2.5.3 SUCCESSOR BORROWER. In connection with any Defeasance
Event, Borrower may at its option, or if so required by the applicable Rating
Agencies shall, establish or designate a successor entity (the "SUCCESSOR
BORROWER") acceptable to Lender, which shall be a Special Purpose Entity and
Borrower shall transfer and assign all obligations, rights and duties under and
to the Note, together with the pledged U.S. Obligations to such Successor
Borrower. Such Successor Borrower shall assume the obligations under the Note
and the Security Agreement and Borrower shall be relieved of its obligations
under such documents. Borrower shall pay One Thousand and 00/100 Dollars
($1,000) to any such Successor Borrower as consideration for assuming the
obligations under the Note and the Security Agreement. Notwithstanding anything
in this Agreement to the contrary, no other assumption fee shall be payable upon
a transfer of the Note in accordance with this SECTION 2.5.3, but Borrower shall
pay
26
all costs and expenses incurred by Lender, including Lender's attorneys' fees
and expenses and any fees and expenses of any Rating Agencies, incurred in
connection therewith.
Section 2.6 RELEASE OF PROPERTY. Except as set forth in this Section
2.6 or Section 6.4(e) or a prepayment of the entire Loan pursuant to Section
2.4.2, no repayment, prepayment or defeasance of all or any portion of the Loan
shall cause, give rise to a right to require, or otherwise result in, the
release of the Lien of the Mortgage on the Property. If the entire Loan has been
prepaid pursuant to Section 2.4.2, Borrower has elected to prepay the entire
amount of the Loan pursuant to Section 6.4(e) or after the requirements of this
Section 2.6 have been satisfied, the Property shall be released from the lien of
the Mortgage.
2.6.1 RELEASE OF PROPERTY.
(a) If Borrower has elected to defease the entire Loan and
the requirements of SECTION 2.5 and this SECTION 2.6 have been satisfied, all of
the Property shall be released from the Lien of the Mortgage and the U.S.
Obligations, pledged pursuant to the Security Agreement, shall be the sole
source of collateral securing the Note.
(b) In connection with the release of the Mortgage, Borrower
shall submit to Lender, not less than thirty (30) days prior to the Defeasance
Date (or such later date as may be agreed to by Lender or Servicer) a release of
Lien (and related Loan Documents) for the Property for execution by Lender. Such
release shall be in a form appropriate in the jurisdiction in which the Property
is located and that would be satisfactory to a prudent lender and contains
standard provisions, if any, protecting the rights of the releasing lender . In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such releases in
accordance with the terms of this Agreement.
2.6.2 RELEASE ON PAYMENT IN FULL. Lender shall, upon payment
in full of all principal and interest due on the Loan and all other amounts due
and payable under the Loan Documents in accordance with the terms and provisions
of the Note and this Agreement, release the Lien of the Mortgage on the
Property. Borrower shall pay to Lender all reasonable administrative and legal
costs incurred in connection with such release.
Section 2.7 LOCKBOX ACCOUNT/CASH MANAGEMENT.
2.7.1 LOCKBOX ACCOUNT. (a) During the term of the Loan,
Borrower shall establish and maintain an account (the "LOCKBOX ACCOUNT") with
Lockbox Bank in trust for the benefit of Lender, which Lockbox Account shall be
under the sole dominion and control of Lender. The Lockbox Account shall be
entitled "Behringer Harvard Buena Vista Plaza LP, as Borrower, and Bear ▇▇▇▇▇▇▇
Commercial Mortgage, Inc., as Lender, pursuant to Loan Agreement dated as of
July 27, 2005 - Lockbox Account". Borrower hereby grants to Lender a
first-priority security interest in the Lockbox Account and all deposits at any
time contained therein and the proceeds thereof and will take all actions
necessary to maintain in favor of Lender a perfected first priority security
interest in the Lockbox Account, including, without limitation, executing and
filing UCC-1 Financing Statements and continuations thereof. Lender and Servicer
shall
27
have the sole right to make withdrawals from the Lockbox Account and all costs
and expenses for establishing and maintaining the Lockbox Account shall be paid
by Borrower. All monies now or hereafter deposited into the Lockbox Account
shall be deemed additional security for the Debt.
(b) Borrower shall, or shall cause Property Manager to,
deliver irrevocable written instructions to all tenants under Leases to deliver
all Rents payable thereunder directly to the Lockbox Account. Borrower shall,
and shall cause Property Manager to, deposit all amounts received by Borrower or
Property Manager constituting Rents into the Lockbox Account within one (1)
Business Day after receipt thereof.
(c) Borrower shall obtain from Lockbox Bank its agreement to
transfer to the Cash Management Account in immediately available funds by
federal wire transfer all amounts on deposit in the Lockbox Account once every
Business Day during the continuance of a Cash Trap Event Period throughout the
term of the Loan.
(d) Upon the occurrence of an Event of Default, Lender may,
in addition to any and all other rights and remedies available to Lender, apply
any sums then present in the Lockbox Account to the payment of the Debt in any
order in its sole discretion.
(e) The Lockbox Account shall be an Eligible Account and
shall not be commingled with other monies held by Borrower or Lockbox Bank.
(f) Borrower shall not further pledge, assign or grant any
security interest in the Lockbox Account or the monies deposited therein or
permit any lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements, except those naming Lender as the
secured party, to be filed with respect thereto, and except for the rights of
the Lockbox Bank under the Lockbox Agreement.
(g) Borrower shall indemnify Lender and hold Lender harmless
from and against any and all actions, suits, claims, demands, liabilities,
losses, damages, obligations and costs and expenses (including litigation costs
and reasonable attorneys fees and expenses) arising from or in any way connected
with the Lockbox Account and/or the Lockbox Agreement (unless arising from the
gross negligence or willful misconduct of Lender) or the performance of the
obligations for which the Lockbox Account was established.
2.7.2 CASH MANAGEMENT ACCOUNT. (a) During the term of the
Loan, Borrower shall establish and maintain a segregated Eligible Account (the
"CASH MANAGEMENT ACCOUNT") to be held by Agent in trust and for the benefit of
Lender, which Cash Management Account shall be under the sole dominion and
control of Lender. The Cash Management Account shall be entitled "Behringer
Harvard Buena Vista Plaza LP, as Borrower, and Bear ▇▇▇▇▇▇▇ Commercial Mortgage,
Inc., as Lender, pursuant to Loan Agreement dated as of July 27, 2005 - Cash
Management Account." Borrower hereby grants to Lender a first priority security
interest in the Cash Management Account and all deposits at any time contained
therein and the proceeds thereof and will take all actions necessary to maintain
in favor of Lender a perfected first priority security interest in the Cash
Management Account, including, without limitation, executing and filing UCC-1
Financing Statements and continuations thereof. Borrower will not in any way
28
alter or modify the Cash Management Account and will notify Lender of the
account number thereof. Lender and Servicer shall have the sole right to make
withdrawals from the Cash Management Account and all costs and expenses for
establishing and maintaining the Cash Management Account shall be paid by
Borrower.
(b) The insufficiency of funds on deposit in the Cash
Management Account shall not relieve Borrower from the obligation to make any
payments, as and when due pursuant to this Agreement and the other Loan
Documents, and such obligations shall be separate and independent, and not
conditioned on any event or circumstance whatsoever.
(c) All funds on deposit in the Cash Management Account
following the occurrence of an Event of Default may be applied by Lender in such
order and priority as Lender shall determine.
(d) Borrower hereby agrees that Lender may modify the Cash
Management Agreement for the purpose of establishing additional sub-accounts in
connection with any payments otherwise required under this Agreement and the
other Loan Documents and Lender shall provide notice thereof to Borrower.
2.7.3 PAYMENTS RECEIVED UNDER THE CASH MANAGEMENT AGREEMENT.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the payment of the Monthly
Debt Service Payment Amount and amounts required to be deposited into the
Reserve Funds, if any, shall be deemed satisfied to the extent sufficient
amounts are deposited in the Cash Management Account to satisfy such obligations
pursuant to the Cash Management Agreement on the dates each such payment is
required, regardless of whether any of such amounts are so applied by Lender.
ARTICLE 3 - CONDITIONS PRECEDENT
Section 3.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of
Lender to make the Loan hereunder is subject to the fulfillment by Borrower or
waiver by Lender of the following conditions precedent no later than the Closing
Date:
3.1.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS. The representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if made on and as
of such date, and no Default or an Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan
Document on its part to be observed or performed.
3.1.2 LOAN AGREEMENT AND NOTE. Lender shall have received a
copy of this Agreement and the Note, in each case, duly executed and delivered
on behalf of Borrower.
3.1.3 DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
LEASES, ETC.
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(a) MORTGAGE, ASSIGNMENT OF LEASES AND OTHER LOAN DOCUMENTS.
Lender shall have received from Borrower fully executed and acknowledged
counterparts of the Mortgage and the Assignment of Leases and evidence that
counterparts of the Mortgage and Assignment of Leases have been delivered to the
title company for recording, in the reasonable judgment of Lender, so as to
effectively create upon such recording valid and enforceable first priority
Liens upon the Property in favor of Lender or Lender's nominee (or such trustee
as may be required under local law), subject only to the Permitted Encumbrances
and such other Liens as are permitted pursuant to the Loan Documents. Lender
shall have also received from Borrower fully executed counterparts of the
Assignment of Property Management Agreement and the other Loan Documents.
(b) TITLE INSURANCE. Lender shall have received a binding
commitment to issue a Title Insurance Policy issued by a title company
acceptable to Lender and dated as of the Closing Date. To the extent permitted
by applicable Legal Requirements, such Title Insurance Policy shall (i) provide
coverage in an amount equal to the principal amount of the Loan together with,
if applicable, a "tie-in" or similar endorsement, (ii) insure Lender or Lender's
nominee that the Mortgage creates a valid first priority lien on the Property
encumbered thereby, free and clear of all exceptions from coverage other than
Permitted Encumbrances and standard exceptions and exclusions from coverage (as
modified by the terms of any endorsements), (iii) contain such endorsements and
affirmative coverages as Lender may reasonably request, and (iv) name Lender or
Lender's nominee, its successors and assigns, as the insured. Lender also shall
have received evidence that all premiums in respect of such Title Insurance
Policy have been paid.
(c) SURVEY. Lender shall have received a title survey for
the Property, certified to the title company and Lender and their successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the most recent Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys. The following additional items from the list of
"Optional Survey Responsibilities and Specifications" (Table A) should be added
to each survey: 2, 3, 4, 6, 8, 9, 10, 11 and 13. The survey shall reflect the
same legal description contained in the Title Insurance Policy relating to the
Property referred to in clause (b) above and shall include, among other things,
a legal description of the real property comprising part of such Property
reasonably satisfactory to Lender. The surveyor's seal shall be affixed to each
survey and the surveyor shall provide a certification for each survey in form
and substance acceptable to Lender.
(d) INSURANCE. Lender shall have received valid certificates
of insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.
(e) ENVIRONMENTAL REPORTS. Lender shall have received the
Environmental Report in respect of the Property, in form and substance
reasonably satisfactory to Lender.
(f) ZONING. With respect to the Property, Lender shall have
received, at Lender's option, (i) letters or other evidence with respect to the
Property from the appropriate municipal authorities (or other Persons)
concerning applicable zoning and building laws, (ii) an
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ALTA 3.1 zoning endorsement to the Title Insurance Policy, or (iii) other
evidence of zoning compliance, in each case in substance reasonably satisfactory
to Lender.
(g) ENCUMBRANCES. Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender (or Lender's nominee) has a
valid and perfected first Lien on the Property as of the Closing Date with
respect to the Mortgage, subject only to applicable Permitted Encumbrances and
such other Liens as are permitted pursuant to the Loan Documents, and Lender
shall have received satisfactory evidence thereof.
3.1.4 RELATED DOCUMENTS. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Lender shall have received and approved certified copies thereof.
3.1.5 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the
Closing Date, each Borrower shall deliver or cause to be delivered to Lender
copies certified by Borrower of all organizational documentation related to
Borrower and/or the formation, structure, existence, good standing and/or
qualification to do business, as Lender may request in its sole discretion,
including, without limitation, good standing certificates, qualifications to do
business in the State, resolutions authorizing the entering into of the Loan and
incumbency certificates as may be requested by Lender.
3.1.6 OPINIONS OF BORROWER'S COUNSEL. Lender shall have
received opinions of Borrower's counsel (and if applicable, Borrower's local
counsel) (a) with respect to non-consolidation issues (an "INSOLVENCY OPINION")
and (b) with respect to due execution, authority, enforceability of the Loan
Documents and such other matters as Lender may reasonably require, all such
opinions in form, scope and substance reasonably satisfactory to Lender and
Lender's counsel in their reasonable discretion.
3.1.7 BUDGETS. Borrower shall have delivered the Annual Budget
for the current Fiscal Year.
3.1.8 BASIC CARRYING COSTS. Borrower shall have paid or
reserved for all Basic Carrying Costs relating to the Property which are in
arrears, including without limitation, (a) accrued but unpaid Insurance Premiums
due pursuant to the Policies, (b) currently due and payable Taxes (including any
in arrears) relating to the Property, and (c) currently due Other Charges
relating to the Property, which amounts shall be funded with proceeds of the
Loan.
3.1.9 COMPLETION OF PROCEEDINGS. All organizational
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents and all documents
incidental thereto shall be reasonably satisfactory in form and substance to
Lender, and Lender shall have received all such counterpart originals or
certified copies of such documents as Lender may reasonably request.
3.1.10 PAYMENTS. All payments, deposits or escrows required to
be made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the Closing Date shall have been paid.
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3.1.11 TENANT ESTOPPELS. Lender shall have received an executed
tenant estoppel letter, which shall be in form and substance satisfactory to
Lender, from (a) each tenant occupying ten percent (10%) of more of the gross
leasable area of the Property, (b) each tenant leasing an entire building at the
Property, (c) each tenant paying base rent in an amount equal to or exceeding
five percent (5%) of the Gross Income from Operations from the Property occupied
by such tenant and (d) including the area leased by those described in clauses
(a), (b) and (c), lessees of not less than seventy-five percent (75%) of the
gross leasable area of the Property.
3.1.12 TRANSACTION COSTS. Borrower shall have paid or
reimbursed Lender for all title insurance premiums, recording and filing fees or
taxes, costs of environmental reports, Physical Conditions Reports, appraisals
and other reports, the fees and costs of Lender's counsel and all other third
party out-of-pocket expenses incurred in connection with the origination of the
Loan.
3.1.13 MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the financial condition or business condition of
Borrower or the Property since the date of the most recent financial statements
delivered to Lender. The income and expenses of the Property, the occupancy
leases thereof, and all other features of the transaction shall be as
represented to Lender without material adverse change. Neither Borrower nor any
of its constituent Persons shall be the subject of any bankruptcy,
reorganization, or insolvency proceeding.
3.1.14 LEASES AND RENT ROLL. Lender shall have received copies
of all tenant leases, certified copies of any tenant leases as requested by
Lender and certified copies of all ground leases affecting the Property. Lender
shall have received a current certified rent roll of the Property, reasonably
satisfactory in form and substance to Lender.
3.1.15 SUBORDINATION AND ATTORNMENT. Lender shall have received
appropriate instruments acceptable to Lender in its commercially reasonable
discretion subordinating any Leases of Record prior to such Mortgage and
including an agreement by such Tenants to attorn to Lender in the event of a
foreclosure or delivery of a deed in lieu thereof.
3.1.16 TAX LOT. Lender shall have received evidence that the
Property constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
3.1.17 PHYSICAL CONDITIONS REPORTS. Lender shall have received
Physical Conditions Reports with respect to the Property, which reports shall be
reasonably satisfactory in form and substance to Lender.
3.1.18 PROPERTY MANAGEMENT AGREEMENT. Lender shall have
received a certified copy of the Property Management Agreement with respect to
the Property which shall be satisfactory in form and substance to Lender.
3.1.19 APPRAISAL. Lender shall have received an appraisal of
the Property, which shall be satisfactory in form and substance to Lender.
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3.1.20 FINANCIAL STATEMENTS. Lender shall have received (a) a
balance sheet with respect to the Property for the two most recent Fiscal Years
and statements of income and statements of cash flows with respect to the
Property for the three most recent Fiscal Years, each in form and substance
reasonably satisfactory to Lender or (b) such other financial statements
relating to the operation of the Property, in form and substance reasonably
satisfactory to Lender.
3.1.21 CO-TENANCY FORMS. Lender shall have approved the form of
Assignment and Assumption Agreement, Consent and Assumption Agreement,
Tenants-in-Common Agreement and Co-Owner Indemnity to be used by Borrower upon a
transfer pursuant to Section 5.2.13(a) hereof.
3.1.22 INTENTIONALLY OMITTED.
3.1.23 FURTHER DOCUMENTS. Lender or its counsel shall have
received such other documents and further approvals, opinions, documents and
information as Lender or its counsel may have reasonably requested including the
Loan Documents in form and substance reasonably satisfactory to Lender and its
counsel.
3.1.24 INTENTIONALLY OMITTED.
3.1.25 LOCKBOX ESTABLISHMENT. Borrower shall have established
the Lockbox Account at a Lockbox Bank approved by Lender, and shall have
executed and delivered a lockbox agreement acceptable to Lender in its
reasonable discretion.
3.1.26 TENANT DIRECTION LETTERS. Borrower shall deliver Tenant
Direction Letters for each existing Tenant.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
Section 4.1 BORROWER REPRESENTATIONS. Borrower represents and
warrants as of the date hereof and as of the Closing Date (provided any
representations and warranties as to a Borrower shall be deemed made by each
Borrower as to its Borrowing entity only) that, except as set forth on Schedule
XII:
4.1.1 ORGANIZATION. Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
the Property and to transact the businesses in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with the Property,
businesses and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own the
Property and to transact the businesses in which it is now engaged, and the sole
business of Borrower is the ownership, management, operation and sale of the
Property (including any undivided interest therein).
4.1.2 PROCEEDINGS. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable
33
against Borrower in accordance with their respective terms, subject only to
applicable bankruptcy, insolvency and similar laws affecting rights of creditors
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
4.1.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement or other agreement or instrument to
which Borrower is a party or by which any of Borrower's property or assets is
subject, nor to Borrower's Knowledge will such action result in any violation of
the provisions of any statute or any order, rule or regulation of any
Governmental Authority having jurisdiction over Borrower or any of Borrower's
properties or assets, and any consent, approval, authorization, order,
registration or qualification of or with any court or any such regulatory
Governmental Authority required for the execution, delivery and performance by
Borrower of this Agreement or any other Loan Documents has been obtained and is
in full force and effect.
4.1.4 LITIGATION. To Borrower's Knowledge, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or threatened against or affecting
Borrower or the Property, which actions, suits or proceedings, if determined
against Borrower or the Property, might materially adversely affect the
condition (financial or otherwise) or business of Borrower or the condition or
ownership of the Property.
4.1.5 AGREEMENTS. Except such instruments and agreements set
forth as Permitted Exceptions in the Title Insurance Policy, Borrower is not a
party to any agreement or instrument or subject to any restriction which might
materially and adversely affect Borrower or the Property, or Borrower's
business, properties or assets, operations or condition, financial or otherwise.
To Borrower's Knowledge, Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or the Property are bound. Borrower has no material financial
obligation under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Borrower is a party or by which Borrower or the
Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Property and (b) obligations under the Loan
Documents.
4.1.6 TITLE. Borrower has good and indefeasible fee simple
title to the real property comprising part of the Property and good title to the
balance of the Property, free and clear of all Liens whatsoever except the
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. To Borrower's Knowledge,
there are no claims for payment for work, labor or materials affecting the
Property which are due and unpaid under the contracts pursuant to which such
work or labor was performed or materials provided which are or may become a lien
prior to, or of equal priority with, the Liens created by the Loan Documents.
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4.1.7 SOLVENCY; NO BANKRUPTCY FILING. Borrower (a) has not
entered into the transaction or executed the Note, this Agreement or any other
Loan Documents with the actual intent to hinder, delay or defraud any creditor
and (b) received reasonably equivalent value in exchange for its obligations
under such Loan Documents. Giving effect to the Loan, the fair saleable value of
Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debt and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations of Borrower). Except as expressly disclosed to Lender
in writing, no petition in bankruptcy has been filed against Borrower, or to
Borrower's Knowledge, any constituent Person in the last seven (7) years, and
neither Borrower, nor to Borrower's Knowledge, any constituent Person in the
last seven (7) years has ever made an assignment for the benefit of creditors or
taken advantage of any insolvency act for the benefit of debtors. Neither
Borrower nor any of its constituent Persons are contemplating either the filing
of a petition by it under any state or federal bankruptcy or insolvency laws or
the liquidation of all or a major portion of Borrower's assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it or such constituent Persons.
4.1.8 FULL AND ACCURATE DISCLOSURE. To Borrower's Knowledge,
no statement of fact made by Borrower in this Agreement or in any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading. There is no material fact presently known to Borrower which has
not been disclosed to Lender which adversely affects the Property or the
business, operations or condition (financial or otherwise) of Borrower.
4.1.9 NO PLAN ASSETS. Borrower is not an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and
none of the assets of Borrower constitutes or will constitute "plan assets" of
one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In
addition, (a) Borrower is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (b) transactions by or with Borrower are not subject
to state statutes regulating investment of, and fiduciary obligations with
respect to, governmental plans similar to the provisions of Section 406 of ERISA
or Section 4975 of the Code currently in effect, which prohibit or otherwise
restrict the transactions contemplated by this Loan Agreement.
4.1.10 COMPLIANCE. To Borrower's Knowledge, Borrower and the
Property and the use thereof comply in all material respects with all applicable
Legal Requirements, including, without limitation, building and zoning
ordinances and codes. To Borrower's Knowledge, Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority. To Borrower's Knowledge, there has not been committed by Borrower
35
or, to Borrower's Knowledge, any other Person in occupancy of or involved with
the operation or use of the Property any act or omission affording the federal
government or any other Governmental Authority the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Borrower's obligations under any of the Loan Documents.
4.1.11 FINANCIAL INFORMATION. To Borrower's Knowledge, all
financial data, including, without limitation, the statements of cash flow and
income and operating expense, that have been delivered to Lender in respect of
the Property (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of the Property as of the date of
such reports, and (iii) to the extent prepared or audited by an independent
certified public accounting firm, have been prepared in accordance with
accounting principles reasonably acceptable to Lender, consistently applied
throughout the periods covered, except as disclosed therein. Borrower does not
have any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a
materially adverse effect on the Property or the operation thereof as an office
building, except as referred to or reflected in said financial statements. Since
the date of such financial statements, there has been no materially adverse
change in the financial condition, operations or business of Borrower from that
set forth in said financial statements.
4.1.12 CONDEMNATION. No Condemnation or other proceeding has
been commenced or, to Borrower's Knowledge, is contemplated with respect to all
or any portion of the Property or for the relocation of roadways providing
access to the Property.
4.1.13 FEDERAL RESERVE REGULATIONS. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by Legal Requirements or by the terms and conditions of
this Agreement or the other Loan Documents.
4.1.14 UTILITIES AND PUBLIC ACCESS. The Property has rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the Property for its respective intended
uses. To Borrower's Knowledge, all public utilities necessary or convenient to
the full use and enjoyment of the Property are located either in the public
right-of-way abutting the Property (which are connected so as to serve the
Property without passing over other property) or in recorded easements serving
the Property and such easements are set forth in and insured by the Title
Insurance Policy. All roads necessary for the use of the Property for their
current respective purposes have been completed and dedicated to public use and
accepted by all Governmental Authorities.
4.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of ss.1445(f)(3) of the Code.
4.1.16 SEPARATE LOTS. The Property is comprised of one (1) or
more parcels which constitute a separate tax lot or lots and does not constitute
a portion of any other tax lot not a part of the Property.
36
4.1.17 ASSESSMENTS. There are no pending, or to Borrower's
Knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Property, nor are there any contemplated improvements to
the Property that may result in such special or other assessments.
4.1.18 ENFORCEABILITY. The Loan Documents are not subject to
any right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder exercised by Lender in
accordance with applicable law, render the Loan Documents unenforceable, and
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
4.1.19 NO PRIOR ASSIGNMENT. There is no prior assignment of the
Leases or any portion of the Rents by Borrower or any of its predecessors in
interest, given as collateral security which will be outstanding upon
application of the proceeds of the Loan.
4.1.20 INSURANCE. Borrower has obtained and has delivered to
Lender (a) certified copies of all insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement or (b)
other evidence of such matters acceptable to Lender. To Borrower's Knowledge, no
claims have been made under any such policy, and no Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any
such policy.
4.1.21 USE OF PROPERTY. The Property is used exclusively for
office purposes and other appurtenant and related uses.
4.1.22 CERTIFICATE OF OCCUPANCY; LICENSES. To Borrower's
Knowledge, all certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy permits required to
be obtained by Borrower for the legal use, occupancy and operation of the
Property as an office building have been obtained and are in full force and
effect, and to Borrower's Knowledge, all certifications, permits, licenses and
approvals, including without limitation, certificates of completion and
occupancy permits required to be obtained by any Person other than Borrower for
the legal use, occupancy and operation of the Property as an office building,
have been obtained and are in full force and effect (all of the foregoing
certifications, permits, licenses and approvals are collectively referred to as
the "LICENSES"). Borrower shall and shall cause all other Persons to, keep and
maintain all licenses necessary for the operation of the Property as an office
building. To Borrower's Knowledge, the use being made of the Property is in
conformity with all certificates of occupancy issued for the Property.
4.1.23 FLOOD ZONE. To Borrower's Knowledge, no Improvements on
the Property are located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards.
4.1.24 PHYSICAL CONDITION. Except as disclosed in the Physical
Conditions Reports delivered to Lender in connecting with this Loan, to
Borrower's Knowledge, the Property, including, without limitation, all
buildings, improvements, parking facilities,
37
sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire
protection systems, electrical systems, equipment, elevators, exterior sidings
and doors, landscaping, irrigation systems and all structural components, are in
good condition, order and repair in all material respects; there exists no
structural or other material defects or damages in the Property, and Borrower
has not received notice from any insurance company or bonding company of any
defects or inadequacies in the Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
4.1.25 BOUNDARIES. To Borrower's Knowledge, all of the
improvements which were included in determining the appraised value of the
Property lie wholly within the boundaries and building restriction lines of the
Property, and no improvements on adjoining properties encroach upon the
Property, and no easements or other encumbrances upon the Property encroach upon
any of the improvements, so as to affect the value or marketability of the
Property except those which are insured against by title insurance.
4.1.26 LEASES. To Borrower's Knowledge, the Property is not
subject to any Leases other than the Leases described on the Rent Roll attached
as SCHEDULE XI hereto and made a part hereof. No Person has any possessory
interest in the Property or right to occupy the same except under and pursuant
to the provisions of the Leases. The current Leases are in full force and effect
and, to Borrower's Knowledge, there are no defaults thereunder by either party
and there are no conditions that, with the passage of time or the giving of
notice, or both, would constitute defaults thereunder. No Rent (including
security deposits) has been paid more than one (1) month in advance of its due
date. All work to be performed by Borrower under each Lease has been performed
as required and has been accepted by the applicable tenant, and any payments,
free rent, partial rent, rebate of rent or other payments, credits, allowances
or abatements required to be given by Borrower to any tenant has already been
received by such tenant. There has been no prior sale, transfer or assignment,
hypothecation or pledge of any Lease or of the Rents received therein which is
outstanding. To Borrower's Knowledge, except as set forth on Schedule XI, no
tenant listed on SCHEDULE XI has assigned its Lease or sublet all or any portion
of the premises demised thereby, no such tenant holds its leased premises under
assignment or sublease, nor does anyone except such tenant and its employees
occupy such leased premises. No tenant under any Lease has a right or option
pursuant to such Lease or otherwise to purchase all or any part of the leased
premises or the building of which the leased premises are a part. Except as set
forth in SCHEDULE XI, no tenant under any Lease has any right or option for
additional space in the Improvements. To Borrower's actual knowledge based on
the Environmental Report delivered to Lender in connection herewith, no
hazardous wastes or toxic substances, as defined by applicable federal, state or
local statutes, rules and regulations, have been disposed, stored or treated by
any tenant under any Lease on or about the leased premises nor does Borrower
have any knowledge of any tenant's intention to use its leased premises for any
activity which, directly or indirectly, involves the use, generation, treatment,
storage, disposal or transportation of any petroleum product or any toxic or
hazardous chemical, material, substance or waste, except in either event, in
compliance with applicable federal, state or local statues, rules and
regulations.
38
4.1.27 SURVEY. To Borrower's Knowledge, the Survey for the
Property delivered to Lender in connection with this Agreement does not fail to
reflect any material matter affecting the Property or the title thereto.
4.1.28 LOAN TO VALUE. The maximum principal amount of the Loan
does not exceed one hundred twenty-five percent (125%) of the fair market value
of the Property as set forth on the appraisal of the Property delivered to
Lender.
4.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the acquisition of the Property by Borrower have
been paid or are simultaneously being paid. All mortgage, mortgage recording,
stamp, intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid, and, under current Legal Requirements, the Mortgage is
enforceable in accordance with its terms by Lender (or any subsequent holder
thereof).
4.1.30 SPECIAL PURPOSE ENTITY/SEPARATENESS.
(a) Until the Debt has been paid in full, Borrower hereby
represents, warrants and covenants that the Borrower is, shall be and shall
continue to be a Special Purpose Entity. If Borrower consists of more than one
Person, each such Person shall be a Special Purpose Entity (provided any
representations and warranties as to a Borrower shall be deemed made by each
Borrower as to its Borrowing entity only). Lender acknowledges that the single
purpose provisions contained in the organizational documents of Borrower and its
general partners meet the definition of "Special Purpose Entity" as set forth
herein.
(b) The representations, warranties and covenants set forth
in Section 4.1.30(a) shall survive for so long as any amount remains payable to
Lender under this Agreement or any other Loan Document.
(c) Any and all of the assumptions made in any Insolvency
Opinion, including, but not limited to, any exhibits attached thereto, are true
and correct in all respects, and Borrower has complied and will comply with all
of the assumptions made with respect to it in any Insolvency Opinion. Each
Affiliate of Borrower with respect to which an assumption is made in any
Insolvency Opinion will comply with all of the assumptions made with respect to
it in any such Insolvency Opinion.
4.1.31 PROPERTY MANAGEMENT AGREEMENT. The Property Management
Agreement is in full force and effect and, to Borrower's Knowledge, there are no
defaults thereunder by any party thereto and no event has occurred that, with
the passage of time and/or the giving of notice would constitute a default
thereunder.
4.1.32 ILLEGAL ACTIVITY. To Borrower's Knowledge, no portion of
the Property has been or will be purchased with proceeds of any illegal
activity.
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4.1.33 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by Borrower to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection
with the Loan or in satisfaction of the terms thereof and all statements of fact
made by Borrower in this Agreement or in any other Loan Document, are accurate,
complete and correct in all material respects, provided, however, that if such
information was provided to Borrower by non-affiliated third parties, Borrower
represents that such information is, to Borrower's Knowledge, accurate, complete
and correct in all material respects. To Borrower's Knowledge, there has been no
material adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading in any
material respect or that otherwise materially and adversely affects or might
materially and adversely affect the Property or the business operations or the
financial condition of Borrower. To Borrower's Knowledge, Borrower has disclosed
to Lender all material facts and has not failed to disclose any material fact
that could cause any representation or warranty made herein to be materially
misleading.
4.1.34 INVESTMENT COMPANY ACT. Borrower is not (a) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (b) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (c)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
4.1.35 PRINCIPAL PLACE OF BUSINESS AND ORGANIZATION. Borrower
shall not change its principal place of business set forth in the introductory
paragraph of this Agreement without first giving Lender thirty (30) days prior
written notice. Borrower shall not change the place of its organization as set
forth in the introductory paragraph of this Agreement without the consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed. Upon Lender's reasonable request, Borrower shall execute and deliver
additional financing statements, security agreements and other instruments which
may be necessary to effectively evidence or perfect Lender's security interest
in the Property as a result of such change of principal place of business or
place of organization.
4.1.36 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Based upon
an environmental assessment of the Property, and except as otherwise disclosed
by the Environmental Report, Borrower represents and warrants that to Borrower's
Knowledge (a) there are no Hazardous Substances or underground storage tanks in,
on, or under the Property, except those that are both (i) in compliance with all
applicable Environmental Laws and with permits issued pursuant thereto and (ii)
fully disclosed to Lender in writing pursuant to the Environmental Report; (b)
there are no past, present or threatened Releases of Hazardous Substances in,
on, under or from the Property which have not been fully remediated in
accordance with Environmental Law; (c) there is no identified threat of any
Release of Hazardous Substances migrating to the Property; (d) there is no past
or present non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with the Property which has not been fully
remediated in accordance with Environmental Law; (e) Borrower does not know of,
and has not received, any written or oral notice or other communication from any
person or entity (including but not limited to a governmental entity)
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relating to Hazardous Substances or Remediation thereof, of possible liability
of any person or entity pursuant to any Environmental Law, other environmental
conditions in connection with the Property, or any actual or potential
administrative or judicial proceedings in connection with any of the foregoing;
and (f) Borrower has truthfully and fully provided to Lender, in writing, any
and all information relating to conditions in, on, under or from the Property
that is known to Borrower and that is contained in files and records of
Borrower, including but not limited to any reports relating to Hazardous
Substances in, on, under or from the Property and/or to the environmental
condition of the Property.
4.1.37 ACQUISITION COSTS. Borrower represents and warrants that
all consideration payable to the seller of the Property to Borrower has been, or
shall be in connection with the funding of the loan, paid in full, and that no
further obligation to any such seller, contingent or otherwise, shall remain
outstanding after the date hereof.
4.1.38 EMBARGOED PERSON. As of the Closing Date, to Borrower's
Knowledge, (a) none of the funds or other assets of Borrower constitute property
of, or are beneficially owned, directly or indirectly, by any Embargoed Person;
(b) no Embargoed Person has any interest of any nature whatsoever in Borrower
with the result that the investment in Borrower (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of Borrower have been derived from any unlawful activity with
the result that the investment in Borrower (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.
4.1.39 CASH MANAGEMENT ACCOUNT. Borrower hereby represents and
warrants to Lender that:
(a) This Agreement, together with the other Loan Documents,
create a valid and continuing security interest (as defined in the Uniform
Commercial Code of the State of Delaware) in the Lockbox Account and Cash
Management Account in favor of Lender, which security interest is prior to all
other Liens, other than Permitted Encumbrances, and is enforceable as such
against creditors of and purchasers from Borrower. Other than in connection with
the Loan Documents and except for Permitted Encumbrances, Borrower has not sold,
pledged, transferred or otherwise conveyed the Lockbox Account and Cash
Management Account;
(b) Each of the Lockbox Account and Cash Management Account
constitute "deposit accounts" and/or "securities accounts" within the meaning of
the Uniform Commercial Code of the State of Delaware); and
(c) The Lockbox Account and Cash Management Account are not
in the name of any Person other than Borrower, as pledgor, or Lender, as
pledgee. Borrower has not consented to the Lockbox Bank and Agent complying with
instructions with respect to the Lockbox Account and Cash Management Account
from any Person other than Lender or another Person designated by Lender.
Section 4.2 SURVIVAL OF REPRESENTATIONS. Borrower agrees that all of
the representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this
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Agreement and in the other Loan Documents shall survive for so long as any
amount remains owing to Lender under this Agreement or any of the other Loan
Documents by Borrower. All representations, warranties, covenants and agreements
made in this Agreement or in the other Loan Documents by Borrower shall be
deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf. In the event there are
more than one Borrower, each Borrower's representations regarding the Borrower
are limited to such Borrower.
ARTICLE 5 - BORROWER COVENANTS
Section 5.1 AFFIRMATIVE COVENANTS. From the Closing Date and until
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Lien of the Mortgage encumbering the
Property (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees
with Lender that:
5.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS;
INSURANCE. Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to it and the Property. Borrower shall not commit, nor shall Borrower
permit or any other Person in occupancy of or involved with the operation or use
of the Property to commit any act or omission affording the federal government
or any state or local government the right of forfeiture as against the Property
or any part thereof or any monies paid in performance of Borrower's obligations
under any of the Loan Documents. Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall at all times maintain, preserve and protect all its
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Property in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgage. Borrower shall
keep the Property insured at all times by financially sound and reputable
insurers, to such extent and against such risks, and maintain liability and such
other insurance, as is more fully provided in this Agreement. After prior
written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding promptly initiated and conducted in good faith and
with due diligence, the validity of any Legal Requirement, the applicability of
any Legal Requirement to Borrower or the Property or any alleged violation of
any Legal Requirement, provided that (i) no Event of Default has occurred and
remains uncured; (ii) intentionally omitted; (iii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; (iv) the Property or any part thereof
or interest therein will not be in immediate danger of being sold, forfeited,
terminated, cancelled or lost; (v) Borrower shall promptly upon final
determination thereof comply with any such Legal Requirement determined to be
valid or applicable or cure any violation of any Legal Requirement; (vi) such
proceeding shall suspend the enforcement of the contested Legal Requirement
against Borrower or the Property; and (vii) Borrower shall furnish such security
as may be required in the proceeding, or as may be requested by Lender, to
insure compliance with such Legal Requirement, together with all
42
interest and penalties payable in connection therewith. Lender may apply any
such security, as necessary to cause compliance with such Legal Requirement at
any time when, in the reasonable judgment of Lender, the validity, applicability
or violation of such Legal Requirement is finally established or the Property
(or any part thereof or interest therein) shall be in danger of being sold,
forfeited, terminated, cancelled or lost. Provided no Event of Default then
exists, any security deposited with Lender pursuant to this Section 5.1.1 may be
used to satisfy compliance with the related Legal Requirement with any excess
after the satisfaction of same to be returned to Borrower.
5.1.2 TAXES AND OTHER CHARGES. Borrower shall pay or cause to
be paid all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Property or any part thereof as the same become due and
payable; PROVIDED, HOWEVER, Borrower's obligation to directly pay to the
appropriate taxing authority Taxes shall be suspended for so long as Borrower
complies with the terms and provisions of Section 7.2 hereof. Borrower will
deliver to Lender receipts for payment or other evidence satisfactory to Lender
that the Taxes and Other Charges have been so paid or are not then delinquent no
later than ten (10) days prior to the date on which the Taxes and/or Other
Charges would otherwise be delinquent if not paid (PROVIDED, HOWEVER, that
Borrower is not required to furnish such receipts for payment of Taxes in the
event that such Taxes have been paid by Lender pursuant to Section 7.2 hereof).
If Borrower pays or causes to be paid all Taxes and Other Charges and provides a
copy of the receipt evidencing the payment thereof to Lender, then Lender shall
reimburse Borrower, provided that there are then sufficient proceeds in the Tax
and Insurance Escrow Fund and provided that the Taxes are being paid pursuant to
Section 7.2. Upon written request of Borrower, if Lender has paid such Taxes
pursuant to Section 7.2 hereof, Lender shall provide Borrower with evidence that
such Taxes have been paid. Borrower shall not suffer and shall promptly cause to
be paid and discharged any Lien or charge whatsoever which may be or become a
Lien or charge against the Property, and shall promptly pay for all utility
services provided to the Property. After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any Taxes or Other
Charges, provided that (i) Borrower is permitted to do so under the provisions
of any mortgage or deed of trust superior in lien to the Mortgage; (ii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) the Property
nor any part thereof or interest therein will be in immediate danger of being
sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall promptly
upon final determination thereof pay the amount of any such Taxes or Other
Charges, together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the Property; and (vi) Borrower shall
furnish such security as may be required in the proceeding, or as may be
reasonably requested by Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash deposit or part thereof held by Lender to the claimant entitled
thereto at any time when, in the reasonable judgment of Lender, the entitlement
of such claimant is established. Provided no Event of Default then exists, any
security deposited with Lender pursuant to this Section 5.1.2 may be used to
satisfy the related Taxes or Other Charges with any excess after the
satisfaction of same to be returned to Borrower.
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5.1.3 LITIGATION. Borrower shall give prompt written notice to
Lender upon obtaining information of any litigation or governmental proceedings
pending or threatened against Borrower which might materially adversely affect
Borrower's condition (financial or otherwise) or business or the Property.
5.1.4 ACCESS TO PROPERTY. Borrower shall permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice, subject to the
rights of Tenants under their respective Leases.
5.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender
of the occurrence of any Default or Event of Default of which Borrower has
knowledge.
5.1.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
5.1.7 PERFORM LOAN DOCUMENTS. Borrower shall observe, perform
and satisfy all the terms, provisions, covenants and conditions of, and shall
pay when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
5.1.8 INSURANCE BENEFITS. Borrower shall cooperate with Lender
in obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable in connection with the Property, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements, and the payment by Borrower of the
expense of an appraisal on behalf of Lender in case of a fire or other casualty
affecting the Property or any part thereof) out of such Insurance Proceeds.
5.1.9 FURTHER ASSURANCES. Borrower shall, at Borrower's sole
cost and expense:
(a) furnish to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(b) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary or desirable, to evidence, preserve and/or protect the collateral
at any time securing or intended to secure the obligations of Borrower under the
Loan Documents, as Lender may reasonably require; and
(c) do and execute all and such further lawful and
reasonable acts, conveyances and assurances for the better and more effective
carrying out of the intents and purposes of this Agreement and the other Loan
Documents, as Lender shall reasonably require from time to time.
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5.1.10 TENANCY IN COMMON. In the event that Borrower is, now or
hereafter, comprised of more than one Person, then each such Person comprising
Borrower shall execute and be bound by a Tenants-in-Common Agreement, which
shall be recorded, and shall otherwise comply with Section 5.2.13(b) hereof.
Borrower shall give prompt notice to Lender of any default or event of default
under the Tenants-in-Common Agreement of which Borrower obtains knowledge.
5.1.11 FINANCIAL REPORTING.
(a) Borrower will keep and maintain or will cause to be kept
and maintained on a Fiscal Year basis, in accordance with GAAP (or such other
accounting basis reasonably acceptable to Lender), records and accounts
reflecting all of the financial affairs of Borrower and all items of income and
expense in connection with the operation of the Property. Lender shall have the
right from time to time at all times during normal business hours upon
reasonable notice to examine such books, records and accounts at the office of
Borrower, Property Manager or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Lender shall desire.
After the occurrence and during the continuance of an Event of Default, Borrower
shall pay any costs and expenses incurred by Lender to examine Borrower's
accounting records with respect to the Property, as Lender shall reasonably
determine to be necessary or appropriate in the protection of Lender's interest.
(b) Borrower will cause Property Manager to furnish to
Lender annually, within one hundred twenty (120) days following the end of each
Fiscal Year of Borrower, certified annual financial statements prepared in
accordance with GAAP (or such other accounting basis reasonably acceptable to
Lender) for the Property for such Fiscal Year, including statements of profit
and loss for the Property. Such statements shall set forth the financial
condition and the results of operations for the Property for such Fiscal Year,
and shall include, but not be limited to, amounts representing annual Net Cash
Flow, Net Operating Income, Gross Income from Operations and Operating Expenses.
Such annual financial statements shall be accompanied by (i) a comparison of the
budgeted income and expenses and the actual income and expenses for the prior
Fiscal Year, (ii) a certificate executed by the Property Manager, stating that
each such annual financial statement presents fairly the results of operations
of the Property and has been prepared in accordance with GAAP (or such other
accounting basis reasonably acceptable to Lender), (iii) a certified rent roll
containing current rent, lease expiration dates and the square footage occupied
by each tenant; (v) a schedule reconciling Net Operating Income to Net Cash Flow
(the "NET CASH FLOW SCHEDULE"), which shall itemize all material adjustments
made to Net Operating Income to arrive at Net Cash Flow. Together with the
annual financial statements, Property Manager shall furnish to Lender a
Certificate certifying to its knowledge as of the date thereof whether there
exists an event or circumstance which constitutes a Default or Event of Default
under the Loan Documents executed and delivered by, or applicable to, Borrower,
and if such Default or Event of Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy the same.
(c) Borrower will furnish, or cause to be furnished, to
Lender on or before twenty (20) days after the end of each calendar quarter the
following items, accompanied by a certificate of Property Manager, stating that
such items are true, correct, accurate, and complete
45
and fairly present the results of the operations of the Property (subject to
normal year-end adjustments) as applicable: (i) a rent roll for the subject
month; (ii) quarterly and year-to-date operating statements (including Capital
Expenditures) prepared for each calendar quarter, noting Net Operating Income,
Gross Income from Operations, and Operating Expenses (not including any
contributions to the Replacement Reserve Fund, and other information necessary
and sufficient to fairly represent the financial position and results of
operation of the Property during such calendar month, and containing a
comparison of budgeted income and expenses and the actual income and expenses
together with a detailed explanation of any variances of five percent (5%) or
more between budgeted and actual amounts for such periods, all in form
satisfactory to Lender; (iii) a calculation reflecting the annual Debt Service
Coverage Ratio for the immediately preceding twelve (12) month period as of the
last day of such month; and (iv) a Net Cash Flow Schedule.
(d) For the partial year period commencing on the Closing
Date, and for each Fiscal Year thereafter, Borrower shall cause Property Manager
to submit to Lender an Annual Budget not later than thirty (30) days after the
commencement of such period or Fiscal Year in form reasonably satisfactory to
Lender. If a Cash Trap Event Period exists, the Annual Budget shall be subject
to Lender's written approval (each such Annual Budget, an "APPROVED ANNUAL
BUDGET"). In the event that Lender objects to a proposed Annual Budget submitted
by Borrower during a Cash Trap Event Period, Lender shall advise Borrower of
such objections within fifteen (15) days after receipt thereof (and deliver to
Borrower a reasonably detailed description of such objections) and Borrower
shall promptly revise such Annual Budget and resubmit the same to Lender. Lender
shall advise Borrower of any objections to such revised Annual Budget within ten
(10) days after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall promptly revise the same in
accordance with the process described in this subsection until Lender approves
the Annual Budget. Until such time that Lender approves a proposed Annual
Budget, the most recently Approved Annual Budget shall apply; provided that such
Approved Annual Budget shall be adjusted to reflect actual increases in Taxes,
Insurance Premiums and Other Charges.
(e) In the event that a Cash Trap Event Period Exists and
Borrower must incur an extraordinary operating expense or capital expense not
set forth in the Approved Annual Budget (each an "EXTRAORDINARY EXPENSE"), then
Borrower shall promptly deliver to Lender a reasonably detailed explanation of
such proposed Extraordinary Expense for Lender's approval.
(f) Borrower shall cause Property Manager to furnish to
Lender, within ten (10) Business Days after request (or as soon thereafter as
may be reasonably possible), such further detailed information with respect to
Property Manager or the Property as may be reasonably requested by Lender,
including, but not limited to, a certificate stating to its knowledge that the
representations and warranties of Borrower set forth in Section 4.1.30(a) are
true and correct as of the date of such certificate.
(g) Borrower shall cause Property Manager to furnish to
Lender, within ten (10) Business Days after request (or as soon thereafter as
may be reasonably possible), such further detailed information with respect to
the operation of the Property as may be reasonably requested by Lender.
46
(h) Any reports, statements or other information required to
be delivered under this Agreement shall be delivered (i) in paper form, (ii) on
a diskette, and (iii) if requested by Lender and within the capabilities of
Property Manager's data systems without change or modification thereto, in
electronic form and prepared using Microsoft Word for Windows or WordPerfect for
Windows files (which files may be prepared using a spreadsheet program and saved
as word processing files).
5.1.12 BUSINESS AND OPERATIONS. Borrower will continue to
engage in the businesses presently conducted by it as and to the extent the same
are necessary for the ownership, maintenance, management and operation of the
Property. Borrower will qualify to do business and will remain in good standing
under the laws of each jurisdiction as and to the extent the same are required
for the ownership, maintenance, management and operation of the Property.
5.1.13 TITLE TO THE PROPERTY. Borrower will warrant and defend
(a) the title to the Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Lien of the Mortgage and the Assignment of Leases on the
Property, subject only to Liens permitted hereunder (including Permitted
Encumbrances), in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in the Property, other than as permitted hereunder, is claimed by
another Person.
5.1.14 COSTS OF ENFORCEMENT. In the event (a) that the Mortgage
encumbering the Property is foreclosed in whole or in part or that the Mortgage
is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to
the Mortgage encumbering the Property in which proceeding Lender is made a
party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of or an assignment by Borrower for the benefit of its
creditors, then Borrower (or only the applicable Borrower if as a result of
clause (c)), its successors or assigns, shall be chargeable with and agrees to
pay all costs of collection and defense, including reasonable attorneys' fees
and costs, incurred by Lender or Borrower in connection therewith and in
connection with any appellate proceeding or post-judgment action involved
therein, together with all required service or use taxes.
5.1.15 ESTOPPEL STATEMENT.
(a) After request by Lender, Borrower shall cause Property
Manager to furnish to Lender within ten (10) days a statement, duly acknowledged
and certified, setting forth (i) the amount of the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the applicable
interest rate of the Note, (iv) the date installments of interest and/or
principal were last paid, (v) any known offsets or defenses to the payment of
the Debt, if any, and (vi) that the Note, this Agreement, the Mortgage and the
other Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification.
47
(b) Borrower shall cause Property Manager to use
commercially reasonable efforts to deliver to Lender upon request, tenant
estoppel certificates from each commercial tenant leasing space at the Property
in form and substance reasonably satisfactory to Lender provided that Borrower
shall not be required to deliver such certificates more frequently than one (1)
time in any calendar year.
(c) Within thirty (30) days of request by Borrower, Lender
shall deliver to Borrower a statement setting forth the items described at
(a)(i), (ii), (iii) and (iv) of this Section 5.1.15.
5.1.16 LOAN PROCEEDS. Borrower shall use the proceeds of the
Loan received by it on the Closing Date only for the purposes set forth in
Section 2.1.4.
5.1.17 PERFORMANCE BY BORROWER. Borrower shall in a timely
manner observe, perform and fulfill each and every covenant, term and provision
of each Loan Document executed and delivered by, or applicable to, Borrower, and
shall not enter into or otherwise suffer or permit any amendment, waiver,
supplement, termination or other modification of any Loan Document executed and
delivered by, or applicable to, Borrower without the prior written consent of
Lender.
5.1.18 CONFIRMATION OF REPRESENTATIONS. Borrower shall cause
Property Manager to deliver, in connection with any Securitization, (a) one or
more Officer's Certificates certifying as to the accuracy (or disclosing any
inaccuracies, as applicable) of all representations made by Borrower in the Loan
Documents as of the date of the closing of such Securitization, and (b)
certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower and its
member as of the date of the Securitization.
5.1.19 INTENTIONALLY OMITTED.
5.1.20 LEASING MATTERS. Any Leases with respect to the Property
written after the Closing Date for more than the Relevant Leasing Threshold
square footage shall be subject to the prior written approval of Lender, which
approval may be given or withheld in the sole discretion of Lender. Lender shall
approve or disapprove any such Lease within ten (10) Business Days of Lender's
receipt of a final execution draft of such Lease (including all exhibits,
schedules, supplements, addenda or other agreements relating thereto) and a
written notice from Borrower requesting Lender's approval to such Lease, and
such Lease shall be deemed approved, if Lender does not disapprove such Lease
within said ten (10) Business Day period PROVIDED such written notice
conspicuously states, in large bold type, that "PURSUANT TO SECTION 5.1.20 OF
THE LOAN AGREEMENT, THE LEASE SHALL BE DEEMED APPROVED IF LENDER DOES NOT
RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER'S RECEIPT OF
SUCH LEASE AND WRITTEN NOTICE". Borrower shall furnish Lender with executed
copies of all Leases. All renewals of Leases and all proposed Leases shall
provide for rental rates comparable to existing local market rates (unless such
rental rates are otherwise set forth in the Leases executed prior to the Closing
Date). All proposed Leases shall be on commercially reasonable terms and shall
not contain any terms which would materially impair Lender's rights under the
Loan Documents. All Leases executed after the Closing Date shall provide that
they are subordinate to the Mortgage encumbering the
48
Property and that the tenant thereunder agrees to attorn to Lender or any
purchaser at a sale by foreclosure or power of sale. Borrower (i) shall observe
and perform the obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (ii) shall enforce the terms, covenants and
conditions contained in the Leases upon the part of the tenant thereunder to be
observed or performed in a commercially reasonable manner and in a manner not to
impair the value of the Property involved except that no termination by Borrower
or acceptance of surrender by a tenant of any Lease shall be permitted unless by
reason of a tenant default and then only in a commercially reasonable manner to
preserve and protect the Property; PROVIDED, HOWEVER, that no such termination
or surrender of any Lease covering more than the Relevant Leasing Threshold will
be permitted without the written consent of Lender which consent may be withheld
in the reasonable discretion of Lender; (iii) shall not collect any of the rents
more than one (1) month in advance (other than security deposits); (iv) shall
not execute any other assignment of lessor's interest in the Leases or the Rents
(except as contemplated by the Loan Documents); (v) shall not alter, modify or
change the terms of the Leases in a manner inconsistent with the provisions of
the Loan Documents without the prior written consent of Lender, which consent
may be withheld in the sole discretion of Lender; and (vi) shall execute and
deliver at the request of Lender all such further assurances, confirmations and
assignments in connection with the Leases as Lender shall from time to time
reasonably require. Notwithstanding the foregoing, Borrower may, without the
prior written consent of Lender, terminate any Lease which demises less than the
Relevant Leasing Threshold under any of the following circumstances: (i) the
tenant under said Lease is in default beyond any applicable grace and cure
period, and Borrower has the right to terminate such Lease; (ii) such
termination is permitted by the terms of the Lease in question and Borrower has
secured an obligation from a third party to lease the space under the Lease to
be terminated at a rental equal to or higher than the rental due under the Lease
to be terminated; and (iii) if the tenant under the Lease to be terminated, has
executed a right under said Lease to terminate its lease upon payment of a
termination fee to Borrower, and has in fact terminated its lease and paid said
fee, Borrower may accept said termination.
5.1.21 ALTERATIONS. Subject to the rights of tenants to make
alterations pursuant to the terms of their respective Leases, Borrower shall
obtain Lender's prior written consent to any alterations to any Improvements,
which consent shall not be unreasonably withheld or delayed except with respect
to alterations that may have a material adverse effect on Borrower's financial
condition, the value of the Property or the Net Operating Income.
Notwithstanding the foregoing, Lender's consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower's financial condition, the value of the Property or the Net Operating
Income, provided that such alterations are made in connection with (a) tenant
improvement work performed pursuant to the terms of any Lease executed on or
before the Closing Date, (b) tenant improvement work performed pursuant to the
terms and provisions of a Lease and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any
Improvements or the exterior of any building constituting a part of any
Improvements, (c) alterations performed in connection with the restoration of
the Property after the occurrence of a casualty in accordance with the terms and
provisions of this Agreement or (d) any structural alteration which costs less
than $500,000.00 in the aggregate for all components thereof which constitute
such alteration or any non-structural alteration which costs less than
$1,000,000.00 in the aggregate for all components thereof which constitute such
alteration. If the total unpaid amounts due and payable with respect to
alterations to the
49
Improvements at the Property (other than such amounts to be paid or reimbursed
by tenants under the Leases) shall at any time equal or exceed $1,000,000.00
(and such amount is not being paid from any Reserve Funds) (the "THRESHOLD
AMOUNT"), Borrower, upon Lender's request, shall promptly deliver to Lender as
security for the payment of such amounts and as additional security for
Borrower's obligations under the Loan Documents any of the following: (A) cash,
(B) U.S. Obligations, (C) other securities having a rating acceptable to Lender
and that the applicable Rating Agencies have confirmed in writing will not, in
and of itself, result in a downgrade, withdrawal or qualification of the then
current ratings assigned in connection with any Securitization, or (D) a
completion bond or letter of credit issued by a financial institution having a
rating by Standard & Poor's Ratings Group of not less than A-1+ if the term of
such bond or letter of credit is no longer than three (3) months or, if such
term is in excess of three (3) months, issued by a financial institution having
a rating that is acceptable to Lender and that the applicable Rating Agencies
have confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the then current ratings assigned in connection
with any Securitization. Such security shall be in an amount equal to the excess
of the total unpaid amounts with respect to alterations to the Improvements on
the Property (other than such amounts to be paid or reimbursed by tenants under
the Leases) over the Threshold Amount and, if cash, U.S. Obligations or other
securities, may be applied from time to time, at the option of Borrower, to pay
for such alterations. At the option of Lender, following the occurrence and
during the continuance of an Event of Default, Lender may terminate any of the
alterations and use the deposit to restore the Property to the extent necessary
to prevent any material adverse effect on the value of the Property.
5.1.22 TENANT DIRECTION LETTERS. Borrower shall deliver Tenant
Direction Letters for each Tenant occupying any portion of the Property pursuant
to a Lease executed after the date hereof, or pursuant to an assignment of an
existing Lease.
5.1.23 ENVIRONMENTAL COVENANTS. Borrower covenants and agrees
that: (a) all uses and operations on or of the Property, whether by Borrower or
any other person or entity, shall be in compliance with all applicable
Environmental Laws and permits issued pursuant thereto; (b) there shall be no
Releases of Hazardous Substances in, on, under or from the Property; (c) there
shall be no Hazardous Substances in, on, or under the Property, except those
that are both (i) in compliance with all applicable Environmental Laws and with
permits issued pursuant thereto and (ii) fully disclosed to Lender in writing;
(d) Borrower shall keep (or shall cause Tenants to keep) the Property free and
clear of all Environmental Liens; (e) Borrower shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to Section
8.3 of the Mortgage, including but not limited to providing all relevant
information and making knowledgeable persons available for interviews; (f)
Borrower shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection with
the Property, pursuant to any reasonable written request of Lender which
requests shall not be more frequent than once per year unless Lender has a
reasonable basis for an additional request (including but not limited to
sampling, testing and analysis of soil, water, air, building materials, and
other materials and substances whether solid, liquid or gas), and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof; (g)
Borrower, at its sole cost and expense, shall comply (or shall cause Tenants to
comply) with all reasonable written requests of Lender to (i) effectuate
Remediation of any condition (including but not limited to a
50
Release of a Hazardous Substance) in, on, under or from the Property; (ii)
comply with any Environmental Law; (iii) comply with any directive from any
governmental authority; and (iv) take any other reasonable action necessary or
appropriate for protection of human health or the environment; (h) Borrower
shall not do or allow any tenant or other user of the Property to do any act
that materially increases the dangers to human health or the environment, poses
an unreasonable risk of harm to any person or entity (whether on or off the
Property), impairs or may impair the value of the Property, is contrary to any
requirement of any insurer, constitutes a public or private nuisance,
constitutes waste, or violates any covenant, condition, agreement or easement
applicable to the Property; and (i) Borrower shall, upon obtaining knowledge
thereof, immediately notify Lender in writing of (A) any presence or Releases or
threatened Releases of Hazardous Substances in, on, under, from or migrating
towards the Property; (B) any non-compliance with any Environmental Laws related
in any way to the Property; (C) any actual or potential Environmental Lien; (D)
any required or proposed Remediation of environmental conditions relating to the
Property; and (E) any written notice or other written communication of which any
Borrower becomes aware from any source whatsoever (including but not limited to
a governmental entity) relating in any way to Hazardous Substances or
Remediation thereof, possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings in
connection with anything referred to in this Section 5.1.23.
Section 5.2 NEGATIVE COVENANTS. From the Closing Date until payment
and performance in full of all obligations of Borrower under the Loan Documents
or the earlier release of the Lien of the Mortgage encumbering the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that it will not do, directly or
indirectly, any of the following:
5.2.1 OPERATION OF PROPERTY. Borrower shall not, without the
prior written consent of Lender, terminate the Property Management Agreement or
otherwise replace the Property Manager or enter into any other management
agreement with respect to the Property. Lender agrees that its consent will not
be unreasonably withheld, delayed or conditioned provided that the Person chosen
by Borrower as the replacement Property Manager is a Qualifying Property
Manager, and further agrees that any such written request for consent that
includes evidence that the replacement Property Manager is a Qualifying Property
Manager, shall be approved or disapproved within ten (10) Business Days of
Lender's receipt, provided such written request from Borrower shall
conspicuously state, in large bold type, that "PURSUANT TO SECTION 5.2.1 OF THE
LOAN AGREEMENT, A RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF LENDER'S
RECEIPT OF THIS WRITTEN NOTICE". If Lender fails to disapprove any such matter
within such period, Borrower shall provide a second written notice requesting
approval, which written notice shall conspicuously state, in large bold type,
that "PURSUANT TO SECTION 5.2.1 OF THE LOAN AGREEMENT, THE MATTER DESCRIBED
HEREIN SHALL BE DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARY
WITHIN FIVE (5) BUSINESS DAYS OF LENDER'S RECEIPT OF THIS WRITTEN NOTICE".
Thereafter, if Lender does not disapprove such matter within said five (5)
Business Day period such matter shall be deemed approved.
51
5.2.2 LIENS. Borrower shall not, without the prior written
consent of Lender, create, incur, assume or suffer to exist any Lien on any
portion of the Property or permit any such action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan
Documents; and
(iii) Liens for Taxes or Other Charges not yet delinquent (or
that Borrower is contesting in accordance with the terms of Section
5.1.2 hereof).
5.2.3 DISSOLUTION. Borrower shall not (a) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (b) engage in any business activity not related to the
ownership and operation of the Property, (c) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent
permitted by the Loan Documents, or (d) modify, amend, waive or terminate its
organizational documents or its qualification and good standing in any
jurisdiction in which it is organized or the Property is located, in each case,
without obtaining the prior written consent of Lender or Lender's designee.
5.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any
line of business other than the ownership and operation of the Property, or make
any material change in the scope or nature of its business objectives, purposes
or operations, or undertake or participate in activities other than the
continuance of its present business.
5.2.5 DEBT CANCELLATION. Borrower shall not cancel or
otherwise forgive or release any claim or debt (other than termination of Leases
in accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
5.2.6 AFFILIATE TRANSACTIONS. Other than the Property
Management Agreement and the Tenants in Common Agreement, if any, and the
Co-Owner Indemnities, Borrower shall not enter into, or be a party to, any
transaction with an Affiliate of Borrower or any of the partners of Borrower
except in the ordinary course of business and on terms which are fully disclosed
to Lender in advance and are no less favorable to Borrower or such Affiliate
than would be obtained in a comparable arm's-length transaction with an
unrelated third party. Lender hereby acknowledges disclosure of the agreements
described on SCHEDULE VI between Borrower and an Affiliate of Borrower.
5.2.7 ZONING. Borrower shall not initiate or consent to any
zoning reclassification of any portion of the Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
5.2.8 ASSETS. Borrower shall not purchase or own any real
estate other than the Property owned by the Borrower as of the date hereof as
reflected in the applicable Title Insurance Policy.
52
5.2.9 DEBT. Borrower shall not create, incur or assume any
Indebtedness other than the Debt except to the extent expressly permitted
hereby.
5.2.10 NO JOINT ASSESSMENT. Borrower shall not suffer, permit
or initiate the joint assessment of that portion of the Property that
constitutes real property with (a) any other real property constituting a tax
lot separate from the Property, or (b) any portion of the Property which may be
deemed to constitute personal property, or any other procedure whereby the Lien
of any taxes which may be levied against such personal property shall be
assessed or levied or charged to the Property.
5.2.11 NO ACTION FOR PARTITION; TENANTS-IN COMMON AGREEMENT.
Neither Borrower nor any Person comprising Borrower shall initiate any action to
partition the Property, or any similar action, without Lender's prior written
consent and Borrower hereby expressly waives any and all rights to partition the
Property. Other than to reflect transfers permitted hereunder, Borrower shall
not modify, amend or terminate the Tenants-in-Common Agreement without Lender's
prior written consent.
5.2.12 ERISA.
(a) Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to
Lender such certifications or other evidence from time to time throughout the
term of the Loan, as requested by Lender in its sole discretion, that (A)
Borrower is not and does not maintain an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(32) of ERISA; (B) Borrower is not subject
to state statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (C) one or more of the following circumstances is
true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
ss.2510.3-101(c) or (e).
5.2.13 TRANSFERS. (a) Unless such action is permitted by the
provisions of this Section 5.2.13, Borrower will not (i) sell, assign, convey,
transfer or otherwise dispose of its interests in the Property or any part
thereof, (ii) permit any owner, directly or indirectly, of an ownership interest
in the Property, to transfer such interest, whether by transfer of stock or
other interest in Borrower or any entity, or otherwise, (iii) incur
Indebtedness, (iv) mortgage, hypothecate or otherwise encumber or grant a
security interest in the Property or any part
53
thereof, (v) sell, assign, convey, transfer, mortgage, encumber, grant a
security interest in, or otherwise dispose of any direct or indirect ownership
interest in Borrower, or permit any owner of an interest in Borrower to do the
same, or (vi) file a declaration of condominium with respect to the Property
(any of the foregoing transactions, a "TRANSFER"). For purposes hereof, a
"Transfer" shall not include (A) any direct or indirect transfer by devise or
descent or by operation of law upon the death of a partner, member or
shareholder of a Borrower, (B) any direct or indirect sale, transfer or
hypothecation of a partnership, membership or shareholder interest in Borrower
or other entity, whichever the case may be, by the current member(s), as
applicable, to any immediate family member of such member (or a trust for the
benefit of any such persons), (C) any transfer to Behringer Harvard Funds or an
Affiliate of Behringer Harvard Funds or (D) any transfer of an equity interest
in Behringer Harvard Funds or any Affiliate thereof or the issuance of
additional equity interests in Behringer Harvard Funds or any Affiliate thereof.
In addition, as a condition to any Transfer pursuant to this SECTION 5.2.13,
Indemnitor must continue to Control Borrower and own, directly or indirectly, at
least a 51% legal and beneficial interest in Borrower.
(b) Notwithstanding anything in this Section 5.2.13 to the
contrary, the initial Borrower executing this Agreement shall have the right to
transfer title to one or more undivided interests in the Property to one or more
entities as additional tenants-in-common (each, a "CO-OWNER TRANSFEREE")
provided the following conditions shall be satisfied with respect to each such
transfer:
(i) No Event of Default or event which, with the giving of
notice, passage of time or both, shall constitute an Event of Default,
shall exist or shall otherwise occur as a result of such transfer unless
such transfer would cure such default;
(ii) An Affiliate of Sponsor shall continue to own not less
than a 20% undivided interest in the Property, and the total number of
persons who own interests in the Property shall not exceed the number of
co-owners set forth in Revenue Procedure 2002-22, I.R.B. 2002-14, as
such pronouncement may be modified from time to time (for this purpose,
"person" is defined as in Section 7701(a)(1) of the Code);
(iii) Borrower shall have delivered to Lender the following
fully-executed documents, each in a form approved by Lender in writing:
(A) copies of all documents evidencing or relating
to a transfer of an interest in the Property to a Co-Owner Transferee,
and
(B) all other documents, instruments, opinions
and/or agreements reasonably required by Lender, including without
limitation, (1) an Assignment and Assumption Agreement, (2) execution by
each Co-Owner Transferee and a principal of each Co-Owner Transferee of
a Co-Owner Indemnity, (3) copies of all organizational documents, good
standing certificates, resolutions and consents of each Co-Owner
Transferee in form and substance acceptable to Lender, (4) a Consent and
Assumption Agreement and (5) an Approved Investor Questionnaire with
respect to such Co-Owner Transferee in the form approved by Lender;
provided that Lender shall not require, pursuant to this clause (B), (x)
a Consent and Assumption Agreement in any form other
54
than, or (except for the documents described in subclauses (1), (2), and
(5) of this clause (B)), any document imposing obligations upon any
Co-Owner Transferee or existing Borrower, or upon any principal of any
of them, in addition to those contained in, the form of Consent and
Assumption Agreement attached hereto as Schedule VIII, or any change to
the opinions of counsel delivered in connection with the funding of the
Loan, or any opinion supplemental to any such opinion, except, in either
such case, as may be necessary to accommodate any material change in
fact or law occurring after the date of this Agreement;
(iv) The Property shall continue to be subject to a property
management agreement with a Qualified Property Manager owned and
controlled by the Sponsor or otherwise acceptable to Lender, pursuant to
a management agreement approved by Lender in its sole discretion;
(v) There shall have been no material adverse change in the
financial condition in the Borrower or the Sponsor or in the financial
or physical condition of the Property from the date of the closing of
the Loan;
(vi) Each additional Co-Owner Transferee must be organized as
a Delaware limited partnership and a Special Purpose Entity pursuant to
a Co-Owner Transferee Limited Partnership Agreement substantially in the
form set forth on SCHEDULE IX or otherwise as approved by Lender and the
general partner of each additional Co-Owner Transferee must be organized
as a Delaware limited liability company and a Special Purpose Entity
pursuant to a General Partner Operating Agreement substantially in the
form set forth on SCHEDULE X or otherwise as approved by Lender;
(vii) Borrower shall pay Lender's reasonable and customary
out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred by Lender in connection with the
transfer and any fees charged by Rating Agencies, and Borrower pays
Lender, concurrently with the closing of any transfer an administrative
fee (unless such transfer occurs on the Closing Date) of $1,000 per
transfer, provided that for any transfer of more than 49% of the
interests in the Property, Borrower shall (a) obtain a Rating
Confirmation and (b) pay a transfer fee equal to one percent (1%) of the
then outstanding principal balance of the Loan as of the date of the
closing of the transfer;
(viii) The Co-Owner Transferee, shall furnish an opinion of
counsel satisfactory to Lender and its counsel as to due formation and
organization and the valid existence and good standing of the Co-Owner
Transferee, and that the Assignment and Assumption Agreement and Consent
and Assumption Agreement have each been duly authorized, executed and
delivered, and that the Loan Documents are valid, binding and
enforceable against the Co-Owner Transferee in accordance with their
terms; provided that if the general partner of the Co-Owner Transferee
is a limited liability company meeting all of the requirements
applicable to a single-member limited liability company set forth in the
definition of "Special Purpose Entity," no opinions shall be required
with respect to any member thereof or any limited partner of such
Co-Owner Transferee; provided, further, that an opinion in substantially
the form of the opinion of counsel addressing such matters that was
delivered in connection with the funding of the Loan, together with such
55
other matters as Lender may reasonably require in light of material
changes in fact or law occurring after the date of this Agreement or to
address requirements of any Rating Agency, shall be deemed to satisfy
this condition;
(ix) Borrower must deliver to Lender, without any cost or
expense to Lender, such endorsements to the Title Insurance Policy as
Lender may deem necessary at the time of the transfer, all in form and
substance reasonably satisfactory to Lender, including, without
limitation, an endorsement or endorsements to the Title Insurance Policy
extending the effective date of such policy to the date of execution and
delivery (or, if later, of recording) of the Assignment and Assumption
Agreement, with no additional exceptions added to such policy, and
insuring that fee simple title to the Property is vested in the
Borrower, including the Co-Owner Transferee, subject to any
Tenants-In-Common Agreement;
(x) Co-Owner Transferee and its Principal must satisfy the
Co-Owner Transferee Criteria and Lender's standard, customary and
reasonable credit underwriting, in each case, as determined by Lender;
(xi) Except as expressly provided in the Indemnity, no
Transfer to a Co-Owner Transferee pursuant to this Section 5.2.13(b)
shall be deemed to release Indemnitor from any obligations under the
Indemnity Agreement;
(xii) If after giving effect to any such Transfer, more than
twenty percent (20%) in the aggregate of direct or indirect interests in
the Property are owned by any Co-Owner Transferee and its Affiliates
that previously owned less than a twenty percent (20%) direct or
indirect interest in the Property, unless a pairing with such Co-Owner
Transferee was included in a previous Insolvency Opinion Lender shall
have received an Additional Insolvency Opinion acceptable to Lender and
the Rating Agencies with respect to such Co-Owner Transferee and any
Person that directly or indirectly owns forty-nine percent (49%) or more
of such Co-Owner Transferee; provided that an opinion in substantially
the form of the opinion of counsel addressing such matters that was
delivered in connection with the funding of the Loan, together with such
other matters as Lender may reasonably require in light of material
changes in fact or law occurring after the date of this Agreement or to
address requirements of any Rating Agency, shall be deemed to satisfy
this condition;
(xiii) In connection with any Transfer that results in more
than forty-nine percent (49%) of the interests in the Property being
owned by a single Co-Owner Transferee or its Affiliates other than
Behringer Harvard Funds or an Affiliate of Behringer Harvard Funds,
Lender shall have the approval of the Rating Agencies selected by
Lender, which approval, if required by Lender, shall take the form of a
confirmation in writing from such Rating Agencies to the effect that
such Transfer will not result in a requalification, reduction, downgrade
or withdrawal of the ratings in effect immediately prior to such
assumption or transfer for the Securities or any class thereof issued in
connection with a Securitization which are then outstanding;
56
(xiv) No Transfers by Borrower shall be permitted pursuant to
this Section 5.2.13(b) after the date that is 90 days from the Closing
Date; and
(xv) Any Transfer within thirty (30) days prior to the
anticipated date of a Securitization as set forth in a Securitization
Notice shall be permitted only with Lender's prior consent.
(c) Any Transfer by a Borrower other than Transfers described in Section
5.2.13(a) and (b) above, and any subsequent Transfer by a Co-Owner Transferee,
in any case resulting in a single Person or group of related Persons who did not
previously own 49% or more of the interests in the Property owning 49% or more
of the interests in the Property, shall be subject to prior written approval of
the Lender on a discretionary basis, payment of a transfer fee equal to one
percent (1%) of the then outstanding principal balance of the Loan as of the
date of the closing of the transfer and all of Lender's reasonable expenses
incurred in connection with such Transfer, the approval by any and all Rating
Agencies (if required by Lender after a Securitization) of the proposed
Transferee, the proposed Transferee's continued compliance with the covenants
set forth in Sections 4.1.9, 4.1.30 and 5.2.12 hereof, and such other conditions
as Lender shall determine in its sole discretion to be in the interest of
Lender. No such assumption shall be permitted within the first twelve (12)
months from the date hereof.
(d) Notwithstanding anything in this Section 5.2.13 to the
contrary, and in addition to the other transfers expressly permitted hereunder,
at any time other than within thirty (30) days prior to or after the anticipated
date of a Securitization (as determined by Lender), Lender's consent to a
transfer of the entire Property or an assignment or other transfer of one
hundred percent (100%) of the membership interests in Borrower shall not be
withheld provided that Lender receives not less than thirty (30) days prior
written notice of such transfer hereunder and no Event of Default then exists
(unless such transfer would cure such Event of Default), and further provided
that, the following additional requirements are satisfied:
(i) Borrower shall pay any and all out-of-pocket costs
incurred in connection with the transfer of such interests (including,
without limitation, Lender's counsel fees and disbursements and all
recording fees, title insurance premiums and mortgage recording taxes)
and an assumption fee of 1% of the outstanding balance of the Loan.
(ii) The proposed transferee (the "TRANSFEREE") or
Transferee's Principals (hereinafter defined) must have demonstrated
expertise in owning and operating properties similar in location, size
and operation to the Property, which expertise shall be reasonable
determined by Lender. The term "Transferee's Principals" shall mean
collectively, (A) Transferee's managing members, general partners or
principal shareholders and (B) such other members, partners or
shareholders of Transferee owning a controlling interest in Transferee;
(iii) Transferee and Transferee's Principals shall, as of the
date of such transfer, be an Accredited Investor;
(iv) Transferee, Transferee's Principals and all other
entities which may be owned or controlled directly or indirectly by
Transferee's Principals ("RELATED ENTITIES")
57
must not have been a party to any bankruptcy proceedings, voluntary or
involuntary, made an assignment for the benefit of creditors or taken
advantage of any insolvency act, or any act for the benefit of debtors
within seven (7) years prior to the date of the proposed transfer;
(v) If required or requested by any of the Rating Agencies,
Borrower shall deliver an Additional Insolvency Opinion reasonably
acceptable to Lender and the Rating Agencies in connection with such
Transfer; provided that an opinion in substantially the form of the
opinion of counsel addressing such matters that was delivered in
connection with the funding of the Loan, together with such other
matters as Lender may reasonably require in light of material changes in
fact or law occurring after the date of this Agreement or to address
requirements of any Rating Agency, shall be deemed to satisfy this
condition;
(vi) There shall be no material convictions, judgments,
litigation or regulatory action pending or threatened against
Transferee, Transferee's Principals or Related Entities which is not
reasonably acceptable to Lender, and none of Transferee, Transferee's
Principals or Related Entities shall be on any so-called prohibited
persons lists;
(vii) The creditworthiness of Transferee, Transferee's
Principals and Related Entities shall be reasonably acceptable to
Lender, and such entity shall not have defaulted under its or their
obligations with respect to any other indebtedness in a manner which is
not acceptable to Lender;
(viii) If the transfer is a transfer of the Property,
Transferee shall be a Special Purpose Entity which at the time of such
transfer will be in compliance with the covenants contained in Section
5.1.1 and the representations contained in 4.1.30 hereof and which shall
have assumed (subject to the terms of Section 9.4 hereof) pursuant to
executed assumption agreement in form and substance satisfactory to
Lender all of the terms, covenants and conditions set forth in this Loan
Agreement and the other Loan Documents, expressly including the
covenants contained in Section 5.1.1 and the representations contained
in 4.1.30 hereof;
(ix) Transferee and Transferee's Principals must be able to
satisfy the covenants set forth in Sections 4.1.9 and 5.2.12 hereof, and
Transferee and Transferee's Principals shall deliver (A) all
organizational documentation reasonably requested by Lender, which shall
be reasonably satisfactory to Lender, and (B) all certificates,
agreements and covenants reasonably required by Lender;
(x) One or more of Transferee's Principals acceptable to
Lender shall execute in favor of Lender a replacement Indemnity
Agreement in form and substance satisfactory to Lender, upon which
Indemnitor shall be released from any liability under the existing
Indemnity Agreement first arising after the date of such Transfer; and
(xi) Lender shall have the approval of the Rating Agencies
selected by Lender, which approval, if required by Lender, shall take
the form of a confirmation in writing
58
from such Rating Agencies to the effect that such Transfer will not
result in a requalification, reduction, downgrade or withdrawal of the
ratings in effect immediately prior to such assumption or transfer for
the Securities or any class thereof issued in connection with a
Securitization which are then outstanding.
(e) Lender hereby agrees that it shall provide to Borrower
notice of the anticipated date of a Securitization, not less than sixty (60)
days prior to such date (a "SECURITIZATION NOTICE").
(f) With respect to any matter related to a Transfer of less
than forty-nine percent (49%) of the interests in the Property pursuant to
Section 5.2.13(b) above, Lender shall approve or disapprove any such matter
within ten (10) Business Days of Lender's receipt of a written notice from
Borrower requesting Lender's approval, provided such notice includes all
information necessary to make such decision, and further provided that such
written notice from Borrower shall conspicuously state, in large bold type, that
"PURSUANT TO SECTION 5.2.13(B) OF THE LOAN AGREEMENT, A RESPONSE IS REQUIRED
WITHIN TEN (10) BUSINESS DAYS OF LENDER'S RECEIPT OF THIS WRITTEN NOTICE". If
Lender fails to disapprove any such matter within such period, Borrower shall
provide a second written notice requesting approval, which written notice shall
conspicuously state, in large bold type, that "PURSUANT TO SECTION 5.2.13(B) OF
THE LOAN AGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE DEEMED APPROVED IF
LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN FIVE (5) BUSINESS DAYS OF
LENDER'S RECEIPT OF THIS WRITTEN NOTICE". Thereafter, if Lender does not
disapprove such matter within said five (5) Business Day period such matter
shall be deemed approved. Such deemed approval, however, shall not in any way be
deemed to otherwise constitute a waiver of the requirements of Section
5.2.13(b).
(g) Notwithstanding anything in this Section 5.2.13 to the
contrary, Lender's consent shall not be required in connection with one or a
series of Transfers of indirect interests in any Co-Owner Transferee that owns
less than twenty percent (20%) of the aggregate interests in the Property;
PROVIDED, HOWEVER, no such Transfer shall result in the change of control in
such Co-Owner Transferee. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
(h) Borrower, without the consent of Lender, may grant
easements, restrictions, covenants, reservations and rights of way in the
ordinary course of business for water and sewer lines, telephone and telegraph
lines, electric lines and other utilities or for other similar purposes,
provided that no transfer, conveyance or encumbrance shall materially impair the
utility and operation of the Property or materially adversely affect the value
of the Property or the Net Operating Income of the Property. If Borrower shall
receive any consideration in connection with any of said described transfers or
conveyances, Borrower shall have the right to use any such proceeds in
connection with any alterations performed in connection therewith, or required
thereby. In connection with any transfer, conveyance or encumbrance permitted
above, the Lender shall execute and deliver any instrument reasonably necessary
or appropriate to evidence its consent to said action or to subordinate the Lien
of the Mortgage to such easements, restrictions, covenants, reservations and
rights of way or other similar grants upon receipt by the
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Lender of: (A) a copy of the instrument of transfer; and (B) an Officer's
Certificate stating with respect to any transfer described above, that such
transfer does not materially impair the utility and operation of the Property or
materially reduce the value of the Property or the Net Operating Income of the
Property.
Section 5.3 PERFORMANCE BY PROPERTY MANAGER. To the extent that
Borrower consists of more than one tenants-in-common, Lender acknowledges that
Property Manager will perform certain obligations of Borrower, including
delivery to Lender of required information, statements, certifications required
hereunder, and Lender shall accept such performance by Property Manager on
behalf of Borrower.
ARTICLE 6 - INSURANCE; CASUALTY; CONDEMNATION
Section 6.1 INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the
following coverages:
(i) comprehensive all risk insurance on the Improvements and
the Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent
(100%) of the "Full Replacement Cost," which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all
co-insurance provisions; (C) providing for no deductible in excess of
Ten Thousand and No/100 Dollars ($10,000) for all such insurance
coverage; and (D) containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or
uses. In addition, Borrower shall obtain: (y) if any portion of the
Improvements is currently or at any time in the future located in a
federally designated "special flood hazard area", flood hazard insurance
in an amount equal to the lesser of (1) the outstanding principal
balance of the Note or (2) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform
Act of 1994, as each may be amended or such greater amount as Lender
shall require; and (z) earthquake insurance in amounts and in form and
substance satisfactory to Lender in the event the Property is located in
an area with a high degree of seismic activity, provided that the
insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required
under this subsection (i).
(ii) commercial general liability insurance against claims
for personal injury, bodily injury, death or property damage occurring
upon, in or about the Property, such insurance (A) to be on the
so-called "occurrence" form with a combined limit, including umbrella
coverage, of not less than Five Million and No/100 Dollars
($5,000,000.00); (B) to continue at not less than the aforesaid limit
until required to be changed by Lender in writing by reason of changed
economic conditions making such protection inadequate;
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and (C) to cover at least the following hazards: (1) premises and
operations; (2) products and completed operations on an "if any" basis;
(3) independent contractors; (4) blanket contractual liability for all
legal contracts; and (5) contractual liability covering the indemnities
contained in Article 9 of the Mortgage to the extent the same is
available;
(iii) business income insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance
provided for in subsection (i) above; (C) covering rental losses or
business interruption, as may be applicable, for a period of at least
twelve (12) months after the date of the casualty; and (D) in an annual
amount equal to (100%) of the rents or estimated gross revenues from the
operation of the Property (as reduced to reflect expenses not incurred
during Restoration). The amount of such business income insurance shall
be determined prior to the Closing Date and at least once each year
thereafter based on Borrower's reasonable estimate of the gross income
from the Property for the succeeding twelve (12) month period. All
proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan
Documents from time to time due and payable hereunder and under the
Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured by
the Loan Documents on the respective dates of payment provided for in
this Agreement and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such business income
insurance;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements,
and only if the Property coverage form does not otherwise apply, (A)
owner's contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance
provided for in subsection (i) above written in a so-called builder's
risk completed value form (1) on a non-reporting basis, (2) against all
risks insured against pursuant to subsection (i) above, (3) including
permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits
of the State;
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on
terms consistent with the commercial property insurance policy required
under subsection (i) above;
(vii) umbrella liability insurance in an amount not less than
Five Million and No/100 Dollars ($5,000,000.00) per occurrence on terms
consistent with the commercial general liability insurance policy
required under subsection (ii) above;
(viii) if any of the policies of insurance covering the risks
required to be covered under subsections (i) through (vii) above
contains an exclusion from coverage for acts of terrorism, Borrower
shall obtain and maintain a separate policy providing such coverages in
the event of any act of terrorism, provided such coverage is
commercially available for
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properties similar to the Property and located in or around the region
in which the Property is located; and
(ix) upon sixty (60) days' written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time
to time may reasonably request against such other insurable hazards
which at the time are commonly insured against for property similar to
the Property located in or around the region in which the Property is
located.
(b) All insurance provided for in Section 6.1(a) shall be
obtained under valid and enforceable policies (collectively, the "POLICIES" or
in the singular, the "POLICY"), and shall be subject to the approval of Lender
as to insurance companies, amounts, deductibles, loss payees and insureds. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the State and having a rating of "A:X" or
better in the current Best's Insurance Reports and a claims paying ability
rating of "AA" or better by at least two (2) of the Rating Agencies including,
(i) S&P, and (ii) Moody's if ▇▇▇▇▇'▇ is rating the Securities. The Policies
described in Section 6.1 (other than those strictly limited to liability
protection) shall designate Lender as loss payee. Not less than thirty (30) days
prior to the expiration dates of the Policies theretofore furnished to Lender,
certificates of insurance evidencing the Policies accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the "INSURANCE
PREMIUMS"), shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate
to the Property the amount of coverage from time to time required hereunder and
shall otherwise provide the same protection as would a separate Policy insuring
only the Property in compliance with the provisions of Section 6.1(a).
(d) All Policies of insurance provided for or contemplated
by Section 6.1(a), except for the Policy referenced in Section 6.1(a)(v), shall
name Borrower, or the Tenant, as the insured and Lender as the additional
insured, as its interests may appear, and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a so-called New
York standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section 6.1(a)
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any Tenant or other occupant, or failure to comply with
the provisions of any Policy, which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way affect
the validity or enforceability of the insurance insofar as Lender is
concerned;
(ii) the Policy shall not be materially changed (other than
to increase the coverage provided thereby) or canceled without at least
thirty (30) days' written notice to Lender and any other party named
therein as an additional insured;
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(iii) the issuers thereof shall give written notice to Lender
if the Policy has not been renewed fifteen (15) days prior to its
expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and effect,
Lender shall have the right, after ten (10) Business Days written notice to
Borrower, to take such action as Lender deems necessary to protect its interest
in the Property, including, without limitation, the obtaining of such insurance
coverage as Lender in its reasonable discretion deems appropriate. All premiums
incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Borrower to Lender upon demand and,
until paid, shall be secured by the Mortgage and shall bear interest at the
Default Rate. If Borrower fails in so insuring the Property or in so assigning
and delivering the Policies, Lender may, at its option, obtain such insurance
using such carriers and agencies as Lender shall elect from year to year and pay
the premiums therefor, and Borrower will reimburse Lender for any premium so
paid, with interest thereon as stated in the Note from the time of payment, on
demand, and the amount so owning to Lender shall be secured by the Mortgage. The
insurance obtained by Lender may, but need not, protect Borrower's interest and
the coverage that Lender purchases may not pay any claim that Borrower makes or
any claim that is made against Borrower in connection with the Property.
Section 6.2 CASUALTY. If the Property shall be damaged or destroyed,
in whole or in part, by fire or other casualty (a "Casualty"), Borrower (a)
shall give to Lender prompt notice of such damage reasonably estimated by
Borrower to cost more than Five Hundred Thousand Dollars ($500,000.00) to
repair, and (b) shall promptly commence and diligently prosecute the completion
of the repair and restoration of the Property as nearly as possible to the
condition the Property was in immediately prior to such fire or other casualty,
with such alterations as may be reasonably approved by Lender, (a "RESTORATION")
and otherwise in accordance with Section 6.4. Borrower shall pay, or cause to be
paid, all costs of such Restoration whether or not such costs are covered by
insurance. Lender may, but shall not be obligated to make proof of loss if not
made promptly by Borrower.
Section 6.3 CONDEMNATION. Borrower shall promptly give Lender notice
of the actual or threatened commencement of any proceeding for the Condemnation
of the Property upon obtaining information of such proceeding and shall deliver
to Lender copies of any and all papers served in connection with such
proceedings. Lender may participate in any such proceedings if an Event of
Default exists or if the amount of the Award exceeds three percent (3%) of the
outstanding principal amount of the Loan, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through Condemnation or otherwise
(including but not limited to any transfer made in lieu of or in anticipation of
the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement and the Debt shall not be reduced until any Award shall have been
actually received and applied by Lender, after the deduction of
63
expenses of collection, to the reduction or discharge of the Debt. Lender shall
not be limited to the interest paid on the Award by the condemning authority but
shall be entitled to receive out of the Award interest at the rate or rates
provided herein or in the Note. If the Property or any portion thereof is taken
by a condemning authority, Borrower shall promptly commence and diligently
prosecute the Restoration of the Property and otherwise comply with the
provisions of Section 6.4. If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.
Section 6.4 RESTORATION (a) If the Net Proceeds shall be less than
the Relevant Restoration Threshold and the costs of completing the Restoration
shall be less than the Relevant Restoration Threshold, the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in clauses (A), (E), (F), (G), (H), (J) and (L) of Section
6.4(b)(i) below are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than the
Relevant Restoration Threshold or the costs of completing the Restoration is
equal to or greater than the Relevant Restoration Threshold, then in either
case, Lender shall make the Net Proceeds available for the Restoration in
accordance with the provisions of this Section 6.4(b). The term "NET PROCEEDS"
for purposes of this Section 6.4 shall mean: (x) the net amount of all insurance
proceeds received by Lender pursuant to Section 6.1 (a)(i), (iv), (vi) and
(viii) as a result of such damage or destruction, after deduction of its
reasonable costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting same ("INSURANCE PROCEEDS"), or (y) the net amount
of the Award, after deduction of its reasonable costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting same
("CONDEMNATION PROCEEDS"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are
Insurance Proceeds, and (x) less than twenty-five percent (25%) of the
total floor area of the Improvements on the Property has been damaged,
destroyed or rendered unusable as a result of such fire or other
casualty, or (y) Borrower is required under a Lease exceeding the
Relevant Leasing Threshold to use the Net Proceeds for the restoration
of the Property, or (2) in the event the Net Proceeds are Condemnation
Proceeds, and (x) less than fifteen percent (15%) of the land
constituting the Property is taken, and such land is located along the
perimeter or periphery of the Property, and no portion of the building
is located on such land, or (y) Borrower is required under a Lease
exceeding the Relevant Leasing Threshold to use the Net Proceeds for the
restoration of the Property;
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(C) Leases demising in the aggregate a percentage
amount equal to or greater than the Rentable Space Percentage of the
total rentable space in the Property which has been demised under
executed and delivered Leases in effect as of the date of the occurrence
of such fire or other casualty or taking, whichever the case may be,
shall remain in full force and effect during and after the completion of
the Restoration, notwithstanding the occurrence of any such fire or
other casualty or taking, whichever the case may be, and will make all
necessary repairs and restorations thereto at their sole cost and
expense. The term "RENTABLE SPACE PERCENTAGE" shall mean (x) in the
event the Net Proceeds are Insurance Proceeds, a percentage amount equal
to fifty percent (50%) and (y) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to fifty percent (50%);
(D) Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than ninety (90) days
after such damage or destruction or taking or obtaining building
permits, whichever the case may be, occurs) and shall diligently pursue
the same to satisfactory completion;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and interest
under the Note, which will be incurred with respect to the Property as a
result of the occurrence of any such fire or other casualty or taking,
whichever the case may be, will be covered out of (1) the Net Proceeds,
(2) the insurance coverage referred to in Section 6.1(a)(iii), if
applicable, or (3) by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration
will be completed on or before the earliest to occur of (1) the Maturity
Date, (2) the earliest date required for such completion under the terms
of any Leases, (3) such time as may be required under applicable zoning
law, ordinance, rule or regulation in order to repair and restore the
Property to the condition it was in immediately prior to such fire or
other casualty or to as nearly as possible the condition it was in
immediately prior to such taking, as applicable or (4) the expiration of
the insurance coverage referred to in Section 6.1(a)(iii);
(G) the Property and the use thereof after the
Restoration will be in compliance with and permitted under all
applicable zoning laws, ordinances, rules and regulations provided,
however, that compliance with such zoning laws, ordinances, rules and
regulations (including, without limitation, parking requirements) will
not require restoration of the Improvements or the Property to a size,
condition, or configuration materially different than that which existed
immediately prior to such Casualty or taking;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in compliance with
all applicable governmental laws, rules and regulations (including,
without limitation, all applicable environmental laws);
(I) such fire or other casualty or taking, as
applicable, does not result in the loss of access to the Property or the
related Improvements;
65
(J) the Debt Service Coverage Ratio, after giving
effect to the Restoration, shall be equal to or greater than 1:1;
(K) Borrower shall deliver or cause to be delivered
to Lender a signed detailed budget approved in writing by Borrower's
architect or engineer stating the entire cost of completing the
Restoration, which budget should be consistent with restoration budgets
of similar office properties then owned and operated by nationally
recognized owners and operators of office properties located in the
areas in which the Property is located; and
(L) the Net Proceeds together with any cash or cash
equivalent deposited by Borrower with Lender are sufficient in Lender's
discretion to cover the cost of the Restoration.
(ii) The Net Proceeds shall be held by Lender in an interest
bearing account and, until disbursed in accordance with the provisions
of this Section 6.4(b), shall constitute additional security for the
Debt and other obligations under the Loan Documents. The Net Proceeds
shall be disbursed by Lender to, or as directed by, Borrower from time
to time during the course of the Restoration, upon receipt of evidence
satisfactory to Lender that (A) all materials installed and work and
labor performed to be paid for out of the requested disbursement in
connection with the Restoration have been performed, and (B) there exist
no notices of pendency, stop orders, mechanic's or materialman's liens
or notices of intention to file same, or any other liens or encumbrances
of any nature whatsoever on the Property which have not either been
fully bonded to the satisfaction of Lender and discharged of record or
in the alternative fully insured to the satisfaction of Lender by the
title company issuing the Title Insurance Policy.
(iii) All plans and specifications required in connection with
the Restoration, the cost of which exceeds the Relevant Restoration
Threshold, shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected by
Lender (the "CASUALTY CONSULTANT"), such review and acceptance not to be
unreasonably withheld or delayed. Lender shall have the use of the plans
and specifications and all permits, licenses and approvals required or
obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration,
as well as the contracts under which they have been engaged, shall be
subject to prior review and acceptance by Lender and the Casualty
Consultant, such review and acceptance not to be unreasonably withheld
or delayed. All costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, MINUS the
Casualty Retainage. The term "CASUALTY RETAINAGE" shall mean an amount
equal to ten percent (10%) of the costs actually incurred for work in
place as part of the
66
Restoration, as certified by the Casualty Consultant, until the
Restoration has been completed. The Casualty Retainage shall in no
event, and notwithstanding anything to the contrary set forth above in
this Section 6.4(b), be less than the amount actually held back by
Borrower from contractors, subcontractors and materialmen engaged in the
Restoration. The Casualty Retainage shall not be released until the
Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 6.4(b) and
that all approvals necessary for the re-occupancy and use of the
Property have been obtained from all appropriate governmental and
quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid
in full or will be paid in full out of the Casualty Retainage; PROVIDED,
HOWEVER, that Lender will release the portion of the Casualty Retainage
being held with respect to any contractor, subcontractor or materialman
engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor
or materialman delivers the lien waivers and evidence of payment in full
of all sums due to the contractor, subcontractor or materialman as may
be reasonably requested by Lender or by the title company issuing the
Title Insurance Policy, and Lender receives an endorsement to the Title
Insurance Policy insuring the continued priority of the lien of the
Mortgage and evidence of payment of any premium payable for such
endorsement. If required by Lender, the release of any such portion of
the Casualty Retainage shall be approved by the surety company, if any,
which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of
the Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the reasonable opinion of Lender in
consultation with the Casualty Consultant, be sufficient to pay in full
the balance of the costs which are estimated by the Casualty Consultant
to be incurred in connection with the completion of the Restoration,
Borrower shall deposit the deficiency (the "NET PROCEEDS DEFICIENCY")
with Lender before any further disbursement of the Net Proceeds shall be
made. The Net Proceeds Deficiency deposited with Lender shall be held by
Lender and shall be disbursed for costs actually incurred in connection
with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to
this Section 6.4(b) shall constitute additional security for the Debt
and other obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited with
Lender after the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this
Section 6.4(b), and the receipt by Lender of evidence satisfactory to
Lender that all costs incurred in connection with the Restoration have
been paid in full, shall be remitted by Lender to Borrower, provided no
Event of Default shall have
67
occurred and shall be continuing under the Note, this Agreement or any
of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available
for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Section 6.4(b)(vii) may be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its sole discretion shall deem proper (provided no
Event of Default exists, such Borrower shall not be required to pay any
prepayment consideration in connection with such payment), or, at the discretion
of Lender, the same may be paid, either in whole or in part, to Borrower for
such purposes as Lender shall designate, in its discretion.
(d) In the event of foreclosure of the Mortgage with respect
to the Property, or other transfer of title to the Property in extinguishment in
whole or in part of the Debt all right, title and interest of Borrower in and to
the Policies that are not blanket Policies then in force concerning the Property
and all proceeds payable thereunder shall thereupon vest in the purchaser at
such foreclosure or Lender or other transferee in the event of such other
transfer of title.
(e) Lender shall with reasonable promptness following any
Casualty or Condemnation notify Borrower whether or not Net Proceeds are
required to be made available to Borrower for restoration pursuant to this
Section 6.4. All Net Proceeds not required to be made available for Restoration
shall be retained and applied by Lender in accordance with SECTION 2.4.2 hereof
(a "NET PROCEEDS Prepayment"). If such Net Proceeds Prepayment shall be equal to
or greater than Two Million and 00/100 Dollars ($2,000,000.00), Borrower shall
have the right to elect to prepay the remaining outstanding principal balance of
the Note (a "CASUALTY/CONDEMNATION PREPAYMENT") upon satisfaction of the
following conditions: (i) within thirty (30) days following the date of the Net
Proceeds Prepayment, Borrower shall provide Lender with written notice of
Borrower's intention to pay the Note in full, (ii) Borrower shall prepay the
Note on or before the third (3rd) Payment Date occurring following the date of
the Net Proceeds Prepayment subject to and in accordance with the provisions of
SECTION 2.4.2, and (iii) no Event of Default shall exist on the date of such
Casualty/Condemnation Prepayment. Notwithstanding anything in Section 6.2 or
Section 6.3 to the contrary, Borrower shall have no obligation to commence
Restoration of the Property upon delivery of the written notice set forth in
clause (i) of the preceding sentence (unless Borrower subsequently shall fail to
satisfy the requirement of clause (ii) of the preceding sentence).
ARTICLE 7 - RESERVE FUNDS
Section 7.1 REQUIRED REPAIR FUNDS.
7.1.1 DEPOSITS. Borrower shall perform the repairs at the
Property, if any, as more particularly set forth on SCHEDULE IV hereto (such
repairs hereinafter referred to as "REQUIRED REPAIRS"). Borrower shall complete
the Required Repairs on or before the required deadline for each repair as set
forth on SCHEDULE IV. It shall be an Event of Default under this Agreement if
(i) Borrower does not complete the Required Repairs at the Property by the
required deadline for each repair as set forth on SCHEDULE IV, and (ii) Borrower
does not satisfy
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each condition contained in Section 7.1.2 hereof. Upon the occurrence of such an
Event of Default, Lender, at its option, may withdraw all Required Repair Funds
from the Required Repair Account and Lender may apply such funds either to
completion of the Required Repairs at the Property or toward payment of the Debt
in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply Required Repair Funds shall be
in addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents. On the Closing Date, Borrower shall
deposit with Lender the sum of $18,750, which sum represents 125% of the
estimated cost to complete the Required Repairs. Amounts so deposited, if any,
shall hereinafter be referred to as Borrower's "REQUIRED REPAIR FUND" and the
account, if any, in which such amounts are held shall hereinafter be referred to
as Borrower's "REQUIRED REPAIR ACCOUNT".
7.1.2 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse
to Borrower (or to Property Manager on behalf of Borrower) the Required Repair
Funds from the Required Repair Account from time to time upon satisfaction by
Borrower of each of the following conditions: (i) Borrower shall submit a
written request for payment to Lender at least fifteen (15) days prior to the
date on which Borrower requests such payment be made and specifies the Required
Repairs to be paid, (ii) on the date such request is received by Lender and on
the date such payment is to be made, no Default or Event of Default shall exist
and remain uncured, (iii) Lender shall have received a certificate from Borrower
(or the Property Manager on behalf of Borrower) (A) stating that all Required
Repairs at the Property to be funded by the requested disbursement have been
completed in good and workmanlike manner and in accordance with all applicable
federal, state and local laws, rules and regulations, such certificate to be
accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the Required
Repairs, (B) identifying each Person that supplied materials or labor in
connection with the Required Repairs performed at the Property to be funded by
the requested disbursement under a contract in excess of $50,000, and (C)
stating that each Person who has supplied materials or labor in connection with
the Required Repairs to be funded by the requested disbursement has been paid in
full or will be paid in full upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to Lender,
(iv) at Lender's option, a title search for the Property indicating that the
Property is free from all liens, claims and other encumbrances not previously
approved by Lender, and (v) Lender shall have received such other evidence as
Lender shall reasonably request that the Required Repairs at the Property to be
funded by the requested disbursement have been completed and are paid for or
will be paid upon such disbursement to Borrower. Lender shall not be required to
make disbursements from the Required Repair Account with respect to the Property
more than once each calendar month and such disbursement shall be made only upon
satisfaction of each condition contained in this Section 7.1.2.
Section 7.2 TAX AND INSURANCE ESCROW FUND. Borrower shall pay to
Lender on each Payment Date (a) one-twelfth of the Taxes that Lender estimates
will be payable during the next ensuing twelve (12) months in order to
accumulate with Lender sufficient funds to pay all such Taxes at least thirty
(30) days prior to their respective due dates and (b) one-twelfth of the
Insurance Premiums that Lender estimates will be payable for the renewal of the
coverage afforded by the Policies upon the expiration thereof in order to
accumulate with Lender sufficient funds to pay all such Insurance Premiums at
least thirty (30) days prior to the expiration of the Policies, (said amounts in
(a) and (b) above are hereinafter called the "TAX AND INSURANCE
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ESCROW FUND"). The Tax and Insurance Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note, shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the
Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Borrower pursuant to this Agreement and under the
Mortgage. In making any payment relating to the Tax and Insurance Escrow Fund,
Lender may do so according to any ▇▇▇▇, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums) or from Borrower without inquiry into the
accuracy of such ▇▇▇▇, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof, provided,
however, Lender shall use reasonable efforts to pay such real property taxes
sufficiently early to obtain the benefit of any available discounts of which it
has knowledge. If the amount of the Tax and Insurance Escrow Fund shall exceed
the amounts due for Taxes and Insurance Premiums, Lender shall, in its sole
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. Any amount remaining
in the Tax and Insurance Escrow Fund after the Debt has been paid in full shall
be returned to Borrower. In allocating such excess, Lender may deal with the
Person shown on the records of Lender to be the owner of the Property. If at any
time Lender reasonably determines that the Tax and Insurance Escrow Fund is not
or will not be sufficient to pay Taxes or Insurance Premiums by the dates set
forth above, Lender shall notify Borrower of such determination and Borrower
shall increase its monthly payments to Lender by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes or Insurance Premiums.
Section 7.3 REPLACEMENTS AND REPLACEMENT RESERVE.
7.3.1 REPLACEMENT RESERVE FUND. Borrower shall pay to Lender
on the Closing Date and on each Payment Date one twelfth of the amount (the
"REPLACEMENT RESERVE MONTHLY DEPOSIT") reasonably estimated by Lender in its
sole discretion to be due for replacements and repairs required to be made to
the Property during the calendar year (collectively, the "REPLACEMENTS"), which
Replacement Reserve Monthly Deposit shall be in an amount equal to no less than
$0.20 per year per square foot of gross leasable area. Amounts so deposited
shall hereinafter be referred to as Borrower's "REPLACEMENT RESERVE FUND" and
the account in which such amounts are held shall hereinafter be referred to as
Borrower's "REPLACEMENT RESERVE ACCOUNT". Lender may reassess its estimate of
the amount necessary for the Replacement Reserve Fund from time to time based
upon an updated engineering report of the Property, and may increase the monthly
amounts required to be deposited into the Replacement Reserve Fund upon thirty
(30) days notice to Borrower if Lender determines in its reasonable discretion
that an increase is necessary to maintain the proper maintenance and operation
of the Property.
7.3.2 DISBURSEMENTS FROM REPLACEMENT RESERVE ACCOUNT.
(a) Lender shall make disbursements from the Replacement
Reserve Account to pay Borrower only for the costs of the Replacements. Lender
shall not be obligated to make disbursements from the Replacement Reserve
Account to reimburse Borrower for the costs of routine maintenance to the
Property or for costs which are to be reimbursed from the Required Repair Fund
(if any).
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(b) Lender shall, upon written request from Borrower and
satisfaction of the requirements set forth in this Section 7.3.2, disburse to
Borrower amounts from the Replacement Reserve Account necessary to pay for the
actual approved costs of Replacements or to reimburse Borrower therefor, upon
completion of such Replacements (or, upon partial completion in the case of
Replacements made pursuant to Section 7.3.2(e)) as determined by Lender. In no
event shall Lender be obligated to disburse funds from the Replacement Reserve
Account if a Default or an Event of Default exists.
(c) Each request for disbursement from the Replacement
Reserve Account shall be in a form specified or approved by Lender and shall
specify (i) the specific Replacements for which the disbursement is requested,
(ii) the quantity and price of each item purchased, if the Replacement includes
the purchase or replacement of specific items, (iii) the price of all materials
(grouped by type or category) used in any Replacement other than the purchase or
replacement of specific items, and (iv) the cost of all contracted labor or
other services applicable to each Replacement for which such request for
disbursement is made. With each request Borrower shall certify that all
Replacements have been made in accordance with all applicable Legal Requirements
of any Governmental Authority having jurisdiction over the Property to which the
Replacements are being provided and, unless Lender has agreed to issue joint
checks as described below, each request shall include evidence of payment of all
such amounts. Each request for disbursement shall include copies of invoices for
all items or materials purchased and all contracted labor or services provided.
Except as provided in Section 7.3.2(e), each request for disbursement from the
Replacement Reserve Account shall be made only after completion of the
Replacement for which disbursement is requested. Borrower shall provide Lender
evidence of completion of the subject Replacement satisfactory to Lender in its
reasonable judgment.
(d) Borrower shall pay all invoices in connection with the
Replacements with respect to which a disbursement is requested prior to
submitting such request for disbursement from the Replacement Reserve Account
or, at the request of Borrower, Lender will issue joint checks, payable to
Borrower and the contractor, supplier, materialman, mechanic, subcontractor or
other party to whom payment is due in connection with a Replacement. In the case
of payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender's disbursement from the Replacement
Reserve Account. In addition, as a condition to any disbursement, Lender may
require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal
to or greater than $100,000 for completion of its work or delivery of its
materials. Any lien waiver delivered hereunder shall conform to the requirements
of applicable law and shall cover all work performed and materials supplied
(including equipment and fixtures) for the Property by that contractor,
supplier, subcontractor, mechanic or materialman through the date covered by the
current reimbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint check,
the release of lien shall be effective through the date covered by the previous
release of funds request).
(e) If (i) the cost of a Replacement exceeds $100,000, (ii)
the contractor performing such Replacement requires periodic payments pursuant
to terms of a written contract, and (iii) Lender has approved in writing in
advance such periodic payments, a request for reimbursement from the Replacement
Reserve Account may be made after completion of a
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portion of the work under such contract, provided (A) such contract requires
payment upon completion of such portion of the work, (B) the materials for which
the request is made are on site at the Property and are properly secured or have
been installed in the Property, (C) all other conditions in this Agreement for
disbursement have been satisfied, (D) funds remaining in the Replacement Reserve
Account are, in Lender's judgment, sufficient to complete such Replacement and
other Replacements when required, and (E) if required by Lender, each contractor
or subcontractor receiving payments under such contract shall provide a waiver
of lien with respect to amounts which have been paid to that contractor or
subcontractor.
(f) Borrower shall not make a request for disbursement from
the Replacement Reserve Account more frequently than once in any calendar month
and (except in connection with the final disbursement) the total cost of all
Replacements in any request shall not be less than $15,000.00.
7.3.3 PERFORMANCE OF REPLACEMENTS.
(a) Borrower shall make Replacements when required in order
to keep the Property in condition and repair consistent with other similar
properties in the same market segment in the metropolitan area in which the
Property is located, and to keep the Property or any portion thereof from
deteriorating. Borrower shall complete all Replacements in a good and
workmanlike manner as soon as practicable following the commencement of making
each such Replacement.
(b) Lender reserves the right, at its option, to approve all
contracts or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials under contracts for an
amount in excess of $100,000 in connection with the Replacements performed by
Borrower. Upon Lender's request, Borrower shall assign any contract or
subcontract to Lender.
(c) In the event Lender determines in its reasonable
discretion that any Replacement is not being performed in a workmanlike or
timely manner or that any Replacement has not been completed in a workmanlike or
timely manner, and such failure continues to exist for more than thirty (30)
days after notice from Lender to Borrower, Lender shall have the option, upon
ten (10) days notice to Borrower (except in the case of an emergency), to
withhold disbursement for such unsatisfactory Replacement and to proceed under
existing contracts or to contract with third parties to complete such
Replacement and to apply the Replacement Reserve Fund toward the labor and
materials necessary to complete such Replacement, and to exercise any and all
other remedies available to Lender upon an Event of Default hereunder.
(d) In order to facilitate Lender's completion or making of
the Replacements pursuant to Section 7.3.3(c) above, Borrower grants Lender the
right to enter onto the Property and perform any and all work and labor
necessary to complete or make the Replacements and/or employ watchmen to protect
the Property from damage, subject to the rights of Tenants. All sums so expended
by Lender, to the extent not from the Replacement Reserve Fund, shall be deemed
to have been advanced under the Loan to Borrower and secured by the Mortgage.
For this purpose Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Replacements in the name of Borrower.
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Such power of attorney shall be deemed to be a power coupled with an interest
and cannot be revoked but shall only be effective following an Event of Default.
Borrower empowers said attorney-in-fact as follows: (i) to use any funds in the
Replacement Reserve Account for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to complete the Replacements;
(iii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
the Property, or as may be necessary or desirable for the completion of the
Replacements, or for clearance of title; (v) to execute all applications and
certificates in the name of Borrower which may be required by any of the
contract documents; (vi) to prosecute and defend all actions or proceedings in
connection with the Property or the rehabilitation and repair of the Property;
and (vii) to do any and every act which Borrower might do in its own behalf to
fulfill the terms of this Agreement.
(e) Nothing in this Section 7.3.3 shall: (i) make Lender
responsible for making or completing the Replacements; (ii) require Lender to
expend funds in addition to the Replacement Reserve Fund to make or complete any
Replacement; (iii) obligate Lender to proceed with the Replacements; or (iv)
obligate Lender to demand from Borrower additional sums to make or complete any
Replacement.
(f) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties making Replacements pursuant to this Section 7.3.3
to enter onto the Property during normal business hours (subject to the rights
of tenants under their Leases) to inspect the progress of any Replacements and
all materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the Property,
and to complete any Replacements made pursuant to this Section 7.3.3. Borrower
shall cause all contractors and subcontractors to cooperate with Lender or
Lender's representatives or such other persons described above in connection
with inspections described in this Section 7.3.3(f) or the completion of
Replacements pursuant to this Section 7.3.3.
(g) Lender may require an inspection of the Property at
Borrower's expense prior to making a monthly disbursement in excess of $100,000
from the Replacement Reserve Account in order to verify completion of the
Replacements for which reimbursement is sought. Lender may require that such
inspection be conducted by an appropriate independent qualified professional
selected by Lender and/or may require a copy of a certificate of completion by
an independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Replacement Reserve Account. Borrower shall
pay the expense of the inspection as required hereunder, whether such inspection
is conducted by Lender or by an independent qualified professional.
(h) The Replacements and all materials, equipment, fixtures,
or any other item comprising a part of any Replacement shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other liens (except for those Liens existing on the date of
this Agreement which have been approved in writing by Lender).
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(i) Before each disbursement in excess of $100,000 from the
Replacement Reserve Account, Lender may require Borrower to provide Lender with
a search of title to the Property effective to the date of the disbursement,
which search shows that no mechanic's or materialmen's liens or other liens of
any nature have been placed against the Property since the date of recordation
of the Mortgage and that title to the Property is free and clear of all Liens
(other than the lien of the Mortgage and any other Liens previously approved in
writing by Lender, if any).
(j) All Replacements shall comply with all applicable Legal
Requirements of all Governmental Authorities having jurisdiction over the
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(k) In addition to any insurance required under the Loan
Documents, Borrower shall provide or cause to be provided workmen's compensation
insurance, builder's risk, and public liability insurance and other insurance to
the extent required under applicable law in connection with a particular
Replacement. All such policies shall be in form and amount reasonably
satisfactory to Lender. All such policies which can be endorsed with standard
mortgagee clauses making loss payable to Lender or its assigns shall be so
endorsed. Certified copies of such policies shall be delivered to Lender.
7.3.4 FAILURE TO MAKE REPLACEMENTS.
(a) It shall be an Event of Default under this Agreement if
Borrower fails to comply with any provision of this Section 7.3 and such failure
is not cured within thirty (30) days after notice from Lender; PROVIDED,
HOWEVER, if such failure is not capable of being cured within said thirty (30)
day period, then provided that Borrower commences action to complete such cure
and thereafter diligently proceeds to complete such cure, such thirty (30) day
period shall be extended for such time as is reasonably necessary for Borrower,
in the exercise of due diligence, to cure such failure, but such additional
period of time shall not exceed ninety (90) days. Upon the occurrence of such an
Event of Default, Lender may use the Replacement Reserve Fund (or any portion
thereof) for any purpose, including but not limited to completion of the
Replacements as provided in Section 7.3.3, or for any other repair or
replacement to the Property or toward payment of the Debt in such order,
proportion and priority as Lender may determine in its sole discretion. Lender's
right to withdraw and apply the Replacement Reserve Funds shall be in addition
to all other rights and remedies provided to Lender under this Agreement and the
other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply
all or any portion of the Replacement Reserve Fund on account of an Event of
Default to payment of the Debt or in any specific order or priority.
7.3.5 BALANCE IN THE REPLACEMENT RESERVE ACCOUNT. The
insufficiency of any balance in the Replacement Reserve Account shall not
relieve Borrower from its obligation to fulfill all preservation and maintenance
covenants in the Loan Documents.
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7.3.6 INDEMNIFICATION. Borrower shall indemnify Lender and
hold Lender harmless from and against any and all actions, suits, claims,
demands, liabilities, losses, damages, obligations and costs and expenses
(including litigation costs and reasonable attorneys fees and expenses) arising
from or in any way connected with the performance of the Replacements unless the
same are solely due to gross negligence or willful misconduct of Lender.
Borrower shall assign to Lender all rights and claims Borrower may have against
all persons or entities supplying labor or materials in connection with the
Replacements; PROVIDED, HOWEVER, that Lender may not pursue any such right or
claim unless an Event of Default has occurred and remains uncured.
Section 7.4 ROLLOVER RESERVE.
7.4.1 DEPOSITS TO ROLLOVER RESERVE FUND. On the Closing Date,
Borrower shall deposit with Lender the sum of $4,000,000 in the form of cash or
a Letter of Credit (the "INITIAL ROLLOVER DEPOSIT"). Additionally, if Disney
fails to renew (a) Disney Lease Segment #1 for a second time or sign a new lease
for a term of not less than five (5) years on terms acceptable to Lender on or
before ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) Disney Lease Segment #2 for a second time or sign a
new lease for a term of not less than five (5) years on terms acceptable to
Lender on or before March 31, 2014 or (c) Disney Lease Segment #3 for a second
time or sign a new lease for a term of not less than five (5) years on terms
acceptable to Lender on or before March 31, 2015 and, in any Borrower elects to
deposit with Lender cash or a Letter of Credit in order to prevent a Cash Trap
Trigger Event pursuant to the terms of the Cash Management Agreement, such
amount shall be held and disbursed in accordance with this Section 7.4. The
Initial Rollover Deposit and such other amounts so deposited shall hereinafter
be referred to as the "Rollover Reserve Fund" and the account to which such
amounts are held shall hereinafter be referred to as the "Rollover Reserve
Account". Borrower shall have the right to substitute any Letter of Credit
deposited with Lender pursuant to this Section 7.4.1 with cash in the same
amount and, conversely, to substitute any cash deposited with Lender pursuant to
this Section 7.4.1 with a Letter of Credit in the same amount.
7.4.2 WITHDRAWAL OF ROLLOVER RESERVE FUNDS. In the event
Disney fails to renew any of the Lease Segments, Lender shall make disbursements
from the Rollover Reserve Fund for tenant improvement and leasing commission
obligations incurred by Borrower and associated with re-leasing the related
space not renewed. All such expenses shall be approved by Lender in its
commercially reasonable discretion, except that Lender's approval of such
expenses shall not be required (a) if Lender has separately approved (but was
not deemed to have approved) the related Lease in accordance with the provisions
of SECTION 5.1.20 of this Agreement or (b) with respect to tenant improvement
expenses that are less than $22.00 per square foot. Lender shall make
disbursements as requested by Borrower (or by Property Manager on behalf of
Borrower) on a monthly basis in increments of no less than $5,000.00 upon
delivery by Borrower of Lender's standard form of draw request accompanied by
copies of paid invoices for the amounts requested and, if required by Lender,
lien waivers and releases from all parties furnishing materials and/or services
in connection with the requested payment. Lender may require an inspection of
the Property at Borrower's expense prior to making a monthly disbursement in
order to verify completion of improvements for which reimbursement is sought.
Disbursements of Rollover Reserve Funds for leasing commissions shall be limited
as follows: (a) four percent (4%) of base rent for new Leases that are not
co-brokered; (b) two
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percent (2%) of base rent for Lease expansions, extensions and renewals that are
not co-brokered; and (c) six percent (6%) of base rent for Leases that are
co-brokered (provided the commission is shared with such co-broker).
7.4.3 PARTIAL RELEASE OF ROLLOVER RESERVE FUNDS. Provided no
Event of Default then exists, the Rollover Reserve Funds will be reduced by (a)
$800,000 if the Disney Lease Segment #2 is extended for a term of not less than
five (5) additional years beyond its current expiration of December, 2009 on
terms acceptable to Lender and (b) $1,200,000 if the Disney Lease Segment #3 is
extended for a term of not less than five (5) additional years beyond its
current expiration of December, 2010 on terms acceptable to Lender. Provided no
Event of Default then exists, the amount by which the Rollover Reserve Funds is
reduced will be disbursed to Borrower (or, if Borrower has deposited with Lender
a Letter of Credit in lieu of cash, Borrower may deliver to Lender a replacement
Letter of Credit in the applicable amount as so reduced) upon the satisfaction
of the foregoing conditions.
Section 7.5 INTENTIONALLY DELETED.
Section 7.6 RESERVE FUNDS, GENERALLY.
7.6.1 Borrower hereby grants to Lender a security interest in
each of the Reserve Funds and any and all monies now or hereafter deposited in
each Reserve Fund as additional security for payment of the Debt. Until expended
or applied in accordance herewith, the Reserve Funds shall constitute additional
security for the Debt.
7.6.2 Upon the occurrence of an Event of Default, Lender may,
in addition to any and all other rights and remedies available to Lender, apply
any sums then present in any or all of the Reserve Funds to the payment of the
Debt in any order in its sole discretion.
7.6.3 The Reserve Funds shall not constitute trust funds and
may be commingled with other monies held by Lender.
7.6.4 The Rollover Reserve Fund (if received by Lender in
cash, rather than a Letter of Credit) (but not the Tax and Insurance Escrow
Fund, Replacement Reserve Fund and Required Repair Fund (if any)) shall be
placed in interest-bearing accounts and any interest earned thereon shall be
added to and become a part of the related Reserve Fund. Borrower shall be
responsible for payment of any federal, state or local income or other tax
applicable to the interest earned on such Reserve Funds credited or paid to
Borrower.
7.6.5 Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in any
Reserve Fund or the monies deposited therein or permit any lien or encumbrance
to attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto.
7.6.6 Lender shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds unless occasioned by the
gross negligence or willful misconduct of Lender.
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7.6.7 Upon payment in full of the Debt and performance of all
other obligations under this Agreement and the other Loan Documents, Lender
shall disburse to Borrower all remaining Reserve Funds.
7.6.8 The initial deposits into the Reserve Funds on the
Closing Date shall be made from the proceeds of the Loan in the amounts provided
herein.
Section 7.7 LETTER OF CREDIT RIGHTS. Any Letter of Credit delivered
to Lender pursuant to this Agreement shall be held by Lender as additional
security for the Loan. Lender shall have the right to draw upon any Letter of
Credit immediately and without further notice:
7.7.1 upon the occurrence and during the continuance of an
Event of Default;
7.7.2 if Borrower fails to deliver to Lender, no less than
thirty (30) days prior to the expiration of any Letter of Credit (including any
renewal or extension thereof), a renewal or extension of such Letter of Credit
or a replacement Letter of Credit;
7.7.3 if the institution issuing the Letter of Credit ceases
to be an Eligible Institution and Borrower fails to deliver to Lender a
replacement Letter of Credit from an Eligible Institution within thirty (30)
days of the date that Borrower is notified or otherwise becomes aware that such
institution ceased to be an Eligible Institution; or
7.7.4 for the purpose of making a disbursement to Borrower
pursuant to Sections 7.4.2 or 7.4.3.
Section 7.8 APPLICATION OF LETTER OF CREDIT PROCEEDS. In the event
of a draw upon a Letter of Credit due to the existence of an Event of Default,
Lender may apply such amounts in such order and in such amounts as Lender shall
elect, in its sole and absolute discretion, to payment of the Debt. In the event
of a draw upon a Letter of Credit due to the occurrence of an event described in
SECTION 7.7.2 or SECTION 7.7.3 above, Lender shall deposit the proceeds of such
Letter of Credit into a reserve account designated by Lender and such proceeds
shall be held and released in the same manner applicable to the release of the
Letter of Credit.ARTICLE 8 - DEFAULTS
Section 8.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event
of default hereunder (an "EVENT OF DEFAULT"):
(i) if (a) any portion of the principal or interest on the
Debt or monthly escrow payment is not paid when due, except that not
more than two times in any twelve month period it shall not be an Event
of Default if such amount (other than amounts due on the Maturity Date)
is paid within five (5) days of the applicable due date or (b) if any
other portion of the Debt is not paid within ten (10) days after notice
to Borrower from Lender;
(ii) if any of the Taxes or Other Charges are not paid prior
to the date when the same become delinquent, except to the extent that
Borrower is contesting same in
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accordance with the terms of Section 5.1.2 hereof, or there are
sufficient funds in the Tax and Insurance Escrow Fund to pay such Taxes
or Other Charges and Lender fails to or refuses to release the same from
the Tax and Insurance Escrow Fund;
(iii) if the Policies are not kept in full force and effect,
or if certified copies of the Policies are not delivered to Lender
within ten (10) days of request;
(iv) if Borrower transfers or encumbers any portion of the
Property without Lender's prior written consent (to the extent such
consent is required) or otherwise violates the provisions of Section
5.2.13 of this Loan Agreement;
(v) if any material representation or warranty made by
Borrower herein or in any other Loan Document, or in any report,
certificate, financial statement or other instrument, agreement or
document furnished to Lender shall have been false or misleading in any
material respect as of the date the representation or warranty was made;
(vi) if Borrower or Sponsor shall make an assignment for the benefit of
creditors;
(vii) if a receiver, liquidator or trustee shall be appointed
for Borrower or Sponsor or if Borrower or Sponsor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization
or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower or Sponsor, or if any proceeding for the
dissolution or liquidation of Borrower or Sponsor; PROVIDED, HOWEVER, if
such appointment, adjudication, petition or proceeding was involuntary
and not consented to by Borrower or Sponsor, upon the same not being
discharged, stayed or dismissed within one hundred eighty (180) days;
(viii) if Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if Borrower breaches any of its respective negative
covenants contained in Section 5.2 or any covenant contained in Section
4.1.30 hereof;
(x) with respect to any term, covenant or provision set
forth herein which specifically contains a notice requirement or grace
period, if Borrower shall be in default under such term, covenant or
condition after the giving of such notice or the expiration of such
grace period;
(xi) if a default exists beyond any applicable notice and
cure period under any Tenants-in-Common Agreement to the extent such
default can, in Lender's reasonable determination, result in a
termination of such Tenants-in-Common Agreement or a lien on any
interest in the Property;
78
(xii) if Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement not specified
in subsections (i) to (xi) above, for ten (10) days after notice to
Borrower from Lender, in the case of any Default which can be cured by
the payment of a sum of money, or for thirty (30) days after notice from
Lender in the case of any other Default; PROVIDED, HOWEVER, that if such
non-monetary Default is susceptible of cure but cannot reasonably be
cured within such 30-day period and provided further that Borrower shall
have commenced to cure such Default within such 30-day period and
thereafter diligently and expeditiously proceeds to cure the same, such
30-day period shall be extended for such time as is reasonably necessary
for Borrower in the exercise of due diligence to cure such Default, such
additional period not to exceed one hundred eighty (180) days;
(xiii) if there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such
documents, whether as to Borrower or the Property, or if any other such
event shall occur or condition shall exist, if the effect of such event
or condition is to accelerate the maturity of any portion of the Debt or
to permit Lender to accelerate the maturity of all or any portion of the
Debt;
(xiv) any Person comprising Borrower or otherwise owning an
interest in the Property files any partition action affecting the
Property, which action is not dismissed within sixty (60) days; or
(xv) if any of the assumptions contained in any substantive
non-consolidation opinion delivered in connection herewith, Insolvency
Opinion or Additional Insolvency Opinion are or shall become untrue in
any material respect.
Notwithstanding anything herein to the contrary, if an Event of Default shall
occur pursuant to clauses (iv), (vi), (vii), (xi) or (xiv) above which is not
caused by the action of any Borrower that is an Affiliate of Sponsor and such
Event of Default shall cease to exist as a result of a transfer by the
defaulting Borrower to one or more other Borrowers or an Affiliate of Behringer
Harvard Funds made in accordance with the provisions of Section 5.2.13 hereof,
such transfer shall be permitted and Lender shall accept a cure of such Event of
Default effective as of the date of such transfer provided that (a) Borrower
notifies Lender of its intention to effect such cure within 15 days after the
occurrence of the related Event of Default, (b) the transfer is completed within
60 days after the occurrence of the related Event of Default, (c) Borrower
continues to make timely payment of all amounts due under the Loan Documents
(provided that notwithstanding such payment, interest shall accrue at the
Default Rate until such Event of Default is cured pursuant to this paragraph)
and (d) during such cure period there is no material impairment to the value,
use or operation of the Property.
(b) Upon the occurrence of an Event of Default (other than
an Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, Lender may take such action, without notice or demand, that
Lender deems advisable to protect and enforce its rights against Borrower and in
the Property, including, without limitation, declaring the Debt to be
immediately due and payable, and Lender may enforce or avail itself of any or
all rights or remedies provided in the Loan
79
Documents against Borrower and the Property, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default
described in clauses (vi), (vii) or (viii) above, the Debt and all other
obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
Section 8.2 REMEDIES.
(a) Upon the occurrence of an Event of Default, all or any
one or more of the rights, powers, privileges and other remedies available to
Lender against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to the Property. Any such actions taken by Lender shall be cumulative
and concurrent and may be pursued independently, singly, successively, together
or otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
Without limiting the generality of the foregoing, Borrower agrees that if an
Event of Default is continuing (i) Lender is not subject to any "one action" or
"election of remedies" law or rule (to the extent waiveable by Borrower), and
(ii) all liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Property and the Mortgage has been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Debt or the Debt has been paid in full.
(b) To the extent permitted by applicable law, Lender shall
have the right from time to time to partially foreclose the Mortgage in any
manner and for any amounts secured by the Mortgage then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances: (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose the Mortgage to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may foreclose the
Mortgage to recover so much of the principal balance of the Loan as Lender may
accelerate and such other sums secured by the Mortgage as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Mortgage to secure payment of sums secured by the Mortgage and
not previously recovered.
(c) Lender shall have the right from time to time to sever
the Note, the Mortgage and the other Loan Documents into one or more separate
notes, mortgages and other security documents (the "SEVERED LOAN DOCUMENTS") in
such denominations as Lender shall determine in its sole discretion for purposes
of evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and
80
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender following the occurrence of an Event of Default as
its true and lawful attorney, coupled with an interest, in its name and stead to
make and execute all documents necessary or desirable to effect the aforesaid
severance, Borrower ratifying all that its said attorney shall do by virtue
thereof; PROVIDED, HOWEVER, Lender shall not make or execute any such documents
under such power until three (3) days after notice has been given to Borrower by
Lender of Lender's intent to exercise its rights under such power. Borrower
shall not be obligated to pay any costs or expenses incurred in connection with
the preparation, execution, recording or filing of the Severed Loan Documents,
and the Severed Loan Documents shall not contain any representations, warranties
or covenants not contained in the Loan Documents and any such representations
and warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date.
(d) As used in this Section 8.2, a "foreclosure" shall
include any sale by power of sale.
Section 8.3 REMEDIES CUMULATIVE; WAIVERS. The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive of
any other right, power or remedy which Lender may have against Borrower pursuant
to this Agreement or the other Loan Documents, or existing at law or in equity
or otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
ARTICLE 9 - SPECIAL PROVISIONS
Section 9.1 SALE OF NOTES AND SECURITIZATION. At the request of the
holder of the Note and, to the extent not already required to be provided by
Borrower under this Agreement, Borrower shall cooperate with Lender to allow
Lender to satisfy the market standards to which the holder of the Note
customarily adheres or which may be reasonably required in the marketplace or by
the Rating Agencies in connection with the sale of the Note or participations
therein or the first successful securitization (such sale and/or securitization,
the "SECURITIZATION") of rated single or multi-class securities (the
"SECURITIES") secured by or evidencing ownership interests in the Note and the
Mortgage. In this regard Borrower shall:
(a) (i) provide such financial and other information
with respect to the Property, Borrower and the Property Manager, (ii) provide
budgets relating to the Property and (iii) to perform or permit or cause to be
performed or permitted such site inspection, appraisals, market studies,
environmental reviews and reports (Phase I's and, if appropriate, Phase II's),
engineering reports and other due diligence investigations of the Property, as
may be reasonably requested by the holder of the Note or the Rating Agencies or
as may be necessary or appropriate in connection with the Securitization (the
"PROVIDED INFORMATION"), together, if customary, with
81
appropriate verification and/or consents of the Provided Information through
letters of auditors or opinions of counsel of independent attorneys acceptable
to Lender and the Rating Agencies;
(b) cause counsel to render opinions, which may be relied
upon by the holder of the Note, the Rating Agencies and their respective
counsel, agents and representatives, as to non-consolidation, fraudulent
conveyance, and true sale and/or lease or any other opinion customary in
securitization transactions, which counsel and opinions shall be reasonably
satisfactory to the holder of the Note and the Rating Agencies;
(c) make such representations and warranties as of the
closing date of the Securitization with respect to the Property, Borrower, and
the Loan Documents as are consistent with the representations and warranties
made in the Loan Documents; and
(d) execute such amendments to the Loan Documents and
organizational documents as may be reasonably requested by the holder of the
Note or the Rating Agencies or otherwise to effect the Securitization; PROVIDED,
HOWEVER, that Borrower shall not be required to modify or amend any Loan
Document if such modification or amendment would (i) change the interest rate,
the stated maturity or the amortization of principal set forth in the Note, or
(ii) modify or amend any other material economic term of the Loan.
All material out-of-pocket third party costs and expenses incurred by
Borrower in connection with complying with requests made under this Section 9.1
shall be paid by Lender.
Section 9.2 SECURITIZATION. Borrower understands that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization, including, without limitation, a prospectus, prospectus
supplement or private placement memorandum (each, a "DISCLOSURE DOCUMENT") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower will cooperate with the
holder of the Note in updating the Disclosure Document by providing all current
information necessary to keep the Disclosure Document accurate and complete in
all material respects.
Section 9.3 RATING SURVEILLANCE. Lender, at its option, may retain
the Rating Agencies to provide rating surveillance services on any certificates
issued in a Securitization. Such rating surveillance will be at the expense of
Lender (the "RATING SURVEILLANCE CHARGE").
Section 9.4 EXCULPATION. Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note, this Agreement, the Mortgage or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the
Note, this Agreement, the Mortgage and the other Loan Documents, or in the
Property, the Rents following
82
an Event of Default, or any other collateral given to Lender pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property, in the Rents
following an Event of Default and in any other collateral given to Lender, and
Lender, by accepting the Note, this Agreement, the Mortgage and the other Loan
Documents, agrees that it shall not ▇▇▇ for, seek or demand any deficiency
judgment against Borrower in any such action or proceeding under or by reason of
or under or in connection with the Note, this Agreement, the Mortgage or the
other Loan Documents. The provisions of this Section shall not, however, (a)
constitute a waiver, release or impairment of any obligation evidenced or
secured by any of the Loan Documents; (b) impair the right of Lender to name
Borrower as a party defendant in any action or suit for foreclosure and sale
under any of the Mortgage; (c) affect the validity or enforceability of or any
guaranty made in connection with the Loan or any of the rights and remedies of
Lender thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Assignment of Leases
following an Event of Default; or (f) constitute a prohibition against Lender
commencing any other appropriate action or proceeding in order for Lender to
exercise its remedies against the Property. In addition, the foregoing shall not
be deemed a waiver of the right of Lender to enforce the liability and
obligation of a Borrower, Sponsor or any Principal of a Borrower (or any
successor or assign of any of the foregoing), by money judgment or otherwise, as
expressly set forth in any Co-Owner Indemnity or Indemnity Agreement executed in
connection herewith.
Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, (A) the Debt shall be fully recourse to the Borrower
(but not any Principal of Borrower) and (B) Lender shall not be deemed to have
waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provisions of the U.S. Bankruptcy Code to file a claim for the full
amount of the Debt secured by the Mortgage or to require that all collateral
shall continue to secure all of the Debt owing to Lender in accordance with the
Loan Documents in the event that the first full monthly payment under the Note
is not paid within five (5) days of notice that such payment is late (provided,
however, that such grace period relates only to the recourse trigger described
in this paragraph).
Section 9.5 TERMINATION OF PROPERTY MANAGER. If (a) the amounts
evidenced by the Note have been accelerated pursuant to Section 8.1(b) hereof,
(b) the Property Manager shall become insolvent, (c) the Property Manager is in
default under the terms of the Property Management Agreement beyond any
applicable grace or cure period, or (d) Property Manager is not managing the
Property in accordance with the management practices of nationally recognized
management companies managing similar properties in locations comparable to
those of the Property, then, in the case of (a), (b), (c) or (d), Borrower
shall, at the request of Lender, terminate the Property Management Agreement and
replace the Property Manager with a manager reasonably approved by Lender on
terms and conditions reasonably satisfactory to Lender, it being understood and
agreed that the management fee for such replacement manager shall not exceed
then prevailing market rates. In addition and without limiting the rights of
Lender hereunder or under any of the other Loan Documents, in the event that (i)
the Property Management Agreement is terminated, (ii) the Property Manager no
longer manages the Property, or (iii) a receiver, liquidator or trustee shall be
appointed for Property Manager or if Property Manager shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
83
law, shall be filed by or against, consented to, or acquiesced in by, Property
Manager, or if any proceeding for the dissolution or liquidation of Property
Manager shall be instituted, then Borrower (at Borrower's sole cost and expense)
shall immediately, in its name, establish new deposit accounts separate from any
other Person with a depository satisfactory to Lender into which all Rents and
other income from the Property shall be deposited and shall grant Lender a first
priority security interest in such account pursuant to documentation
satisfactory in form and substance to Lender. Property Manager shall have the
right to subcontract some or all of its responsibilities under the Property
Management Agreement pursuant to an agreement on terms and conditions
satisfactory to Lender in its reasonable discretion, it being understood and
agreed that the management fee for such Property Manager shall not exceed then
prevailing market rates, as determined by Lender, and in no event shall each
agreement impair Lender's rights hereunder or under the other Loan Documents.
Section 9.6 SERVICER. At the option of Lender, the Loan may be
serviced by a servicer/trustee (the "SERVICER") selected by Lender and Lender
may delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents to the Servicer pursuant to a servicing agreement (the
"SERVICING AGREEMENT") between Lender and Servicer. Lender shall be responsible
for any set-up fees or any other costs relating to or arising under the
Servicing Agreement.
Section 9.7 RESIZING. Borrower covenants and agrees that in
connection with any Securitization of the Loan, upon Lender's request Borrower
shall deliver one or more new component notes to replace the original note or
modify the original note to reflect multiple components of the Loan or create
one or more mezzanine loans (including amending Borrower's organizational
structure to provide for one or more mezzanine borrowers) (each a "RESIZING
EVENT"). Lender agrees that such new notes or modified note or mezzanine notes
shall immediately after the Resizing Event have the same initial weighted
average coupon as the original note prior to such Resizing Event,
notwithstanding that such new notes or modified note or mezzanine notes or may,
in connection with the application of principal to such new notes or modified
note or mezzanine notes, subsequently cause the weighted average spread of such
new notes or modified note or mezzanine notes to change and apply principal,
interest rates and amortization of the Loan between such new components and/or
mezzanine loans in a manner specified by Lender in its sole discretion such that
the pricing and marketability of the Securities and the size of each class of
Securities and the rating assigned to each such class by the Rating Agencies
shall provide the most favorable rating levels and achieve the optimum bond
execution for the Loan. In connection with any Resizing Event, Borrower
covenants and agrees to modify the Cash Management Agreement with respect to the
newly created components and/or mezzanine loans.
ARTICLE 10 - MISCELLANEOUS
Section 10.1 SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth herein or in the other Loan Documents. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the
84
legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
Section 10.2 LENDER'S DISCRETION. Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 10.3 GOVERNING LAW. (a) THIS AGREEMENT WAS NEGOTIATED IN THE
STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN AND
SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST
EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK
SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS
AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST
EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES
ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND, EXCEPT AS PROVIDED ABOVE,
THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇
▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT:
CT CORPORATION SYSTEM
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 10.4 MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Note, or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party against whom enforcement is sought,
and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or other
circumstances.
Section 10.5 DELAY NOT A WAIVER. Neither any failure nor any delay on
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note or under any other Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, the Note or any other Loan
Document, Lender shall not be deemed to have waived any right
86
either to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 10.6 NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section):
If to Lender: Bear ▇▇▇▇▇▇▇ Commercial Mortgage, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Borrower: c/o Behringer Harvard Funds
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
with a copy to: ▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇ & Scripps LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or certified mail,
when delivered or the first attempted delivery on a Business Day; or in the case
of expedited prepaid delivery and telecopy, upon the first attempted delivery on
a Business Day.
Section 10.7 TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS
87
TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER AND LENDER.
Section 10.8 HEADINGS. The Article and/or Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
Section 10.9 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.10 PREFERENCES. Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by Borrower
during the existence of an Event of Default to any portion of the obligations of
Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Lender.
Section 10.11 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 10.12 REMEDIES OF BORROWER. In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
Section 10.13 EXPENSES; INDEMNITY.
(a) Borrower covenants and agrees to pay or, if Borrower
fails to pay, to reimburse, Lender upon receipt of written notice from Lender
for all reasonable costs and
88
expenses (including reasonable attorneys' fees and disbursements) incurred by
Lender in connection with (i) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of furnishing
all opinions by counsel for Borrower (including without limitation any opinions
requested by Lender as to any legal matters arising under this Agreement or the
other Loan Documents with respect to the Property); (ii) Borrower's ongoing
performance of and compliance with Borrower's respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(iii) Lender's ongoing performance and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iv) except as
otherwise provided in this Agreement, the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other
modifications to this Agreement and the other Loan Documents and any other
documents or matters reasonably requested by Lender; (v) securing Borrower's
compliance with any requests made pursuant to the provisions of this Agreement;
(vi) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (vii) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, the Property, or any other security given for the
Loan; and (viii) enforcing any obligations of or collecting any payments due
from Borrower under this Agreement, the other Loan Documents or with respect to
the Property or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Notwithstanding the foregoing, all material out-of-pocket
third party costs and expenses incurred by Borrower in connection with complying
with requests made under Section 9.1 shall be paid by Lender.
(b) Each Borrower shall indemnify, defend and hold harmless
Lender from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for Lender in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not Lender shall be designated a party thereto), that may
be imposed on, incurred by, or asserted against Lender in any manner relating to
or arising out of (i) any breach by such Borrower of its obligations under, or
any material misrepresentation by such Borrower contained in, this Agreement or
the other Loan Documents, or (ii) the use or intended use of the proceeds of the
Loan (collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, that such
Borrower shall not have any obligation to Lender hereunder to the extent that
such Indemnified Liabilities arise from the gross negligence, illegal acts,
fraud or willful misconduct of Lender. To the extent that the undertaking to
indemnify, defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, such
89
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.
Section 10.14 SCHEDULES INCORPORATED. The Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of
Lender's interest in and to this Agreement, the Note and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrower may otherwise have
against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
Section 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely
for the benefit of Lender and Borrower and nothing contained in this Agreement
or the other Loan Documents shall be deemed to confer upon anyone other than
Lender and Borrower any right to insist upon or to enforce the performance or
observance of any of the obligations contained herein or therein. All conditions
to the obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 10.17 PUBLICITY. All news releases, publicity or advertising
by Borrower or their Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, Bear ▇▇▇▇▇▇▇, or any of their Affiliates shall be subject
to the prior written approval of Lender. All news releases, publicity or
advertising by Lender through any media intended to reach the general public
which refers solely to the Borrower or to the Loan made by the Lender to the
Borrower shall be subject to the prior written approval of Borrower, provided
however, the foregoing shall not apply to Provided Information included in
disclosure documents in connection with a Securitization.
Section 10.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest extent
permitted by law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets
90
of Borrower, Borrower's partners and others with interests in Borrower, and of
the Property, or to a sale in inverse order of alienation in the event of
foreclosure of the Mortgage or sale of the Property by power of sale, and agrees
not to assert any right under any laws pertaining to the marshalling of assets,
the sale in inverse order of alienation, homestead exemption, the administration
of estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of the Property
for the collection of the Debt without any prior or different resort for
collection or of the right of Lender to the payment of the Debt out of the net
proceeds of the Property in preference to every other claimant whatsoever.
Section 10.19 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right
to assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.
Section 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE. In the
event of any conflict between the provisions of this Loan Agreement and any of
the other Loan Documents, the provisions of this Loan Agreement shall control.
The parties hereto acknowledge that they were represented by competent counsel
in connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
Section 10.21 BROKERS AND FINANCIAL ADVISORS. Borrower hereby
represents that it has dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement other than NorthMarq Capital. Borrower hereby
agrees to indemnify, defend and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind (including Lender's
reasonable attorneys' fees and expenses) in any way relating to or arising from
a claim by any Person that such Person acted on behalf of Borrower or Lender in
connection with the transactions contemplated herein. The provisions of this
Section 10.21 shall survive the expiration and termination of this Agreement and
the payment of the Debt.
Section 10.22 PRIOR AGREEMENTS. This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements or understandings among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other
91
Loan Documents and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of such prior agreement do not
survive execution of this Agreement.
Section 10.23 TRANSFER OF LOAN. In the event that Lender transfers the
Loan, Borrower shall continue to make payments at the place set forth in the
Note (and its obligation to make such payments shall be deemed satisfied upon
the making of such payments) until such time that Borrower is notified in
writing by Lender that payments are to be made at another place.
Section 10.24 JOINT AND SEVERAL LIABILITY. If Borrower consists of
more than one person or party, the obligations and liabilities of each person or
party shall be joint and several except as otherwise expressly provided in the
Loan Documents.
(THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.)
92
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
BEHRINGER HARVARD BUENA VISTA PLAZA LP,
a Delaware limited partnership
By: Behringer Harvard Buena Vista GP, LLC, a
Delaware limited liability company
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Secretary
LENDER:
BEAR ▇▇▇▇▇▇▇ COMMERCIAL MORTGAGE, INC.,
a New York corporation
By: ___________________________________
Name:
Managing Director
Indemnitor hereby executes this Agreement to
evidence its agreement to be bound by the
applicable terms hereof, including Section 9.4:
BEHRINGER HARVARD REIT I, INC.,
a Maryland corporation
By:_____________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Title: Executive Vice President
SCHEDULE I
[reserved]
SCH. I-1
SCHEDULE II
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
SCH. II-1
SCHEDULE III
CO-OWNER INDEMNITY
------------------
SCH. III-1
SCHEDULE IV
REQUIRED REPAIRS
----------------
SCH. IV-1
SCHEDULE V
TENANTS IN COMMON AGREEMENT
---------------------------
SCH. V-1
SCHEDULE VI
AFFILIATE AGREEMENTS
--------------------
[NONE]
SCH. VI-1
SCHEDULE VII
CO-OWNER TRANSFEREE CRITERIA
----------------------------
1) Each Co-Owner Transferee and/or its principals must be an Accredited
Investor;
2) Each Co-Owner Transferee, its principals and all other entities which may
be owned or controlled directly or indirectly by Transferee's principals
("Related Entities") must not have been a party to any bankruptcy
proceedings, voluntary or involuntary, made an assignment for the benefit
of creditors or taken advantage of any insolvency act, or any act for the
benefit of debtors within seven (7) years prior to the date of the proposed
transfer of the Property;
3) Each Co-Owner Transferee and/or its principals must not be an "Embargoed
Person";
4) There shall be no material litigation or regulatory action pending or
threatened, or judgments or convictions against Co-Owner Transferee, its
principals or Related Entities which is not reasonably acceptable to
Lender; and
5) Co-Owner Transferee, its principals and Related Entities shall not have
defaulted under its or their obligations with respect to any other
indebtedness in a manner which is not reasonably acceptable to Lender.
SCH. VII-1
SCHEDULE VIII
CONSENT AND ASSUMPTION AGREEMENT
--------------------------------
SCH. VIII-1
SCHEDULE IX
CO-OWNER TRANSFEREE PARTNERSHIP AGREEMENT
-----------------------------------------
SCH. IX-1
SCHEDULE X
GENERAL PARTNER OPERATING AGREEMENT
-----------------------------------
SCH. X-1
SCHEDULE XI
RENT ROLL
---------
SCH. XI-1
SCHEDULE XII
EXCEPTIONS TO REPRESENTATIONS
-----------------------------
[NONE]
SCH. XII-1